Full Transcript: Takeda Pharmaceutical Co Q1 2026 Earnings Call

Takeda Pharmaceutical Co (NYSE: TAK ) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

5% at constant exchange rates, aligning with expectations. The company is advancing its Two-Horizon strategic roadmap, focusing on the successful launch of Orzafl, Rusfertide, and Zazositinib, as well as continuing its transformation program to drive future growth. S. and Japan approvals by Q2, with launches expected in the second half of 2026.

S. S. launch in the first half of 2027. The company's R&D pipeline is robust, with significant progress in oncology treatments and preparations for key product launches, supporting long-term growth.

Management highlighted continued investment in growth initiatives, with a commitment to maintaining strong free cash flow and financial discipline. Takeda announced a collaboration with the Indonesian government to build plasma operations, enhancing its PDT business and global plasma ecosystem. The company reaffirmed confidence in its strategic direction and growth trajectory, aiming for accelerated revenue growth and sustained value creation. Full Transcript OPERATOR For those of you who wish to listen to this call in English, please select English in the Zoom language select button.

Julie, please go ahead. Julie Kim, President and CEO Thank you. Chris, thank you for joining us for today's earnings call focused on the first quarter of fiscal year 2026. We delivered a solid start to the fiscal year and our performance this quarter demonstrates steady progress against our strategic priorities, keeping us firmly on track to achieve our full year guidance.

These achievements reflect our continued execution against the Two-Horizon strategic roadmap we shared last quarter, which will position us for accelerated growth in the years ahead to expand impact for patients and set the stage for sustained value creation. Today I will outline this quarter's progress against our priorities. Financially, we delivered a solid quarter and made steady progress against our fiscal year 26 priorities. 5% at constant exchange rate, or CER, in line with our expectations as momentum across our core inline brands and existing new launch brands largely offset anticipated headwinds in our mature portfolio.

5% year over year at CER, reflecting the continued investment behind our upcoming launches and exciting late-stage pipeline, which we are partially offsetting by savings generated through our transformation program. 8% at CER, mainly due to a favorable tax position in the prior year. Milana will walk you through the financial dynamics in more detail shortly, but the key takeaway is that we are well on track towards our full year guidance. This quarter we had strong execution across all Horizon 1 priorities.

3% at CER. We also continue to execute against our transformation program. As an example, we have largely completed the implementation of our International Business Unit, which is bringing leadership and teams closer to patients and customers and supports more simplicity, speed, and efficiency. We'll do all of this without sacrificing quality to help us move at pace to bring life-transforming medicines to patients.

Takeda's consistent and effective execution of our enterprise transformation is enabling us to fund our launches and advance our pipeline. It also represents a fundamental change in how we work today and how we will grow as a company in the future. We also made excellent progress across the pipeline this quarter. S.

and Japan are key milestones expected in Q2. I will speak more about the important milestones and progress towards launch for Orzafl, Rusfertide, and Zazositinib on the next slide. In oncology we presented TAK-928 data at ASCO in first- and second-line non-small cell lung cancer, and we initiated a phase 3 study of EL ridercept in first-line anemia-associated MDS. Taken together, our three priorities for FY26 remain firmly on: continue advancing preparations for the successful launch of Orzafl, Rusfertide, and Zazositinib; progress the next wave of our pipeline; and continued execution of our transformation program to unlock new capabilities and efficiencies.

We continue to build the foundation for our future growth by preparing to bring new medicines to patients, with the first Orzafl approval obtained in China. S. and Japan as well, with launches expected in the second half of 2026. Orzafl has delivered transformative efficacy across a broad range of NT1 symptoms.

At the SLEEP 2026 meeting we presented additional Orzafl phase 3 data reinforcing the potential of this medicine to establish a new standard of care by improving measures of daily function, cognition, and nighttime sleep in patients with narcolepsy type 1. Rusfertide, our potential first-in-class hepcidin mimetic for polycythemia vera, has demonstrated rapid, stable, and durable hematocrit control while reducing patients' reliance on phlebotomy. S. S.

launch also in the second half of 2026. S. co-commercialization, we are excited to have sole responsibility for commercializing Rusfertide globally, and we are committed to maximizing its growth potential and impact on patients. Turning to the third of these transformative medicines, Zazositinib is our potential best-in-class oral treatment for psoriasis, delivering rapid and durable skin clearance in a convenient once-daily pill with no fasting restrictions.

