Takeda Delivers Strong First Quarter FY2022 Results; On Track Towards Full-Year Management Guidance

Takeda (TOKYO:4502/NYSE:TAK) today announced strong financial results for the first quarter of fiscal year 2022 (period ended June 30, 2022) and is on track to meet its full-year management guidance.

The gain on the sale of Takeda’s Japan diabetes portfolio in the first quarter of the previous fiscal year has impacted reported financial results on a year-over-year basis, as expected. The sale contributed a one-off 133 billion yen to revenue and 131.4 billion yen to operating profit in Q1 FY2021. This impact is excluded from core financial results; the Company delivered +8.3% core revenue growth and +17% core operating profit growth at CER this quarter, with a core operating profit margin of 32.8%.

Takeda chief financial officer, Costa Saroukos, commented: “Takeda has delivered strong first quarter performance with Growth and Launch Products continuing to drive robust core revenue growth. Our results reflect continued momentum and solid commercial execution across key business areas.”

“First quarter results also reflect the impact of the last of our major non-core divestitures in the prior year. The sale of the Japan diabetes portfolio in FY2021 is the main factor behind the year-over-year decline in reported operating profit and is the only difference between reported and core revenue growth in our Q1 FY2022 results.”

“Foreign exchange has been a tailwind for our performance in the first quarter, while our portfolio momentum and prudent cost management have allowed us to improve our core operating profit margin despite rising inflation and other emerging macro challenges. We also remain resilient amid the outlook for increasing interest rates as approx. 98% of our debt is now secured at fixed interest rates averaging approx. 2%.”

FINANCIAL HIGHLIGHTS
Results for Q1 FY2022 Ended June 30, 2022

(Billion yen, except percentages and per share amounts)	REPORTED		CORE(c) (Non-IFRS)(a)
	Q1 FY2022	vs. PRIOR YEAR (Actual % change)	Q1 FY2022	vs. PRIOR YEAR (Actual % change)	vs. PRIOR YEAR (CER % change(d))
Revenue	972.5	+2.4%	972.5	+19.1%	+8.3%
Operating Profit	150.5	-39.4%	319.1	+28.2%	+17.0%
Margin	15.5%	-10.7pp	32.8%	+2.3pp
Net Profit	105.0	-23.7%	224.1	+26.9%	+14.3%
EPS (yen)	68	-22.8%	145	+28.5%	+15.8%
Operating Cash Flow	84.2	-49.5%
Free Cash Flow (Non-IFRS)(a)(b)	42.6	-67.2%

(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, amortization and impairment of intangible assets, other operating income and expenses, certain JV-related accounting adjustments, non-recurring items, purchase accounting effects and transaction related costs.
(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 key business areas in Q1 FY2022 was driven mainly by Growth & Launch Products, which delivered revenue of 363.6 billion yen and +26% growth at CER.

• Gastroenterology (GI), with 270.4 billion yen in reported revenue, grew +15% on a CER basis driven by gut-selective ENTYVIO^® and TAKECAB^®/VOCINTI^®. The strong launch in China of VOCINTI was a key contributor to growth. Global revenue for ENTYVIO is forecast to grow +20% on a CER basis in FY2022.
• Rare Diseases, with 181.6 billion yen in reported revenue, grew +7% on a CER basis driven by continued strong performance of TAKHZYRO^® and promising LIVTENCITY™ sales following a U.S. launch in December 2021. Geographical expansion is expected to continue with additional TAKHZYRO launches and LIVTENCITY approvals planned for FY2022.
• Plasma-Derived Therapies (PDT) Immunology, with 141.9 billion yen in reported revenue, delivered outstanding growth of +18% on a CER basis driven by continued strong global demand for Immunoglobulin and higher sales of Albumin. Our global plasma donation footprint grew to 212 centers as of June 30, 2022. With plans for >25 centers to be opened this fiscal year, the Company is targeting to increase plasma collection volume by 10-20% in FY2022 compared to FY2021.
• Oncology, with 117.5 billion yen in reported revenue, declined -10% on a CER basis mainly due to the impact of generic competition to VELCADE^®. ALUNBRIG^® delivered growth of +34.7% on a CER basis. EXKIVITY^® market data showed early signs of commercial success with a U.S. launch in September 2021 and global expansion continues with approvals in UK, Switzerland, Australia and South Korea. Additional approval decisions are expected in FY2022, including in China. Following discussions with the EMA, Takeda has decided to withdraw the EU Marketing Authorization Application (MAA) for EXKIVITY in second-line treatment of EGFR Exon20 insertion+ non-small cell lung cancer (NSCLC).
• Neuroscience, with 142.4 billion yen in reported revenue, grew +11% on a CER basis signaling a continued rebound from COVID-19. TRINTELLIX grew +5.2% at CER driven by continued market share gains, notably in Japan. We expect VYVANSE^® growth in FY2022 to be driven by the expanding adult market in the U.S.

