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Executives

Yasumasa Masuda - Chief Financial Officer

Analysts

Hidemaru Yamaguchi - Citigroup

Takashi Akahane - Tokai Tokyo Research Center

Fumiyoshi Sakai - Credit Suisse

Shinichiro Muraoka - Morgan Stanley

Atsushi Seki - Barclays

Astellas Pharma, Inc. (OTCPK:ALPMF) F1Q 2013 Results Earnings Call August 1, 2013 2:30 AM ET

Unidentified Participant

Thank you very much. I’d like to go into my presentation. Thank you very much for attending the Fiscal Year 2013 First Quarter Financial Results despite your busy meeting and busy schedule. I would like to take about 20 minutes to give you the outline of the financial results and the status of our pipeline.

Please turn to page two. Fiscal year 2013 first quarter financial results outline. Sales has increased, but the operating income, ordinary income, but net income has declined. Sales reached 275.8 billion yen plus 13.4% year-over-year.

I’d like to go into details afterwards but in Japan because of impact of generics obviously anticipate a decline in sales but in United States, Europe and Asia new products and the major products has grown and we’ve seen increase of sales in these regions. The cost of goods sold was 31.4% year-over-year, it increased by 1.2%.

R&D expenses because of the impact of the currency and there has been an increase of the upfront in-licensing expenses year-over-year it increased by 21.4% to 52 billion yen. The ratio against sales is 18.9%.

SG&A excluding R&D, while there has been impact of the currency, on top of that the European and U.S. oncology business related expenses has increased, including the co-promotion expense have expanded in United States, so it has increased 33.2% year-over-year reaching 98.6 billion yen.

But the sales has increased the gross profit has increased but because of increase of SG&A the operating profit was minus 27.1% year-over-year at 38.5 billion yen, ordinary profit was 37.4 billion yen, net profit was 22.1 billion yen.

In the first quarter we have booked extraordinary loss of 6.9 billion yes related to the restructuring costs in the connection with restating research framework which we announced in May.

The progress against the first half forecasts is shown on the very right of this slide. Sales, because the sales is robust in U.S., Europe and Asia basically is in line, but in Japan we have been receiving some slight impact from the generics and dispense progress is slightly lower than our projection.

In terms of costs, R&D spending and (inaudible) SG&A, basically they were in line in terms of progress. The forex level it has been in line as well. As a result sales was 48.7%, operating income 46.4%, in terms of the progress it was slightly weaker.

Please turn to page three. This slide I would like to give you analysis of change in sales. Year-over-year it has increased by 32.6 billion. So the growth products, the growth products, Vesicare, mirabegron, XTANDI has made the major contribution in total 17.6 billion of increase was shown. Prograf, Harnal, Funguard were the other global products although we have seen increase of 9.7 billion.

For the domestic pharmaceuticals excluding global products, it has declined by 6.9 billion yen. For the new products and Celecox, Symbicort and Bonoteo, these growth products combined we saw a sales expansion of 4.8 billion while Lipitor, Gaster, Myslee, Seroquel has been impacted by the generics and sales has declined.

In Europe and the U.S. local products in total increased by 12.1 billion yen. In the Americas, (inaudible) and Tarceva were growing. The sales impact of currency is a positive 28.3 billion yen.

Please turn to page four, this is the analysis of change in operating income. Year-over-year it declined by 14.3 billion yen. The sales increased so the gross profit has increased by 19.4 billion.

Cost of good sold ratio rise of 1.2 points year-over-year. While change in the product mix led to a decline in cost it was offset by the forex impact on elimination of unrealized gains. As a result, the gross profit increase was lower than the increase of the sales by 2 point.

R&D spending has increased by 9.1 billion. On top of the currency impact the increase of upfront milestone payment has an impact. The graph -- the yellow portion on the graph, impact coming from the currency but it is more than half of the impact in terms of the increase of the costs.

