ＪＣＲファーマ（4552） – [Delayed] Financial Results for the Year ended March 31, 2022 (FY2021) (Japanese standard)

Translation – Original Text in Japanese JCR Pharmaceuticals Co., Ltd. (4552) Financial Summary Consolidated Financial Results for the Year ended March 31, 2022 (FY2021) (Japanese standard) May 12, 2022 4552 Listed company name: JCR Pharmaceuticals Co., Ltd. Listed stock exchange: Tokyo Stock Exchange Code number: Representative: Person in charge of inquires: Scheduled date to hold the ordinary general meeting of shareholders: June 22, 2022 Scheduled date to commence dividend payments: June 23, 2022 Scheduled date to file the Securities Report: June 22, 2022 Explanatory material for business results: Available IR Conference: To be held (for institutional investors and analysts) URL: https://www.jcrpharm.co.jp/ (Title) Representative Director, Chairman and President (Name) Shin Ashida (Title) Corporate Officer, Executive Director, Administration Division (Name) Yutaka Honda TEL: 0797(32)1995 1. Consolidated Financial Results for FY2021 (April 1, 2021 to March 31, 2022) (1) Consolidated Operating Results (Cumulative) (Percentage shows year-on-year changes.) Net sales Operating income Ordinary income (Fractions smaller than one million yen omitted) Profit attributable to owners of parent million yen 14,507 6,892 % 110.5 157.4 Year ended March 31, 2022 March 31, 2021 % 69.8 21.4 (Reference) Comprehensive income: Year ended March 31, 2022: 14,514 million yen (112.2%) Year ended March 31, 2021: 6,841 million yen (173.1%) million yen 20,512 8,488 million yen 51,082 30,085 million yen 19,933 8,269 % 141.1 154.9 % 141.6 157.7 Earnings per share (basic) Earnings per share (diluted) Return on equity Ordinary profit to total assets Operating income to Net sales Year ended March 31, 2022 March 31, 2021 yen 117.26 55.81 yen 116.80 55.53 % 32.9 19.8 % 24.0 14.0 % 39.0 27.5 (Reference) Gains/(losses) on equity method investments: (Note) For the year ended March 31, 2022 — million yen For the year ended March 31, 2021 — million yen We conducted a 4-for-1 stock split on October 1, 2020. Calculations of “Earnings per share (basic)” and “”Earnings per share (diluted)” are based on the assumption that the stock split was implemented at the beginning of the previous fiscal year. (2) Consolidated Financial Conditions Year ended March 31, 2022 March 31, 2021 (Reference) million yen million yen 51,089 97,134 38,557 73,784 Shareholders’ equity: As of March 31, 2022: 50,316 million yen As of March 31, 2021: 37,864 million yen (3) Consolidated Cash Flows Total assets Net assets Equity ratio Net asset per share % 51.8 51.3 yen 406.57 306.31 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of period million yen (3,250) (3,290) million yen (2,179) 8,304 million yen 30,733 26,260 Year ended March 31, 2022 March 31, 2021 million yen 9,289 10,341 Translation – Original Text in Japanese 2. Dividends JCR Pharmaceuticals Co., Ltd. (4552) Dividends per share 1st quarter-end 2nd quarter-end 3rd quarter-end Year-end Total Dividend pay-out ratio (consolidated) Dividends on net assets (consolidated) FY2020 FY2021 FY2022 (Forecast) yen — — — yen 18.00 10.00 10.00 yen — — — yen 7.50 yen — 12.00 22.00 10.00 20.00 % 21.5 18.8 24.0 % 4.3 6.2 (Notes) 1. We conducted a 4-for-1 stock split on October 1, 2020. The presented year-end dividend per share for the fiscal year ended March 31, 2021 reflects the impact of this stock split, and the annual dividend is presented as “–“.If the stock split is assumed to have been implemented at the beginning of the previous fiscal year, the 2nd quarter-end dividend per share for the fiscal year ended March 31, 2021 would be 4.50 yen and the annual dividend per share would be 12.00 yen. 2. Breakdown of the year-end dividend for the fiscal year ended March 31, 2021 Total annual dividends (total) million yen 1,487 2,730 3. Breakdown of the year-end dividend for the fiscal year ended March 31, 2022 Ordinary dividend: 7.00 yen Commemorative dividend: 0.50 yen Ordinary dividend: 10.00 yen Special dividend: 2.00 yen 3. Consolidated Forecasts for the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March 31, 2023) (Percentage figures for the fiscal year represent the changes from the previous year.) Net sales Operating income Ordinary income Profit attributable to owners of the parent Earnings per per share % million yen Year ending March 31, 2023 *Note (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in consolidation % million yen million yen million yen 45,000 14,500 14,500 10,300 (29.3) (27.3) (11.9) (29.0) % % yen 83.25 scope): None (2) Changes and revisions/restatements in accounting principles and accounting estimates 1. Changes associated with changes in accounting standards 2. Changes in accounting principles other than 1. 