ラクオリア創薬（4579） – Summary of Consolidated Financial Results for the First Three Months of the Fiscal Year Ending December 31, 2022 (JGAAP)

Disclaimer: This translation is prepared and provided for readers’ convenience only. This summary does not constitute any guarantee, and the Company will not compensate any losses and/or damage stemming from actions taken based on these statements. In the case that there is any discrepancy between the Japanese and English versions, the Japanese version is assumed to be correct. May 13, 2022 Summary of Consolidated Financial Results for the First Three Months of the Fiscal Year Ending December 31, 2022 (JGAAP) Listed company’s name: RaQualia Pharma Inc. Listed on: Stock code: URL: Representative: Contact: Scheduled date of filing of quarterly securities report: May 13, 2022 Scheduled date of dividend payment: Supplementary documents for quarterly results: Quarterly results briefing: Tokyo Stock Exchange (TSE) 4579 https://www.raqualia.com/ Hirobumi Takeuchi, President and CEO Hidefumi Sugiyama, General Manager, Finance & Accounting Dept. ― Yes Yes (TEL) +81-52-446-6100 1. Consolidated financial results for the first three months of the fiscal year ending December 31, 2022 (January 1, 2022 to (Amounts are rounded down to the nearest million yen.) March 31, 2022) (1) Consolidated operating results (cumulative) (Percentage figures represent changes from the same period of the previous fiscal year.) Net sales Operating profit Ordinary profit Profit attributable to owners of parent million yen (120) 188 % – – First three months ended March 31, 2022 March 31, 2021 Note: Comprehensive income % (48.3) 430.7 million yen 339 655 Three months ended March 31, 2022: Three months ended March 31, 2021: million yen (119) 149 % – – % – – million yen (70) 268 (126) million yen 206 million yen [–%] [–%] First three months ended March 31, 2022 March 31, 2021 (2) Consolidated financial position Earnings per share (Basic) Earnings per share (Diluted) yen (5.77) 9.00 yen – 9.00 Total assets Net assets Equity ratio As of March 31, 2022 December 31, 2021 million yen 5,188 5,234 million yen 4,663 4,788 Reference: Equity As of March 31, 2022: 4,653 million yen 2. Dividends As of December 31, 2021: 4,777 million yen Fiscal year ended December 31, 2021 Fiscal year ending December 31, 2022 Fiscal year ending December 31, 2022 (forecast) First quarter-end Second quarter-end Third quarter-end yen yen yen Fiscal year-end Total yen yen Annual dividends per share – – – – – – – – Note: Revisions to the forecasts of dividends most recently announced: None % 89.7 91.3 – – 3. Forecasts of consolidated financial results for the fiscal year ending December 31, 2022 (January 1, 2022 to December 31, Net sales Operating profit Ordinary profit (Percentage figures represent year-on-year changes) Profit attributable to owners of parent Earnings per share (Basic) million yen % million yen % million yen % million yen % 2,605 (6.2) 420 (40.6) 420 (51.3) 342 (54.7) yen 16.34 Note: Revisions to the forecasts of results most recently announced: None * As the Company conducts performance management on an annualized basis, forecasts of results over a six-month period are 2022) Fiscal year ending December 31, 2022 omitted. * Notes (1) Changes in significant subsidiaries during the first three months ended March 31, 2022 (changes in specified subsidiaries resulting in the change in scope of consolidation): None (2) Application of special accounting for preparing quarterly consolidated financial statements: Yes Note: For more details, please refer to the section of “(4) Notes to quarterly consolidated financial statements (Application of special accounting for preparing quarterly consolidated financial statements)” of “2. Quarterly consolidated financial statements and significant notes thereto” on page 8 of the attached material. (3) Changes in accounting policies, changes in accounting estimates, and restatements of prior financial statements a. Changes in accounting policies due to the revisions to accounting standards and other regulations: Yes b. Changes in accounting policies due to other reasons: None c. Changes in accounting estimates: None d. Restatements of prior financial statements: None Note: For more details, please refer to the section of “(4) Notes to quarterly consolidated financial statements (Changes in accounting policies)” of “2. Quarterly consolidated financial statements and significant notes thereto” on page 8 of the attached material. (4) Number of issued shares (common shares) a. Total number of issued shares at the end of the period (including treasury shares) b. Total number of treasury shares at the end of the period As of March 31, 2022 As of December 31, 2021 As of March 31, 2022 As of December 31, 2021 For the first three months ended March 31, 2022 For the first three months ended March 31, 2021 c. Average number of outstanding shares during the period (cumulative from the beginning of the fiscal year) 20,959,642 shares 20,955,142 shares 50 shares 50 shares 20,956,714 shares 20,951,592 shares * Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation. * Appropriate use of financial forecasts and other special remarks (Caution concerning forward-looking statements) Forward-looking statements provided in this document, including financial forecasts, are based on the information currently available to the Company and certain assumptions considered reasonable. Such statements are included without any guarantee as to their future achievement. Actual results, etc. may differ materially from the forecasts depending on various factors. (Method of accessing supplementary documents for quarterly results and details of quarterly results briefing) The Company plans to hold a briefing for the first three months online on May 18, 2022. The Company plans to post the documents used at the briefing on its website promptly after the briefing is held. Contents of attachment 1. Qualitative information regarding settlement of accounts for the first three months …………………………………………… 2 (1) Qualitative information regarding consolidated operating results …………………………………………………………………. 2 (2) Qualitative information regarding consolidated financial position ………………………………………………………………… 3 (3) Qualitative information regarding consolidated earnings forecasts ……………………………………………………………….. 3 2. Quarterly consolidated financial statements and significant notes thereto …………………………………………………………. 4 (1) Consolidated balance sheet ……………………………………………………………………………………………………………………… 4 (2) Consolidated statement of income and consolidated statement of comprehensive income ……………………………….. 6 Consolidated statement of income (cumulative)…………………………………………………………………………………………. 6 Consolidated statement of comprehensive income (cumulative) ………………………………………………………………….. 6 (3) Consolidated statement of cash flows ……………………………………………………………………………………………………….. 7 (4) Notes to quarterly consolidated financial statements …………………………………………………………………………………… 8 Notes on premise of going concern ………………………………………………………………………………………………………….. 8 Notes on significant changes in the amount of shareholders’ equity ……………………………………………………………… 8 Application of special accounting for preparing quarterly consolidated financial statements ……………………………. 8 Changes in accounting policies ……………………………………………………………………………………………………………….. 8 Additional information …………………………………………………………………………………………………………………………… 8 Segment information, etc. ……………………………………………………………………………………………………………………….. 9 Significant subsequent event …………………………………………………………………………………………………………………… 9 – 1 – 1. Qualitative information regarding settlement of accounts for the first three months (1) Qualitative information regarding consolidated operating results 1) Financial results During the first three months of the fiscal year ending December 31, 2022, the outlook for the Japanese economy remained uncertain due to the impact of the outbreak of the Omicron strain of the novel coronavirus on service consumption and production activities in the manufacturing sector, as well as rising resource prices and market turmoil following the Russian invasion of Ukraine. In the pharmaceutical industry, the Ministry of Health, Labour and Welfare announced the NHI drug price revision for FY2022, with a revision rate of -1.35% on a medical cost basis and a revision equivalent to -6.69% on a drug cost basis for market prices. Such industry trends as these had no small impact on the business development activities of drug discovery startups, like the Group, that operate a drug discovery business. Under such conditions, the Group achieved the following financial results during the first three months. Regarding human drug products, sales of K-CAB® (generic name: tegoprazan)—a drug for gastro-esophageal reflux disease marketed by HK inno.N Corporation (South Korea, “HK inno.N (South Korea)”)—in South Korea performed well overall from last year through this year, with sales from external prescriptions recording an increase of 23% compared with the same period of the previous fiscal year. Furthermore, HK inno.N (South Korea) received manufacturing and marketing approval in South Korea for a new orally disintegrating tablet dosage form of tegoprazan. Regarding the global development of tegoprazan, in China, review proceeded smoothly in its manufacturing and marketing approval for the indication for erosive gastro-esophageal reflux disease, and HK inno.N (South Korea)’s Chinese licensee Shandong Luoxin Pharmaceutical Group Stock Co., Ltd. (China) received manufacturing and marketing approval from the Chinese authority in April 2022. In Malaysia, a drug product supply agreement was concluded between HK inno.N (South Korea) and Pharmaniaga Logistics Sdn Bhd (Malaysia). Furthermore, in Japan, where the Company is the rights holder, the Company decided to conduct a clinical pharmacology study (Phase