R&D, our SG&A including R&D has increased by 24.5 billion yen, more than half of business coming from currency. The U.S. expanded co-promotion expense is included the European and U.S. oncology-related business expenses and the strengthening of the cost of sales forces in emerging markets and increase of costs for product launches in each countries has contribute to the increase of cost.

The currency impact from the operating income, the average rate of the U.S. dollar and euro has been substantial weakening of the yen and this has been a positive impact in sales of 28.3 billion yen but the end of the quarter rate has been the weaker yen against the previous year and because of the currency impact on -- elimination of the unrealized gains of the inventory this was 0.6 billion yen minus impact.

In the first quarter in the sales area, the domestic sales, product sales has been impacted by generics and there was negative impact on the distribution inventory level, so this was a negative impact.

In terms of the expenses, before the sales has expanded there has been a increase of costs for the launching of the U.S. oncology franchise and Europe as well and there are some special factors related to the timing of the expenses. So year-over-year this was the reason why we saw a decline in profit.

Let’s turn to page five. This is on a local currency basis the regional sales. In Japan the total sales has declined but for growth products and new products they continue to grow.

In the Americas the new product XTANDI and (inaudible) has contributed to the sales. On top of that, Vesicare, (inaudible) and Tarceva has grown sales steadily.

Europe Vesicare, MYCAMINE has grown. In Asia all the major products has grown. If we exclude the currency impact on a local currency basis year-over-year we saw a 12.1% growth.

Please turn to page six. For the following three slides, I would like to give you the situation of the key franchise, major product sales situation. First, this is the urology OAD franchise.

With the growth of Vesicare and the contribution coming from the new product mirabegron, the combination sales of the two products on a global basis has grown by 33.3% to 36.4 billion yen.

Mirabegron is called Betanis in Japan, in the Americas Myrbetriq and in Europe it’s called BETMIGA.

Betanis sales has been increasing steadily reaching 2.3 billion yen and Myrbetriq, which was launched in October last year reached 2.1 billion of sales. BETMIGA this February has been launched in the U.K. and we’re expecting contribution of -- to sales going forward. By region Vesicare and mirabegron both combined in all of the regions has been seeing strong growth.

Going forward with these two pharmaceuticals we would like to further strengthen OAD franchise.

Please turn to page seven. In the oncology franchise we have XTANDI, Tarceva, Eligard, Gonax, with these four products the sales was has increased greatly to 25.8 billion yen. XTANDI has been launched in September last year in the U.S. sales has been growing steadily.

In Europe, in the U.K. July has started to be soft. In this first quarter the sales in the France under the temporary (inaudible) for use has been booked. With this combined the total sales was 8.5 billion yen.

Following -- regarding Tarceva, sorry, regarding Tarceva the sales is increasing as well. We are aiming for the further growth to make this franchise one of the global category franchise.

Please turn to page eight. This is the transplantation franchise. Prograf sales because of the currency impact year-over-year increased by 11.5% to 44.2 billion. On a global basis we’ve been able to maintain the Prograf business. In Japan and Asia sales is continuing. In the United States the impact of the generics has becoming slower. In the Europe, the generics impact is still in a mild level.

In terms of the Americas sales, in the previous first quarter there was a one-off factor, which was a positive impact on the sales, on a local currency basis the sales for the first quarter year-over-year seems to have declined in a more major manner.

This is page nine. This is the Japanese major products, excluding Japanese products. In Japanese market total sales has been impacted by generics and has declined but on the other hand the Micardis family and new products and growth products has steadily grown its sales.

Celecox, Symbicort and Bonoteo and for the other growth and new products in total has grown its sales to 26.8 billion. Going forward we’ll continue to maximize the sales of these products.

Let’s turn to page 10. These are the products that were launched after our financial results meeting in May. In June we have launched the Acofide, which is for functional dyspepsia and as I have explained, in Europe in July XTANDI has been launched in the U.K. We will continue to stimulate the sales of this product.

