JCR Pharmaceuticals : FY2022 Second-Half Results Briefing Session -Script-（6,169KB）

JCR Pharmaceuticals Co., Ltd.

Financial Results Briefing for the Fiscal Year Ended March 2023

May 12, 2023

Event Summary

*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A.

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Presentation

Moderator: Thank you very much for your patience. We will now begin the meeting on FY2022 results and new midterm business plan of JCR Pharmaceuticals Co., Ltd.

First, we'd like to explain the language settings for those who are attending through the web. Please select off or Japanese or English, from the interpreting icon at the bottom of your Zoom window.

Before we begin, we'd like to remind you of a few important points. In this presentation, we may make forward-looking statements based on our current expectations, all of which are subject to risks and uncertainties. However, investors should be aware that actual results may differ materially from those discussed in the forward-looking statements.

The presentation and the materials here today are intended to provide shareholders, investors, and the press with information about our business. The information of our products on the market and in the pipeline is not intended for the purpose of advertising or medical advice. This meeting is being recorded for the purpose of posting on our website. Please note that some of the presenters may speak while wearing a mask during presentation.

First of all, I would like to introduce today's speakers.

From the right, Shin Ashida, Representative Director, Chairman, President, and CEO; Toru Ashida, Senior Vice President, Executive Director, Sales Division; Mathias Schmidt, Vice President, Clinical Development, he is joining remotely from the US; Hiroyuki Sonoda, Vice President, Executive Director, Research Division.

In the back row from the left, Yoh Ito, Senior Corporate Officer, Executive Director, Corporate Strategy Division; Yutaka Honda, Senior Corporate Officer, Executive Director Administration Division; and Yoshihiro Ohta, Director, Accounting Development, Management Division.

Next, I'd like to explain the materials we will use today. The materials have been posted on our website at 16:00 on May 11. If you need the materials at hand, please refer to them. The materials will also be distributed at the venue. Please raise your hand if you don't have one.

Let me explain the flow of today's briefing. Today's meeting will last two hours, including the Q&A session. Questions will be taken after all the presentations have been completed. The Q&A session is expected to last approximately one hour.

Now, Mr. Shin Ashida, President and the CEO, would like to make a few remarks.

Shin Ashida: Good afternoon, ladies and gentlemen. Thank you for your attendance. My name is Ashida of JCR Pharma. I would like to take this opportunity to thank you for your continued understanding and support for our company.

In today's financial results briefing session, each of our officers in charge will report on the financial results for the fiscal year ending March 31, 2023, as well as our research and development activities, and also explain our new midterm business plan, Reach Beyond Together, which we have newly formulated.

During the past midterm plan period, we have achieved stable growth and produced many positive results. In particular, the world's first successful commercialization of J-Brain Cargo was a major achievement for us. This achievement was made possible entirely because of our strength in R&D and manufacturing. We are one of

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the few companies in Japan that can handle the entire process of pharmaceuticals, from research to manufacturing, in an integrated fashion. We are using this modality of J-Brain Cargo to further promote research and development for rare diseases centered on lysosomal storage diseases. We will also use this modality to further promote research and development for rare diseases with respect to innovative protein products and gene therapies.

We are committed to providing as many patients and families as possible with medicines with features that only JCR can offer, which we believe is our mission. In a new five-year midterm business plan, we will strengthen various initiatives to secure a stable management foundation and maximize our corporate value.

In the previous fiscal year, the production of AstraZeneca's vaccine bulk drug substance was completed as planned, which combined with the decrease in revenue from the contract, led to a decline in both revenue and earnings. On the other hand, we initiated negotiations for a global alliance for lysosomal disease drug and sought to expand our modality licensing, amongst others. We have been engaging in a number of negotiations for a variety of agreements.

As a result, in October, we signed an agreement with MEDIPAL for the global commercialization of ultra-rare disease. In March, we signed a global research collaboration agreement with Alexion, the rare disease division of AstraZeneca for the treatment of neurodegenerative diseases. In addition, as we put out a press release yesterday, we signed an agreement with Angelini for the development of an epilepsy drug utilizing our J-Brain Cargo technology. We will continue to invest actively in research and development, which replace the core of our company in the current fiscal year and beyond.

We are also working on a new drug for the treatment of Sanfilippo Syndrome type A, a JR-441, which is expected to enter the clinical stage as soon. Preparations for the clinical stage of JR-446 next year are also steadily progressing. In addition, as with Alexion and Angelini, we will continue to proactively pursue opportunities to license out the J-Brain Cargo technology to other companies.

In what we call our company's second founding phase that we're in right now, as an attempt to nurture the next generation of global leaders, we have started a training program called the JCR Academy. We will continue to be more proactive than ever in our efforts to develop talents for the Company, so we will continue to constantly challenge ourselves to create new value. We look forward to your continued understanding and support. Thank you very much for your attention.

Moderator: Now, Mr. Ohta will now give an overview of the financial results.

Ohta: My name is Ohta from the accounting department. I would like to give you the overview of the financial results of FY2022.

As Ashida mentioned earlier, there was the completion of the contract revenue. Because of the bulk solution manufacturers, there was the YoY decrease in sales profit. Net sales was JPY 34.343 billion. That was 32.8% minus from the previous year. Operating income was JPY4.975 billion, minus 75%. The operating income was JPY5.418 billion. That was minus 73.6% YoY. Net profit was JPY3.772 billion. That was minus 74% from the previous year. We made some revisions of the forecast in March, and these numbers are consistent with those mostly.

As for the major products, regarding IZCARGO, there was an increase YoY, but GROWJECT, as well as the renal anemia drug sales showed a decrease YoY because of the NHI price reduction. C&A showed a decrease YoY thanks to the various cost reduction measures, although there was the decline in the personnel cost due to the decline of the increase of the number of employees. The R&D expenses increased from previous year due to steady progress.

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