Japan Q3 Roundup: Forex Impacts Majors Amid New Product Growth Expectations
Leadership Changes Also Announced
Executive Summary
Amid ongoing impact from exchange rates, Japan's five largest pharma firms showed mostly positive growth in the fiscal nine-month period. Enhertu will continue to drive Daiichi Sankyo, while Shionogi is forecasting record-breaking revenue on oral COVID-19 drug Xocova and Eisai is rolling out closely-watched Alzheimer's contender Leqembi.
While fluctuations in the yen exchange rate impacted revenue and costs in both positive and negative ways for major Japanese pharma companies in the quarter ended 31 December, Chugai Pharmaceutical Co., Ltd., Daiichi Sankyo Co., Ltd., Shionogi & Co. Ltd. and Astellas Pharma, Inc. all logged positive revenue growth on the back of mainstay products.
Although Eisai Co., Ltd. saw an overall contraction due to one-off factors, its pharma business rose on solid increases in oncology.
Looking ahead, Shionogi is aiming to reach its highest revenues in history following the launch of oral COVID-19 therapeutic drug Xocova (ensitrelvir), while Eisai is carrying high hopes for its newly approved Alzheimer's drug Leqembi (lecanemab) in the US, along with planned approvals in Europe and Asia.
Daiichi Sankyo and Astellas also announced changes in their top leadership at the start of their next fiscal year on 1 April.
Chugai Hits JPY1tn For Full-Year
| Annual Revenue (year-on-year growth) | JPY1,168bn (+17%) |
| Core Operating Profit | JPY451.7bn |
| Annual Revenue Achievement | 102% (vs forecast JPY1,150bn) |
| Key Points | Revenues exceeded JPY1tn for the first time. Several mainstays outperformed in and outside Japan. Royalty and profit-sharing income exceeded the forecast due to exchange rates. |
Chugai announced results for its full year ended 31 December, when revenues exceeded JPY1tn for the first time, hitting JPY1,168bn ($8.9bn). In 2022, the firm finished constructing a new R&D site in Yokohama and is focusing investment on lab automation. (Also see "Chugai Building On Roche Alliance Success As It Eyes Future: CEO Okuda" - Scrip, 16 Jan, 2023.)
Domestic sales grew 26%. In addition to mainstays, new products including Evrysdi (risdiplam), Polivy (polatuzumab), Enspryng (atralizumab) and Vabysmo (faricimab) all contributed to “steady market penetration,” the firm noted.
Annual sales of the combination antibody therapy Ronapreve (casirivimab/imdevimab) were JPY203.7bn (+163%) and “Government deliveries...contributed significantly to the large increase,” noted CEO Osamu Okuda. For sales outside Japan, Chugai saw a year-on-year decrease “in exports of Alecensa [alectinib] to Roche but increases in Hemlibra [emicizumab] and Actemra [tocilizumab] made a significant contribution,” he said.
On the other hand, royalty and other operating income was down 35% due to a significant decrease in royalty income related to initial shipment inventory of Hemlibra. Royalty and profit-sharing income exceeded the forecast due to a weaker yen rate, although this also impacted operating expenses.
Chugai forecasts 2023 annual revenue will be slightly lower at JPY1,070bn, due to a JPY142.7bn impact from decreasing COVID-19-related product sales. Hemlibra and Alecensa will “contribute to earnings through further growth” in the short-to-mid-term, the Roche Holding AG-affiliated firm said.
Key global growth products include Enspryng and crovalimab, a second recycling antibody being developed in collaboration with Roche for neuromyelitis optica spectrum disorder. Okuda also highlighted the potential of several out-licensed candidates, including OWL833, a GLP-1 receptor agonist type 2 diabetes candidate out-licensed to Eli Lilly and Company.
Enhertu A Key Growth Driver For Daiichi Sankyo
| Nine-Month Revenue (year-on-year growth) | JPY948.3bn (+17%) |
| Core Operating Profit | JPY118.3bn (-4%) |
| Annual Revenue Forecast | JPY1,250bn |
| Key Points | Strong oncology business performance led by Enhertu. Forex both impacted and contributed to global business. |
Daiichi Sankyo's revenue for the fiscal nine months ended 31 December grew to JPY948.3bn, the weaker yen contributing JPY72.3bn but also helped by a strong oncology business, led by antibody-drug conjugate Enhertu (trastuzumab deruxtecan), with a JPY62.8bn increase.
