アステラス製薬（4503） – Financial Results (Q3/FY2021)

Contact: Corporate Advocacy & Relations, Astellas Pharma Inc. TEL +81-3-3244-3201 February 2, 2022 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) First nine months of FY2020 First nine months of FY2021 Change (%) (Millions of yen) Revenue 940,907 992,293 Core operating profit 203,746 220,047 Core profit 166,641 169,677 +51,386(+5.5%)+16,300(+8.0%)+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 medicaladvice.11. Qualitative information on consolidated financial results for the first nine months of FY2021 (1) Business performance 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) First nine months of FY2020 First nine months of FY2021 Change (%) (Millions of yen) Revenue 940,907 992,293 Cost of sales 187,736 194,094 Selling, general and administrative expenses 363,044 406,420 R&D expenses 168,821 177,648 Amortisation of intangible assets Gain on divestiture of intangible assets* Share of profit (loss) of investments accounted for using equity method 17,294 20,247 – 24,130 -266 2,032 Core operating profit 203,746 220,047 Core profit 166,641 169,677 Basic core earnings per share (yen) 89.71 91.57 +51,386 (+5.5%) +6,358 (+3.4%) +43,376 (+11.9%) +8,827 (+5.2%) +2,952 (+17.1%) +24,130 ( – ) +2,298 ( – ) +16,300 (+8.0%) +3,035 (+1.8%) +1.86 (+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.” 2Revenue – Main products XTANDI for the treatment of prostate cancer, XOSPATA for thetreatment of acute myeloid leukemia and PADCEV for the treatment of urothelialcancer showed steady growth as expected. In addition, the sales growth ofEVRENZO for the treatment of renal anemia, Betanis / Myrbetriq / BETMIGA forthe treatment of overactive bladder (“OAB”) and EVENITY for the treatment ofosteoporosis contributed to revenue growth as well.- Moreover, another factor for the increase in sales in the first nine months ofFY2021 was the sales of pharmacologic stress agent Lexiscan returning to pre-pandemic level which decreased mainly in the first three months of the previousfiscal year by the impact of the spread of COVID-19.-The sales growth of the products above offset the sales decrease mainly due to thetermination of sales agreements for Celecox for the treatment of inflammation andpain and Lipitor for the treatment of hypercholesterolemia, and the divestiture ofEligard 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. –product mix.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 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). 3- 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 of FY2020 First nine months of FY2021 US$/¥ €/¥ 106 122 111 131 Change ¥5 (Weakening of yen) ¥8 (Weakening of yen) Change from beginning to end of period US$/¥ €/¥ As of December 31, 2020 ¥5 As of December 31, 2021 ¥4 (Strengthening of yen) (Weakening of yen) ¥7 ¥1 (Weakening of yen) (Weakening of yen) 4 Consolidated financial results on a full basis in the first nine months of FY2021 are shown Revenue and operating profit increased, and profit remained largely unchanged year-on-in the table below. 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) First nine months of FY2020 First nine months of FY2021 Change (%) (Millions of yen) Revenue 940,907 992,293 Operating profit 159,470 169,371 Profit before tax 164,227 167,402 Profit 132,917 132,495 Basic earnings per share (yen) Comprehensive income 71.56 71.51 155,897 164,538 +51,386 (+5.5%) +9,901 (+6.2%) +3,175 (+1.9%) -422 (-0.3%) -0.05 (-0.1%) +8,642 (+5.5%) 5 First nine months of FY2020 First nine months of FY2021 Change (Billions of yen) 342.7 17.6 9.4 0.7 122.3 138.3 411.6 +20.1% 25.7 14.6 2.1 126.9 141.1 +45.8% +55.7% +198.6% +3.8% +2.0% XTANDI XOSPATA PADCEV EVRENZO BETMIGA Prograf* Betanis / Myrbetriq / Japan and China. * Prograf: Includes Advagraf, Graceptor, and ASTAGRAF XL. – Sales grew in all regions. Sales grew substantially in the United States compared to the corresponding period of the previous fiscal year, and in Europe, an increase in the number of countries where reimbursement for additional indication “metastatic hormone-sensitive prostate cancer (M1 HSPC)” (approved in April 2021) began contributing to sales growth. In addition, sales continued to show strong growth in – Sales expanded in all regions, especially in the United States and Europe. In addition, sales in China also contributed, where the product was launched in April 2021. In the International Markets, XOSPATA was approved in Russia, Saudi Arabia and Turkey in the first