I clinical trial) aimed at evaluating ethnic differences between Japanese and South Korean people for the purpose of utilizing data from South Korea for rapid and efficient development and approval. With regard to the schizophrenia drug ziprasidone, the Company and Meiji Seika Pharma Co., Ltd. have, by mutual consent in February 2022, terminated the license agreement concluded in March 2011 granting exclusive rights to develop and market the drug in Japan. With regard to pet drugs, sales trended upward for GALLIPRANT® (generic name: grapiprant), which is a drug for osteoarthritis in dogs, and ENTYCE® (generic name: capromorelin), which has an indication for anorexia management for dogs, both of which were licensed to Elanco Animal Health Inc. (U.S., “Elanco (U.S.)”). Furthermore, Elanco (U.S.) applied for manufacturing and marketing approval for capromorelin in Europe, following approval in the U.S., where it currently markets the drug under the brand name ELURA® as a drug for the management of weight loss in cats with chronic kidney disease. As a result, the Company received a lump-sum payment for achievement of this milestone. Other licensed programs are in the pre-clinical development stage or later at licensee companies. For programs in preparation for licensing, opportunities for face-to-face meetings continue to be limited due to COVID-19, but business development activities have steadily progressed while utilizing online conferencing and other tools. Also, pre-clinical trials for the ghrelin receptor agonist, developed in-house by the Company, are progressing smoothly. Accordingly, financial results for the first three months, the reporting period, were as follows. Business revenue for the period was 339 million yen (down 48.3% year on year), operating loss totaled 119 million yen (compared with operating profit of 149 million yen a year earlier), ordinary loss totaled 70 million yen (compared with ordinary profit of 268 million yen a year earlier), and loss attributable to owners of parent was 120 million yen (compared with profit attributable to owners of parent of 188 million yen a year earlier). Business revenue mainly consists of milestone income of 115 million yen (down 77.7% year on year) and sales royalty income of 184 million yen (up 36.4% year on year). On the other hand, total business expenses were 459 million yen (down 9.4% year on year). This total mainly consists of cost of business revenue (53 million yen, a 28.1% increase from the same period of the previous fiscal year), research and development expenses (263 million yen, a 3.0% increase from the same period of the previous fiscal year) and other selling, general and administrative expenses (142 million yen, a 32.0% decrease from the same period of the previous fiscal year). 2) Research and development Research and development expenses of the entire Group during the first three months were 263 million yen. For the first three months, there were no material changes to the research and development activities. – 2 – (2) Qualitative information regarding consolidated financial position 1) Analysis of assets, liabilities and net assets Assets Total assets as of March 31, 2022 were 5,188 million yen, a decrease of 46 million yen (down 0.9%) from the end of the previous fiscal year. This is mainly attributable to an increase in cash and deposits of 168 million yen, a decrease in accounts receivable – trade and contract assets of 857 million yen, an increase in prepaid expenses of 191 million yen, an increase in lease assets of 189 million yen, and an increase in investment securities of 292 million yen. Liabilities Total liabilities as of March 31, 2022 were 524 million yen, an increase of 78 million yen (up 17.6%) from the end of the previous fiscal year. This is mainly attributable to an increase in lease obligations of 210 million yen, a decrease in accounts payable – other of 24 million yen, a decrease in income taxes payable of 73 million yen, and a decrease in accrued consumption taxes of 37 million yen. Net assets Net assets as of March 31, 2022 were 4,663 million yen, a decrease of 124 million yen (down 2.6%) from the end of the previous fiscal year. This is mainly attributable to the recording of loss attributable to owners of parent of 120 million yen and a decrease in valuation difference on available-for-sale securities of 5 million yen. Consequently, the equity ratio was 89.7% (down 1.6 percentage points from the end of the previous fiscal year). 