Takeda Announces First Quarter FY2024 Results - Strong Performance by Growth & Launch Products; Advancements in Promising Late-Stage Pipeline

Rhea-AI Summary

Takeda reported strong Q1 FY2024 results, with revenue growth of 14.1% at AER and 2.1% at CER. Growth & Launch Products drove performance, increasing 17.8% at CER and representing 46% of total revenue. Core Operating Profit rose 4.5% at CER, with a margin of 31.6%. The company maintained its full-year forecast and management guidance.

Key highlights include:

• Geographic expansion with approvals of LIVTENCITY in Japan and FRUZAQLA in EU
• Positive Phase 2b data for TAK-861 in narcolepsy type 1 and mezagitamab for ITP
• Q1 revenue of 1,208.0 billion yen and Core Operating Profit of 382.3 billion yen
• Core EPS of 176 yen, up 17.5% year-over-year

Positive

• Revenue growth of 14.1% at AER and 2.1% at CER
• Growth & Launch Products increased 17.8% at CER, representing 46% of total revenue
• Core Operating Profit rose 4.5% at CER with a margin of 31.6%
• Core EPS increased 17.5% year-over-year to 176 yen
• Operating Cash Flow improved by 84.3% to 170.3 billion yen
• Geographic expansion with new product approvals in Japan and EU

Negative

• Expected acceleration of generic erosion impact in coming quarters
• Planned increase in R&D investment in the second half of the year
• Full-year forecast predicts flat to slightly declining Core Revenue
• Core Operating Profit guidance indicates approximately 10% decline for FY2024
• Core EPS guidance suggests mid-10s% decline for FY2024

Financial Analyst

Takeda's Q1 FY2024 results demonstrate a robust performance, particularly in its Growth & Launch Products segment. The 14.1% revenue growth at AER and 2.1% at CER underscores the company's ability to navigate challenges posed by significant losses of exclusivity in the previous fiscal year. The 17.8% growth at CER in Growth & Launch Products, now representing 46% of total revenue, is a strong indicator of Takeda's strategic focus on high-growth areas.

The Core Operating Profit increase of 4.5% at CER and a healthy margin of 31.6% for the quarter reflect effective cost management, particularly in R&D investment phasing and OPEX reduction. However, investors should note that R&D investment is expected to intensify in the second half of the year due to planned Phase 3 program initiations.

While the company maintains its full-year forecast, the potential upside to revenue if current foreign exchange rates persist is a positive factor to consider. The 84.3% increase in Operating Cash Flow to 170.3 billion yen is particularly noteworthy, indicating strong operational efficiency.

Investors should keep a close eye on the anticipated acceleration of generic erosion in coming quarters, especially regarding VYVANSE®. The company's ability to offset this through its Growth & Launch Products will be important for maintaining its growth trajectory.

Medical Research Analyst

Takeda's Q1 results highlight significant advancements in its late-stage pipeline, which bodes well for the company's long-term growth prospects. The positive Phase 2b data for TAK-861 in narcolepsy type 1 and mezagitamab (TAK-079) in immune thrombocytopenia (ITP) are particularly encouraging.

These developments underscore Takeda's commitment to addressing unmet medical needs in rare diseases and neurological disorders. The potential of these candidates to drive revenue growth into the next decade is substantial, especially considering the high unmet need in these therapeutic areas.

The geographic expansion with approvals of LIVTENCITY® in Japan and FRUZAQLA® in the EU demonstrates Takeda's ability to successfully navigate regulatory pathways across different markets. This global approach enhances the company's potential to maximize the commercial success of its products.

Investors should pay attention to the planned initiation of multiple Phase 3 programs in the second half of the year. These late-stage trials will be critical in determining the future of Takeda's pipeline and its ability to sustain long-term growth. The increased R&D investment associated with these programs underscores the company's confidence in its pipeline and its commitment to innovation.

