Takeda Reinforces Long-term Growth Through Pipeline Advancement and Two Targeted Acquisitions; Delivers Another Strong Quarter in FY2022 Q3

Rhea-AI Summary

Takeda (NYSE: TAK) reported strong Q3 2022 results with a 13.9% increase in revenue and 4.5% core revenue growth at constant exchange rates. Net profit rose 18.4%, and EPS rose 19.6%. The company approved the dengue vaccine QDENGA® in the EU and received priority review from the U.S. FDA. Takeda also announced an agreement to acquire a TYK2 inhibitor from Nimbus Therapeutics for USD 4 billion, enhancing its pipeline in autoimmune diseases. Despite revenue increases in most segments, oncology revenue fell 13% due to generic competition for VELCADE®.

Positive

• Reported revenue increased by 13.9% YoY.
• Net profit grew 18.4% YoY, indicating strong overall performance.
• EPS increased by 19.6%, reflecting improved profitability.
• Approval of QDENGA® in the EU opens new market opportunities.
• Acquisition of TYK2 inhibitor expected to strengthen late-stage pipeline.

Negative

• Oncology revenue declined by 13% due to VELCADE® generics.

• Announced Agreement With Nimbus Therapeutics in December to Acquire a Potential Best-in-Class TYK2 Inhibitor, and with HUTCHMED in January to In-license Highly Selective, Oral Tyrosine Kinase Inhibitor
• Continued Momentum With Q3 Year-to-Date Reported Revenue Growth of +13.9% and Core Revenue Growth of +4.5% at Constant Exchange Rate; Reported EPS Growth of +19.6%
• Approval for Dengue Vaccine, QDENGA^® in EU; U.S. FDA Priority Review Granted
• Net Debt / Adjusted EBITDA Improves to 2.5x as of Q3 End Even After Full-year Dividend Payment
• Robust Cash Flow and Improved Debt Profile Enabling Investment for Growth While Maintaining Focus on Shareholder Returns

OSAKA, Japan--(BUSINESS WIRE)-- Takeda (TOKYO:4502/NYSE:TAK) today announced financial results for the third quarter of fiscal year 2022 (period ended December 31, 2022).

Takeda chief financial officer, Costa Saroukos, commented:
“Our third-quarter performance demonstrates sustained momentum as our Growth and Launch Products and solid commercial execution again drove strong revenue and core profit growth. We continue to advance our organic pipeline, including notable approvals in the EU and China, and in December announced a significant acquisition that will add a potentially best-in-class TYK2 inhibitor to our late-stage pipeline and enhance our long-term growth strategy. Our robust cash flow and strong financial position enabled us to make substantive progress in deleveraging even as we continued to invest for growth.”

FINANCIAL HIGHLIGHTS
Results for FY2022 Q3 Ended December 31, 2022
(Billion yen, except percentages and per share amounts)	REPORTED		CORE(c) (Non-IFRS)(a)
	FY2022 Q3 YTD	vs. PRIOR YEAR (Actual % change)	FY2022 Q3 YTD	vs. PRIOR YEAR (Actual % change)	vs. PRIOR YEAR (CER % change(d))
Revenue	3,071.3	+13.9%	3,071.3	+19.8%	+4.5%
Operating Profit	401.9	-13.1%	954.7	+26.0%	+9.7%
Margin	13.1%	-4.1pp	31.1%	+1.5pp
Net Profit	285.9	+18.4%	707.2	+35.6%	+15.9%
EPS (yen)	184	+19.6%	456	+37.0%	+17.1%
Operating Cash Flow	683.5	-8.6%
Free Cash Flow (Non-IFRS)(a)(b)	585.2	-12.8%
(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/.
(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.

COMMERCIAL UPDATES ACROSS FIVE KEY BUSINESS AREAS
Growth in our key business areas in FY2022 Q3 YTD was driven largely by Growth & Launch Products¹, which delivered reported revenue of 1,199.6 billion yen, marking a +20% increase on a CER basis.

• Gastroenterology (GI), with 857.5 billion yen in reported revenue, grew +11% on a CER basis, driven by ENTYVIO^® (for ulcerative colitis and Crohn’s disease; +17% on a CER basis) and by TAKECAB^®/VOCINTI (for acid-related diseases), whose strong uptake in China was also a key contributor to growth.