Chief financial officer Hiroyuki Okuzawa stated on the results call that sales growth in multiple areas contributed to the increase across several indications. Pointing to the second-line treatment of HER2-positive breast cancer in the US and Europe as an example, he noted “the share of new patients [for the indication] has been growing steadily.”
Revenues of the Japan business decreased by JPY37.3bn, mainly due to a decrease in Nexium (esomeprazole) revenue of JPY39.6bn, although other mainstays including Lixiana (edoxaban) and Tarlige (mirogabalin) grew steadily. The fall in core operating profit was noted by a number of analysts (and was attributed for a share price drop after the results) and the company pointed out R&D expenses increased by 45%, mainly due to ongoing investment in Enhertu.
An increase in the share of gross profit with global Enhertu partner AstraZeneca PLC caused selling, general and administrative expenses to increase by JPY42.4bn; forex also impacted the profit figure by JPY75.6bn. Goldman Sachs analysts said in a 31 January note that "We think underlying earnings trends are favorable, including faster-than-expected market penetration for Enhertu."
In the fiscal fourth quarter, the firm expects a Japanese approval for FluMist Quadrivalent, a nasal live attenuated vaccine for prevention of seasonal flu licensed from AstraZeneca, while in the first half of 2023, Daiichi may see the global first approval of quizartinib for first-line, adult FLT3-ITD-positive acute myeloid leukemia. The candidate was granted Priority Review in the US in October 2022.
Daiichi also announced that Okuzawa would become president and chief operating officer on 1 April, with current president and CEO Sunao Manabe remaining as CEO but also becoming executive chairperson.
Xocova Takes Shionogi To Record High
| Nine-Month Revenue (year-on-year growth) | JPY338.3bn (+54%) |
| Core Operating Profit | JPY144.9bn (+133%) |
| Annual Revenue Forecast | JPY421bn (revised in January 2023) |
| Key Points | Significant revenue increase from Xocova with JPY100bn as Japanese govt purchases two million courses. Royalty income from HIV franchise with ViiV Healthcare also contributed. |
Shionogi's significant revenue increase in the nine-month period came mainly from Xocova, which was finally granted an Urgent Approval in Japan last November and generated JPY100bn as the Japanese government purchased two million courses of the oral COVID-19 antiviral. (Also see "Third Time Lucky As Japan Finally Approves Shionogi’s Oral COVID Antiviral" - Scrip, 23 Nov, 2022.)
Royalty income from its HIV franchise with ViiV Healthcare also contributed JPY126.9bn to revenue. But the company noted the prescription drug figure decreased by 21% to JPY54.7bn. Cymbalta (duloxetine) decreased by JPY9.7bn and flu franchise drugs including Xofluza (baloxavir marboxil) and Rapiacta (peramivir) also saw decreasing sales.
The firm modified its full-year revenue forecast for the second time on 30 January to JPY421bn, with core operating profit of JPY147bn - both numbers would mark record highs in the history of the company, helped by Xocova. Approvals are also being sought in other markets such as China (pre-submission) and South Korea (already filed) and the firm stated “Further increases in sales may be expected from overseas progression.”
Shionogi noted Xocova has been supplied to 3.5 million people in Japan since its approval there and forecasts the annual supply to reach 10 million courses in Japan, plus 20 million in China if approved. In a 3 February note, BofA Securities analysts said they had revised their assumption for Japanese sales to JPY120bn in the next fiscal year, although "there are many uncertainties regarding Xocova sales forecasts," including a possible reimbursement price cut due to its rapid growth.
Astellas's Hopes For Zolbetuximab, Fezolinetant
| Nine-Month Revenue (year-on-year growth) | JPY1,164.4bn (+17%) |
| Core Operating Profit |
JPY233.7bn (+6%) |
| Annual Revenue Forecast |
JPY1,529bn |
| Key Points |
Xtandi led solid revenue growth. US approval filings for zolbetuximab and launch of fezolinetant expected soon. |
Astellas's solid growth was led by major mainstays Xtandi (enzalutamide; JPY511.9bn, +24%), Padcev (enfortumab vedotin; JPY33.1bn, +127%) and Xospata (gilteritinib; JPY36.3bn, +41%).