• Revenue Growth of 14.1% at Actual Exchange Rates (AER); +2.1% at Constant Exchange Rate (CER) Driven by Acceleration of Growth & Launch Products (+17.8% at CER)
• Core Operating Profit Increase of 4.5% at CER Reflecting Phasing of R&D Investment and Other OPEX Reduction; Core Operating Profit Margin of 31.6% for the Quarter
• No Change to Full Year Forecast or Management Guidance
• Geographic Expansion with Approvals of LIVTENCITY^® in Japan and FRUZAQLA^® in EU
• Late-Stage Pipeline Advances with Positive Phase 2b Data Presented for TAK-861 in Narcolepsy Type 1 and Mezagitamab for Immune Thrombocytopenia (ITP)

OSAKA, Japan--(BUSINESS WIRE)-- Takeda (TOKYO:4502/NYSE:TAK) today announced earnings results for the first quarter of fiscal year 2024 (period ended June 30, 2024), with continued momentum in its Growth & Launch Products driving Core growth at CER and more than offsetting revenue impact resulting from significant losses of exclusivity that occurred in the previous fiscal year.

The strong performance of Takeda’s Growth and Launch Product portfolio, which grew 17.8% at CER and represented 46% of total revenue, supports the company’s outlook for a return to sustainable revenue and profit growth in the near term and its ability to deliver life-transforming treatments and vaccines.

In addition, positive Phase 2b data presented in June for TAK-861 in narcolepsy type 1 and for mezagitamab (TAK-079) in immune thrombocytopenia (ITP), a rare immune-mediated bleeding disorder, underscore the promise of Takeda’s late-stage pipeline and the potential for strong revenue growth into the next decade and beyond.

Takeda chief financial officer, Milano Furuta, commented:
“Takeda has delivered a positive first quarter performance, with Growth and Launch Products driving overall revenue growth. Our results reflect strong commercial execution, with new launches, geographic expansion and lifecycle management enabling us to reach more patients and communities around the world.

“First quarter Core Operating Profit benefitted from this strong Growth and Launch Product performance, as well as from phasing of R&D investment, reduction in other OPEX and milder than anticipated VYVANSE^® generic erosion in the U.S.

“There is no change to our full-year FY2024 outlook announced in May. We expect the impact of generic erosion to accelerate in coming quarters and the phasing of our R&D investment will focus on the second half of the year due to the planned initiation of multiple Phase 3 programs. Foreign exchange has been a tailwind for revenue performance in the first quarter and we see potential upside to our revenue forecast if current foreign exchange rates continue.”

FINANCIAL HIGHLIGHTS for FY2024 Q1 Ended June 30, 2024
(Billion yen, except percentages and per share amounts)
	FY2024 Q1	FY2023 Q1	vs. PRIOR YEAR (Actual % change)
Revenue	1,208.0	1,058.6	+14.1%
Operating Profit	166.3	168.6	-1.3%
Net Profit	95.2	89.4	+6.5%
EPS (Yen)	61	58	+5.6%
Operating Cash Flow	170.3	92.4	+84.3%
Adjusted Free Cash Flow (Non-IFRS)	23.7	-207.5	N/A

Core (Non-IFRS)
(Billion yen, except percentages and per share amounts)
	FY2024 Q1	FY2023 Q1	vs. PRIOR YEAR (Actual % change)	vs. PRIOR YEAR (CER % change)
Revenue	1,208.0	1,058.6	+14.1%	+2.1%
Operating Profit	382.3	326.3	+17.1%	+4.5%
Margin	31.6%	30.8%	+0.8pp	―
Net Profit	276.8	233.4	+18.6%	+3.9%
EPS (Yen)	176	150	+17.5%	+2.9%