3. Changes in accounting estimates 4. Revisions/restatements : Yes : None : None : None (Note) For details, please refer to “3. Quarterly consolidated financial statements and important notes, (5) Notes to Consolidated Financial Statements, (Changes in accounting policy)” on page 13 of the attached material. (3) Number of shares outstanding (common stocks) 1. Number of shares outstanding at the end of the period (including treasury stock) 2. Number of shares treasury stock at the end of the period 3. Average number of shares outstanding during the period As of March 31, 2022 129,686,308 shares As of March 31, 2021 129,686,308 shares As of March 31, 2022 5,929,344 shares As of March 31, 2021 6,071,644 shares As of March 31, 2022 123,720,398 shares As of March 31, 2021 123,517,401 shares (Note) We conducted a 4-for-1 stock split on October 1, 2020. Calculation for “Average number of shares during the period” is based on the assumption that the stock split was implemented at the beginning of the previous fiscal year. (Reference) Summary of Individual Business Results 1. Individual Business Results for FY2021 (From April 1, 2021 to March 31, 2022) (1) Individual Business Results Net sales million yen 51,081 30,085 % 69.8 21.7 Operating income Ordinary income (% figures represent annual changes over the preceding year) Net income for the year million yen 14,446 7,081 million yen 20,425 8,594 % 137.7 157.1 % 133.0 162.8 % 104.0 158.3 million yen 20,137 8,641 Year ended March 31, 2022 March 31, 2021 Year ended March 31, 2022 March 31, 2021 Earnings per share (basic) Earnings per share (diluted) Yen 116.77 57.33 Yen 116.31 57.05 (Note) We conducted a 4-for-1 stock split on October 1, 2020. Calculations of “Earnings per share (basic)” and “Earnings per share (diluted)” are based on the assumption that the stock split was implemented at the beginning of the previous fiscal year. Translation – Original Text in Japanese (2) Individual Financial Conditions Year ended million yen million yen March 31, 2022 March 31, 2021 50,939 97,033 38,546 73,727 Shareholders’ equity; As of March 31, 2022: 50,371 million yen As of March 31, 2021: 38,028 million yen (Reference) Total assets Net assets Equity ratio Net asset per share JCR Pharmaceuticals Co., Ltd. (4552) % 51.9 51.6 yen 407.02 307.64 * There annual financial results are not subject to audits by certified public accounts and audit firms. * Explanations and other special notes concerning the appropriate use of business performance forecasts The forward-looking statements such as a result forecasts in this document are based on the information available to the Company at the time of the announcement and on certain assumptions considered reasonable, which are inherently speculative, and actual results may differ materially from the forecast depending on various factors. As for notes, etc. of the conditions as a prerequisite and the appropriated use for business performance forecasts, please refer to page 2 of the Attached Material, “Overview on Financial Results.” Translation – Original Text in Japanese Table of Contents for Attached Material JCR Pharmaceuticals Co., Ltd. (4552) 1. Overview of Financial Results, Etc. ……………………………………………………………………………………………………………….. 2 (1) Overview of Financial Results ……………………………………………………………………………………………………………….. 2 (2) Overview of Financial Conditions ………………………………………………………………………………………………………….. 4 (3) Basic Policy on the Distribution of Profits/Dividends for FY2021 and FY2022 ……………………………………………. 5 2. Basic Concept Regarding Selection of Accounting Standard……………………………………………………………………………… 5 3. Consolidated Financial Statements…………………………………………………………………………………………………………………. 6 (1) Consolidated Balance Sheets …………………………………………………………………………………………………………………. 6 (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income Consolidated Statements of Income ………………………………………………………………………………………………………… 8 Consolidated Statements of Comprehensive Income …………………………………………………………………………………. 9 ………………………………………………………………………………………………………………………………………………………….. 9 (3) Consolidated Statements of Changes in Net Assets FY2020 (From April 1, 2020 to March 31, 2021) …………… 10 (4) Consolidated Statements of Cash Flows ………………………………………………………………………………………………… 12 (5) Notes to Consolidated Financial Statements …………………………………………………………………………………………… 13 (Notes on premises as a going concern) …………………………………………………………………………………………………. 13 (Changes in accounting policy) ……………………………………………………………………………………………………………. 13 (Application of Accounting Standard for Fair Value Measurement, etc.) …………………………………………………… 13 (Concerning consolidated statements of income) ……………………………………………………………………………………. 13 (Segment information) ………………………………………………………………………………………………………………………… 13 (Per share information) ……………………………………………………………………………………………………………………….. 14 (Important Subsequent Events) …………………………………………………………………………………………………………….. 14 4. Other ………………………………………………………………………………………………………………………………………………………… 15 R&D Pipeline ……………………………………………………………………………………………………………………………………………. 