S. in the first half of 2027. Our confidence in its profile is stronger than ever. In our recent head-to-head phase 3 psoriasis study versus ducravacitinib, Zazositinib demonstrated statistical superiority for all primary and key secondary endpoints, with more than 35% of patients achieving PASI 100, or complete skin clearance, at week 16.

We also shared new data this month from the pivotal phase 3 psoriasis studies demonstrating that Zazositinib achieved consistent high rates of skin clearance across the body, including hard-to-treat and high-impact sites. Andy will talk more about this in a few minutes. Importantly, we are not just generating compelling data, we are continuing to lay the groundwork for successful launches for Orzafl. We have had medical science liaisons in the field for more than a year.

We've engaged payers and KOLs, and we've set up specialty pharmacy and patient support programs to facilitate an exceptional patient experience. For Rusfertide, we are building HCP awareness of the importance of sustained hematocrit control and leveraging our established hematology commercial infrastructure to ensure we're ready for a successful launch. For Zazositinib, payer discussions and broader prelaunch preparations are already underway, supporting our ambition not only to gain market share but also to expand the oral treatment segment. Our efforts are planful.

We believe they will enable us to ensure these transformative medicines will reach patients as quickly as possible, delivering on our commitments in Horizon 1 and positioning Takeda for accelerated long-term growth. These milestones reinforce the depth of our late-stage pipeline and reflect the sustained, disciplined commitment we have to faster AI-enabled discovery and development, strong market access, and best-in-class scientific, medical, manufacturing technology, and commercial capabilities. Today we are in Horizon 1 and fundamentally transforming Takeda from within.

This includes optimizing our operations, strengthening our competitiveness, and successfully launching new medicines that will become our future growth drivers. As I just shared, this phase is progressing well through our launch preparation, pipeline progress, core inline brand resilience, and execution of our transformation. To provide an additional example, we recently announced a landmark collaboration with the Indonesian government to build plasma operations in the country, starting with establishing plasma donation centers and assessing the feasibility of potential future manufacturing capabilities.

Partnerships like this support the growth of our PDT business and the competitive resilience of our core inline brands while reinforcing our commitment to a sustainable global plasma ecosystem. Throughout this period we are committed to a clear set of performance measures: returning to top-line growth, protecting our core operating profit margins while making substantial growth investments, and improving our return on equity to above 5%. The entire Takeda team is working diligently to execute on our priorities and establish a strong foundation in Horizon 1. Every milestone we accomplish reinforces our path of progress towards Horizon 2 growth acceleration.

Our employees' relentless dedication and discipline will continue to set the stage for sustained value creation for patients and shareholders. With that, I will hand the call over to Milano to walk through our first quarter financial results in more detail. Milano Furuta, Chief Financial Officer Thank you, Julie, and hello everyone. Let me walk through our financial highlights for Q1 of fiscal year 2026.

Overall, our Q1 results are on track towards full-year guidance. 5% at constant exchange rates, or CR. 4 billion yen. 8% decline at CR as expected, mainly reflecting tax favorability in the prior year.

Reported EPS was 72 yen. Operating cash flow was lower than the prior year, reflecting changes in working capital related to our trade receivables factoring program. Adjusted free cash flow also reflects a payment of 200 million US dollars to Protagonist following their decision in April to opt out of a co-promotion agreement for rusfertide. As Julie highlighted, this means that Takeda now holds exclusive development and commercialization rights for rusfertide globally.

Overall, we are on track to deliver 650 to 750 billion yen free cash flow for the full year. Slide 10 shows a revenue bridge versus the prior year at CR. 5% as growth from core inline brands and new launches largely offset the decline from LOE and mature products, which includes the continued generic erosion of VYVANSE in the US. 3% at CR, which is on track with our expectations for Q1.

Our largest product, Entyvio, remains resilient with 4% growth at CR, while immunoglobulin and albumin were both impacted by phasing in the US, which was within expectation. 6% at CR, supported by Fruzaqla, Livtencity, Adzynma, and Qdenga. We are excited at the prospect of introducing new products to this category with the potential launches of Orzaful and Rooseveltai later this year. 2% growth at actual exchange rates.

