Takeda Q1 earnings soar as plans to speed R&D rejig announced

Osaka-based Takeda Pharmaceutical said it would accelerate a reorganization of its R&D units in the U.S. and Japan to focus on the three therapy areas previously outlined by management: oncology, gastroenterology and central nervous system.

The reorganization comes as Takeda said first quarter net profit soared 305% to ¥99.5 billion even as revenues dipped 2.8% to ¥434 billion, according to a press release.

The top Japanese drugmaker has cleaned house on its pipeline this year and made new alliances in the therapeutic focus areas as CEO Christophe Weber works to reshape the firm's innovative development push. It is also looking to sell the Wako Pure Chemical unit.

"Takeda will refocus research & development on targeted therapeutic areas--oncology, gastroenterology and central nervous system, plus vaccines--and concentrate its R&D activities in Japan and the U.S. to build a world-leading R&D organization and pipeline," Weber said in the earnings release.

"I am confident that these achievements and initiatives will result in Takeda's sustainable future growth as a leading, global innovative pharmaceutical company."

Andy Plump, Takeda’s chief medical and scientific officer, outlined the scope of the reorganization in a separate release with comments that "operational efficiency" will guide the effort along with the flexibility to throw resources at candidates that progress well through the research pathway.

The cost impact was placed at ¥75 billion in implementation which should lead to cost savings of around ¥18 billion when finished over the 2017 financial year.

In a conference call with analysts, Plump added that Takeda will work with a so-far unnamed firm to corral capabilities and efforts across its partnerships in discovery that will run the gamut from lab work to clinical trials.

"So, we're providing capabilities to (potential partners) that allow for really end-to-end trial management, so capabilities that include medical functions like pharmacovigilance and regulatory," Plump said. "We will still keep those critical strategic individuals that will be our interface with regulatory agencies, but a lot of the activities that are done in both groups will be transitioned to the partner."

Plump added however that, for now, he could not detail the framework, whether with a CRO or other organization.

"We've chosen a partner. We can't provide today the name of the partner because they don't have a final agreement in place," he said.

"We chose the partner based on the fact that the partner had a value system and a respect for people that was very consistent with ours. It was also a partner that was willing to work with us to create a model that was fit for purpose for Takeda. And then, another key piece of this ultimately would be the potential to form a relationship in Japan as well since we'll be a truly global partnership."

The program, while likely leading to job cuts, is not expected to hit the bottom line, according to Deutsche Bank analyst Tim Race.

"Management announced a reorganization of the company’s R&D footprint, concentrating operations in two sites in the US and Japan while shutting down or de-emphasizing other overseas R&D centers," Race said.

"The impact to profitability will be minimal as the company plans to reinvest savings."

Race did note that in the quarter, Entyvio (vedolizumab) stood out, recording ¥32 billion of sales for a gain of 114% year-on-year.

- here's the release on R&D plans
- and the earnings release from Takeda

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