First Quarter Consolidated Financial Results
for the Fiscal Year Ending March 31
31, 2018
1. Overview of consolidated results
2. Highlights of Business Performance
3. Main Product Sales Update
4 Development pipeline
4.
【Reference】
5. Segment information
5
6. Financial summary
July 31, 2017

KYORIN Holdings, Inc.
These forecast performance figures are based on information currently available to theCompany and may include uncertain factors or risk that affect our future performance.
Accordingly, actual business results may materially differ from the forecasted figures dueto various factors in the future.

Outline of First Quarter Consolidated Financial Results
for the Fiscal Year Ending March 31, 2018

Units:
millions of yen

Firstquarter
Jun / 2014

Firstquarter
Jun / 2015

Firstquarter
Jun / 2016

Firstquarter
Jun / 2017

YoYchange(%)

Interimterm
Sep / 2017
(forecast)

YoYchange
((%))

Year
ending Mar/ 2018
(forecast)

Net sales

26,397

26,567

27,70726,458－4.5％

54,600－0.1%

113,400－1.7%

Operating income

3,575

2,173

3,244

2,595

－20.0％

5,300＋44.7%

12,100＋16.2%

Ordinary income

3,847

2,316

3,485

2,805

－19.5％

5,600＋42.8%12,600＋15.9%Net income

2,681

1,757

2,580

2,393

－7.3％

4,500

＋67.6%

9,700＋32.8%

YoYchange(%)

First Quarter Consolidated Financial Results for the Fiscal Year Ending March 31, 2018
[Net sales] Despite steady growth in Flutiform, a core product, and Desalex, a new product, sales in the new pharmaceutical products inJapan decreased following the expiration of the patent for KIPRES. In contrast, sales in generic drugs increased with the rise in sales ofMONTELUKAST AG (KIPRES). As a result, overall net sales were 26,458 million yen, a decrease of 1,249 million yen on a year-on-yearbasis (down 4.5% year on year).
[Profit] Gross profit declined by 1,501 million yen on a year-on-year basis mainly due to the decline in the sales of new pharmaceuticalproducts in Japan. SG & A expenses decreased by 852 million yen (including a reduction in R&D expenses of 537 million yen) on a year-onyear basis
b i owing
i tto ththe promotion
ti off costt reduction.
d tiA
As a result,lt operatingti iincome amountedt d tto 2
2,594594 million
illi yen (down(d20.0%
20 0% year on year),)and profit attributable to owners of parent was 2,393 million yen (down 7.3% year on year) partly because of extraordinary profit ofapproximately 600 million yen associated with the recording of the stocks transfer of Dr. Program Co., Ltd.

Consolidated Financial Results for the Fiscal Year Ending March 31, 2018(forecast)
The results forecasts for the second half and the full year announced on May 11, 2017 remain unchanged.
(Progress compared with the forecast for the first half: net sales: 48.5%; operating income: 49.0%)
1

Highlights of Business Performance（ Units: ¥ billion）

cost of
Sales ratio

cost ofSales ratio

Highlight

42 0%
42.0%

45 0%
45.0%

Net Sales decreased ¥1.2bln

Cost ofsales

11 6
11.6
Sales

Sales

R&D

Cost of sales ratio increased 3.0%.

Gross Profit decreased ¥1.5bln

2.5
SG&A

12.8

9.8
OperatingOtiincomeJun / 2016

11.9
R&D

3.0
SG&A
(excluding
R&D)

・Sales of new ethical drugs decreased
・Sales of generic drugs increased

Cost ofsales

SG&A(excludingR&D)

959.5SG&A

12.0
Operatingincome

SG&A expenses decreased ¥0.8bln
・R&D expense decreased ¥0.5bln
・SG&A(excluding R&D) decreased ¥0.3bln

OOperatingti IncomeIdecreased
dd ¥0.6bln¥0 6blJun / 20172

Consolidated Financial Results
for the first Quarter ending
g March 31,, 2018
Jun/2016

Jun/2017

changeNet Sales

27.7

26.5

－1.2

Ethical drugs
Business

26.4

25.1

－1.3

◆Sales of new
ethical drugs

21.8

18.2

－3.6

●Japan21.7

18.0－3.701
0.1

0.2＋0 1＋0.1（¥ billion）●Overseas◆Generic drugs

HealthcareBusiness

4.6
1.3

6.9
1.3

＋2.30

■Net Sales¥26.5bln

Year onYear(- 1.2)

◆Ethical drugs business¥25.1bln(- 1.3)¥18.0bln(- 3.7)● Sales of new ethical drugs
・ Flutiform
・ Uritos
・ Desalex※
・ Kipres・ Pentasa
・ Mucodyne

Jun/2016⇒Jun/2017

2.3
2.0－
9.9
4.0
2.4

⇒
⇒
⇒
⇒
⇒
⇒

2.8
1.9
0.5
5.2
4.0
2.1

(＋0.5)(－0.1)((＋0.5))(－4.7)(0)(－0.3)※Launch(11/2016)●Sales of new ethical drugs
g in Overseas¥0.2bln(＋ 1))●Sales of Generic drugs¥6.9bln(＋2.3)◆Healthcare Business¥1.3bln(■O■Operatingti IncomeI¥2 6bl¥2.6bln(－0.6)
0 6)

・Increase of MONTELKAST AG sales0).

