CHUGAI PHARMACEUTICAL CO.,LTD. Q2 FY2026 earnings call

Financial Performance • The company delivered year-on-year increases in both total revenue and core operating profit, driven by steady domestic and overseas product sales and a large increase in other revenue. Performance against full-year forecasts is tracking better than the prior year, with operating profit already near the 50% progress mark halfway through the fiscal year, with typical pharmaceutical industry seasonality meaning higher sales usually occur in the second half. • Positive foreign exchange impact from a weaker yen against the Swiss franc contributed 26.9 billion yen to revenue and 19.8 billion yen to operating profit year-on-year. • Cost of sales increased 11.8% to 195.9 billion yen, with the cost-to-sales ratio rising 0.3pp to 34.6% due to product mix changes; R&D expenses increased 3.9 billion yen to 90.2 billion yen to support ongoing pipeline progression; SG&A expenses rose 3.6 billion yen to ~49 billion yen due to higher new product promotional costs and profit-linked accruals. Net income after tax increased 23.2% to 238.4 billion yen. • Total assets were 3.4499 trillion yen, down slightly due to a special dividend payout; net assets increased ~20 billion yen, the equity ratio rose to 82.8%, and net cash stood at 962.6 billion yen.

Regulatory & Pipeline Progress • Eight regulatory filings were completed in Japan in the first half, putting the company on track to hit its target of the highest annual number of filings in company history for full-year FY2026. Three new product approvals were granted: Alicensa for additional indication in advanced/recurrent ALK fusion gene positive solid tumors, Avastin for neurofibromatosis type 2, and Ritxan for adult-onset frequently relapsing/steroid-dependent nephrotic syndrome. • A filing for I in the U.S. for thyroid eye disease was granted priority review, with an October 15 PDUFA target action date. Multiple new domestic filings were completed: Gaziwa for idiopathic nephrotic syndrome, several oncology indications, Sparcentum for IgA Nephropathy, and the drug component of the Ranibizumab port delivery system (device component filed in March 2026). • Two Phase III studies were initiated for the internal candidate NEXT-007 (Zemosimic) in Hemophilia A; a Phase III study for CT388 (Anisepatide) in obese patients with type 2 diabetes was initiated. One candidate, Tommy Nelson, was discontinued from the pipeline for Huntington's disease per partner decision. • Positive phase 3 results for Sparcentum (PSKI) in atypical hemolytic uremic syndrome (AHUS) were reported: the complete remission rate was 59.5% in the adult study (exceeding the 40% success threshold), with a 100% remission maintenance rate for patients switching from existing therapies; all baseline dialysis patients discontinued treatment, and over 85% of patients reported reduced treatment burden. A global submission for approval is planned in 2026. • The first patient has been dosed in the Phase I study for AQUA07, an internal allosteric ALK inhibitor discovered using the company's proprietary Snipetide macrocyclic peptide platform. AQUA07 binds a distinct allosteric site rather than the conventional ATP pocket, allowing it to potentially treat existing ALK inhibitor-resistant cases and improve efficacy when combined with existing therapies; it received U.S. FDA Fast Track designation in May 2026. • The Phase 3 study of DIVAR-SIB in second-line non-small-cell lung cancer met its primary endpoint, and the DIVAR-SIB filing was accelerated to 2026 from the original 2027 target. The filing for INABOLICYB in endocrine therapy-sensitive breast cancer was pushed to 2029 from 2028. A Phase 2a study for DONG52 in celiac disease (an area with no approved treatments) is ongoing in the U.S., Australia, and New Zealand.

Strategic Updates • A new Strategic Investment Department has been established to drive mid-to-long term growth aligned with the company's R&D and business strategy, focusing on external opportunities including in-licensing, co-development, and M&A to leverage the company's strong net cash position and accelerate growth. • The company maintains a target dividend payout ratio of 40%, and has increased its annual dividend for 10 consecutive years; the expected full-year FY2026 dividend is 132 yen per share.

For the first half of FY2026, total consolidated revenue was 663.3 billion yen, up 14.7% year-on-year. Core operating profit was 329.1 billion yen, up 21% year-on-year. Product sales totaled 566.5 billion yen, an increase of 10.8% year-on-year, accounting for 85.4% of total revenue. Domestic product sales were 237.9 billion yen, up 6.5% year-on-year, accounting for 35.9% of total revenue and 42.0% of total product sales: oncology domestic sales were 117.4 billion yen (+0.7% YoY), specialty domestic sales were 120.5 billion yen (+12.9% YoY). Overseas product sales were 328.6 billion yen, up 14.1% year-on-year, accounting for 49.5% of total revenue and 58.0% of total product sales, driven by strong growth in Hemlibra exports. Other revenue was 96.8 billion yen, up 44.6% year-on-year, accounting for 14.6% of total revenue, with growth driven by higher one-time income and increased royalty income from partnered products.

• Management confirmed that first half performance is tracking ahead of prior year progress and in line with full-year forecasts, and the company remains on track to meet its original full-year FY2026 guidance, with no upward or downward revisions announced. • The company now targets 16 regulatory submissions in FY2026, up from the original 15, after accelerating the DIVAR-SIB filing to 2026 from 2027; the INABOLICYB filing for endocrine therapy-sensitive breast cancer was revised to 2029 from the prior 2028 target. • Sparcentum (PSKI) for AHUS remains on track for global regulatory submission (Japan, U.S., Europe) by the end of FY2026.

• The U.S. Medicare MFN (most favored nation) international reference pricing policy introduces high uncertainty for future revenue of the company's U.S.-marketed products; management noted the company will continue engaging with stakeholders to support access to innovative therapies but cannot quantify the potential impact at this time. • Weakened yen has a positive short-term impact on reported financials, but the long-term impact of ongoing exchange rate volatility is uncertain, and management did not identify an

Q: Yamaguchi from Citi asked for an update on Sparcentum's domestic market potential for IgA nephropathy, noting the high company expectations for the drug. / A: Management explained that while multiple new treatments are in development for IgA nephropathy, Sparcentum targets patients who do not respond to existing therapies, preserves renal function, and has a favorable efficacy profile. The company filed for approval earlier than most competing candidates, so it expects to capture significant market share and achieve strong penetration after launch. 263 characters

Q: Hashiguchi from Diver Securities asked what the company expects to gain from its newly established Strategic Investment Department. / A: Management stated that open innovation is a core pillar of its TopEye 2030 strategy. While internal R&D remains a top priority, the company sees significant innovation emerging across chemistry and digital biology, and wants to expand beyond existing academic and early-stage collaborations. The new department will proactively pursue in-licensing, co-development, and M&A opportunities to leverage the company's strong net cash position, add high-value pipeline assets, and accelerate long-term growth. 528 characters

Q: Ueda from Goldman Sachs asked about the strategic positioning of NEXT-007, specifically whether it will capture incremental growth or just cannibalize existing Hemlibra sales. / A: Management confirmed that NEXT-007 is expected to be a net growth driver for the company. While some patients currently on Hemlibra will switch to NEXT-007 if it is approved, the drug will also capture incremental demand from patients who do not achieve sufficient control with Hemlibra or have high disease activity requiring a stronger treatment option. Management does not expect Hemlibra sales to decline overall as a result of a NEXT-007 launch. 481 characters

Q: Seki from UBS Securities asked whether share buybacks are a possible capital allocation option, given the recent share price decline. / A: Management confirmed that share buybacks are technically possible, but the company evaluates all options to deliver the best return to shareholders. The company recently opted to issue a special dividend as the most appropriate capital return option at this time, taking into account the company's current floating share ratio requirements and stakeholder considerations. 310 characters

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