Let’s turn to page 11, as you can see, including the two products in each of the regions, many products has been approved and launched. We have been able to continuously introduce new products into the market.

As shown in the lower half of this slide, because of the reshaping of research network and the strategic alliance of Amgen, we are trying to optimize our allocation of our managerial resources.

Please turn to page 12, in May we have announced a strategic alliance of Amgen in Japan and I would like to recap this. This strategic alliance has two parts.

The first part is that, we will have alliance of five pipeline medicines for the Amgen, basically for biologic medicine and we have a long-term contract with them. For the five pipeline products this long-term alliance with Amgen, this is to be in place in 2013 at the latest on the product-by-product basis.

The second part is that the joint venture company, the Astellas Amgen BioPharma company that we’ll be setting up with Amgen. So that Amgen can establish a business foundation in the Japanese market, us and Amgen will collaborate so that this joint venture will be successful.

Astellas Amgen BioPharma as of the October 1, 2013 will start business. The headquarters will be located in Tokyo, planned to be located in Tokyo. In 2020 this company will aim to become a wholly-owned Amgen affiliate.

This strategic alliance will combine the strength of both companies and construct we’ve been in relationship and this will allow cutting-edge drugs to Japanese patients. We hope that we’ll be able to enhance our pipeline in Japan and we’ll be able to capture candidates future growth.

Let’s turn to page 13, so this is a slide that we always show. Astellas 2010 was the bottom of our performance and after that we have been able to conduct a sustainable growth. For the full year 2013 outlook sales is -- target is 1.17 trillion yen, operating income 170 billion yen, as of this May we have not changed our outlook.

First quarter result because of the sales in the domestic market has been slightly weak and we are not being optimistic but in the Americas the business is doing well and we think we’ll be able to catch up in the weaker Japanese market.

New products such mirabegron, XTANDI is going to fully contribute to our performance in the second half and the expense progress is in line with our plan but we’ll further efficiently use our costs so that we’ll be achieving our full year target.

Now I’d like to talk about the progress of the pipeline products. Page 15 please, as always this slide shows our pipeline by therapeutic area and stage. Compounds written in red are the changes from May when we announced the results of FY 2012. Let me discuss the details with the next four slides.

Page 16 shows approved product. We received approval for six products in three months since May. Tarceva was approved in U.S. together with its companion diagnostics for the additional indication of first line treatment of patients with NSCLC with EGFR mutation.

VESOMNI is a fixed dose combination of Vesicare and Harnal, and has received the first European approval in Netherlands in May. Prograf’s indication of interstitial pneumonia was approved in Japan. As discussed earlier, XTANDI was approved for post-chemotherapy stage cancer in Europe in June and was launched in July.

Mycamine was approved for pediatric patients over four months old in U.S. Lastly, ASTAGRAF XL which is an extended release formulation of Prograf was approved in U.S.

Page 17 shows filed and (inaudible) project. NDA for enzalutamide was filed in Japan in May for prostrate cancer and it received priority review status in July. EB178 is a combination therapy of solifenacin and mirabegron, and is now in Phase 3 in U.S., EU and Asia.

ASP4901 which we introduced from (inaudible) entered Phase 2 in Japan. Also Phase 2 study of enzalutamide for breast cancer patients started in U.S. and Europe.

Page 18 shows new projects. With the strategic alliance with Amgen that I discussed earlier, we have three new projects in the clinical stage pipeline, AMG 785 in Phase 3 for osteoporosis, AMG 145 in Phase 2 for hyperlipidemia and AMG 102 Phase 2 for gastric cancer.

In addition there are new projects in Phase I. They are ASG-15ME using ADC technology, ASP2215 for cancer and ASP3325 for hyperphosphatemia. CK-2127107 that was in-licensed from Cytokinetics also joined our pipeline as a Phase 1 compound.

Page 19 shows discontinued projects. Discontinued products are YM155 for non-Hodgkin’s lymphoma, ASP0777 for Alzheimer’s disease and ASG-5ME for cancer. We remain however interested in ASG-5ME’s target SLC44A4.