Operating
Income

3.2

2.6

－0.6

Ordinary
Income35
3.5

28
2.8－0.7
07

Net Income

2.6

2.4－0.2◆Operating Income margin decreased 1.9 percentage points to 9.8%
●Cost of Sales Ratio : increased 3.0 percentage points (42.0%⇒45.0%)
・Sales of new ethical drugs
g decreased ・Sales of ggeneric drugs
g increased●R&D Ratio : decreased 1.5 percentage points (10.9%⇒9.4%)
・¥3.0bln⇒¥2.5bln －¥0.5bln
・The effect of the increased due to Last year of project progress. (KRP-AM1977X)●SG&A Ratio (excluding R&D expenses) : increased 0.5 percentage points((35.3%⇒35.8%))
・¥99.8bln⇒¥9.5bln
8b
9 5b¥－0.3bln
0 3b・Decrease of sales and general costs and labor costs.

■Net Income¥2.4bln(－ 0.2)・Extraordinary income : Approximately 0.6 billion yen associated with the recordingof the stocks transfer of Dr. Program Co., Ltd.

Main Product Sales Update（ Units: ¥ billion ）Interim term

Product name

Progress toFull term
forecast(%)

Jun/2017

4.5

5.4 10.1

12.0

2.3

2.8

＋20.3%

50.8%

22.8%

3.8

3.8

7.5

7.6

2.0

1.9

－5.8%

48.3%

24.4%

－0.9

1.0

3.5

－0.5

―

48.1%

12.8%

17.8 10.2 32.7

21.0

9.9

5.2

－47.8%

50.5%

24.5%

6.3

5.5

14.9

11.1

3.3

3.1

－4.5%

57.0%

28.1%

7.9

7.9 15.5

15.6

4.0

4.0

－0.8%

49.6%

25.3%

（Mucoregulant）

4.4

3.7

9.9

8.3

2.4

2.1

－10.1%56.5%

25.6%

MONTELUKAST Tablets
“KM”

1.8

4.6

8.2

10.3

－2.7―

58.4%

26.0%

Milton

1.1

1.0

2.2

2.1

0.5

0.5

＋6.9%

51.8%

25.3%

U i （Kyorin）
Uritos（）(Overactive bladder)

Desalex(Antiallergic Agent)

Kipres（LT receptor antagonist）
For children

Pentasa(Ulcerative colitis andCrohn’s diseasetreatment)

MucodyneO
Over-thethcounterdrugs

Progress toInterim term
forecast(%)

Jun/2016(Combination drug for asthmatreatment)

Genericdrugs

YoYchangeg(%)

Mar/2018(f(forecast)t)

FlutiformSalesof new
ethicaldrugs(Japan)First quarter（April 1 to June 30）

Mar/2017

Sep/2016
p(Disinfectant)

Sep/2017(f(forecast)t)

Full term

4

Main R&D Activities -1 (as of July 31 2017)Ph III ~ Application submittedStage※Changes from the previous announcement(May 11 2017)

Compound/
Code

Therapy area/Action

OriginApplication(4/2017)※KRP-AM1977X(Oral agent）(Note:1)

New quinolone
synthetic antibacterial
agent

In-house

PhⅢ(3/2016)

KRP-AM1977Y(Injection）

New quinolone
synthetic antibacterial
agent

In-house

KRP-114V

Overactive bladder

Merck & Co.,KRP-114V is expected to improve urinary
frequency through stimulation of the beta 3
receptor in bladder which improves bladdermuscle relaxation.

PhⅢ(3/2017)

KRP-116D

Interstitial cystitis―Evaluation committee on unapproved or offlabeled drugs with high medical needs“Dimethyl sulfoxide(DMSO)”

PhⅢ(6/2017)※KRP-108P※KRP108P（Note:2）

A ti th ti
Anti-asthmatic(U.K.)(UK)
VecturaExpandEd theth indicationi di ti off Flutiform
Fl tifttopediatric patients

JJapanPreparing forApplicationOOverseas

PhⅡclinical trialendMerck & Co.,Features

Comments-Superior ability to combat drug-resistantgram-positive bacteria (incl. MRSA)-has a powerful antimicrobial activity against
anaerobic bacteria- Expectation of high clinical effects withexcellent tissue penetration-High degree of safety expected since safety
hurdles cleared prior to clinical trials
・License agreement withMerck & Co., Inc.,(7/2014)
・Co-Development and
Co-Marketing Agreementwith Kissei
Pharmaceutical Co., Ltd.
affiliate . (3/2016)･License agreement withMerck & CoCo., Inc
Inc., for Asia
(4/2017)

Note 1: For KRP-AM 1977 X,X additional nonclinical studies are required and will be carried out.
out
Note 2: KRP-108P, a Phase III clinical trial commenced for expand the indication of Flutiform, a compound for asthma treatment, to pediatric patients.