15 – 1 – Translation – Original Text in Japanese 1. Overview of Financial Results, Etc. (1) Overview of Financial Results [1] Financial results for the year JCR Pharmaceuticals Co., Ltd. (4552) Net sales amounted to 51,082 million yen (up 69.8% year on year). Sales volume for our recombinant human growth hormone product GROWJECT® increased, but sales were affected by the NHI price revision in April 2021. Total net sales of our mainstay products increased year on year, although sales of treatment for renal anemia decreased significantly as a result of similar NHI price revisions, there was a substantial contribution from IZCARGO® for I.V. infusion 10mg, which was placed on the NHI reimbursement price list in May 2021. The sharp increase in net sales also reflected a year on year rise in income from contractual payments and domestic production of bulk solution for its COVID-19 vaccine of AstraZeneca K.K. On the profit front, gross profit increased (up 82.4% year on year) on the back of higher sales revenues, while SG&A expenses also rose 47.7%. As a result, operating income increased 141.1% year on year to 19,933 million yen, ordinary income increased 141.6% year on year to 20,512 million yen, and profit attributable to owners of the parent increased 110.5% year on year to 14,507 million yen; all new record highs. As a result of proactive R&D activities and development activities in line with progress on clinical trials, R&D expenses totaled 7,175 million yen (up 1,815 million yen, or 33.9%, year on year). In September 2021, JCR and Takeda Pharmaceutical Company Limited concluded an agreement to promote collaboration and commercialization of JR-141 in specific regions. JR-141 is a next-generation therapy for Hunter syndrome. With this agreement, the JCR Group has taken a further step toward becoming a global specialty pharma in the rare disease arena. Previous Consolidated Fiscal Year (From April 1, 2020 to March 31, 2021) Current Consolidated Fiscal Year (From April 1, 2021 to March 31, 2022) Increase-decrease rate Amount (millions of yen) Amount (millions of yen) % Previous Consolidated Fiscal Year (From April 1, 2020 to March 31, 2021) Current Consolidated Fiscal Year (From April 1, 2021 to March 31, 2022) Increase-decrease ratio Amount (millions of yen) Amount (millions of yen) % Net sales Operating income Ordinary income Profit attributable to owners of the parent [2] Main components of sales Name of business segment Human growth hormone product GROWJECT® Treatment for mucopolysaccharidosis type II IZCARGO® for I.V. Infusion Treatment for renal anemia Epoetin Alfa BS Inj. [JCR] Darbepoetin Alfa BS Inj. [JCR] Regenerative medical products TEMCELL® HS Inj. Treatment for Fabry disease Agalsidase Beta BS I.V. Infusion [JCR] Income from contractual payment AZD1222 stock solution 51,082 19,933 20,512 14,507 69.8 141.1 141.6 110.5 12,945 3,003 5,875 2,876 2,998 3,497 711 10,571 14,375 (2.3) － (17.1) (12.2) (21.3) 43.2 51.3 65.0 3,458.3 Note: Income from contractual payments is derived from the conclusion of agreements concerning joint development and commercialization. 30,085 8,269 8,488 6,892 13,256 － 7,087 3,278 3,809 2,441 470 6,406 404 – 2 – Translation – Original Text in Japanese [3] The Status of R&D JCR Pharmaceuticals Co., Ltd. (4552) [Treatments for lysosomal storage disorders] • Currently, we are focused on research and development of new drugs that employ our unique blood-brain barrier (BBB) technology, J-Brain Cargo®, as treatments for over 17 types of lysosomal storage disorders. • Pabinafusp alfa (development code: JR-141/ IZCARGO® for I.V. infusion 10mg), our BBB-penetrating product for the treatment of patients with Hunter syndrome launched in Japan in May 2021. Furthermore, we filed for marketing approval of JR-141 in Brazil with the Brazilian Health Regulatory Agency (ANVISA) in December 2020. In other regions, JR-141 received Fast Track (*1) designation from the U.S. Food and Drug Administration (FDA) in February 2021, and PRIME (*2) designation from the European Medicines Agency (EMA) in October 2021. Moreover, in February 2022, the first patient was dosed in a global Phase III clinical trial of JR-141. • For our BBB-penetrating product candidate for the treatment of patients with mucopolysaccharidosis type I (MPS I) (development code: JR-171), we are currently conducting a Phase I/II clinical trial in Japan, Brazil, and the U.S., and completed scheduled patient enrollment in March 2022. JR-171 received orphan drug designation from the FDA in February 2021 and from the European Commission (EC) in March 2021. Additionally, JR-171 received Fast Track designation from the FDA in September 2021.This designation is expected to expedite clinical development in the U.S. and to enable priority review and accelerated approval. • A treatment enzyme formulation for mucopolysaccharidosis III-A (Sanfilippo syndrome type A) (development code: JR-441) was granted orphan drug status by the European Commission (EC) in January 2022, enabling receipt of various incentives to promote development within the European Union (EU). Efforts are currently moving ahead toward starting a global clinical trial in the first half of 2023. • We have also been successively conducting R&D into other treatments for lysosomal storage disorders that employ J-Brain Cargo®, including a treatment for Pompe disease (development code: JR-162), a treatment for Sly syndrome (development code: JR-443), and a treatment for Sanfilippo syndrome type B (JR-446). We will also develop each of these treatments globally. In March 2022, we resolved to embark on development of a GM2 gangliosidosis treatment (development code: JR-479). • Furthermore, as noted above, in March 2022 we signed a joint research and development agreement with Takeda Pharmaceutical Company Limited, concerning application of our J-Brain Cargo® technology in the treatment of several types of lysosomal storage disorders. This marks the first step toward demonstrating that our J-Brain Cargo® technology can be applied to various modalities. [Regenerative medicine