Astellas Pharma : Financial Results (Q3/FY2021)

February 2, 2022

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Financial Results of Astellas for the First Nine Months of FY2021

Japan, February 2, 2022 - Astellas Pharma Inc. (TSE: 4503, President and CEO: Kenji Yasukawa, "the Company") today announced the financial results for the first nine months (April 1, 2021 - December 31, 2021) of the fiscal year 2021 (FY2021) ending March 31, 2022.

Consolidated financial results for the first nine months of FY2021 (core basis)

			(Millions of yen)
	First nine months	First nine months	Change
	of FY2020	of FY2021	(%)
Revenue	940,907	992,293	+51,386
(+5.5%)
Core operating profit	203,746	220,047	+16,300
(+8.0%)
Core profit	166,641	169,677	+3,035
(+1.8%)

Cautionary Notes

In this material, statements made with respect to current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Astellas. These statements are based on management's current assumptions and beliefs in light of the information currently available to it and involve known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those discussed in the forward-looking statements. Such factors include, but are not limited to: (i) changes in general economic conditions and in laws and regulations, relating to pharmaceutical markets, (ii) currency exchange rate fluctuations, (iii) delays in new product launches, (iv) the inability of Astellas to market existing and new products effectively, (v) the inability of Astellas to continue to effectively research and develop products accepted by customers in highly competitive markets, and (vi) infringements of Astellas' intellectual property rights by third parties.

Information about pharmaceutical products (including products currently in development) which is included in this material is not intended to constitute an advertisement or medical advice.

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1. Qualitative information on consolidated financial results for the first nine months of FY2021

1. Business performance

(Note))>

Consolidated financial results (core basis) in the first nine months of FY2021 are shown in the table below.

Revenue, core operating profit and core profit increased across the board.

Consolidated financial results (core basis)

			(Millions of yen)
	First nine months	First nine months	Change
	of FY2020	of FY2021	(%)
Revenue	940,907	992,293	+51,386
(+5.5%)
Cost of sales	187,736	194,094	+6,358
(+3.4%)
Selling, general and	363,044	406,420	+43,376
administrative expenses	(+11.9%)
R&D expenses	168,821	177,648	+8,827
(+5.2%)
Amortisation of	17,294	20,247	+2,952
intangible assets	(+17.1%)
Gain on divestiture of	-	24,130	+24,130
intangible assets*	( - )
Share of profit (loss) of			+2,298
investments accounted	-266	2,032
( - )
for using equity method
Core operating profit	203,746	220,047	+16,300
(+8.0%)
Core profit	166,641	169,677	+3,035
(+1.8%)
Basic core earnings per	89.71	91.57	+1.86
share (yen)	(+2.1%)

• Established a new account, which includes gain on sale of rights of in-market products or pipeline assets

(Note) The Company discloses financial results on a core basis as an indicator of its recurring profitability. Certain items reported in financial results on a full basis that are deemed to be non-recurring items by the Company are excluded as non-core items from these financial results on a core basis. These adjusted items include impairment losses, gain/loss on sales of property, plant and equipment, restructuring costs, loss on disaster, a large amount of losses on compensation or settlement of litigations and other legal disputes, and other items that are deemed to be excluded based on the Company's judgment. A reconciliation table between results on a full basis and results on a core basis is provided in the "Supplementary Documents for Q3/FY2021 Financial Results."

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Revenue

• Main products XTANDI for the treatment of prostate cancer, XOSPATA for the treatment of acute myeloid leukemia and PADCEV for the treatment of urothelial cancer showed steady growth as expected. In addition, the sales growth of EVRENZO for the treatment of renal anemia, Betanis / Myrbetriq / BETMIGA for the treatment of overactive bladder ("OAB") and EVENITY for the treatment of osteoporosis contributed to revenue growth as well.
• Moreover, another factor for the increase in sales in the first nine months of FY2021 was the sales of pharmacologic stress agent Lexiscan returning to pre- pandemic level which decreased mainly in the first three months of the previous fiscal year by the impact of the spread of COVID-19.
• The sales growth of the products above offset the sales decrease mainly due to the termination of sales agreements for Celecox for the treatment of inflammation and pain and Lipitor for the treatment of hypercholesterolemia, and the divestiture of Eligard for the treatment of prostate cancer.

