Kringle Pharma : Financial Results for the Three Months Ended December 31, 2021(Non-consolidated)

1

1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Operating Results

The forward-looking statements herein are based on the judgments of Kringle Pharma, Inc. (the "Company") as of the end of the first quarter under review.

In the Japanese pharmaceutical market during the three months ended December 31, 2021, substitution by generic drugs progressed in response to the increase in medical costs associated with the aging of the population. Drug prices are declining significantly due to the forced NHI price revision by the government that now occurs annually from 2021. Development costs of new drugs are increasing to accommodate the growing scale of clinical trials, which is accelerating alliances and M&As between pharmaceutical companies in Japan and overseas in order to expand their corporate scale. Companies are focusing their R&D efforts on selected therapeutic areas of priority and actively looking for in-licensing opportunities outside the organization.

In the development of new drugs, the target is shifting from so-called "blockbuster drugs," which have a large number of potential patients and can generate large, stable future profits, to drugs that can provide effective treatment to specific patient groups. Thus, biotech companies now assume a greater role because they usually concentrate their resources on a certain specific field and are swift and agile to make decisions. In response to these trends, the Japanese government, primarily led by central ministries including the Ministry of Health, Labour and Welfare (MHLW) and the Ministry of Economy, Trade and Industry (METI), has launched the Medical Innovation Support Office (MEDISO) and compiled the "Ito Review 2.0: Biomedical Edition" as part of its efforts to proactively support Japan-based biotech companies. In addition, the Conditional Early Approval System and the SAKIGAKE Designation System for pioneering drugs have been legislated in order to promote drug discovery in Japan.

On the other hand, although the spread of COVID-19 has increased public interest in the pharmaceutical industry, more pharmaceutical resources are currently directed to development of vaccines and treatments for COVID-19, causing potential delay in clinical development of other drugs.

Amidst the above business environment, the Company continued to focus its managerial resources on the recombinant human hepatocyte growth factor (HGF) protein and developed the business activities outlined below, as the Company believes development of recombinant human HGF protein will lead to therapeutic innovation, creating business opportunities and maximizing the value of the Company.

1. Drug development activities

(a) Acute spinal cord injury (SCI)

The Company conducted a Phase I/II clinical trial with Professor Masaya Nakamura of the Department of Orthopaedic Surgery, Keio University School of Medicine as a coordinating investigator and obtained results that confirmed the safety and indicated the efficacy of the drug. The Company designed the Phase III clinical trial to verify the proof of concept (POC; a preliminary evidence of efficacy detected in humans with a new drug candidate under development) obtained in the Phase I/II clinical trial. On June 9, 2020, the Company submitted a clinical trial notification for the Phase III study to the Pharmaceuticals and Medical Devices Agency (PMDA).

In July 2020, the Company started the Phase III study at Spinal Injuries Center, Hokkaido Spinal Cord Injury Center, and Murayama Medical Center. With the addition of Japanese Red Cross Kobe Hospital and Aijinkai Rehabilitation Hospital in March 2021, the phase III clinical trial continued to proceed during the three months ended December 31, 2021, in line with plans at the five medical facilities where patients are being enrolled.

In order to submit marketing authorization application for the treatment of acute SCI, the Company is also conducting various tests related to the process of manufacturing recombinant human HGF. Trial manufacturing (process validation) is currently underway as planned for the drug substance, which is required for the submission, using the same process as commercial manufacturing. The spread and prolongation of the COVID-19 pandemic has led to a global decline in plant operating rates and a prioritization of supply of raw materials for the production of COVID-19 vaccines, resulting in a decline in volume and delays in the supply of the raw materials required for the Company's development and manufacturing of HGF. Accordingly, several trials that were scheduled to be

2

completed in the previous fiscal year have been rescheduled for completion in the current fiscal year.

For the purpose of identifying more effective administration methods and timing with recombinant human HGF for SCI, the Company launched a new joint research program with Keio University School of Medicine in February 2021 to investigate possible combination with the transplantation technology for iPS cell-derived neural progenitor cells. This joint research program continued in the three months ended December 31, 2021.

In June 2021, the APSS Congress Best Clinical Research Award was given for the presentation on Phase I/II clinical trial for acute SCI at the 13th Combined Meeting of Asia Pacific Spine Society & Asia Pacific Paediatric Orthopaedic Society (APSS-APPOS 2021; held from June 9 to 12, 2021 at Kobe International Conference Center).

(b) Amyotrophic lateral sclerosis (ALS)

The investigator-initiated Phase II clinical trial started in May 2016 at Tohoku University Hospital and Osaka University Hospital by Professor Masashi Aoki of the Department of Neurology, Tohoku University. In November 2020, the enrollment of patients was completed, and during the three months ended December 31, 2021, the final follow-up for the last patient was completed in December 2021. As the supplier of the investigational drug, the Company has continued to engage in the trial by supplying the investigational drug, supporting clinical trial operations, and performing the drug stability tests. The Company continued to perform the drug stability tests in the three months ended December 31, 2021.

In addition, during the three months ended December 31, 2021, the Company supported the clinical trial financially mainly covering the cost for contract research organization (CRO), in order to avoid a delay of the study due to the termination of subsidies provided by Japan Agency for Medical Research and Development (AMED) , a National Research and Development Agency, in March 2021.

In September 2021, Professor Masashi Aoki gave a presentation on the development of recombinant human HGF protein as a therapeutic agent for ALS at the Pan-Asian Consortium for Treatment and Research in ALS (PACTALS).

(c) Vocal fold scarring (VFS)

For VFS, a disorder in which the vocal fold mucosa hardens and degenerates (fibrosis), an investigator-initiated Phase I/II clinical trial confirmed the safety of intracordal administration of the recombinant human HGF. It also detected signals of efficacy showing functional recovery of the vocal cord with some patients (J Tissue Eng Regen Med. 2017; 1-8.). A preliminary consultation meeting with PMDA was subsequently conducted in July 2019, based on which discussion is ongoing with Kyoto Prefectural University of Medicine to design details of the next phase trial (double-blind,placebo-controlled comparative study) aimed at obtaining POC, and the Company has formulated a plan to commence the study in the fiscal year ending September 2022.

In order to raise funds to finance clinical trials, the manufacturing of investigational drugs, and the development of commercial formulations, the Company issued share acquisition rights in November 2021, and is also working to utilize public funding, with its proposed research topic being selected for the Cyclic Innovation for Clinical Empowerment (CiCLE) project operated by the Japan Agency for Medical Research and Development (AMED).

(d) Supply of drug substance to Claris Biotherapeutics, Inc.

The Company concluded a license and supply agreement with Claris Biotherapeutics, Inc. of the U.S. in April 2020 to supply HGF drug substance for clinical development by Claris Biotherapeutics to treat ophthalmologic diseases in the U.S.

The Company did not supply HGF drug substance to Claris Biotherapeutics during the three months ended December 31, 2021. Meanwhile, Claris Biotherapeutics filed an investigational new drug (IND) application* in May 2021 to initiate a Phase I/II clinical trial for neurotrophic keratitis utilizing the various preclinical and clinical information related to HGF provided by the Company, and the first patient received treatment in August 2021. With this development, the Company will now receive a fixed annual technology access fee (royalty income).

* Clinical trial application filed with the U.S. Food and Drug Administration (FDA)

3