products] • We are conducting a Phase I/II clinical trial of TEMCELL® HS Inj. for the additional indication of neonatal hypoxic ischemic encephalopathy (HIE) (development code: JR-031HIE). • In April 2022, we reached an agreement with Teijin Ltd. to terminate our contract to co-develop an allogeneic regenerative medical product using dental pulp stem cells (DPCs) for the indication of acute cerebral infarction (development code: JTR-161/JR-161). [Human growth hormone product] • We are conducting a Phase III clinical trial for an additional indication for GROWJECT® in patients with short stature homeobox-containing gene SHOX deficiency (development code: JR-401X). • We also initiated a Phase II clinical trial of a recombinant long-acting growth hormone (development code: JR-142). *1 FDA Fast Track Designation The FDA Fast Track is a process designed to facilitate the development, and expedite the review of drugs to treat serious conditions and fill an unmet medical need. The purpose is to enable early delivery of important new drugs to the patients. A drug that receives Fast Track designation may be allowed more frequent meetings with the FDA to discuss the drug’s development plan, followed by priority review and an accelerated approval when relevant criteria are met. 2 EMA PRIME (PRIority MEdicines) Designation PRIME is a scheme launched by the European Medicines Agency (EMA) to enhance support for the development of medicines that target an unmet medical need. Through PRIME, EMA offers early and proactive support to medicine developers to enable accelerated assessment of medicines applications and may grant eligibility for accelerated assessment. [4] Forecast for the next term Forecast for the next consolidated financial results are as follows. Current year actuals (Year ended March 2022) Forecast for the next year (Year ended March 2023) Increase or decrease Increase-decrease rate Net sales (millions of yen) Operating income (millions of yen) Ordinary income (millions of yen) Profit attributable to owners of the parent (millions of yen) 51,082 19,933 20,512 14,507 45,000 14,500 14,500 10,300 (6,082) (5,433) (6,012) (4,207) (11.9) % (27.3) % (29.3) % (29.0 )% – 3 – Translation – Original Text in Japanese JCR Pharmaceuticals Co., Ltd. (4552) (Net sales) We anticipate an increase in sales through steady growth of sales volume of IZCARGO® for Hunter syndrome, and will continue to engage proactively in licensing operations. Although we forecast a 11.9% decrease in sales year on year to 45,000 million yen for the Group overall due to the completion of the contract to manufacture AstraZeneca K.K.’s COVID-19 vaccine solution in Japan, we project continued growth in sales of core products including GROWJECT® in the current fiscal year. (Profit) Over the next several years, we project active investment in R&D activities, which we regard as a critical element in further advancing our business. In addition to an increase in R&D expenses, we also forecast a decrease in sales following completion of the contract with AstraZeneca K.K. to carry out domestic production of the COVID-19 vaccine bulk solution, and an associated fall in gross profit. We accordingly anticipate operating income of 14,500 million yen (down 27.3% year on year), ordinary income of 14,500 million yen (down 29.3% year on year), and profit attributable to owners of parent of 10,300 million yen (down 29.0% year on year). (2) Overview of Financial Conditions [1] Status of assets, liabilities and net assets [2] Status of cash flows As of March 31, 2022, total assets amounted to 97,134 million yen (an increase of 23,349 million yen from March 31, 2021), total liabilities were 46,045 million yen (an increase of 10,817 million yen from March 31, 2021), and net assets were 51,089 million yen (an increase of 12,531 million yen from March 31, 2021). Current assets increased by 13,642 million yen from March 31, 2021 to 62,188 million yen, mainly due to increases in cash and deposits and notes and accounts receivable – trade, and contract assets. Non-current assets increased by 9,707 million yen from March 31, 2021 to 34,946 million yen, mainly due to an increase in property, plant and equipment. Current liabilities increased by 13,025 million yen from March 31, 2021 to 42,054 million yen, mainly reflecting an increase in income taxes payable and special suspense account for tax purpose reduction entry. Non-current liabilities decreased by 2,208 million yen from March 31, 2021 to 3,990 million yen, mainly due to a decrease in long-term borrowings. Net assets increased by 12,531 million yen from March 31, 2021 to 51,089 million yen, mainly due to recording profit attributable to owners of the parent, despite the payment of dividends. As a result, the equity ratio as of March 31, 2022 increased 0.5 percentage points compared with March 31, 2021 to 51.8%. At this point in time, the JCR Group has not felt the impact of the COVID-19 pandemic. However, the global outlook remains uncertain. In order to achieve sustainable global growth, we need to secure a flexible and stable source of funds. In the fiscal year under review, we concluded commitment line agreements with our financial institutions for a total of 15.5 billion yen for the purpose of securing operating funds as a backup