PRESS RELEASE

August 30, 2010
Company Name: Japan Tissue Engineering Co., Ltd. (J-TEC)
Representative: Yosuke Ozawa, President and CEO(Code: 7774 NEO)
Headquarters:
6-209-1 Miyakitadori, Gamagori, Aichi, Japan
Contact:
Masahito Obayashi
Director, Corporate Management & Administration Dept.
URL:
http://www.jpte.co.jp/english/

Announcement Regarding Issuance of New Shares by Third Party Allocation,
and a Change in the Largest Shareholder
Japan Tissue Engineering Co., Ltd. (also known as J-TEC) has resolved at its Board of Directors meeting
convened on August 30, 2010 to issue new shares by third party allocation as detailed below. This allocation ofnew shares to a third party will be subject to an approval at the extraordinary shareholders’ meeting to be heldon October 28, 2010.
This third party allocation is also expected to change the largest shareholder.
Details
1. Outline of Third Party Allocation(1) Date of issuance

October 29, 2010

(2) Number of new shares to be issued

75,500 common shares(3) Issue price

53,000 yen per share(4) Aggregate amount of issue4,001,500,000 yen(5) Amount to be incorporated into capital

26,500 yen per share(6) Total amount to be incorporated into capital

2,000,750,000 yen(7) Method of allocation

Allocation to a third party(Allottee)(8) Other

FUJIFILM Corporation

75,500 shares

The above terms and conditions are subject to anapproval at the extraordinary shareholders’ meeting,and to the effectuation of notification under Japan’s
Financial Instruments and Exchange Law.

2. Purposes of Capital Increase
J-TEC develops two business groups, the "Regenerative Medicine Business" and the "R&D Support Business",
based on the science of tissue engineering (technology using living cells to artificially grow tissue and organs
which would then be capable of carrying out their normal functions). Currently, J-TEC has three productpipelines for the Regenerative Medicine Business; autologous cultured epidermis (JACE), autologous cultured
cartilage, and autologous cultured corneal epithelium. JACE is the first domestic medical device utilizing
human cell and tissue to be approved by Japan’s Ministry of Health, Labor and Welfare (MHLW) in October
2007, having become eligible for insurance coverage from January 2009. In spite of the reimbursement
condition imposed on JACE, the product has been successfully launched in the market. For FY2010, thecondition was partially deregulated on April 1, 2010, and thus the sales opportunity has been greatly expanded.
Autologous cultured cartilage is a product being developed with the aim of complementing or repairing of1

damaged knee cartilage as well as improving the knee function, and J-TEC has submitted an application for
manufacturing and sales in August 2009. J-TEC has submitted an application for starting clinical trial ofautologous cultured corneal epithelium in May 2007. As for the R&D Support Business, sales have beenlaunched of LabCyte, a human cultured tissue model, since April 2005.
J-TEC recorded the sales of 211 million yen in FY2009, while posting the ordinary loss and net loss of -1,096
and -1,099 million yen respectively. J-TEC expects to register losses in the next three years as projected in its
midterm business plan, and as the regenerative medicine business takes a long time to progress requiring
regulatory procedures, reinforcement of financial standing by strengthening the capital base is considered a toppriority.
However, cash and cash equivalents at the end of last fiscal year were 1,475 million yen, and the amount is notsatisfactory for the funds sufficient to carry out the business plan J-TEC disclosed of next three years. Inaddition to the challenge of small market size of JACE due to the limitation to severe burn patient, various
factors in autologous cultured cartilage business are unclear at this moment (e.g. approval timing, indication,
insurance coverage and list price). Thus, the possibility that the business may not turn out as planned remains asa risk.
Under these circumstances, J-TEC has decided to raise capital by about 4 billion yen through third party
allocation. The purpose of this capital increase is to reinforce the company’s financial base and further stabilize
its management foundations, making the future business expansion possible.
3. Outline of Allottee(As of March 31, 2010)(1)

Allottee name

FUJIFILM Corporation(2)

Head office26-30, Nishiazabu 2-chome, Minato-ku, Tokyo 106-8620, Japan(3)

Representative

Shigetaka Komori, President and CEODevelopment, production and marketing of products in the Imaging
Solutions business (color films, digital cameras, photofinishingequipment and color paper, chemicals and services for(4)

Main business areasphotofinishing) and Information Solutions business (equipment andmaterials for medical diagnostics and life science, equipment andmaterials for graphic arts, flat panel display materials, recording
media, optical devices, electronic materials and inkjet materials).

(5)

Capital40,000 million yen(6)Date of foundation

October 2, 2006

(7)

Number of shares issued

1,000 shares(8)

Fiscal end

March 31(9)Number of employees

7,284(10) Major business partners(11) Main financing bank(12) Major shareholder and percentof shares(13) Relationship with J-TEC

Private companies in manufacturing, distribution and service
industries, and public offices
Sumitomo Mitsui Banking Corporation
FUJIFILM Holdings Corporation
Capital

None

Trade

None

100%

One outside auditor of J-TEC

Personal

doubles as an employee of allottee.

Relevance to related parties
2None(14) Recent business performance and financial data
FY2007(in million yen)
FY2009FY2008

Net assets

1,281,071

1,230,383

1,225,687

Total assets

1,479,420

1,379,567

1,395,238

Shareholders’ equity per share (yen)1,281.07

1,230.38

1,225.69

Sales

776,843

627,463

618,533

Operating profit

97,890-19,907

12,247

Net income before taxes

93,117-26,351

7,056

Net income

56,765-7,681-20,561

Net income per share (yen)

56.77

-7.68

-20.56

Dividends per share (yen)

18

230

The allottee, its board members and major shareholders have confirmed to have no relationship with gangs or
any organized crime group, and have submitted a written confirmation to the Osaka Securities Exchange.
4. Major Shareholders and Percent of Shares after Capital Increase
Before (March 31, 2010)

NIDEKAfter
41.30%Toyama Chemical

19.70% FUJIFILM Corporation
7.73% NIDEK

INAX

4.19% Toyama Chemical

4.54%

Mitsubishi UFJ Capital

4.05% INAX

2.46%

JAFCO Biotechnology No.1 Fund

1.88% Mitsubishi UFJ Capital

2.38%

Chubu Shiryo

1.86% JAFCO Biotechnology No.1 Fund

1.10%

Yoko Maeda

1.49% Chubu Shiryo

1.09%

Mitsui Sumitomo Insurance

1.40% Yoko Maeda

0.88%

Gastec Service

1.40% Mitsui Sumitomo Insurance

0.82%

Yosuke Ozawa

1.12% Gastec Service

0.82%

11.56%

5. Outstanding Number of Shares
Outstanding shares before issuance (as of March 31, 2010)

107,301 shares

Outstanding shares after issuance

182,801 shares

6. Future Outlook
As the purpose of this third party allocation is to reinforce the company’s financial base further stabilizing its
operating foundations, the impact on the business results, forecasts and midterm plans shall be minimal. J-TEC
will announce as soon as possible when influence on the business results becomes evident.

NOTE: This press release is an abstract and excerption from the original J-TEC press release, covering the main points of theinformation. Please read the original (Japanese) for full contents. http://www.jpte.co.jp/3