Takeda Delivers Strong H1 FY2021 Results; Further Growth Momentum Expected Through Fiscal Year-End Driven by 14 Global Brands

Takeda Pharmaceutical Company Limited (TOKYO:4502/NYSE:TAK) (“Takeda”) today announced financial results for the first half of fiscal year 2021 (period ended September 30, 2021). Based on the strong first half results, the company also confirmed its fiscal year 2021 management guidance.

Fiscal year 2021, ending in March 31, 2022, continues to be a year of growth with anticipated topline acceleration driven by the company’s 14 global brands. In addition, the company is committed to the potential of its highly innovative R&D strategy built on a combination of in-house innovation and strategic partnerships that tap cutting-edge science at the source. Recent key pipeline wins, including the U.S. Food and Drug Administration (FDA) approval of EXKIVITY™ and unanimous recommendation for approval of maribavir by a U.S. FDA Advisory Committee further underscore its promise and potential. The company also announced today the intent to buy back shares up to 100B yen, underscoring confidence in its business strategy and commitment to delivering value to shareholders.

Christophe Weber, Chief Executive Officer, commented:

“Our strategic vision to discover and deliver life-transforming treatments will be realized by the strength of our leading products and our innovative pipeline. Takeda’s Q2 and first-half results are evidence of progress and conviction in our strategy while consistently delivering on our fundamentals. As a result, we are confirming full-year FY2021 guidance as we track toward topline growth and strong core operating profit margins.”
“Takeda’s growth continues to be driven by our 14 Global Brands, which will remain our primary growth driver for the coming years. In addition, our ambitious pipeline is starting to deliver results, including the recent U.S. FDA approval of EXKIVITY. This underscores the potential of the pipeline to transform lives and our business.”
“The announcement of our new share buyback program, approved by Takeda’s Board of Directors, further demonstrates commitment to delivering shareholder value and our confidence in our business strategy.”
“Takeda’s strong commercial portfolio and R&D pipeline are diversified across four core therapeutic areas and represent innovative and potentially transformative benefits for patients. Altogether, we believe that the combination of these growth drivers will continue to propel our business forward and help to ensure our future growth is resilient, for not just the next quarter but the next decade.”

FINANCIAL AND BUSINESS HIGHLIGHTS
Results for H1 FY2021 Ended September 30, 2021

(billion yen, except percentages and per share amounts)	REPORTED		CORE (Non-IFRS)(a)		UNDERLYING(b) (Non-IFRS)(a)
	H1 FY2021	vs. PRIOR YEAR	H1 FY2021	vs. PRIOR YEAR
Revenue	1,794.4	+12.8%	1,661.4	+4.4%	+6.8%
Operating Profit	346.0	+60.5%	485.7	-4.3%	+6.4%
Margin	19.3%	+ 5.7pp	29.2%	-2.7pp	29.1%
Net Profit	183.6	+112.2%	335.9	-2.8%
EPS (JPY)	117 yen	+111.2%	214 yen	-3.3%	+9.1%
Operating Cash Flow	400.0	+2.0%
Free Cash Flow (Non-IFRS)(a)(d)	315.6	-25.8%

(a) Further information on certain of Takeda’s Non-IFRS measures is posted on Takeda’s investor relations website at https://www.takeda.com/investors/financial-results/.
(b) Underlying growth compares two periods (quarters or years) of financial results under a common basis and is used by management to assess the business. These financial results are calculated on a constant currency basis and excluding the impact of divestitures and other amounts that are unusual, non-recurring items or unrelated to our ongoing operations.
(c) Core Operating Profit represents net profit adjusted to exclude income tax expenses, the share of profit or loss of investments accounted for using the equity method, finance expenses and income, other operating expenses and income, amortization and impairment losses on acquired intangible assets and other items unrelated to Takeda’s core operations, such as non-recurring items, purchase accounting effects and transaction related costs.
(d) Free Cash Flow represents cash flows from operating activities, excluding acquisition of plant, property and equipment, intangible assets and investments, and any other cash that is not available to Takeda’s immediate or general business use, and including proceeds from sales of property, plant, sales and redemption of investments and businesses, net of cash and cash equivalents divested.
https://www.takeda.com/investors/financial-results/