As for Tivozanib, we decided not to conduct additional RCC study and not to submit MAA for RCC in Europe. Our partner Aveo received a Complete Response Letter from the FDA. The development for colorectal and breast cancer is continuing.

As for ASP3652, based on the efficacy results of the Phase 2 study, we discontinued its development for chronic prostatitis and chronic pelvic pain syndrome. But the development for bladder pain syndrome and the interstitial cystitis is continuing, development of erlotinib for colorectal cancer was discontinued.

Page 20 list our pipeline projects in oncology. There are some discontinued products. But there are new compounds shown in red and the total number of oncology products in the clinical stage has become 13.

Page 21 please, this slide shows the development status of enzalutamide. We received approval in EU for post-chemo -- prostrate cancer and the product was launched in U.K. in July. NDA was filed in Japan in May for prostrate cancer and it received priority review designation in July.

The PREVAIL study, which is a Phase 3 study for chemotherapy naive prostrate cancer interim analysis will be done by the end of this year. For (inaudible) study which is a Phase 3 study for non-metastatic castration-resistant prostrate cancer is planned to start by the end of 2013.

In the Phase 2 study for breast cancer shown at the bottom of the table, enrollment started in June. We will continue to make efforts to obtain additional indications for enzalutamide.

Page 22 shows the status of EB178, combination therapy of solifenacin and mirabegron. It entered Phase 3 stage in Europe, U.S. and Asia. Studies are under preparation now.

These slide shows the result of Phase 2 study in Europe, when mirabegron is combined with solifenacin, significantly greater improvement was observed over monotherapy in terms of mean volume voided per micturition.

Page 23 please, at the end of the pipeline part, let me just show you the progress of late-stage projects. As you can see many projects received the approval for three-month -- in three months since May, development is progressing steadily. We will work hard so that these late-stage compounds, as well as many compounds in Phase 1 or 2 move forward as quickly as possible.

Page 24 please, lastly, I will discuss our policy on profit distribution and return to shareholders as we have been describing. Based upon the basic policy shown on the slide we continue to endeavor to realize continuous improvement of the corporate value and through that improvement of return to shareholders.

Business development environment in and outside of Japan is getting tougher but we will accelerate our growth by early market penetration of new products such as XTANDI and maximization of sales existing growth products.

Thank you very much for your attention and continue support.

Unidentified Participant

This is the end of the presentation. From now on I would like to receive questions. The operator is now calling in questions.

Question-and-Answer Session

Operator

So this is Mr. Yamaguchi from Citigroup.

Hidemaru Yamaguchi - Citigroup

So this is Yamaguchi from Citi. So this is for XTANDI, some questions. So by quarter sales, if you look at that, for you it’s a first quarter. So compared to the previous quarter, it seems that the sales has slowed down a bit. So comparing to April to June and January to March. So are there any inventory pile up? Have you any grasp of that kind of situation with XTANDI?

Yasumasa Masuda

This is Masuda speaking. I would like to answer your question. In terms of the inventory there have not been no abnormal situations. However, January to March quarter -- in the previous quarter, the gross to net adjustment has been conducted more than usual. So there has been -- there were some special factors.

So it has been higher than normal for the January to March period. So if you compare the two quarters, March quarter to June quarter, it seems that the June quarter seems a bit slow but in terms of growth, we think that we’re still seeing robust growth.

Hidemaru Yamaguchi - Citigroup

So if you know, if it’s possible, so I think basically it is used in pre-chemo but -- so is there any proportion between post-chemo and pre-chemo?

Yasumasa Masuda

Yeah. It is true that some part of it is used for pre-chemo. Yeah, we do understand that is the situation but we don’t conduct promotion. In terms of the ratio, we do not disclose that.

Hidemaru Yamaguchi - Citigroup

Understood. And in the US$82 million and you’re going to target $400 million of sales. So if things go as normal, I think it just makes that target. Is it possible this $400 million? Do you think they will be able to achieve this target?

