Astellas Pharma : Financial Results (Q1/FY2022)

August 1, 2022

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Financial Results of Astellas for the First Three Months of FY2022

Japan, August 1, 2022 - Astellas Pharma Inc. (TSE: 4503, President and CEO:

Kenji Yasukawa, "the Company") today announced the financial results for the first three months (April 1, 2022 - June 30, 2022) of the fiscal year 2022 ending March 31, 2023 (FY2022).

Consolidated financial results for the first three months of FY2022 (core basis)(Millions of yen)

	First three months	First three months	Change
	of FY2021	of FY2022	(%)
	326,143	381,791	+55,647
	(+17.1%)
Core operating profit	62,820	55,292	-7,527
(-12.0%)
	49,241	45,843	-3,399
	(-6.9%)

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 three months of FY2022

Business performance

(Note))>

Consolidated financial results (core basis) in the first three months of FY2022 are shown in the table below.

While revenue increased, core operating profit and core profit decreased.

Consolidated financial results (core basis)

		(Millions of yen)
First three months	First three months	Change
of FY2021	of FY2022	(%)
326,143	381,791	+55,647
(+17.1%)
62,231	88,870	+26,639
(+42.8%)
137,109	153,396	+16,287
(+11.9%)
58,313	74,007	+15,695
(+26.9%)
5,963	10,745	+4,782
(+80.2%)
292	350	+58
(+19.8%)
62,820	55,292	-7,527
(-12.0%)
49,241	45,843	-3,399
(-6.9%)
26.58	25.12	-1.46
(-5.5%)

(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 Q1/FY2022 Financial Results."

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Revenue

• Sales of XTANDI for the treatment of prostate cancer and XOSPATA for the treatment of acute myeloid leukemia continued to grow.
• PADCEV for the treatment of urothelial cancer contributed to revenue growth due to significant expanding of sales in the United States and Japan as well as an increase in the number of countries in which the product was launched in Europe.
• Additionally, the expansion of sales of Betanis / Myrbetriq / BETMIGA for the treatment of overactive bladder ("OAB") and the immunosuppressant agent Prograf as well as the growth of sales of EVENITY for the treatment of osteoporosis in Japan contributed to revenue growth.

compared to those in the corresponding period of the previous fiscal year ("yearyear")

Core operating profit / Core profit

- Gross profit increased by 11.0% year-on-year to ¥292.9 billion. The cost-to- revenue ratio increased by 4.2 percentage points year-on-year to 23.3%, mainly due to the foreign exchange rate impact from the elimination of unrealized profit in intra-group transactions (increase of ¥12.3 billion year-on-year).

• Selling, general and administrative expenses increased by 11.9% year-on-year to ¥153.4 billion. Although expenses decreased as a result of global optimization of personnel aligned with transformation of product portfolio (decrease of approximately ¥3.0 billion year-on-year) and reduction of mature products-related costs (decrease of approximately ¥2.0 billion year-on-year), the total amount increased due to foreign exchange rate impact (increase of ¥16.7 billion year-on- year) and an increase in investment for new product launch readiness (increase of approximately ¥2.0 billion year-on-year). Selling, general and administrative expenses, excluding co-promotion fees of XTANDI in the United States, increased by 7.4% year-on-year to ¥110.3 billion.
• Research and development (R&D) expenses increased by 26.9% year-on-year to ¥74.0 billion. The total amount increased due to foreign exchange rate impact (increase of ¥7.5 billion year-on-year) in addition to one-time expenses recorded during this period, which was included in the full-year forecast.
• Amortisation of intangible assets increased by 80.2% year-on-year to ¥10.7 billion.

As a result of the above, core operating profit decreased by 12.0% year-on-year to ¥55.3 billion, and core profit decreased by 6.9% year-on-year to ¥45.8 billion.

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Impact of exchange rate on financial results

The exchange rates for the yen in the first three months of FY2022 are shown in the table below. The resulting impacts were a ¥35.5 billion increase in revenue and a ¥7.4 billion decrease in core operating profit compared with if the exchange rates of the first three months of FY2021 were applied.

Average rate	First three months	First three months		Change
	of FY2021	of FY2022
US$/¥		109		130	¥20
			(Weakening of yen)
€/¥		132		138		¥6
			(Weakening of yen)
Change from beginning	As of June 30, 2021		As of June 30, 2022
to end of period
US$/¥		¥0				¥14
	(Strengthening of yen)		(Weakening of yen)
€/¥		¥2				¥8
	(Weakening of yen)		(Weakening of yen)

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Consolidated financial results on a full basis in the first three months of FY2022 are shown in the table below. While revenue increased, operating profit and profit decreased.

The full basis financial results include "Other income" and "Other expenses," which are excluded from the core basis financial results. In the first three months of FY2022, "Other income" was ¥16.3 billion (¥0.4 billion in the corresponding period of the previous fiscal year) and "Other expenses" was ¥38.4 billion (¥27.1 billion in the corresponding period of the previous fiscal year).

As "Other income," the Company recorded foreign exchange gains of ¥14.1 billion (¥0.3 billion in the corresponding period of the previous fiscal year). Impairment loss of intangible assets due to the termination of the research and development of the gene therapy programs AT702, AT751 and AT753 (¥22.0 billion) as well as the increase in fair value of contingent consideration resulting from the application for approval of fezolinetant in the United States (¥13.6 billion) were recorded as "Other expenses."

Consolidated financial results (full basis)

			(Millions of yen)
	First three months	First three months	Change
	of FY2021	of FY2022	(%)
Revenue	326,143	381,791	+55,647
(+17.1%)
Operating profit	36,090	33,147	-2,943
(-8.2%)
Profit before tax	35,830	31,679	-4,152
(-11.6%)
Profit	30,687	24,812	-5,875
(-19.1%)
Basic earnings per	16.56	13.59	-2.97
share (yen)	(-17.9%)
Comprehensive	36,206	134,396	+98,190
income	(+271.2%)

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