PIPELINE UPDATE

In Q1 FY2022, Takeda further demonstrated pipeline momentum and its ability to bring new therapies to patients. Pipeline updates in Q1 FY2022 include:

• TAK-003, Takeda’s dengue vaccine candidate, prevented 84% of hospitalized dengue cases and 61% of symptomatic dengue cases with no important safety risks identified in the overall population, including both seropositive and seronegative individuals through 54 months. These data from the Phase 3 TIDES trial were presented at the 8^th Northern European Conference on Travel Medicine (NECTM8). TAK-003 is currently undergoing regulatory review in the European Union and select dengue-endemic countries, with decisions expected in FY2022.
  Additional information related to this announcement is available here .
• The New England Journal of Medicine published results from a Phase 2 clinical study of investigational fazirsiran (TAK-999/ARO-AAT) for the treatment of liver disease associated with alpha-1 antitrypsin deficiency (AATD). Co-developed with Arrowhead Pharmaceuticals, fazirsiran was granted Breakthrough Therapy Designation in July 2021 and Orphan Drug Designation in February 2018 by the U.S. FDA for the treatment of AATD.
  Additional information related to this announcement is available here.
• ADCETRIS^® Phase 3 data was presented at the 59^th American Society of Clinical Oncology (ASCO) Annual Meeting, demonstrating statistically significant improvement in overall survival in adult patients with previously untreated Stage III or IV classical Hodgkin Lymphoma.
  Additional information related to this announcement is available here.
• Takeda and Moderna announced plans to transfer marketing authorization for Spikevax™ COVID-19 vaccine in Japan to Moderna.
  Additional information related to this announcement is available here.
• TAKHZYRO demonstrated positive results in the prevention of hereditary angioedema (HAE) attacks in patients 2 to <12 years of age. These results, which were consistent with earlier studies in adult and adolescent patients, were presented at the European Academy of Allergy and Clinical Immunology (EAACI) Hybrid Congress 2022. There are currently no long-term prophylactic treatments approved for HAE patients younger than 6 years and global regulatory filings are scheduled to begin in FY2022.
  Additional information related to this announcement is available here.
• HYQVIA^® met its primary endpoint in a pivotal Phase 3 clinical trial evaluating its efficacy and safety as a maintenance therapy for Chronic Inflammatory Demyelinating Polyradiculoneuropathy (CIDP). Preparations are now underway for regulatory filings in the U.S. and EU.
  Additional information related to this announcement is available here.
• In June 2022, Takeda signed a licensing agreement with Momenta Pharmaceuticals, Inc., which was acquired by Johnson & Johnson, for an investigational hypersialylated immunoglobulin (HsIG) candidate. HsIG has the potential to have similar efficacy as IGs but at a lower dose due to its increased potency. If proven safe and effective, it has the potential to help address patient needs for significantly lower administration volume with better tolerability and convenience, while simultaneously helping to address existing supply constraints.

FY2022 OUTLOOK
On track towards full-year FY2022 guidance (Unchanged from May 2022)

(Billion yen)	FY2022 FORECAST	FY2022 MANAGEMENT GUIDANCE Core Growth at CER (Non-IFRS)
Revenue	3,690.0
Core Revenue	3,690.0	Low-single-digit growth
Reported Operating Profit	520.0
Core Operating Profit	1,100.0	High-single-digit growth
Reported Net Profit	292.0
Reported EPS (Yen)	188
Core EPS (Yen)	484	High-single-digit growth
Free Cash Flow	600.0 - 700.0
Annual Dividend per Share (Yen)	180

Company outlook for FY2022 reflects management’s expectations for continued business momentum across Takeda’s five key business areas, discipline in operating expenses, and FX favorability.
For more details on Takeda’s Q1 FY2022 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 Genetic and Hematology, Neuroscience, and Gastroenterology (GI). 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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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 Q1 FY2022 investor presentation (available at takeda.com/investors/financial-results).

Medical information

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Contact information

Investor Relations
Christopher O’Reilly
christopher.oreilly@takeda.com
+81 (0) 3-3278-2543

Media Relations
U.S. and International
Megan Ostrower
Megan.Ostrower@takeda.com
+1 (772) 559-4924

Japan
Jun Saito
Jun.Saito@takeda.com
+81 (0) 3-3278-2325