Forex rates contributed a JPY135.2bn increase in revenue and JPY34.8bn in core operating profit, but also pushed up SG&A expenses by 12%; these would have decreased by 1% excluding the impact. The weaker yen also caused R&D expenses to increase by 16% and the firm booked a one-time JPY13.8bn charge for using a US Priority Review Voucher for fezolinetant, its candidate for vasomotor symptoms associated with menopause, which has a 22 February action date.
Padcev was filed in the US last December for the additional indication of first-line, locally advanced or metastatic urothelial cancer in patients ineligible for cisplatin. The firm said the new use, if approved, could be a growth driver in the next fiscal year.
Astellas also plans to file globally for the approval of its claudin (CLDN) 18.2-targeting antibody zolbetuximab in 2023, as its two Phase III trials SPOTLIGHT and GLOW met their primary endpoints for the first-line treatment of CLDN18.2-positive, HER2-negative, locally advanced unresectable or metastatic gastric or gastroesophageal junction adenocarcinoma. (Also see "Astellas's First-In-Class CLDN18 Antibody Meets Phase III Gastric Endpoints" - Scrip, 22 Nov, 2022.)
Astellas held a briefing on the zolbetuximab SPOTLIGHT results on 23 January, after which J.P. Morgan analysts said in a same-day note that "we think Astellas' peak sales forecast (for gastric cancer) of JPY100-200 billion is ambitious," given challenges of taking share from Opdivo (nivolumab) in the setting. The analysts forecast JPY63.6bn in fiscal 2032.
Astellas also announced that Naoki Okamura, currently chief strategy officer (CStO), will become president and CEO on 1 April, succeeding Kenji Yasukawa, who becomes chairman. Claus Ziegler, at present president, Established Markets Commercial, will be appointed chief commercial officer on the same date, succeeding Yukio Matsui, who is retiring. Corporate Strategy division head Adam Pearson moves into the CStO position.
Eisai Aiming High With Leqembi
| Nine-Month Revenue (year-on-year growth) | JPY546.2bn (-3%) |
| Operating Profit |
JPY13.8bn (-81%) |
| Annual Revenue Forecast | JPY760bn |
| Key Points |
Growth in pharmaceutical business mainly led by Lenvima was solid, despite the revenue decrease in total due to one-time income in the previous year. Hope for AD drug Leqembi approved in January is high. |
Revenue from Eisai's pharma business alone grew by 15% to JPY531.9bn, led by mainstays Lenvima (lenvatinib; JPY191.3bn, +34%) and Dayvigo (lemborexant; JPY22.0bn, +95%).
Lenvima’s solid growth came mostly from combination use with Keytruda (pembrolizumab), which was “due to the wide spread of a chemotherapy-free regimen position,” noted Eisai. The share for the combo approach in advanced endometrial cancer is increasing, it added.
The company noted the overall decrease in revenue was due largely to one-time factors the previous year, which included a JPY49.6bn upfront payment from Bristol Myers Squibb Company for farletuzumab ecteribulin (MORAb-202).
Eisai/Biogen, Inc.’s Leqembi (lecanemab) was granted accelerated approval in the US in January for Alzheimer’s disease and the Japanese firm noted the first prescription was written on 23 January and administration initiated on 3 February. (Also see "Eisai/Biogen’s Leqembi Will Launch Below Aduhelm At $26,500 Per Year" - Scrip, 6 Jan, 2023.)
It added that engagement with US payers, including the Veteran’s Health Administration and major commercial/private plans, as well as the Centers for Medicare & Medicaid Services, is “steadily ongoing towards insurance coverage.” As well as a US Patient Assistance Program, an unbranded educational website on understanding and managing amyloid-related imaging abnormalities was launched on 25 January.
In Japan, the Ministry of Health, Labour and Welfare has granted a Priority Review after a filing in January - when a marketing authorization application was also made in the EU - and Eisai initiated submission of data in China in December. Eisai gave no revenue projections for Leqembi.
In terms of ongoing studies, the multi-country AHEAD 3-45 Phase III study for asymptomatic disease is underway, as are Clarity AD sub-studies for a subcutaneous injection formulation using an autoinjector and a maintenance dose regimen; both are due for regulatory submissions in the fiscal year beginning 1 April.