Yasumasa Masuda

So -- yeah. I think we will be able to achieve that level.

Hidemaru Yamaguchi - Citigroup

So Yasumasa, you mentioned about the distribution inventory in Japan. So it seems that at the end of the quarter it’s been deteriorating, the sales in Japan?

Yasumasa Masuda

Well, in terms of the distribution inventory, each quarter there is some changes. And as a fact for this quarter from March end to June end, the distribution inventory actually declined. So last year, the same period last year, the change was actually opposite of this year. So year-over-year comparison means that that was major impact.

Hidemaru Yamaguchi - Citigroup

So the domestic sales basically worsened because of this inventory situation?

Yasumasa Masuda

Exactly. One thing I want to say is that the distribution inventory change I think basically we have been able to see it went down. If you look at the first quarter, during this short period of time, this is a very limited time and the impact could be bigger. So I think if you go to the full year, this impact will be more mitigated.

Hidemaru Yamaguchi - Citigroup

Thank you. That’s all from me.

Unidentified Participant

Let’s go to the next question.

Operator

This is from the Tokai Tokyo Research Center, Akahane.

Takashi Akahane - Tokai Tokyo Research Center

This is Akahane speaking. I would like to talk about your financial results. So the cost of goods ratio has gone up by 1.2 points. So it is 30.2% to 31.4%. Is it raised to that level? It’s increased by 1.2 points. Hello, do you hear me?

Yasumasa Masuda

Yeah, yeah. Exactly. This is on page four.

Takashi Akahane - Tokai Tokyo Research Center

So what I want to hear is unrealized gains, this 2.4 points up like this, because you have mentioned about inventory. If you don’t have this, actually there was a positive by 6.5 billion yen, if you exclude those factors.

Yasumasa Masuda

Yeah. Your calculation was, yes, just assuming if that happens.

Takashi Akahane - Tokai Tokyo Research Center

So if this unrealized gain were in the full-year results, so is it the -- in terms of the international situation overseas, what’s happening there?

Yasumasa Masuda

So what we have been saying is that because we are company that does global business and we have foreign-currency-denominated inventory within the group, there is a substantial amount. But in terms of the value, the break out, we do not disclose the precise details of the value. It is a substantial amount. So because -- this will be always impacted by the difference of the currency from the beginning of the year and the end of the year.

Takashi Akahane - Tokai Tokyo Research Center

So 8.2 going up in the inventory. So you have 9.46 billion yen in terms of last year’s inventory but in terms of the trends is it the same?

Yasumasa Masuda

So this is for annualized gains. This is for the foreign-denominated inventory within the group and that will be impacting. So it’s not the case that it should flow directly to the inventory on the balance sheet. That’s just part of the inventory carried on the balance sheet.

Takashi Akahane - Tokai Tokyo Research Center

But in terms of the product mix, the COGS have improved by 1.2 points. Do you think that this trend will continue going forward? So what’s the major reasons why you have been seeing an improvement of the COGS?

Yasumasa Masuda

So the U.S. XTANDI business has expanded. So this is typical. These new products have been -- these new products have a lower cost base. So these new products are going to grow. So roughly speaking we think that this trend will grow, will continue.

Takashi Akahane - Tokai Tokyo Research Center

My last question is that what if the currency level continues at this level. So in the second quarter, is the elimination of unrealized gains at neutral position?

Yasumasa Masuda

In terms of the elimination of unrealized gain, we’ll be looking at the difference of the currency rate at the beginning and the end of the quarter. So if the currency rate stays at this level, it means that this will have only limited impact. Of course, it will be impacted by the change of the inventory level but not much.

Takashi Akahane - Tokai Tokyo Research Center

So, for instance, the first quarter 8% inventory increase, so if the trend continues I think that would be neutral.