• Rare Diseases, with 553.6 billion yen in reported revenue, grew +5% on a CER basis. Sales of TAKHZYRO^® (for hereditary angioedema) grew +25% on a CER basis due to expansion of the prophylactic market, continued geographic expansion and strong patient uptake. LIVTENCITY™ (for post-transplant cytomegalovirus) continues to generate high interest and strong uptake since its launch in the U.S. in December 2021, with 87% of U.S. transplant centers having initiated therapy with at least one patient.
• Plasma-Derived Therapies (PDT) Immunology, with 502.4 billion yen in reported revenue, delivered outstanding growth of +18% on a CER basis. Growth was driven by higher sales of immunoglobulin products (for primary immunodeficiency and multifocal motor neuropathy), with +19% growth on a CER basis, particularly in the U.S. amid easing of pandemic pressures coupled with increasing supply. Robust growth for albumin products (primarily used for hypovolemia and hypoalbuminemia), at +20% on a CER basis, was driven by strong demand in the U.S. and in China. We added 5 donation centers as planned in the U.S. in FY2022 Q3, bringing us to 21 new centers YTD, and our global donation network to 225 centers.
• Oncology, with 345.0 billion yen in reported revenue, declined -13% on a CER basis as a result of the expected entry of VELCADE^® generics (for multiple myeloma) that began in the U.S. in May 2022. Besides VELCADE, all other revenue totaled 320.2 billion yen, a year-over-year increase of +7% on a CER basis, driven by strong demand for ALUNBRIG^® (for non-small cell lung cancer; +39% growth on a CER basis) in Europe and Growth & Emerging Markets, and China. ADCETRIS^® (for malignant lymphomas) grew +18% on a CER basis, driven by increased access and uptake in frontline indications, while increased awareness of positive OPTIC trial results and label update contributed to +13% growth of ICLUSIG^® (for Leukemia) on a CER basis. Sales of EXKIVITY^® (for non-small cell lung cancer), which was first launched in the U.S. in September 2021 followed by several other countries, also contributed.
• Neuroscience, with 477.1 billion yen in reported revenue, grew +10% on a CER basis, driven by an expanding ADHD adult market in the U.S., Europe and Canada for VYVANSE^®/ELVANSE. Sales of TRINTELLIX were 79.7 billion yen (+5% growth on a CER basis), due to continued recovery of the Major Depressive Disorder market in the U.S. and strong market share gains in Japan.

PIPELINE UPDATE
Takeda has continued to deliver on its ability to bring new therapies to patients and capitalize on momentum within its innovative pipeline. Updates since the FY2022 H1 announcement include:

• Takeda announced that it has entered into an exclusive licensing agreement with HUTCHMED for the further development and commercialization of fruquintinib worldwide (ex-China, Hong Kong, and Macau). Fruquintinib is a highly selective inhibitor of vascular endothelial growth factor receptors (VEGFR) -1, 2 and 3. It is orally administered and offers a potential new treatment option for patients with refractory metastatic colorectal cancer, regardless of biomarker status.
  Additional information related to this announcement is available here.
  

• Takeda announced that it will acquire NDI-034858, an oral selective allosteric TYK2 inhibitor being evaluated for the potential treatment of multiple autoimmune diseases, from Nimbus Therapeutics. With Phase 3 studies in psoriasis expected to begin this year, NDI-034858 has the potential to demonstrate best-in-class efficacy and safety and convenience in psoriasis as well as other immune-mediated diseases including psoriatic arthritis, inflammatory bowel disease and systemic lupus erythematosus. The acquisition is expected to strengthen Takeda’s growing late-stage pipeline in alignment with the company’s therapeutic area strategy and expertise in immune-mediated diseases. Takeda will pay Nimbus USD 4 billion upfront in addition to two milestone payments of USD 1 billion each upon achieving annual net sales of USD 4 billion and USD 5 billion for products developed from the NDI-034858 program. The upfront payment will be primarily funded by cash on hand. The transaction is expected to be finalized before the end of FY2022.
  Additional information related to this announcement is available here.
  

• QDENGA, Takeda’s dengue vaccine, was approved by the European Commission (EC) in December 2022 for use in individuals four years of age and older. With the EC approval, QDENGA becomes the only dengue vaccine approved in the EU for use in individuals regardless of previous dengue exposure. In November, the U.S. FDA granted priority review of the Biologics License Application.
  Additional information related to the EC and U.S. FDA announcements is available here and here.

• China’s National Medical Products Administration (NMPA) approved EXKIVITY (mobocertinib) for the treatment of adult patients with locally advanced or metastatic non-small cell lung cancer with epidermal growth factor receptor Exon20 insertion mutations, whose disease has progressed on or after platinum-based chemotherapy. EXKIVITY is now the first and only treatment available for this patient population in China and was reviewed as part of the NMPA’s Breakthrough Therapy program.
  Additional information related to this announcement is available here.

• LIVTENCITY^™ (maribavir) was approved by the European Commission (EC) for the treatment of adults with post-transplant cytomegalovirus (CMV) infection and/or disease that are refractory (with or without resistance) to one or more prior therapies. This approval makes LIVTENCITY the first and only treatment approved for this indication by the EC. CMV is one of the most common and serious post-transplant infections and can lead to loss of transplanted organ and failure of graft.
  Additional information related to this announcement is available here.