Slide 11 shows a bridge of core operating profit consistent with our priorities in Horizon 1. We have positioned fiscal year 2026 as a year of growth investment funded by savings from our Transformation Program. The Transformation Program is firmly on track, as Julie commented earlier. However, many of the initiatives were implemented at the end of the quarter, meaning the savings amount captured in Q1 results is still relatively limited.

All the high-priority growth investments are on track, including launch readiness for Orzaful, rusfertide, and Associate NIF, as well as progress of late-stage development programs such as TAK-928 and TAK-921. We continue to demonstrate cost discipline alongside targeted investments. Finally, you can see in the chart that gross profit was positive in Q1, primarily driven by favorable FX variance in cost of goods, as well as a one-time divestiture-related milestone. Next, reported operating profit on slide 12.

As you can see in this chart, the two main factors impacting year-on-year performance were lower amortization of intangible assets, mainly due to the completion of VYVANSE amortization in January 2026, and higher restructuring expenses related to the Transformation Program. 1% growth versus the prior year at actual exchange rates. Slide 13 shows our full-year fiscal 2026 outlook, which is unchanged from May, and our Q1 performance was fully on track towards our targets for this year. I will close my section of the presentation by re-emphasizing our commitment to strict financial discipline through our two growth horizons.

In particular, during this Horizon 1, our focus is on returning to revenue growth, protecting operating profit, improving reported profits and ROE, and maintaining strong adjusted free cash flow. I look forward to sharing our ongoing progress towards these goals. Thank you, and I now pass to Andy for updates on the pipeline. Andy Plump, President, Research & Development Thank you, Milano, and hello to everyone on today's call.

I want to frame this quarter simply. Takeda R&D is ready to convert pipeline progress into commercial performance that supports our two-horizon growth strategy. Over the coming months, we are poised to launch three transformative medicines—Orzaphyl, rusfertide, and zazacitinib—each with the potential to redefine the standard of care in its field and, together, set Takeda on a new growth trajectory. Let me begin with Orzaphyl, which I believe is one of the most exciting stories in neuroscience today.

Narcolepsy type 1 is a lifelong disorder caused by the loss of orexin signaling, leading to disabling daytime and nighttime symptoms. At the 2025 World Sleep Congress, we presented groundbreaking results from two Phase 3 studies that met all 14 primary and secondary endpoints, demonstrating statistically significant and clinically meaningful improvements. Orzaphyl delivered transformative efficacy across the broad disease spectrum, including daytime symptoms like excessive daytime sleepiness and cataplexy, as well as nighttime symptoms, cognitive symptoms, functional improvements, and quality of life.

Orzaphyl doesn't just manage symptoms; it addresses the underlying orexin deficiency in NT1, offering patients a single, well-tolerated oral therapy that could restore how a majority of NT1 patients feel and function. We are on track to bring the first and only orexin agonist to patients living with NT1. S. and Japan this quarter.

At Sleep 2026, we presented additional Phase 3 data that I would describe as remarkable, with improvements spanning daily function, cognition, and nighttime sleep. Let me share a few of the highlights. 0001, including benefits to cognitive functioning, social activities, everyday activities, and daily responsibilities. These important benefits led to significant gains in work productivity, activity impairment, and quality of life.

On cognition, we saw improvement versus placebo in attention, memory, and executive function, each with a very significant p-value. On nighttime sleep, I want to dwell for a moment on the striking REM latency finding. REM latency is the time it takes to enter the first REM sleep stage after falling asleep. REM sleep disturbances can manifest as sleep paralysis, sleep-related hallucinations, and sleep disruptions.

At baseline, our NT1 patients had a mean REM latency of about 50 minutes against a healthy control value of roughly 130 minutes. Orzaphyl shifted mean REM latency into the normative range across all treatment groups in both the First Light (OR-3001) study and the Radiant Light (OR-3002) study. This objective shift in sleep is unprecedented. To keep it simple, we are showing data from the Radiant Light study; both trials produced similar results.

As you can see, the objective REM shift is corroborated by the subjective assessments. We measured the subjective effects on REM-linked sleep using the NSS-CT, or Narcolepsy Severity Scale for Clinical Trials, a validated instrument used in narcolepsy. Orzaphyl significantly reduced hallucinations and sleep paralysis in all treatment groups, and it did so with no clinically meaningful disruption to sleep architecture. In practical terms, we are significantly improving—often normalizing—a patient's day and night.

Now let me turn to zazacitinib, our next-generation, highly selective and potent oral TYK2 inhibitor.