nine months of FY2021. – In the United States, revenue from co-promotion grew as expected, as the additional indication “locally advanced or metastatic urothelial cancer patients who are ineligible for cisplatin-containing chemotherapy and have previously received one or more prior lines of therapy” (approved in July 2021) contributed to the growth, along with the contribution from the existing indication. In addition, it was launched in Japan in November 2021, and the uptake was higher than expected. – Although sales expanded in Japan, sales were lower than expected due to the strong 6competition in the market. In addition, in Europe, where EVRENZO was launched in September 2021, initial uptake was below expectation, as sales promotion activities at the time of launch were restricted by the impact of the spread of COVID-19. – Sales expanded globally, mainly in Europe and Japan offsetting a decline in sales in the United States. – Global sales were in line with expectation, although there were regional differences, such as sales growth in Europe and China, while sales decreased in other regions. 7 Revenue by region is shown in the table below. Revenue in United States, Established Markets and Greater China increased, while in Japan and International Markets decreased. First nine months of FY2020 First nine months of FY2021 Change (Billions of yen) Japan United States Greater China International Markets 221.8 355.8 218.0 43.8 87.6 203.2 -8.4% 407.9 +14.7% 50.3 83.0 +14.8% -5.3% Established Markets 239.2 +9.8% Established Markets: Europe, Canada, Australia. Greater China: China, Hong Kong, Taiwan. International Markets: Russia, Latin America, Middle East, Africa, South East Asia, South Asia, Korea, Export sales, etc. 8(2) Financial position 1) Assets, equity and liabilities An overview of the consolidated statement of financial position as of December 31, 2021 and the main changes from the end of the previous fiscal year are shown below. Total assets saw an increase of ¥82.6 billion compared to the end of the previous fiscal Assets year to ¥2,356.2 billion. billion) As of December 31, 2021: ¥1,416.9 billion (an increase of ¥15.9 – Property, plant and equipment increased by ¥3.2 billion compared to the end of the previous fiscal year to ¥267.8 billion. – Goodwill increased by ¥9.6 billion compared to the end of the previous fiscal year to ¥293.6 billion, and intangible assets increased by ¥0.8 billion compared to the end of the previous fiscal year to ¥652.3 billion. As of December 31, 2021: ¥939.3 billion (an increase of ¥66.7 billion) – Cash and cash equivalents increased by ¥24.1 billion compared to the end of the previous fiscal year to ¥350.2 billion. Total equity as of December 31, 2021 saw an increase of ¥80.2 billion compared to the end of the previous fiscal year to ¥1,466.3 billion, making the ratio of equity attributable to owners of the parent to total assets 62.2%. – While profit stood at ¥132.5 billion, the Company paid ¥85.2 billion of dividends of Total liabilities increased by ¥2.4 billion compared to the end of the previous fiscal year to As of December 31, 2021: ¥292.0 billion (a decrease of ¥3.2 As of December 31, 2021: ¥598.0 billion (an increase of ¥5.6 billion) Equity surplus. Liabilities ¥890.0 billion. billion) 92) Cash flow Cash flows from operating activities Net cash flows from operating activities in the first nine months of FY2021 decreased by ¥16.3 billion year-on-year to ¥208.9 billion. – Income tax paid increased by ¥23.3 billion year-on-year to ¥33.8 billion. Cash flows from investing activities Net cash flows used in investing activities in the first nine months of FY2021 was ¥47.6 billion, a decrease in outflow of ¥20.1 billion year-on-year. – Proceeds from sales of intangible assets amounted to ¥24.2 billion. Cash flows from financing activities Net cash flows used in financing activities in the first nine months of FY2021 was ¥141.3 billion, a decrease in outflow of ¥30.1 billion year-on-year. – The balance of bonds and short-term borrowings decreased by ¥40.0 billion. Dividends paid increased by ¥9.1 billion year-on-year to ¥85.2 billion. As a result, cash and cash equivalents totaled ¥350.2 billion as of December 31, 2021, an increase of ¥24.1 billion compared to the end of the previous fiscal year. 10(3) Consolidated business forecasts for FY2021 and other forward-looking statements The Company’s business forecasts are presented on a core basis and full basis. The consolidated full-year business forecasts