plan. Cash and cash equivalents at the end of the current consolidated fiscal year was up by 4,472 million yen from the end of the previous consolidated fiscal year to 30,733 million yen. Status of each cash flows and major reasons are as stated below. (Cash flows from operating activities) Net cash provided by operating activities in FY2021 was 9,289 million yen (a decrease of 1,052 million yen compared with the previous fiscal year). The main factors were recording of profit before income taxes of 19,404 million yen, which was partly offset by an increase of 7,402 million yen of notes and accounts receivable – trade and 2,517 million yen of income taxes paid. (Cash flows from investing activities) Net cash used in investing activities was 3,250 million yen (decrease of 40 million yen in net cash used in the previous fiscal year). The main use of cash was 11,333 million yen for the purchase of property, plant and equipment, which was partly offset by subsidies received of 8,167 million yen. (Cash flows from financing activities) Net cash used in financing activities was 2,179 million yen (an increase of 10,483 million yen in net cash used compared with the previous fiscal year). This was mainly attributable to 2,169 million yen in dividends paid. (Reference) Changes in indicators related to cash flows Year ended March 2018 Year ended March 2019 Year ended March 2020 Year ended March 2021 Year ended March 2022 Equity ratio Market base equity ratio Ratio of cash flow and interest-bearing debts 70.3% 486.2% 71.1% 472.3% 66.6% 607.9% 51.3% 600.6% 51.8% 287.6% 1.9 years 1.5 years 1.8 years 1.8 years 2.0 years Interest coverage ratio 113.0 times 182.4 times 219.0 times 223.7 times 202.9 times (Note) Equity ratio means equity / total assets Market base equity ratio means total market value of shares / total assets Ratio of cash flow and interest-bearing debts means interest-bearing debts / cash flow Interest coverage ratio means cash flow / interest payment * Calculations were based on consolidated financial figures. * Total market value of shares was calculated based on the number of outstanding shares at the end of the fiscal year after deduction of * Cash flow here is the cash flow from operations of consolidated cash flow statement. Interest-bearing debts are all the debts listed on the balance sheet for which interest has been paid. Interest payment is the amount of interest paid as indicated in the cash flow statement. treasury stock. – 4 – Translation – Original Text in Japanese JCR Pharmaceuticals Co., Ltd. (4552) (3) Basic Policy on the Distribution of Profits/Dividends for FY2021 and FY2022 JCR regards the distribution of its profits to shareholders as an important management policy. The basic policy of JCR in regard to the declaration of dividends of earned surplus, etc., is to provide continuous and stable dividends by taking into account of factors such as business performance and cash flow while securing sufficient internal reserves for the development of new drug products and the strengthening of financial status that will be the source of future profits. Since JCR achieved new record high operating results in the fiscal year under review, in accordance with the above basic policy, for the year-end dividend for the fiscal year under review, the Board of Directors resolved at its meeting on May 12, 2022 to pay a dividend of 12 yen per share (including a special dividend of 2 yen per share). JCR conducted a 4-for-1 stock split of its common shares on October 1, 2020. The annual dividend per share for the fiscal year ended March 31, 2021 is 12 yen based on the assumption that the stock split was conducted at the beginning of the previous fiscal year (April 1, 2020). The annual dividend per share for the fiscal year ended March 31, 2022 is 22 yen (interim dividend of 10 yen and year-end dividend of 12 yen), which is an increase of 10 yen per share from the previous fiscal year. Internal reserves will be put to effective use as funds for strengthening the corporate structure and contributing to sustainable profit improvement and return of profit to shareholders. For the next fiscal year (the fiscal year ending March 31, 2023), the Company plans to pay a dividend of 20 yen per share (interim dividend of 10 yen, year-end dividend of 10 yen). 2. Basic Concept Regarding Selection of Accounting Standard JCR group has adopted Japanese standards as its accounting standards. As for IFRS, it is our policy to continue examination in consideration of trends in adoption of IFRS. – 5 – Translation – Original Text in Japanese 3. (1) Consolidated Financial Statements Consolidated Balance Sheets Assets Current assets Cash and deposit Notes and accounts receivable – trade, and contract assets Securities Merchandise and finished goods Work in process Raw materials and supplies Other Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Machinery, equipment and vehicles, net Land Construction in progress Other, net Total property, plant and equipment Intangible assets Patent right Other Total intangible assets Investments and other assets Investment securities Retirement benefit asset Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets JCR Pharmaceuticals Co., Ltd. (4552) As of March 31, 2021 As of March 31, 2022 (millions of yen) 26,260 