2) Analysis of cash flows The balance of cash and cash equivalents (“net cash”) as of March 31, 2022 amounted to 2,404 million yen (compared with 2,041 million yen a year earlier), an increase of 163 million yen (up 7.3%) from the end of the previous fiscal year. The respective cash flows in the first three months and the factors thereof are as follows. Cash flows from operating activities Net cash provided by operating activities was 372 million yen (up 609.7% year on year). This is mainly attributable to the recording of loss before income taxes of 85 million yen, a cash inflow from a decrease in trade receivables of 857 million yen, a cash outflow from an increase in prepaid expenses of 184 million yen, and income taxes paid of 90 million yen. Cash flows from investing activities Net cash used in investing activities was 244 million yen (up 58.2% year on year). This is mainly attributable to purchase of investment securities of 301 million yen and proceeds from redemption of investment securities of 56 million yen. Cash flows from financing activities Net cash used in financing activities was 4 million yen (compared with net cash of 6 million yen provided a year earlier). This is mainly attributable to proceeds from issuance of shares as a result of exercise of share acquisition rights of 2 million yen and repayments of lease obligations of 6 million yen. (3) Qualitative information regarding consolidated earnings forecasts At the present time, there are no changes to the full-year consolidated earnings forecasts for the fiscal year ending December 31, 2022 presented in “Summary of Consolidated Financial Results for the Fiscal Year Ended December 31, 2021 (JGAAP)” published on February 14, 2022. – 3 – 2. Quarterly consolidated financial statements and significant notes thereto (1) Consolidated balance sheet As of December 31, 2021 As of March 31, 2022 (Thousands of yen)Assets Current assets Cash and deposits Accounts receivable – trade Accounts receivable – trade, and contract assets Securities Supplies Advance payments to suppliers Prepaid expenses Other Total current assets Non-current assets Property, plant and equipment Buildings, net Tools, furniture and fixtures, net Leased assets, net Total property, plant and equipment Intangible assets Trademark right Software Other Total intangible assets Investments and other assets Investment securities Other Total investments and other assets Total non-current assets Total assets 2,345,306 1,205,401 – 313,807 10,547 15,939 90,382 22,390 4,003,775 70,479 180,500 48,409 299,389 3,839 29,227 731 33,799 887,932 9,300 897,233 1,230,422 5,234,197 2,513,536 – 347,738 260,807 9,578 19,911 281,690 60,286 3,493,549 68,520 166,737 238,355 473,613 3,648 26,916 731 31,296 1,180,539 9,083 1,189,622 1,694,533 5,188,082 – 4 – As of December 31, 2021 As of March 31, 2022 (Thousands of yen)Liabilities Current liabilities Accounts payable – trade Lease obligations Accounts payable – other Accrued expenses Income taxes payable Accrued consumption taxes Deposits received Other Total current liabilities Non-current liabilities Lease obligations Asset retirement obligations Deferred tax liabilities Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Total accumulated other comprehensive income Share acquisition rights Total net assets Total liabilities and net assets 45,996 21,547 112,768 63,004 80,405 37,475 28,884 10,442 400,524 17,520 12,129 16,018 – 45,668 446,193 2,256,920 2,446,703 49,631 (21) 4,753,234 23,919 23,919 10,850 4,788,004 5,234,197 58,366 49,955 87,839 48,688 6,538 – 6,260 23,880 281,531 199,594 12,153 14,231 17,053 243,032 524,564 2,258,745 2,448,528 (71,272) (21) 4,635,980 17,985 17,985 9,552 4,663,518 5,188,082 – 5 – (2) Consolidated statement of income and consolidated statement of comprehensive income Consolidated statement of income (cumulative) First three months ended March 31, 2021 First three months ended March 31, 2022 (Thousands of yen) Business revenue Business expenses Cost of business revenue Research and development expenses Other selling, general and administrative expenses Total business expenses Operating profit (loss) Non-operating income Interest income Interest on securities Foreign exchange gains Subsidy income Other Total non-operating income Non-operating expenses Interest expenses Loss on valuation of compound financial instruments Share issuance costs Loss on valuation of derivatives Other Total non-operating expenses Ordinary profit (loss) Extraordinary income Gain on sale of investment securities Gain on redemption of investment securities Total extraordinary income Extraordinary losses Retirement benefits for directors (and other officers) Total extraordinary losses Profit (loss) before income taxes Income taxes Profit (loss) Profit attributable to non-controlling interests Profit (loss) attributable to owners of parent Profit (loss) Other comprehensive income Valuation difference on available-for-sale securities Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controllinginterests – 6 – 655,610 41,529 255,977 209,059 506,566 149,043 359 5,319 111,683 1,972 2,404 121,738 398 2,040 – – – 2,438 268,343 3,382 – 3,382 – – 271,726 83,148 188,578 – 188,578 188,578 18,388 18,388 206,967 206,967 – 339,273 53,218 263,751 142,153 459,122 (119,849) 209 5,117 62,148 – 6 67,482 704 3,000 76 13,438 583 17,803 (70,170) – 2,739 2,739 17,800 