for FY2021 are shown below. The Company has left its business forecasts unchanged from the consolidated full-year business forecasts announced in October 2021. Consolidated full-year business forecasts (core basis) Results (FY2020) Forecasts (FY2021) (Millions of yen) Change (%) Revenue 1,249,528 1,323,000 Selling, general and administrative expenses 504,316 541,000 R&D expenses 224,489 242,000 Core operating profit 251,375 270,000 Core profit for the year 209,906 213,000 Basic core earnings per share (yen) 113.03 114.95 +73,472 (+5.9%) +36,684 (+7.3%) +17,511 (+7.8%) +18,625 (+7.4%) +3,094 (+1.5%) +1.92 (+1.7%) 11Consolidated full-year business forecasts (full basis) Results (FY2020) Forecasts (FY2021) Revenue 1,249,528 1,323,000 Operating profit 136,051 218,000 Profit before tax 145,324 216,000 Profit for the year 120,589 174,000 Basic earnings per share (yen) 64.93 93.90 Expected exchange rate for FY2021 (Forecast) FY2020 (Result) ¥110/US$ ¥106/US$ ¥130/€ ¥124/€ (Millions of yen) Change (%) +73,472 (+5.9%) +81,949 (+60.2%) +70,676 (+48.6%) +53,411 (+44.3%) +28.97 (+44.6%) 122. Condensed Interim Consolidated Financial Statements and Notes (1) Condensed Interim Consolidated Statement of Income (Millions of yen) Nine months ended 31 December 2020 Nine months ended 31 December 2021 Revenue Cost of sales Gross profit Selling, general and administrative expenses Research and development expenses Amortisation of intangible assets Gain on divestiture of intangible assets Share of profit (loss) of investments accounted for using equity method Other income Other expenses Operating profit Finance income Finance expenses Profit before tax Income tax expense Profit Profit attributable to: Owners of the parent Earnings per share: Basic (Yen) Diluted (Yen) 940,907 (187,736) 753,171 (363,044) (168,821) (17,294) － (266) 7,045 (51,322) 159,470 6,504 (1,746) 164,227 (31,310) 132,917 992,293 (194,094) 798,199 (406,420) (177,648) (20,247) 24,130 2,032 4,209 (54,885) 169,371 2,306 (4,274) 167,402 (34,908) 132,495 132,917 132,495 71.56 71.52 71.51 71.47 13(2) Condensed Interim Consolidated Statement of Comprehensive Income (Millions of yen) Nine months ended 31 December 2020 Nine months ended 31 December 2021 132,917 132,495 Other comprehensive income Items that will not be reclassified to profit or loss Financial assets measured at fair value through other comprehensive income Remeasurements of defined benefit plans Subtotal Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Subtotal Other comprehensive income Profit 24,423 (656) 23,767 (787) (787) 22,980 (2,986) 1,271 (1,715) 33,759 33,759 32,044 Total comprehensive income 155,897 164,538 Total comprehensive income attributable to: Owners of the parent 155,897 164,538 14(3) Condensed Interim Consolidated Statement of Financial Position As of 31 March 2021 As of 31 December 2021 (Millions of yen) Assets Non-current assets Property, plant and equipment Goodwill Intangible assets Trade and other receivables Investments accounted for using equity method Deferred tax assets Other financial assets Other non-current assets Total non-current assets Current assets Inventories Trade and other receivables Income tax receivable Other financial assets Other current assets Cash and cash equivalents Total current assets Total assets 264,623 284,011 651,427 33,924 7,117 54,176 95,850 9,913 164,080 343,178 13,984 5,560 19,658 326,128 872,588 267,817 293,649 652,251 30,365 10,870 58,457 93,436 10,070 151,576 373,923 16,799 17,880 28,940 350,213 939,331 1,401,040 1,416,914 2,273,628 2,356,245 15 As of 31 March 2021 As of 31 December 2021 Equity and liabilities Equity Share capital Capital surplus Treasury shares Retained earnings Other components of equity Total equity attributable to owners of the parent Total equity Liabilities Non-current liabilities Trade and other payables Deferred tax liabilities Retirement benefit liabilities Provisions Other financial liabilities Other non-current liabilities Total non-current liabilities Current liabilities Trade and other payables Income tax payable Provisions Other financial liabilities Other current liabilities Total current liabilities Total liabilities Total equity and liabilities (Millions of yen) 103,001 179,042 (15,520) 999,640 200,129 1,466,291 1,466,291 664 10,618 37,942 4,322 201,534 36,897 291,978 136,892 21,983 13,973 108,710 316,418 597,976 889,954 103,001 177,830 (15,377) 953,289 167,373 1,386,115 1,386,115 400 18,161 38,982 5,796 199,021 32,782 295,141 124,777 8,395 22,187 