8,183 — 1,367 3,538 8,649 546 48,545 6,295 1,282 7,663 841 1,088 17,172 2,988 244 3,232 2,572 225 1,739 300 (4) 4,833 25,238 73,784 30,733 15,585 244 2,121 5,024 7,491 986 62,188 6,086 1,308 10,379 8,019 989 26,782 2,711 249 2,960 2,230 213 2,433 330 (4) 5,202 34,946 97,134 – 6 – Translation – Original Text in Japanese As of March 31, 2021 As of March 31, 2022 JCR Pharmaceuticals Co., Ltd. (4552) (millions of yen) Liabilities Current liabilities Notes and accounts payable-trade Short-term loans payable Accounts payable‐other Income taxes payable Special suspense account for tax purpose reduction entry Provision for bonuses Provision for bonuses for directors Other Total current liabilities Non-current liabilities Bonds payable Long-term borrowings Allowance for employee stock ownership benefits Retirement benefit liability 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 Deferred gains or losses on hedges Foreign currency translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Share acquisition rights Non-controlling interests Total net assets Total liabilities and net assets 2,932 12,850 2.295 2,646 3,828 850 63 3,560 29,028 500 4,750 62 798 88 6,199 35,227 9,061 10,941 20,904 (3,685) 37,222 691 0 (18) (31) 641 517 174 38,557 73,784 1,324 15,150 5,189 5,915 11,996 902 102 1,473 42,054 500 2,450 78 870 92 3,990 46.,045 9,061 10,994 33,241 (3,600) 49,697 619 0 30 (32) 618 567 205 51,089 97,134 – 7 – Translation – Original Text in Japanese (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Consolidated Statements of Income) JCR Pharmaceuticals Co., Ltd. (4552) (millions of yen) FY2020 (From April 1, 2020 to March 31, 2021) FY2021 (From April 1, 2021 to March 31, 2022) 8,488 20,512 30,085 7,812 22,272 14,003 8,269 7 25 206 65 305 42 11 31 85 22 108 19 19 － 170 5 － － 5 8,653 2,836 (1,072) 1,764 6,888 (4) 6,892 51,082 10,461 40,620 20,686 19,933 7 28 551 68 656 45 12 18 77 － － － － 0 0 2 * 1,000 105 1,108 19,404 5,549 (663) 4,886 14,517 10 14,507 Selling, general and administrative expenses Net sales Cost of sales Gross profit Operating income Non-operating income Interest income Dividend income Foreign exchange gains Other Total non-operating income Non-operating expenses Interest expenses Commission expenses Other Total non-operating expenses Ordinary income Extraordinary income Gain on liquidation of subsidiaries and associates Reversal of provision for loss on guarantees Reversal of allowance for doubtful accounts Reversal of losses related to voluntary recall Gains on sale of investment securities Total extraordinary income Extraordinary losses Loss on disposal of non-current assets Loss on cancellation of contracts Other Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit (loss) attributable to non-controlling interests Profit attributable to owners of parent – 8 – Translation – Original Text in Japanese (Consolidated Statements of Comprehensive Income) JCR Pharmaceuticals Co., Ltd. (4552) (millions of yen) FY2020 (From April 1, 2020 to March 31, 2021) FY2021 (From April 1, 2021 to March 31, 2022) Profit Other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans, net of tax Total other comprehensive income Comprehensive income (Comprehensive income attributable to) Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 6,888 107 0 (162) 7 (47) 6,841 6,855 (14) 14,517 (71) 0 68 (0) (3) 14,514 14,483 31 – 9 – Translation – Original Text in Japanese (3) Consolidated Statements of Changes in Net Assets FY2020 (From April 1, 2020 to March 31, 2021) JCR Pharmaceuticals Co., Ltd. (4552) Share capital Capital surplus Treasury shares Shareholders’ equity Retained earnings 9,061 10,891 15,039 (3,865) 31,127 Beginning balance Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Purchase of shares of consolidated subsidiaries Net changes in items other than shareholders’ equity Total changes during period Ending balance Beginning balance Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Purchase of shares of consolidated subsidiaries Net changes in items other than shareholders’ equity Total changes during period Ending balance 107 107 691 (1,083) 6,892 55 49 1 0 0 0 － 9,061 50 10,941 5,865 20,904 180 (3,685) 6,095 37,222 Accumulated other comprehensive income Valuation difference on available-for- sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Stock acquisition rights Non- controlling interests Total net assets 583 — 134 (39) 679 584 189 32,579 (66) (66) 517 (14) (14) 174 (1,083) 6,892 (0) 230 56 (118) 5,977 38,557 (152) (152) (18) 7 7 (31) (37) (37) 641 (millions of yen) Total shareholders’ equity (0) 181 (1,083) 6,892 (0) 230 56 – 10 – Translation – Original Text in Japanese FY2021 (from April 1, 2021 to March 31, 2022) JCR Pharmaceuticals Co., Ltd. (4552) Beginning balance Changes during period Dividends of surplus Profit attributable to owners of parent Disposal of treasury shares Net changes in items other than shareholders’ equity Total changes during period Ending balance Beginning balance Changes during period Dividends of surplus Profit attributable to owners of parent Disposal of treasury shares Net changes in items other than shareholders’ equity Total changes during period Ending balance Share capital Capital surplus Treasury stock Shareholders’ equity Retained earnings (millions of yen) Total