CHUGAI PHARMACEUTICAL CO.,LTD. Q3 FY2026 earnings call

• Financial Outlook: Management expects to exceed the full-year forecast, noting that year-to-date progress significantly outpaces benchmarks. A one-time shipment front-loading in Japan contributed approximately 30 billion yen to Q3 domestic sales.
• Hemlibra Auto-Injector: Development has advanced, with regulatory filing completed in Japan in August 2026. The global launch is targeted for 2027. The device aims to reduce patient burden with a hidden needle design and dosing completion within 10 seconds.
• Lasker Award Recognition: Three researchers received the Lasker Award for the creation of Hemlibra, highlighting the company's frontier spirit and proprietary bispecific antibody technology.
• Pipeline Updates: InSpring received U.S. approval for thyroid eye disease. Four new filings were made, including for MOGAD and Bamiki Bard. Phase III studies for Sebostomab (multiple myeloma) and Akua07 have initiated.
• Discontinuations and New Initiatives: Development of GM-329 for obesity was discontinued after Phase II results did not meet primary endpoints. However, SMA development (formerly under license from Roche) will resume in-house, potentially involving out-licensing.
• Devarasib (DIVARSIV) Data: Phase III Crescendo-1 study showed superior efficacy vs. first-generation KRAS G12C inhibitors, with a 42% reduction in progression risk and 44% reduction in death risk. Median OS was 18 months. Filing in Japan is planned for this year.

The company reported consolidated revenue of 906.8 billion yen, an increase of 14.1% year-on-year. This is composed of domestic sales of 405.9 billion yen (up 13.3%) and overseas sales of 500.5 billion yen (up 11.1%). Other revenue, primarily royalties and milestones, reached 16.1 billion yen (up 11.1%). The core operating profit was 536.1 billion yen, with an operating margin of 50.2%. Domestic sales growth was driven by new products like Lunsumio and Polivy, offsetting declines in Avastin due to price revisions and generics. Overseas sales growth was fueled by increased volumes of Nemubio for Galderma and Alicenza for Roche, along with favorable foreign exchange impacts.

• Full-Year Forecast: Management stated it is 'very likely' they will achieve and potentially exceed the full-year financial forecast, particularly driven by strong domestic performance and overseas volume growth.
• Hemlibra Sales: Full-year sales are expected to exceed the initial forecast by more than 10 billion yen, reaching close to or surpassing the 130.8 billion yen target.
• Nemubio (Galderma): Fourth-quarter export plans are fixed, and management expects to meet the full-year forecast, though the exact magnitude of any upside remains uncertain.
• Next Term Guidance: No specific guidance was provided for the next fiscal term; management indicated these discussions will occur at the beginning of the next year.

• Obesity Program Failure: Discontinuation of GM-329 for obesity due to lack of consistent efficacy in Phase II trials across ambulatory and non-ambulatory SMA patients.
• Pricing Pressures: Domestic sales face headwinds from NHI price revisions and generic penetration, particularly impacting older products like Avastin.
• Regulatory Uncertainty: Specific dosage and administration details for the Hemlibra auto-injector remain confidential until regulatory review outcomes are published.
• Competitive Landscape: Intense competition in the KRAS G12C space requires continuous innovation to maintain market position against established therapies.

Q: What was the rationale behind discontinuing the GM-329 obesity program? / A: The Phase II MANATEE study failed to show consistent efficacy across both ambulatory and non-ambulatory SMA patients, leading to discontinuation. However, long-term data showed a tendency for motor function improvement, suggesting that adjusted Phase III designs might still verify efficacy. The company is simultaneously exploring out-licensing opportunities for the asset.

Q: How does Devarasib (DIVARSIV) compare to competitors, and what is the strategic positioning relative to other RAS inhibitors? / A: DIVARSIV demonstrated superior PFS and OS compared to first-generation KRAS G12C inhibitors in head-to-head trials. Regarding portfolio strategy, while DIVARSIV targets G12C specifically, the pan-KRAS inhibitor OPE00 covers broader mutations (G12D, G12V). Combination therapies are scientifically rational, but the company is evaluating the best path forward within the Roche Group context.

Q: Can you clarify the impact of the ERP system replacement on domestic sales and costs? / A: The ERP transition caused a one-time front-loading of shipments to wholesalers, boosting Q3 domestic sales by approximately 30 billion yen without affecting costs. This adjustment will reverse in Q4. The growth was broad-based across products rather than driven by specific items, and no cost-side impacts were observed.

Q: What is the outlook for the newly established Strategic Investment Group and its role in corporate value enhancement? / A: The group supports Chugai’s open innovation strategy by identifying and acquiring attractive technologies or companies to enhance drug discovery capabilities. It complements the existing venture fund approach by focusing on mature technologies and potential acquisitions, aiming to balance shareholder returns with internal R&D strength.

Q: What data will be presented regarding DONC-52 in celiac disease, and how is the Hemlibra auto-injector dosing structured? / A: DONC-52 presentations will focus on safety, tolerability, pharmacokinetics, and biomarker suppression of T-cell activation upon gluten intake, excluding symptom scores. For the Hemlibra auto-injector, dosing volume is subject to regulatory review and cannot be disclosed yet, but the device is designed to complete injection within 10 seconds, significantly reducing caregiver burden compared to manual preparation.