• Takeda announced favorable safety and efficacy results of TAK-755 from the first and only Phase 3 trial in congenital thrombotic thrombocytopenic purpura (cTTP), an ultra-rare disease with limited treatment options. Based on this data, Takeda aims to seek marketing authorization for TAK-755 as the first recombinant ADAMTS13 replacement therapy for cTTP, a disorder with considerable unmet patient need.
  Additional information related to this announcement is available here.

• Takeda and Arrowhead Pharmaceuticals Inc. announced topline results from the SEQUOIA Phase 2 study of investigational fazirsiran (TAK-999/ARO-AAT) in patients with liver disease associated with alpha-1 antitrypsin deficiency (AATD-LD). Takeda has initiated a Phase 3 study to evaluate the safety and efficacy of fazirsiran in the treatment of patients with AATD-LD with METAVIR stage F2 to F4 fibrosis.
  Additional information related to this announcement is available here.

• Results from Takeda’s Phase 3 AURORA trial provided evidence of maribavir’s clinically meaningful and durable effect in cytomegalovirus infection in hematopoietic stem cell transplant patients despite missing the primary endpoint. Full data results will be submitted for publication in a peer-reviewed journal and are being shared with relevant regulatory agencies.
  Additional information related to this announcement is available here.

• Takeda’s Phase 3 PhALLCON trial met its primary endpoint, demonstrating that adult patients with newly diagnosed Philadelphia chromosome-positive acute lymphoblastic leukemia (Ph+ ALL) treated with ICLUSIG^® (ponatinib) plus reduced-intensity chemotherapy achieved higher rates of minimal residual disease-negative complete remission compared to imatinib. There are currently no targeted treatments approved for Ph+ ALL in the U.S.
  Additional information related to this announcement is available here.

• TAK-861, Takeda’s oral orexin agonist for narcolepsy, met pre-specified criteria set to advance the program into two Phase 2b studies in narcolepsy type 1 and narcolepsy type 2. Both Phase 2b trials are currently enrolling patients.
  Additional information related to this update is available here.

FY2022 Outlook
On track towards full-year FY2022 Management Guidance
(Billion yen)	FY2022 FORECAST (Upgraded October 2022)	FY2022 MANAGEMENT GUIDANCE Core Growth at CER (Non-IFRS) (Unchanged from May 2022)
Revenue	3,930.0
Core Revenue	3,930.0	Low-single-digit growth
Reported Operating Profit	530.0
Core Operating Profit	1,180.0	High-single-digit growth
Reported Net Profit	307.0
Reported EPS (Yen)	198
Core EPS (Yen)	525	High-single-digit growth
Free Cash Flow	650.0 - 750.0
Annual Dividend per Share (Yen)	180
Free Cash Flow forecast does not include the impact of the upfront cash payment for the acquisition of NDI-034858 from Nimbus Therapeutics, LLC for USD 4 billion, as the exact timing of cash payment is dependent upon deal close.
For more details on Takeda’s FY2022 Q3 results and other financial information including key assumptions in FY2022 forecast and management guidance, please visit: https://www.takeda.com/investors/financial-results/.

About Takeda
Takeda is a global, values-based, R&D-driven biopharmaceutical leader headquartered in Japan, committed to discover and deliver life-transforming treatments, guided by our commitment to patients, our people and the planet. Takeda focuses its R&D efforts on four therapeutic areas: Oncology, Rare Genetics and Hematology, Neuroscience, and Gastroenterology (GI), with expertise in immune and inflammatory diseases. We also make targeted R&D investments in Plasma-Derived Therapies and Vaccines. We are focusing on developing highly innovative medicines that contribute to making a difference in people’s lives by advancing the frontier of new treatment options and leveraging our enhanced collaborative R&D engine and capabilities to create a robust, modality-diverse pipeline. Our employees are committed to improving quality of life for patients and to working with our partners in health care in approximately 80 countries and regions. For more information, visit https://www.takeda.com.

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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/ 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 FY2022 Q3 investor presentation (available at takeda.com/investors/financial-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.
¹Please refer to slide 18 of Takeda’s FY2022 Q3 investor presentation (available at takeda.com/investors/financial-results) for the definition of Growth & Launch Products.

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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 are the financial highlights for Takeda in Q3 2022?

Takeda reported a 13.9% increase in revenue, 18.4% increase in net profit, and 19.6% EPS growth for Q3 2022.

What is the significance of the TYK2 inhibitor acquisition for Takeda?

The acquisition of the TYK2 inhibitor from Nimbus Therapeutics for USD 4 billion is expected to enhance Takeda's pipeline in autoimmune diseases.

What new approvals did Takeda receive in December 2022?

Takeda's dengue vaccine QDENGA® was approved by the European Commission for use in individuals four years and older.

How did Takeda's oncology revenue perform in Q3 2022?

Oncology revenue declined by 13% in Q3 2022 due to the expected entry of VELCADE® generics.

How is Takeda's cash flow and debt profile?

Takeda's net debt to adjusted EBITDA improved to 2.5x, signaling a stronger financial position.