Yasumasa Masuda

I’m sorry we won’t be able to comment on that because this is the foreign-denominated inventory. It will not be directly related to the inventory you see on the balance sheet.

Unidentified Participant

Next person please. Thank you very much. Next.

Operator

From Credit Suisse, Mr. Sakai please. Mr. Sakai. Hello.

Fumiyoshi Sakai - Credit Suisse

I have two questions. In the first quarter, R&D and other SG&A contents, so if you look at this, you haven’t changed the first half and the full-year outlook. It means that in the first quarter or in the first half, basically you have been incorporating that. Of course, you can’t foresee the currency but I think basically this plan was already baked in your outlook. Is that true?

So you are talking about the upfront in-licensing expenses or increasing the sales forces in the emerging markets. More specifically, can you explain how you use your cost? If you can do that, I think I can understand this area more clearly.

Yasumasa Masuda

In terms of the currency, we have been putting 100 yen to the euro, 100 yen to -- sorry, 100 yen to the dollar, 100 yen to the euro, that’s our assumption. So if you look at the trend of the currency and going forward, we don’t think there will be a huge deviation. Because of this we don’t think that we’re going to see a huge deviations from our cost projections.

In terms of our forecast, against the forecast for costs, it is basically in line with the projection or slightly under 50% in terms of the progress for the first half. So each year for the first half that’s what it actually is so this is in line with our expectations. Of course item by item there’s some positives and negative items but overall it’s in line with our projections. So the milestone-related payments, most of it is in line with our expectations not all but most of it is in line with expectations.

Fumiyoshi Sakai - Credit Suisse

For XTANDI, I think they had some step-up milestones. For instance, the breast cancer has been increased and the CCP test is going to start in terms of milestones. Is this -- has this impacted the increase of the R&D?

Yasumasa Masuda

No, no impact on R&D spending. No impact.

Fumiyoshi Sakai - Credit Suisse

So the increase of the upfront in-licensing product, this is specifically in-licensing new products?

Yasumasa Masuda

The major ones would be ASP1517 domestic phase II start milestone payment. CK-107, that permits for the contracts. Ambrx ADC, the partnership lump-sum payments. So a couple of billions of yens of payments. That’s for domestic spending.

Fumiyoshi Sakai - Credit Suisse

For XTANDI vendors’ data, so it’s not actually compiled with sales of XTANDI and in terms of the prescription region there is no link. So Mr. Hatanaka at the previous meeting said that, he has pointed out that this is an issue of the vendor. But the U.S. analysts’ view is that Astellas is actually blocking that information. So what is your view on that?

Yasumasa Masuda

What I want to say is that it’s very anticipatory if you don’t have any data for that specific matter.

Fumiyoshi Sakai - Credit Suisse

The fact is that the distributor and IMS, between the distributor and IMS, most of the cases, the data has not been compiled. So that’s a fact.

Yasumasa Masuda

I cannot comment further.

Fumiyoshi Sakai - Credit Suisse

Well, the President’s comment, basically you will support the President’s comment? Mr. Hatanaka said that -- he said that specifically this is issue of the IMS. So you do support his comment?

Yasumasa Masuda

Please understand my word as is -- as a fact, the distributor and IMS, between the distributor and IMS, in some areas the information has not been provided. That’s the fact. Distributors are the specialty pharmas.

Fumiyoshi Sakai - Credit Suisse

So this is the same retailers that is handling the Zytiga?

Yasumasa Masuda

Maybe not fully overlapping with the Zytiga, we wouldn’t know that but this will be specialty pharmas.

Fumiyoshi Sakai - Credit Suisse

Understood. Thank you.

Unidentified Participant

Thank you very much. Next?

Operator

From Morgan Stanley, Muraoka please.

Shinichiro Muraoka - Morgan Stanley

This is Muraoka from Morgan Stanley. Hello? Protopic, about one month ago there was the selling off of some business and that story, how realistic is that?

Yasumasa Masuda

If you are talking about some rumor, we are not able to comment on that. Sorry.