148,163 288,851 592,372 887,513 2,273,628 2,356,245 16(4) Condensed Interim Consolidated Statement of Changes in Equity Equity attributable to owners of the parent Share capital Capital surplus Treasury shares Retained earnings (Millions of yen) Other components of equity Subscription rights to shares Exchange differences on translation of foreign operations As of 1 April 2020 103,001 177,506 (7,178) 905,851 899 93,277 As of 31 December 2020 103,001 177,644 (7,184) 963,012 775 92,489 As of 1 April 2021 103,001 177,830 (15,377) 953,289 745 147,024 (5) (75,756) (124) Comprehensive income Profit Other comprehensive income Total comprehensive income Transactions with owners Acquisition of treasury shares Disposals of treasury shares Dividends Transfers Share-based payments Total transactions with owners Comprehensive income Profit Other comprehensive income Total comprehensive income Transactions with owners Acquisition of treasury shares Disposals of treasury shares Dividends Transfers Share-based payments Total transactions with owners － － － － (444) － 583 － 139 － － － － (377) － 1,589 － － － － － － － － － － － － － － － － － － － － － － (882) 876 － － － 132,917 － 132,917 － (308) (76,157) － 709 132,495 － 132,495 － (130) (85,236) － (777) － － － (716) 573 － － － － － － － (124) － － － － － － － (66) － － － (66) － (787) (787) － － － － － － － － － － － － － 33,759 33,759 As of 31 December 2021 103,001 179,042 (15,520) 999,640 679 180,783 1,212 (143) (86,144) 17Other comprehensive income Total comprehensive income 24,423 24,423 Equity attributable to owners of the parent (Millions of yen) Other components of equity Financial assets measured at fair value through other comprehensive income Remeasurements of defined benefit plans Total Total Total equity 15,813 109,989 1,289,168 1,289,168 132,917 132,917 22,980 22,980 22,980 22,980 155,897 155,897 (76,157) (76,157) (882) 1 583 － (882) 1 583 － (833) (76,456) (76,456) 132,136 1,368,609 1,368,609 (1,365) (1,365) 38,871 － － － － － － － － － － － － (656) (656) － － － － 656 656 － － － － － － － － － (124) － － (709) － － (66) － － 777 (85,236) (85,236) (716) 0 1,589 － (716) 0 1,589 － As of 1 April 2020 Comprehensive income Profit Transactions with owners Acquisition of treasury shares Disposals of treasury shares Dividends Transfers owners Share-based payments Total transactions with As of 31 December 2020 Comprehensive income Profit Transactions with owners Acquisition of treasury shares Disposals of treasury shares Dividends Transfers owners Share-based payments Total transactions with As of 1 April 2021 19,604 167,373 1,386,115 1,386,115 Other comprehensive income Total comprehensive income (2,986) (2,986) 1,271 1,271 32,044 32,044 32,044 32,044 164,538 164,538 132,495 132,495 2,048 (1,271) 2,048 (1,271) 712 (84,363) (84,363) As of 31 December 2021 18,666 － 200,129 1,466,291 1,466,291 18(5) Condensed Interim Consolidated Statement of Cash Flows (Millions of yen) Nine months ended 31 December 2020 Nine months ended 31 December 2021 Cash flows from operating activities Profit before tax Depreciation and amortisation Impairment losses (reversal of impairment losses) Finance income and expenses (Increase) decrease in inventories (Increase) decrease in trade and other receivables Increase (decrease) in trade and other payables Other Subtotal Income tax paid Net cash flows from operating activities Cash flows from investing activities Purchases of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Proceeds from sales of intangible assets Payments for acquisition of subsidiaries Interest and dividends received Other Net cash flows provided by (used in) investing activities Cash flows from financing activities Increase (decrease) in bonds and short-term borrowings Proceeds from long-term borrowings Acquisition of treasury shares Dividends paid to owners of the parent Repayments of lease liabilities Other Net cash flows provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the period 164,227 54,090 35,280 (4,758) (1,534) 5,385 (59,192) 42,136 235,634 (10,491) 225,143 (22,915) 6,567 (35,947) － (14,903) 553 (1,090) (67,735) (161,000) 80,000 (882) (76,157) (11,589) (1,709) 2,052 (11,877) 318,391 306,514 167,402 58,602 26,718 1,968 17,262 (17,707) 1,130 (12,683) 242,693 (33,834) 208,859 (20,239) 405 (38,937) 24,155 (659) 549 (12,860) (47,586) (40,000) － (716) (85,236) (13,472) (1,840) 4,076 24,085 326,128 350,213 (171,337) (141,264) 19(6) Notes to condensed interim consolidated financial statements Notes on going concern assumption Not applicable. 20