As a result of the above, revenue in the first nine months of FY2021 increased by 5.5% compared to those in the corresponding period of the previous fiscal year ("year-on-year") to ¥992.3 billion.

Core operating profit / Core profit

• Gross profit increased by 6.0% year-on-year to ¥798.2 billion. The cost-to-revenue ratio fell by 0.4 percentage points year-on-year to 19.6%, mainly due to changes in product mix.
• Selling, general and administrative expenses increased by 11.9% year-on-year to ¥406.4 billion. The total amount increased mainly due to the increase of co- promotion fees associated with the growth of sales of XTANDI in the United States (increase of ¥18.5 billion year-on-year), impact of the foreign exchange rates (increase of ¥16.5 billion year-on-year), investment in Digital Transformation (increase of approximately ¥6.0 billion year-on-year), and the increase in sales promotion expenses for new product launch readiness (increase of approximately ¥2.5 billion year-on-year), despite a decrease in expenses due to the global optimization of personnel aligned with transformation of product portfolio (decrease of approximately ¥5.0 billion year-on-year). Selling, general and administrative expenses, excluding co-promotion fees of XTANDI in the United States, increased by 9.1% year-on-year to ¥297.7 billion.
• Research and development (R&D) expenses increased by 5.2% year-on-year to ¥177.6 billion. While there was a decrease in development expenses for fezolinetant, a selective neurokinin-3 receptor antagonist, for which patient enrollment in Phase III trials in the United States and Europe has been completed, the total amount increased mainly due to increases in development expenses for zolbetuximab, an anti-Claudin 18.2 monoclonal antibody and R&D investment for Rx+ business (related to iota).

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• Amortisation of intangible assets increased by 17.1% year-on-year to ¥20.2 billion.
• Gain on divestiture of intangible assets was ¥24.1 billion. Including such as transfer of five products to Cheplapharm which were sold in Europe and other regions (¥12.3 billion), transfer of a pipeline asset (¥9.2 billion) and transfer of Bendamustine (¥2.0 billion).

As a result of the above, core operating profit increased by 8.0% year-on-year to ¥220.0 billion, and core profit increased by 1.8% year-on-year to ¥169.7 billion.

Impact of exchange rate on financial results

The exchange rates for the yen in the first nine months of FY2021 are shown in the table below. The resulting impacts were a ¥42.8 billion increase in revenue and a ¥15.4 billion increase in core operating profit compared with if the exchange rates of the first nine months of FY2020 were applied.

Average rate	First nine months	First nine months		Change
	of FY2020	of FY2021
US$/¥		106		111		¥5
			(Weakening of yen)
€/¥		122		131		¥8
			(Weakening of yen)
Change from beginning	As of December 31,		As of December 31,
to end of period		2020				2021
US$/¥		¥5				¥4
	(Strengthening of yen)		(Weakening of yen)
€/¥		¥7				¥1
	(Weakening of yen)		(Weakening of yen)

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Consolidated financial results on a full basis in the first nine months of FY2021 are shown in the table below.

Revenue and operating profit increased, and profit remained largely unchanged year-on- year.

The full basis financial results include "Other income," "Other expenses," which are excluded from the core basis financial results. In the first nine months of FY2021, "Other income" was ¥4.2 billion (¥7.0 billion in the corresponding period of the previous fiscal year) and "Other expenses" was ¥54.9 billion (¥51.3 billion in the corresponding period of the previous fiscal year).

As "Other expenses," the Company recorded severance expenses in relation to the early retirement incentive program in Japan of ¥15.8 billion in the first nine months of FY2021.

Consolidated financial results (full basis)

			(Millions of yen)
	First nine months	First nine months	Change
	of FY2020	of FY2021	(%)
Revenue	940,907	992,293	+51,386
(+5.5%)
Operating profit	159,470	169,371	+9,901
(+6.2%)
Profit before tax	164,227	167,402	+3,175
(+1.9%)
Profit	132,917	132,495	-422
(-0.3%)
Basic earnings per	71.56	71.51	-0.05
share (yen)	(-0.1%)
Comprehensive	155,897	164,538	+8,642
income	(+5.5%)

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