Shinichiro Muraoka - Morgan Stanley

And for you Protopic is an important core business. Is that correct understanding?

Yasumasa Masuda

Mr. Muraoka, I’m sorry. I’m having problem listening to you. The connection is not very good.

Shinichiro Muraoka - Morgan Stanley

Protopic will continue to remain as your core topic -- core business. Is that correct?

Yasumasa Masuda

Yeah. Protopic is one of the important products for us.

Shinichiro Muraoka - Morgan Stanley

And as for the Vesicare in Japan, it seems that it’s negative growth and so it’s rather weak. Mirabegron may be eroding Vesicare and could you explain what’s happening there?

Yasumasa Masuda

What you say is correct. Betanis actually, Betanis versus Vesicare and the total it’s growing. But when you look at the numbers, Vesicare is not growing. So it’s anticholinergic agent, in total. The Betanis is taking a lot of prescription in that anticholinergic agent market.

It’s not only for the Vesicare but total market of anticholinergic patients. And additional thing is the adjustment of the inventory in distribution, that’s affecting. So there are two such factors. But for the OAB franchise in total, yes, we are looking at very good growth.

Shinichiro Muraoka - Morgan Stanley

And for the inventory adjustment of the Vesicare as compared to your other products has been more material?

Yasumasa Masuda

Well, we do not -- cannot disclose about the specific items. But for all products, there is some differences. But I think what I said will be more or less applicable to most of our products.

Shinichiro Muraoka - Morgan Stanley

So Vesicare, Betanis, mirabegron so you have come out with a combination drug. And the clinical trial it seems that the study will be ended in the 2014. So can we expect you will be filing next fiscal year for the combination?

Yasumasa Masuda

Well, as for the plan, it’s disclosed in the clinicaltrial.com and as for the actual timing for the NDA filing, it is too early to mention that.

Shinichiro Muraoka - Morgan Stanley

And is this one study enough for filing or are you going to run another study for the combination?

Yasumasa Masuda

Well, please take a look at the clinicaltrial.com and there is phase III and the long-term studies are being planned currently.

Shinichiro Muraoka - Morgan Stanley

I see. Thank you. That’s it from me. Thank you.

Unidentified Participant

And so now we’d like to take the last question. The next question will be the last one please. Thank you.

Operator

From Barclays, Seki please.

Atsushi Seki - Barclays

Regarding your XTANDI development plan, PREVAIL study (inaudible), could you talk about the target population and also the endpoint? And also for the -- there is a breast cancer and 16-week and the ending timing is mentioned as 2015 and there’s triple negative breast cancer?

Yasumasa Masuda

Well as for the (inaudible) study, we are still working on the plan of the study. So we are not able to comment on the specific information regarding the study. And at the appropriate point, we will disclose the information about the study on the clinicaltrial.com. And as for the triple negative breast cancer, recruitment is rather difficult in this area. And so we believe that the study will take a good amount of time. And as for the breakthrough, it’s related to our development strategy. So I’m sorry I’m not able to comment on that.

Atsushi Seki - Barclays

And two more questions, 0777, it was in P1 and now it’s not. Could you discuss the background for that?

Yasumasa Masuda

In the last -- the meetings before, we were working on that as a multi-track. And those activities have been completed or they are finished and we officially discontinued the development of this.

Atsushi Seki - Barclays

On July 24, there was the settlement in the litigation and so there is no mention in the review the timing of the generics send to us and settlement will -- does it affect you?

Yasumasa Masuda

In terms of impairment for intangible assets, well, this is not related to an impairment of intangible assets. So that’s all from me.

Atsushi Seki - Barclays

Thank you very much.

Unidentified Participant

So we’d like to close our meeting. Thank you very much for participating in our conference call. I hope for your further patronage. Thank you very much.

Yasumasa Masuda

Thank you.

Operator

So this ends the teleconference and that concludes today’s conference call. You may disconnect your lines.

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