FY2024 Outlook (unchanged from May 2024)
(Billion yen, except percentages and per share amounts)
	FY2024 FORECAST	FY2024 MANAGEMENT GUIDANCE Core Change at CER (Non-IFRS)
Revenue	4,350.0	―
Core Revenue (Non-IFRS)	4,350.0	Flat to slightly declining
Operating Profit	225.0	―
Core Operating Profit (Non-IFRS)	1,000.0	Approximately 10% decline
Net Profit	58.0	―
EPS (Yen)	37	―
Core EPS (Yen) (Non-IFRS)	431	Mid-10s% decline
Adjusted Free Cash Flow (Non-IFRS)	350.0 - 450.0
Annual Dividend per Share (Yen)	196

Additional Information About Takeda’s FY2024 Q1 Results
For more details about Takeda’s FY2024 Q1 results, commercial progress, pipeline updates and other financial information, including key assumptions in the FY2024 forecast and management guidance as well as definitions of non-IFRS measures, please refer to Takeda’s FY2024 Q1 investor presentation (available at https://www.takeda.com/investors/financial-results/quarterly-results/)

About Takeda
Takeda is focused on creating better health for people and a brighter future for the world. We aim to discover and deliver life-transforming treatments in our core therapeutic and business areas, including gastrointestinal and inflammation, rare diseases, plasma-derived therapies, oncology, neuroscience and vaccines. Together with our partners, we aim to improve the patient experience and advance a new frontier of treatment options through our dynamic and diverse pipeline. As a leading values-based, R&D-driven biopharmaceutical company headquartered in Japan, we are guided by our commitment to patients, our people and the planet. Our employees in approximately 80 countries and regions are driven by our purpose and are grounded in the values that have defined us for more than two centuries. For more information, visit www.takeda.com.

Important Notice
For the purposes of this notice, “press release” means this document, any oral presentation, any question and answer session and any written or oral material discussed or distributed by Takeda Pharmaceutical Company Limited (“Takeda”) regarding this press release. This press release (including any oral briefing and any question-and-answer in connection with it) is not intended to, and does not constitute, represent or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, exchange, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction. No shares or other securities are being offered to the public by means of this press release. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. This press release is being given (together with any further information which may be provided to the recipient) on the condition that it is for use by the recipient for information purposes only (and not for the evaluation of any investment, acquisition, disposal or any other transaction). Any failure to comply with these restrictions may constitute a violation of applicable securities laws.

The companies in which Takeda directly and indirectly owns investments are separate entities. In this press release, “Takeda” is sometimes used for convenience where references are made to Takeda and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.

The product names appearing in this document are trademarks or registered trademarks owned by Takeda, or their respective owners.

Forward-Looking Statements
This press release and any materials distributed in connection with this press release may contain forward-looking statements, beliefs or opinions regarding Takeda’s future business, future position and results of operations, including estimates, forecasts, targets and plans for Takeda. Without limitation, forward-looking statements often include words such as “targets”, “plans”, “believes”, “hopes”, “continues”, “expects”, “aims”, “intends”, “ensures”, “will”, “may”, “should”, “would”, “could”, “anticipates”, “estimates”, “projects”, “forecasts”, “outlook” or similar expressions or the negative thereof. These forward-looking statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those expressed or implied by the forward-looking statements: the economic circumstances surrounding Takeda’s global business, including general economic conditions in Japan and the United States; competitive pressures and developments; changes to applicable laws and regulations; challenges inherent in new product development, including uncertainty of clinical success and decisions of regulatory authorities and the timing thereof; uncertainty of commercial success for new and existing products; manufacturing difficulties or delays; fluctuations in interest and currency exchange rates; claims or concerns regarding the safety or efficacy of marketed products or product candidates; the impact of health crises, like the novel coronavirus pandemic; the success of our environmental sustainability efforts, in enabling us to reduce our greenhouse gas emissions or meet our other environmental goals; the extent to which our efforts to increase efficiency, productivity or cost-savings, such as the integration of digital technologies, including artificial intelligence, in our business or other initiatives to restructure our operations will lead to the expected benefits; and other factors identified in Takeda’s most recent Annual Report on Form 20-F and Takeda’s other reports filed with the U.S. Securities and Exchange Commission, available on Takeda’s website at: https://www.takeda.com/investors/sec-filings-and-security-reports/ or at www.sec.gov. Takeda does not undertake to update any of the forward-looking statements contained in this press release or any other forward-looking statements it may make, except as required by law or stock exchange rule. Past performance is not an indicator of future results and the results or statements of Takeda in this press release may not be indicative of, and are not an estimate, forecast, guarantee or projection of Takeda’s future results.