17,800 (85,231) 35,671 (120,902) – (120,902) (120,902) (5,934) (5,934) (126,836) (126,836) – Consolidated statement of comprehensive income (cumulative) First three months ended March 31, 2021 First three months ended March 31, 2022 (Thousands of yen) (3) Consolidated statement of cash flows First three months ended March 31, 2021 First three months ended March 31, 2022 (Thousands of yen)Cash flows from operating activities Profit (loss) before income taxes Depreciation Interest income Interest income on securities Interest expenses Foreign exchange losses (gains) Loss (gain) on valuation of compound financialinstruments Subsidy income Loss (gain) on valuation of derivatives Share issuance costs Loss (gain) on sale of investment securities Loss (gain) on redemption of investment securities Retirement benefits for directors (and other officers) Decrease (increase) in trade receivables Decrease (increase) in inventories Increase (decrease) in trade payables Decrease (increase) in advance payments to suppliers Decrease (increase) in prepaid expenses Decrease (increase) in consumption receivable Increase (decrease) in accrued consumption taxes Increase (decrease) in accounts payable – other Increase (decrease) in accrued expenses Increase (decrease) in income taxes payable – factorbased tax Increase (decrease) in deposits received Other, net Subtotal Interest and dividends received Interest paid Income taxes paid Subsidies received Other, net Net cash provided by (used in) operating activities taxes refundCash flows from investing activities Payments into time deposits Purchase of property, plant and equipment Purchase of intangible assets Purchase of investment securities Proceeds from sale of investment securities Proceeds from redemption of investment securities Net cash provided by (used in) investing activities Cash flows from financing activities Proceeds from short-term borrowings Proceeds from issuance of shares resulting from exerciseof share acquisition rights Repayments of lease obligations Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period – 7 – 271,726 32,324 (359) (5,319) 398 (89,487) 2,040 (1,972) – – (3,382) – – (99,434) (9,415) 3,116 (6,488) (199,431) 74,146 21,387 94,680 748 (5,787) 5,068 10,428 94,987 4,653 (398) (48,698) 1,972 – 52,516 (207,380) (53,557) (4,757) – 110,923 – (154,771) 10,000 – (3,068) 6,931 75,425 (19,898) 2,061,316 2,041,418 (85,231) 31,835 (209) (5,117) 704 (47,193) 3,000 – 13,438 76 – (2,739) 17,800 857,662 969 12,370 (3,972) (184,891) (15,802) (37,475) (49,563) (14,315) (19,628) (22,623) 17,756 466,850 3,988 (704) (90,444) – (7,000) 372,689 – – – (301,856) – 56,940 (244,916) – 2,275 (6,385) (4,110) 39,802 163,465 2,240,661 2,404,126 (4) Notes to quarterly consolidated financial statements Notes on premise of going concern No items to report. Notes on significant changes in the amount of shareholders’ equity No items to report. Application of special accounting for preparing quarterly consolidated financial statements (Calculation of tax expenses) Tax expenses are calculated by multiplying the profit before income taxes by the reasonably estimated effective tax rates after the application of tax effect accounting to the profit before income taxes for the fiscal year including the quarter under review. However, in cases where calculations using said estimated effective tax rate yield a result that is notably lacking rationality, tax expenses are calculated by multiplying profit (loss) before income taxes by the statutory effective tax rate, taking into consideration the recoverability of deferred tax assets. Income taxes is the amount inclusive of income taxes – deferred. Changes in accounting policies (Application of accounting standard for revenue recognition, etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the beginning of the first quarter of the current fiscal year, and it has recognized revenue at the time the control of promised goods or services is transferred to the customer at the amount expected to be received upon exchange of said goods or services. The Group earns revenues (upfront payments, milestone-related revenues, royalty income, etc.) from licensing agreements that allow third parties to research, develop, manufacture and sell pharmaceuticals and other products and to use their technologies. With regard to upfront payments and milestone-related revenues, when performance obligations are satisfied at a point in time, contractual performance obligations are deemed to be satisfied at the time when development, marketing, and other rights are granted, or at the time when the contractually stipulated milestone is achieved. These revenues are recognized as business revenue at the point when contractual performance obligations are deemed to be satisfied. Royalty income is consideration based on license agreements, etc., calculated based on the sales revenue of the contract partner, etc. This income is