shareholders’ equity 9,061 10,941 20,904 (3,685) 37,222 — 9,061 53 10,994 12,336 33,241 85 (3,600) 12,475 49,697 Accumulated other comprehensive income Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Valuation difference on available-for- sale securities 691 53 0 0 0 0 (2,170) 14,507 48 48 30 85 (0) (0) (32) (2,170) 14,507 138 — (23) (23) 618 (71) (71) 619 (18) (31) 641 517 174 38,557 Stock acquisition rights Non- controlling interests Total net assets 49 49 567 30 30 205 (2,170) 14,507 138 56 12,531 51,089 – 11 – Translation – Original Text in Japanese (4) Consolidated Statements of Cash Flows JCR Pharmaceuticals Co., Ltd. (4552) (millions of yen) FY2020 (From April 1, 2020 to March 31, 2021) FY2021 (From April 1, 2021 to March 31, 2022) Cash flows from operating activities Profit before income taxes Depreciation Increase (decrease) in provision for loss on guarantees Increase (decrease) in retirement benefit liability Increase (decrease) in provision for bonuses Share-based payment expenses Interest and dividend income Interest expenses Foreign exchange losses (gains) Decrease (increase) in trade receivables Decrease (increase) in accounts receivable‐other Decrease (increase) in inventories Increase (decrease) in trade payables Increase (decrease) in accounts payable‐other Increase (decrease) in accrued consumption taxes Increase (decrease) in advances received Other, net Subtotal Interest and dividends received Interest paid Income taxes refund (paid) Net cash provided by (used in) operating activities Cash flows from investing activities Payments into time deposits Proceeds from withdrawal of time deposits Proceeds from sale and redemption of securities Purchase of property, plant and equipment Subsidies received Purchase of patent Purchase of investment securities Other, net Net cash provided by (used in) investing activities Cash flows from financing activities Increase (decrease) in short-term borrowing Proceeds from long-term borrowing Repayments of long-term borrowing Proceeds from issuance of bonds Repayments of lease liabilities Net decrease (increase) in treasury shares Dividends paid Other, net Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period – 12 – 8,653 1,892 (108) 74 137 149 (33) 42 (140) (205) 1 (4,699) 2,253 202 175 2,493 265 11,156 10,341 39 (46) (807) (300) 345 239 (4,780) 3,892 (2,747) (91) 152 (3,290) 8,320 1,250 (650) 500 (47) 13 (1,083) 1 8,304 (22) 15,332 10,928 26,260 19,404 1,945 － 74 51 177 (35) 45 (544) (7,402) (99) (1,082) (1,608) 3,033 (120) (1,877) (143) 11,817 35 (45) (2,517) 9,289 (300) 300 － (11,333) 8,167 － － (84) (3,250) － 750 (750) － (20) 10 (2,169) － (2,179) 612 4,472 26,260 30,733 Translation – Original Text in Japanese (5) Notes to Consolidated Financial Statements (Notes on premises as a going concern) No corresponding item existed. (Changes in accounting policy) JCR Pharmaceuticals Co., Ltd. (4552) (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; hereinafter “Revenue Recognition Accounting Standards”), etc. from the beginning of FY2021, and recognizes revenue as the amount expected to be received in exchange for promised goods or services when control of the goods or services is transferred to the customer. As a result, a portion of commission expenses previously recorded in selling, general and administrative expenses has been deducted from net sales. In addition, a portion of sales promotion expenses previously recorded in the net amount has been included in net sales and cost of sales. In applying the Accounting Standard for Revenue Recognition, etc., the Company follows the transitional treatment set forth in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition. The cumulative effect of retroactively applying the new accounting policy to periods prior to the beginning of FY2021 has been added to or subtracted from retained earnings at the beginning of FY2021, and the new accounting policy has been applied from the beginning balance of FY2021. As a result, the consolidated financial results for FY2021 are as follows: a 57 million yen increase in net sales, a 280 million yen increase in cost of sales, a 223 million yen decrease in selling, general and administrative expenses, and no impact on operating income, ordinary income, or profit before income taxes. In addition, there was no impact on the balance of retained earnings at the beginning of the fiscal year under review. Due to the application of these accounting standards, notes and accounts receivable – trade under current assets in the consolidated balance sheets of the previous fiscal year have been reclassified as notes and accounts receivable – trade, and contract assets from the fiscal year under review. (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; hereinafter “Fair Value Measurement Accounting Standards”) from the beginning of FY2021. In accordance with the transitional treatment prescribed in Paragraph 19 of the Fair Value Measurement Accounting Standards and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), the Company will apply the new accounting policies set forth in the Fair Value Measurement Accounting Standards, etc. at a future date. This has no impact on the consolidated financial statements. (Concerning consolidated statements of income) *Loss on cancellation of contracts In May 2021, we terminated an agreement concluded for first right of refusal pertaining to certain products currently in the preclinical stage of development upon mutual agreement of the parties. This resulted in a loss on cancellation of contracts. (Segment information) Segment information is not disclosed since the Group has only one segment, Pharmaceuticals. – 13 – Translation – Original Text in Japanese JCR Pharmaceuticals Co., Ltd. (4552) (Per share information) The bases for calculations and the amounts of net asset per share, net income per share and diluted net income per share for the year and others are as described below. Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Item (1) Net asset per share (yen) (Bases for calculations) Total net assets in the consolidated balance sheet (millions of yen) Net assets associated with common shares (millions of yen) Breakdown of major differences (millions of yen) Stock acquisition rights Non-controlling interests Number of common shares outstanding (shares) Number of shares of treasury stock (common shares) Number of common shares used for calculations of net asset per share (shares) Item (2) Net income per share (yen) (Bases for calculations) Net income per share attributable to owners of the parent in the Consolidated Statements of Income (millions of yen) Amount not attributable to common shares (millions of yen) Net income attributable to owners of the parent associated with common shares (millions of yen) Average number of common shares outstanding (shares) (3) Diluted net income per share (yen) (Bases for calculations) Adjustment to net income attributable to owners of parent (millions of yen) Major breakdown of increased number of common shares used for calculations of diluted net income per share (shares) Stock acquisition rights Increased number of common shares (shares) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 306.31 38,557 37,864 517 174 129,686,308 6,071,644 123,614,664 55.81 6,892 — 6,892 123,517,401 55.53 — 615,252 615,252 406.57 51,089 50,316 567 205 129,686,308 5,929,344 123,756,964 117.26 14,507 — 14,507 123,720,398 116.80 — 488,821 488,821 Outline of dilutive shares which were not included in the calculation of “Diluted net income attributable to owners of the parent per share” because they are antidilutive for the each period. (Notes) 1. The Company’s shares held by a trust under the Employee Stock Ownership Plan, which are reported as treasury shares under Shareholders’ equity, are included in the number of treasury shares excluded in the calculations of average number of shares during term for calculations of net income per share and are included in the number of treasury shares excluded from the number of shares outstanding at the end of the term for calculations of net asset per share. — — The average number of the said treasury shares excluded during the term for calculations of net income per share were 371,366 shares for the previous fiscal year, and 349,666 shares for the current fiscal year, and the number of the said treasury shares excluded for calculations of net asset per share was 363,900 shares for the previous fiscal year and 343,600 shares for the current fiscal year. 2. We conducted a 4-for-1 stock split on October 1, 2020. Calculations of “Net assets per share, ” “Earnings per share (basic)” and “Earnings per share (diluted)” are based on the assumption that the stock split was implemented at the beginning of the previous fiscal year. (Important Subsequent Events) No corresponding item existed. – 14 – Translation – Original Text in Japanese 4. Other R&D Pipeline Recombinant drug products JCR Pharmaceuticals Co., Ltd. (4552) Code Nonproprietary Name Status Indication Remarks JR-141 BBB-penetrating Iduronate-2-sulfatase (rDNA origin) JR-171 BBB-penetrating acid α-L-Iduronidase (rDNA origin) JR-162 J-Brain Cargo® applied acid α-glucosidase (Blood Brain Barrier passage) (rDNA origin) JR-441 BBB-penetrating heparan N-sulfatase (rDNA origin) JR-443 BBB-penetrating recombinant β-glucuronidase (rDNA origin) JR-446 BBB-penetrating α-N-acetylglucosaminidase (rDNA origin) JR-479 BBB-penetrating β-Hexosaminidase A (rDNA origin) JR-401X Somatropin (rDNA origin) JR-142 Long-acting Growth hormone (rDNA origin) Mucopolysaccharidosis II (Hunter syndrome) Brazil: Filed for Marketing approval Global: Phase III ERT J-Brain Cargo® Global: Phase I/II Mucopolysaccharidosis I (Hurler syndrome, etc) ERT J-Brain Cargo® J-MIG System® Pompe disease Japan: Preclinical ERT J-Brain Cargo® Japan: Preclinical Japan: Preclinical Japan: Preclinical ERT J-Brain Cargo® ERT J-Brain Cargo® ERT J-Brain Cargo® Mucopolysaccharidosis III-A (Sanfilippo syndrome type A) Mucopolysaccharidosis VII (Sly’s syndrome) Mucopolysaccharidosis III-B (Sanfilippo syndrome type B) GM2 gangliosidosis (Tay-Sachs disease, Sandhoff disease) Japan: Preclinical Japan: Phase III ERT J-Brain Cargo® SHOX deficiency Expanded Indication of GROWJECT® Growth hormone deficiency dwarfism Japan: Phase II J-MIG System® (Note) ERT= Enzyme Replacement Therapy Allogeneic regenerative medical product Code Nonproprietary Name Status JR-031HIE Human mesenchymal stem cells Japan: Phase I / II Indication Remarks Neonatal hypoxic ischemic encephalopathy Expanded Indication of TEMCELL® HS – 15 –