Financial information and Non-IFRS Measures
Takeda’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”).

This press release and materials distributed in connection with this press release include certain financial measures not presented in accordance with IFRS, such as Core Revenue, Core Operating Profit, Core Net Profit for the year attributable to owners of the Company, Core EPS, Constant Exchange Rate (“CER”) change, Net Debt, Adjusted Net Debt, EBITDA, Adjusted EBITDA, Free Cash Flow and Adjusted Free Cash Flow. Takeda’s management evaluates results and makes operating and investment decisions using both IFRS and non-IFRS measures included in this press release. These non-IFRS measures exclude certain income, cost and cash flow items which are included in, or are calculated differently from, the most closely comparable measures presented in accordance with IFRS. Takeda’s non-IFRS measures are not prepared in accordance with IFRS and such non-IFRS measures should be considered a supplement to, and not a substitute for, measures prepared in accordance with IFRS (which we sometimes refer to as “reported” measures). Investors are encouraged to review the definitions and reconciliations of non-IFRS measures to their most directly comparable IFRS measures, which are in the Financial Appendix appearing at the end of our FY2024 Q1 investor presentation (available at www.takeda.com/investors). Beginning in the quarter ended June 30, 2024, Takeda (i) changed its methodology for CER adjustments to results of subsidiaries in hyperinflation countries to present those results in a manner consistent with IAS 29, Financial Reporting in Hyperinflation Economies, (ii) re-named Free Cash Flow as previously calculated as “Adjusted Free Cash Flow” (with “Free Cash Flow” to be reported as Operating Cash Flow less Property, Plant and Equipment), and (iii) re-named Net Debt as previously calculated as “Adjusted Net Debt” (with “Net Debt” to be reported as the book value of bonds and loans less cash and cash equivalents).

Medical information
This press release contains information about products that may not be available in all countries, or may be available under different trademarks, for different indications, in different dosages, or in different strengths. Nothing contained herein should be considered a solicitation, promotion or advertisement for any prescription drugs including the ones under development.

Please refer to slide 8 of Takeda’s FY2024 Q1 investor presentation (available at https://www.takeda.com/investors/financial-results/quarterly-results/) for the definition of Growth & Launch Products.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725145481/en/

Investor Relations

Christopher O’Reilly

Christopher.oreilly@takeda.com

+81 (0) 90-6481-3412



Media Relations

Brendan Jennings

Brendan.jennings@takeda.com

+81 (0) 80-2705-8259

Source: Takeda Pharmaceutical Company Limited

FAQ

What was Takeda's (TAK) revenue growth in Q1 FY2024?

Takeda reported revenue growth of 14.1% at Actual Exchange Rates (AER) and 2.1% at Constant Exchange Rate (CER) in Q1 FY2024.

How did Takeda's Growth & Launch Products perform in Q1 FY2024?

Takeda's Growth & Launch Products grew by 17.8% at CER and represented 46% of total revenue in Q1 FY2024.

What was Takeda's (TAK) Core Operating Profit margin in Q1 FY2024?

Takeda's Core Operating Profit margin was 31.6% for Q1 FY2024.

Did Takeda (TAK) change its full-year forecast for FY2024?

No, Takeda maintained its full-year forecast and management guidance for FY2024 as announced in May 2023.

What pipeline advancements did Takeda (TAK) report in Q1 FY2024?

Takeda reported positive Phase 2b data for TAK-861 in narcolepsy type 1 and mezagitamab for immune thrombocytopenia (ITP).