5Main R&D Activities -2 (as of July 31 2017)
POC Project (Ph I ~ Ph II)
Stage
Japan

Overseas

Compound/
Code

Therapy area/Action

OriginFeatures

Comments

PhⅡ(8/2015)

PhⅢ
Merz

KRP-209

Tinnitus

Merz

KRP-209 (Neramexane) is expected to improve thepatients' annoyance and difficulties in their life caused bytinnitus, mainly through its two pharmacological properties:
1) NMDA antagonistic activity and 2) Nicotinic acetylcholine
antagonistic activity

License agreement withMerz (11/2009)
Merz:Ph I clinical trial ofJapanese patients in US
completed (3/2010)

PhⅠ,Ⅱ（7/2015）(US)
Momotaro-Gene
prostate cancer(5/2014)

Ad-SGE-REIC

malignant pleural
mesothelioma

Okayama
University

A gene-therapy product using a novel tumor suppressor
gene of reduced expression in immortalized cells/ Dickkopf3 (REIC/Dkk-3), which was discovered by researchers fromOkayama University, as a therapeutic gene.
It is expected to have direct effect on primary tumor lesions
and indirect effect on metastatic tumor lesions as a g
genetherapy product that simultaneously induces tumor cellselective apoptosis and the activation of antitumor
immunity respectively.

Adopted to Next
generation Technology
Transfer Program(NexTEP)(6/2014)

6Main R&D Activities -3 (as of July 31 2017)
Licensing development（preclinical）
Compound/Code

Licensee /Collaborative
research

Therapyarea/Action

KRP-203

Novartis

GVHD

Stage/Overseas
PhⅠ

OriginIn-house

Features
Sphingosine-1-Phosphate Receptor Agonist .
immunomodukatory drug.

Comments
License agreement with Novartis(2/2006)
Novartis has decided to proceed with
development of KRP-203 for GvHD.

Preclinical-BMS

Nondisclosure

In-house

FPR-2 agonists that mainly inhibit themigration of neutrophils and exhibit antiinflammatory action.

License agreement with BMS(12/2015)

7

Reference8Segment information
for the first Quarter Ending March 31, 2018
Sales, Profit or Loss of each report segment(Units:¥ billion)

Sales

Year on Year

ProfitYear on Year

26 5
26.5

－1
1.2
226
2.6

－0
0.6
6

25.1

－1.3

2.5

－0.7

18 218.2－3.636●Overseas

18.0
0.2－3.70.1◆Generic drugs

6.92.3

Healthcare business1.30000.10

total
Ethical drugs business◆S l off new ethical◆Salesthi l drugsd●Japan

Amount of adjustment－－9Consolidated Financial Results
for the first Quarter ending March 31, 2018
（単位：百万円）

Interim termFirst quarter （April 1 to June 30）

Full term

ChangeYoYchange(%)

Progressto interimterm forecast(%)

gtoProgress
full term
forecast(%)

26,458－1,249－4.5%

48.5%

23.3%

26,412

25,112－1,300

－4.9%

48.4%

23.4%

78,900,21,805

18,242－3,563－16.3%

47.6%

23.1%

83,77775,50021,741

17,999－3,742－17.2%

50.4%

23.8%

2,600

764

3 300
3,300

64

242

＋178

＋278.1%

9.3%

7.3%

10,321

13,50025,02428,500

4,606

6,870

＋2,264＋49.2%

50.9%

24.1%

Healthcare
business

2 691
2,691

2 700
2,700

5 807
5,807

5 900
5,900

1 295
1,295

1 346
1,346

＋51

9%
＋3.9%
＋3

49 9%
49.9%

22 8%
22.8%

Operatingincome

3,663

5,300

10,413

12,1003,244

2,595－649－20.0%

49.0%

21.4%

O diOrdinary
income
i

3 921
3,921

5 600
5,600

10,874

12,600

3 485
3,485

2 805
2,805

680
－680

－19.5%
19 5%

50.1%
0 1%

22 3%
22.3%

Net income

2,684

4,500

7,305

9,700

2,580

2,393

－187

－7.3%

53.2%

24.7%

(Units: ¥million)
Sep/2016

Sep/2017(forecast)

Sales

54,628

Ethical drugs
business

Mar/2017

Mar/2018(forecast)Jun/2016

Jun/2017

54,600115,373

113,400

27,70751,93651,900109,566

107,400

ethical drugs

41,61538,300,84,542●Japan41,272

35,700343◆Genericdrugs◆Sales of new●Overseas10