recognized as business revenue with consideration to the point in time at which it is incurred. The application of the Accounting Standard for Revenue Recognition and its guidance is subject to the transitional treatment provided in the proviso to paragraph 84 of the Accounting Standard for Revenue Recognition. The cumulative effect of the retrospective application assuming the new accounting policy had been applied to periods prior to the start of the first quarter ended March 31, 2022, was added to or subtracted from the opening balance of retained earnings of the first quarter ended March 31, 2022, and thus the new accounting policy is applied from such opening balance; provided, however, that the new accounting policy is not retrospectively applied to contracts where recognitions of nearly all the revenue amounts for periods prior to the start of the first quarter ended March 31, 2022, are subject to the previous treatment by applying the method provided for in paragraph 86 of the Accounting Standard for Revenue Recognition. Furthermore, by applying the method set forth in item (1) of the supplementary provisions of paragraph 86 of the Accounting Standard for Revenue Recognition, modifications to contracts carried out prior to the beginning of the first quarter of the current fiscal year were accounted for based on the contractual terms after all contract modifications were reflected. Consequently, this cumulative effect was added to or deducted from the opening balance of retained earnings of the first quarter of the current fiscal year. As a result, there was no effect on the quarterly consolidated financial statements for the first quarter of the current fiscal year. In addition, there was no effect on the opening balance of retained earnings. In accordance with the transitional treatment provided for in paragraph 89-2 of the Accounting Standard for Revenue Recognition, figures for the previous fiscal year have not been restated in accordance with the new approach to presentation. Furthermore, the information on disaggregation of revenue from contracts with customers during the first three months of the previous fiscal year has not been disclosed as allowed by the transitional treatment provided for in paragraph 28-15 of the Accounting Standard for Quarterly Financial Reporting (ASBJ Statement No. 12, March 31, 2020). (Application of accounting standard for fair value measurement, etc.) The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) and relevant ASBJ regulations from the beginning of the first quarter of the fiscal year under review, and it has applied the new accounting policy provided for by the Accounting Standard for Fair Value Measurement, etc. prospectively in accordance with the transitional measures provided for in paragraph 19 of the Accounting Standard For Fair Value Measurement, and paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). Note that there was no effect on the quarterly consolidated financial statements. Additional information (Application of tax effect accounting for transition from consolidated taxation system to group tax sharing system) As for items regarding the transition to the group tax sharing system introduced in the “Act Partially Amending the Income Tax Act” (Act No. 8 of 2020) and items revised on non-consolidated taxation system in connection with the transition to the group tax sharing system, the Company and its consolidated subsidiaries have not applied the provisions of paragraph 44 of the “Guidance on Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan (ASBJ) Guidance No. 28, February 16, 2018) as allowed by the provisions of paragraph 3 of the “Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, March 31, 2020). Accordingly, – 8 – amounts of deferred tax assets and deferred tax liabilities are determined in accordance with the provisions of the tax law before revision. (Accounting estimates amid the spread of COVID-19) The Group has determined the accounting estimates for impairment accounting of non-current assets, etc. based on information available when preparing the consolidated financial statements. The effects of the spread of COVID-19 on the Group are limited at the present time and the Group has determined that there will not be a significant impact on the estimates for the fiscal year under review. Segment information, etc. [Segment information] I. For the first three months ended March 31, 2021 (January 1, 2021 to March 31, 2021) This information is omitted because the Group consists of a single business segment dealing with research and development of pharmaceutical and related businesses. II. For the first three months ended March 31, 2022 (January 1, 2022 to March 31, 2022) This information is omitted because the Group consists of a single business segment dealing with research and development of pharmaceutical and related businesses. Significant subsequent event No items to report. – 9 –