Takeda Announces Third-Quarter FY2023 Results; On-Track Towards Full-Year Management Guidance With Strong Momentum in Growth & Launch Products

Rhea-AI Summary

Takeda announced two new U.S. FDA approvals in FY2023 Q3 for FRUZAQLA and ADZYNMA, enhancing its portfolio. The company reported a revenue growth of +4.6% at AER, flat at CER, and a core operating profit change of -12.7% at CER. Takeda's financial results show a strong momentum in its Growth & Launch Products, offsetting the revenue impact of generic entrants. The company remains on track towards its full-year Management Guidance, reflecting significant generic impact, lower coronavirus vaccines revenue, and investment in R&D and data, digital, and technology to secure long-term competitiveness. Takeda's Chief Financial Officer, Costa Saroukos, emphasized the company's vision to discover and deliver life-transforming treatments and the improvement in their debt profile.

Insights

Financial Analyst

The announcement from Takeda showcases a nuanced financial landscape. The reported revenue growth of +4.6% at Actual Exchange Rate (AER) suggests resilience in Takeda's portfolio despite market pressures. However, revenue being flat at Constant Exchange Rate (CER) indicates that the growth is somewhat attributed to favorable currency fluctuations rather than underlying business expansion.

The core operating profit decline of -12.7% at CER is a critical figure, reflecting challenges such as the impact of generics, reduced coronavirus vaccine revenue and increased investments in R&D. This decline is particularly significant as it points to margin compression and the potential need for strategic adjustments to maintain profitability amidst increased competition and market saturation.

Furthermore, the substantial decrease in free cash flow (-93.8%) raises concerns about the company's liquidity and its ability to fund ongoing operations and investments without resorting to additional financing or asset sales.

Medical Research Analyst

The FDA approvals of FRUZAQLA and ADZYNMA represent significant milestones for Takeda, potentially bolstering its competitive position in oncology and rare diseases. The approval for metastatic colorectal cancer, a condition with a high unmet need, could lead to substantial revenue generation given the size of the market and the lack of effective treatments for patients who have failed other therapies.

Conversely, ADZYNMA's target for an ultra-rare blood clotting disorder, cTTP, while less impactful on revenue due to the smaller patient population, emphasizes Takeda's strategic focus on niche markets where competition is less intense and pricing power can be stronger.

The lifecycle management approvals for HYQVIA® and GAMMAGARD LIQUID® also underscore the company's efforts to extend the commercial longevity of its products, a crucial strategy to offset patent cliffs and generic competition.

Market Research Analyst

Takeda's launch of the ENTYVIO® Pen in the U.S. for ulcerative colitis and the anticipated FDA decision on its Crohn's Disease filing could impact the company's market share in the gastrointestinal therapeutic area. The introduction of a pen delivery system often enhances patient compliance and convenience, potentially increasing product uptake.

The expansion of the dengue vaccine, QDENGA®, now launched in 21 countries, taps into a growing vaccine market, especially in regions where dengue is endemic. The approval of LIVTENCITY® in China for refractory post-transplant CMV also opens up a new revenue stream in a significant market, provided Takeda navigates China's complex regulatory and pricing environment effectively.

• Two New U.S. FDA Approvals in FY2023 Q3: FRUZAQLA for Adults With Previously Treated Metastatic Colorectal Cancer and ADZYNMA for Ultra-Rare Blood Clotting Disorder cTTP
• Strong Commercial Execution Maximizing Value of Existing Portfolio:

• ENTYVIO^® Pen Launched in U.S. for Ulcerative Colitis; U.S. FDA Approval Decision on Crohn’s Disease Filing Expected in early FY2024
• QDENGA ^® Dengue Vaccine Now Launched in 21 Countries
• LIVTENCITY ^® Approved in China for Refractory Post-Transplant CMV

• Revenue Growth of +4.6% at Actual Exchange Rate (AER); Flat at Constant Exchange Rate (CER)
• Core Operating Profit Change of -12.7% at CER, Reflecting Generic Impact, Lower Coronavirus Vaccines Revenue and Increased Investment in R&D and Data, Digital & Technology
• Life-Cycle Management Approvals for HYQVIA^® and GAMMAGARD LIQUID^® in January Support Forward Momentum of Growth & Launch Products
• Confirms Full-Year Management Guidance

OSAKA, Japan & CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Takeda (TOKYO:4502/NYSE:TAK) today announced financial results for the third quarter of fiscal year 2023 (period ended December 31, 2023). With year-to-date strong momentum in its Growth & Launch Products (+12.7% at CER) offsetting the significant revenue impact of generic entrants, Takeda remains on track towards its full-year Management Guidance.

Takeda chief financial officer, Costa Saroukos, commented:
“In FY2023 Q3 we made further progress in our vision to discover and deliver life-transforming treatments, receiving two new U.S. FDA approvals and broadening the reach of our existing portfolio with multiple life-cycle management approvals for our Growth & Launch Products.

“We remain on track towards our full-year Management Guidance at CER, reflecting significant generic impact, lower coronavirus vaccines revenue and investment in R&D and data, digital and technology to secure our long-term competitiveness, as well as continued strong momentum in our Growth & Launch Products.

“We continue to improve our debt profile with 100% of our debt now at fixed interest rates averaging 1.6%, and our financial foundation remains strong as we enter the fourth quarter of FY2023.”