Reported Revenue increased +12.8%, Underlying Core Revenue increased +6.8% vs H1 FY2020, driven by 14 global brands

• Takeda’s 14 global brands, with an aggregate reported revenue of 692.2 billion yen ($6.2B), posted year-over-year underlying revenue growth of +11.4% and now represent 42% of total core revenue, with further acceleration expected in H2.
• Takeda’s 5 key business areas with 1,434.6 billion yen ($12.9B) in reported revenue.
  • GI with 429.1 billion yen ($3.85B) in reported revenue, with underlying revenue growth of +8% spearheaded by gut-selective ENTYVIO.
  • Rare Diseases with 300.1 billion yen ($2.69B) in reported revenue declined -2% on an underlying basis with rare hematology decline in line with expectations due to competition and HAE growth being impacted by phasing dynamics; remain on track toward full year forecast.
  • Plasma Derived Therapy (PDT) Immunology with 238.0 billion yen ($2.13B) in reported revenue, with underlying revenue growth +11% driven by Immunoglobulin and ALBUMIN/FLEXBUMIN.
  • Oncology with 233.7 billion yen ($2.09B) in reported revenue, with underlying revenue growth of +8% driven by indication expansion across portfolio.
  • Neuroscience with 233.7 billion yen ($2.09B) in reported revenue, with underlying revenue growth of +9% driven by strong rebound of VYVANSE following impact of COVID-19 in prior year.

Reported Operating Profit increased +60.5%; Underlying Core Operating Profit Margin was 29.1% for H1

• Reported operating profit increased +60.5% to 346.0 billion yen ($3.1B) compared to H1 FY2020, reflecting a gain on the sales of the diabetes portfolio in Japan and declining purchase price accounting and integration costs.
• Core operating profit for the current period decreased -4.3% due to divestitures and increased R&D investment. On track towards full year forecast of 930.0 billion yen ($8.34B)

Important R&D Milestones as Innovative Pipeline Begins to Deliver

• Received U.S. FDA approval for EXKIVITY (mobocertinib) as the first and only approved oral therapy specifically designed for patients with EGFR Exon20 insertion mutations+ NSCLC, with filing under review in China and other countries.
• Received unanimous recommendation from a U.S. FDA Advisory Committee for maribavir as a treatment for post-transplant recipients with refractory CMV infection with or without resistance. A decision is expected by next month (PDUFA November 23, 2021).
• Partnership with Novavax in Japan for development, manufacturing (250 million doses per year) and commercialization of TAK-019, their COVID-19 vaccine candidate with distribution in Japan expected to begin in early calendar year 2022, subject to regulatory approval.
• Received approval from the Japan Ministry of Health, Labour and Welfare for Alofisel (darvadstrocel) to be manufactured and marketed for the treatment of complex perianal fistulas in patients with non-active or mildly active luminal Crohn’s disease.
• Announced an exclusive collaboration and license agreement with JCR Pharmaceuticals to commercialize JR-141 (INN: pabinafusp alfa) for the treatment of Hunter syndrome (also known as Mucopolysaccharidosis type II or MPS II).
• Announced intent to acquire Gamma Delta Therapeutics to accelerate the development of allogeneic gamma delta T-cell therapies with the intention to finalize deal in Q1 FY22. Closing of the transaction is contingent on completion of review under antitrust laws, including the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 in the U.S.
• Entered into three next generation gene therapy collaborations, including with Selecta Biosciences, Poseida Therapeutics and Immusoft.

Additional Pipeline Developments

• Suspended dosing of patients in two Phase 2 studies of TAK-994, an investigational oral orexin agonist for the treatment of narcolepsy type 1 (NT1), after a liver toxicity signal emerged in two clinical studies. Takeda, as well as many experts and regulatory authorities, remain excited and optimistic about the potential of orexin agonists given the transformative efficacy demonstrated by TAK-994 in NT1 patients, and Takeda has a number of differentiated molecules in the pipeline that are part of its orexin franchise.
• Announced that the Phase 3 PANTHER (pevonedistat-3001) study did not achieve statistical significance for the primary endpoint of event-free survival.