FINANCIAL HIGHLIGHTS
Results for FY2023 Q3 YTD Ended December 31, 2023
(Billion yen, except percentages and per share amounts)	REPORTED		CORE(c)   (Non-IFRS)(a)
	FY2023 Q3 YTD	vs. PRIOR YEAR (Actual % change)	FY2023 Q3 YTD	vs. PRIOR YEAR (Actual % change)	vs. PRIOR YEAR (CER % change(d))
Revenue	3,212.9	+4.6%	3,212.9	+4.6%	+0.0%
Operating Profit	224.1	-44.2%	865.6	-9.3%	-12.7%
Margin	7.0%	-6.1pp	26.9%	-4.1pp
Net Profit	147.1	-48.6%	643.6	-9.0%	-12.2%
EPS (yen)	94	-48.9%	412	-9.7%	-12.9%
Operating Cash Flow	437.8	-36.0%
Free Cash Flow (Non-IFRS)(a)(b)	36.3	-93.8%
(a) Further information regarding certain of Takeda’s Non-IFRS measures is posted on Takeda’s investor relations website at https://www.takeda.com/investors/financial-results/quarterly-results/.
(b) We define Free Cash Flow as cash flows from operating activities, subtracting acquisition of property, plant and equipment (“PP&E”), intangible assets and investments as well as removing any other cash that is not available to Takeda’s immediate or general business use, and adding proceeds from sales of PP&E, as well as from sales of investments and businesses, net of cash and cash equivalents divested.
(c) Core results adjust our reported results calculated and presented pursuant to IFRS to exclude the effect of items unrelated to Takeda’s core operations, such as, to the extent applicable for each line item, non-recurring items, purchase accounting effects and transaction related costs, as well as amortization and impairment of intangible assets and other operating income and expenses.
(d) CER (Constant Exchange Rate) change eliminates the effect of foreign exchange rates from year-over-year comparisons by translating Reported or Core results for the current period using corresponding exchange rates in the same period of the previous fiscal year.

FY2023 OUTLOOK
On track towards full-year FY2023 Management Guidance
(Billion yen except per share amounts)	FY2023 FORECAST (Unchanged from October 2023)	FY2023 MANAGEMENT GUIDANCE Core Change at CER (Non-IFRS) (Unchanged from May 2023)
Revenue	3,980.0
Core Revenue	3,980.0	Low-single-digit % decline
Reported Operating Profit	225.0
Core Operating Profit	1,015.0	Low-10s % decline
Reported Net Profit	93.0
Reported EPS (yen)	59
Core EPS (yen)	447	Low-20s % decline
Free Cash Flow*	400.0-500.0
Annual Dividend per Share (yen)	188

*Free Cash Flow forecast reflects expenditures related to the acquisition of TAK-279 from Nimbus and in-licensing of FRUZAQLA (fruquintinib) from HUTCHMED.

Additional Information About Takeda’s FY2023 Q3 Earnings Results
For more details on Takeda’s FY2023 Q3 results and other financial information, including key assumptions in FY2023 forecast and management guidance, please visit: https://www.takeda.com/investors/financial-results/quarterly-results/

For more information on Takeda’s commercial progress across the five key business areas and pipeline updates, please visit: https://takeda.info/qr2023_q3_qfr_en

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” 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, including global health care reforms; 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, on Takeda and its customers and suppliers, including foreign governments in countries in which Takeda operates, or on other facets of its business; the timing and impact of post-merger integration efforts with acquired companies; the ability to divest assets that are not core to Takeda’s operations and the timing of any such divestment(s); the extent to which our internal energy conservation measures and future advancements in renewable energy or low carbon energy technology will enable us to reduce our greenhouse gas emissions; 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 report 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 report may not be indicative of, and are not an estimate, forecast, guarantee or projection of Takeda’s future results.

Financial information and Certain Non-IFRS Financial 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, Core EPS, Constant Exchange Rate (“CER”) change, Net Debt, EBITDA, Adjusted EBITDA and Free Cash Flow. Takeda’s management evaluates results and makes operating and investment decisions using both IFRS and non-IFRS measures included in this presentation. 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. By including these non-IFRS measures, management intends to provide investors with additional information to further analyze Takeda’s performance and core results, including when controlling for the effect of fluctuations in exchange rates. 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 financial measures to their most directly comparable IFRS measures, which are in the financial appendix at the end of Takeda's FY2023 Q3 investor presentation (available at takeda.com/investors/financial-results/quarterly-results/).

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 17 of Takeda’s FY2023 Q3 investor presentation (available at 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/20240131987348/en/

Investor Relations

Christopher O’Reilly

Christopher.oreilly@takeda.com

+81 (0) 3-3278-2543

Media Relations

Brendan Jennings

Brendan.jennings@takeda.com

+81 (0) 3-3278-2111

Source: Takeda Pharmaceutical Company Limited

FAQ

What new U.S. FDA approvals did Takeda receive in FY2023 Q3?

Takeda received approvals for FRUZAQLA and ADZYNMA.

What was Takeda's revenue growth in FY2023 Q3?

Takeda reported a revenue growth of +4.6% at AER and flat at CER.

What was Takeda's core operating profit change in FY2023 Q3?

Takeda reported a core operating profit change of -12.7% at CER.

What is Takeda's full-year Management Guidance for FY2023?

Takeda's full-year Management Guidance includes significant generic impact, lower coronavirus vaccines revenue, and investment in R&D and data, digital, and technology to secure long-term competitiveness.

What did Takeda's Chief Financial Officer, Costa Saroukos, comment on the financial results?

Costa Saroukos emphasized the company's vision to discover and deliver life-transforming treatments and the improvement in their debt profile.