Other Important Developments in H1

• Broke ground in Woodlands, Singapore for company’s first building to follow the Singapore Green Mark Zero Energy certification scheme as the first ‘net zero carbon emissions’ building in its global network and first-of-its-kind investment within the biotechnology industry in Singapore.
• Selected four new partners for the annual global Corporate Social Responsibility program to help strengthen health systems in low- and middle-income countries.

FY2021 GUIDANCE
On Track Towards Full-Year FY2021 Guidance

(billion yen)	FY2021 CURRENT FORECAST	Underlying Management Guidance
Revenue	3,370.0	Mid-single-digit growth
R&D Expenses	-522.0
Reported Operating Profit	488.0
Core Operating Profit	930.0	Mid-single-digit growth ~30% margin
Reported EPS (Yen)	117(a)
Core EPS (Yen)	394	Mid-single-digit growth
Free Cash Flow	600-700
Annual Dividend per Share (Yen)	180

(a) Previously 160 yen per Share. This change reflects the recording of a tax provision involving Irish taxation of the break fee Shire received from AbbVie in connection with the terminated offer to acquire Shire made by AbbVie in 2014. This change reflects an update to Takeda’s forecasted net income attributable to owners of the Company for the fiscal year ending March 31, 2022 filed today with the Tokyo Stock Exchange. See the release entitled “Summary of Financial Statements for the Six-month Period Ended September 30, 2021 (IFRS, Consolidated)” for additional information.

Key Assumptions in FY2021 Forecast

Company guidance reflects management’s expectations for continued business momentum across Takeda’s five key business areas and underlying revenue growth of its 14 global brands, while also increasing investment in R&D.

FY2021 guidance reflects key assumptions, including (1) Takeda expects at least one 505(b)2 competitor for subcutaneous VELCADE to launch in the U.S. around mid FY2021; (2) Takeda does not expect to restart sales of NATPARA in the U.S. market in FY2021; and (3) FY2021 guidance does not include the impact of any potential further divestitures beyond what has already been disclosed by Takeda.

To date, Takeda has not experienced a material effect on its financial results as a result of the global spread of the novel coronavirus infectious disease (COVID-19). Based on currently available information, Takeda believes that its financial results for FY2021 will not be materially affected by COVID-19 and, accordingly, Takeda's FY2021 forecast reflects this belief. However, the situation surrounding COVID-19 remains highly fluid, and future COVID-19-related developments in FY2021, including new or additional COVID-19 outbreaks and additional or extended lockdowns, shelter-in-place orders or other government action in major markets, could result in further or more serious disruptions to Takeda’s business, such as slowdowns in demand for Takeda’s products, supply chain related issues or significant delays in its clinical trial programs. These events, if they occur, could result in an additional impact on Takeda’s business, results of operations or financial condition, as well as result in significant deviations from Takeda’s FY2021 forecast.

For more details on Takeda's H1 FY2021 results and other financial information, please visit: https://www.takeda.com/investors/financial-results/

About Takeda Pharmaceutical Company Limited

Takeda Pharmaceutical Company Limited (TOKYO: 4502/NYSE: TAK) 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). 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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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 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.

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Forward-Looking Statements

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Financial Information

Takeda’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). Convenience translations of JPY figures into USD are included for reference and have been calculated at a rate of JPY/USD of 111.5.

Certain Non-IFRS Financial Measures

This press release and materials distributed in connection with this press release include certain IFRS financial measures not presented in accordance with International Financial Reporting Standards (“IFRS”), such as Underlying Revenue, Core Operating Profit, Underlying Core Operating Profit, Core Net Profit, Underlying Core EPS, 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 press release. 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, core results and underlying trends. 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 reconciliation of non-IFRS financial measures to their most directly comparable IFRS measures.

Further information on certain of Takeda’s Non-IFRS measures is posted on Takeda’s investor relations website at https://www.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.

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Contact information

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

Media Relations
Christina Beckerman, +1 (908) 581-4133
christina.beckerman@takeda.com