Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail.

January 15, 2024

Non-consolidated Financial Results
for the Nine Months Ended November 30, 2023
[Japanese GAAP]
Company name:
TMS Co., Ltd.
Listing:
Tokyo Stock Exchange
Securities code:
4891
URL:
https://www.tms-japan.co.jp/
Representative:
Takuro Wakabayashi, Chief Executive Officer
Inquiries:
Go Ito, Chief Financial Officer
Telephone:+81-42-307-7480
Scheduled date to file quarterly securities report:
January 15, 2024
Scheduled date to commence dividend payments:–
Preparation of supplementary material on quarterly financial results: None
Holding of quarterly financial results briefing:
None(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Non-consolidated financial results for the nine months ended November 30, 2023 (from March 1, 2023
to November 30, 2023)(1) Non-consolidated operating results (cumulative)
Operating revenue
Nine months ended(Percentages indicate year-on-year changes.)

Operating income

Ordinary income

Net income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

November 30, 2023

–

–

(566)

–

(563)

–

(564)

–

November 30, 2022

–

–

(412)

–

(753)

–

(753)

–

Basic earnings per share
Nine months ended

Diluted earnings per
share

Yen

Yen

November 30, 2023

(15.42)–

November 30, 2022

(22.67)–

Notes: 1. The Company began disclosing the non-consolidated financial results for the first nine months of the fiscal year startingfrom the fiscal year ended February 28, 2023. Therefore, the year-on-year changes for the nine months ended November
30, 2022 are not shown.
2. Diluted earnings per share is not stated because, although potential shares existed, a basic loss per share was recorded.

(2) Non-consolidated financial position
Total assets
As of

Net assets

Equity-to-asset ratio

Millions of yen

Millions of yen%

November 30, 2023

3,229

3,160

97.6

February 28, 2023

3,790

3,714

98.0

Reference:

EquityAs of November 30, 2023
As of February 28, 2023

¥3,152 million¥3,714 million

2. Cash dividends
Annual dividends per shareFirst quarter-end
Fiscal year ended
February 28, 2023
Fiscal year ending
February 29, 2024

Second quarter-end

Third quarter-end

Yen

Yen

Yen

Yen

Yen

–

0.00

–

0.00

0.00

–

0.00

–
0.00

0.00

Fiscal year ending
February 29, 2024
(Forecast)Fiscal year-end

Total

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Forecast of non-consolidated financial results for the fiscal year ending February 29, 2024 (from March
1, 2023 to February 29, 2024)
The forecast of non-consolidated financial results for the fiscal year ending February 29, 2024 has not been presented as it isdifficult to reasonably calculate the forecast for financial results. For details concerning the reasons, business policy, estimatedcosts, etc. for the fiscal year ending February 29, 2024, please refer to “(3) Explanation of earnings forecasts and other forwardlooking statements” under “1. Qualitative information regarding financial results for the nine months ended November 30, 2023”
on page 5 of the attached material.

* Notes(1) Adoption of accounting treatment specific to the preparation of quarterly financial statements: Yes
Note: For details, please refer to “Adoption of accounting treatment specific to the preparation of quarterly financial statements”
under “(3) Notes to quarterly financial statements” of “2. Quarterly financial statements and significant notes thereto” onpage 8 of the attached material.

(2) Changes in accounting policies, changes in accounting estimates, and restatement(i) Changes in accounting policies due to revisions to accounting standards and other regulations: None(ii) Changes in accounting policies due to other reasons: None(iii) Changes in accounting estimates: None(iv) Restatement: None
(3) Number of issued shares (common shares)(i)

Total number of issued shares at the end of the period (including treasury shares)
As of November 30, 2023

36,604,880 shares

As of February 28, 2023

36,574,880 shares(ii) Number of treasury shares at the end of the period
As of November 30, 2023

10 shares

As of February 28, 2023

– shares(iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)
Nine months ended November 30, 2023

36,587,203 shares

Nine months ended November 30, 2022

33,228,218 shares* Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants oran audit corporation.
* Proper use of earnings forecasts, and other special matters
Caution regarding forward-looking statements and others
The forward-looking statements, including earnings forecasts, contained in these materials are based on
information currently available to the Company and on certain assumptions deemed to be reasonable.
Consequently, any statements herein do not constitute assurances regarding actual results by the Company.
Actual financial results may differ significantly from the forecasts for various reasons. For the suppositions thatform the assumptions for earnings forecasts and cautions concerning the use thereof, please refer to “(3)Explanation of earnings forecasts and other forward-looking statements” of “1. Qualitative information regarding
financial results for the nine months ended November 30, 2023” on page 5 of the attached material.

Attached Material
Index
1. Qualitative information regarding financial results for the nine months ended November 30, 2023 .......................... 2(1) Explanation of operating results ......................................................................................................................... 2(2) Explanation of financial position ........................................................................................................................ 4(3) Explanation of earnings forecasts and other forward-looking statements ........................................................... 5
2. Quarterly financial statements and significant notes thereto ........................................................................................ 6(1) Quarterly balance sheet ....................................................................................................................................... 6(2) Quarterly statement of income ............................................................................................................................ 7(Cumulative) ....................................................................................................................................................... 7(3) Notes to quarterly financial statements ............................................................................................................... 8
Notes on premise of going concern..................................................................................................................... 8
Notes when there are significant changes in amounts of shareholders’ equity ................................................... 8
Adoption of accounting treatment specific to the preparation of quarterly financial statements ........................ 8
Segment information ........................................................................................................................................... 8
Subsequent events ............................................................................................................................................... 9-1-

1. Qualitative information regarding financial results for the nine months ended November 30, 2023
(1) Explanation of operating results
In the first nine months of this fiscal year (March 1, 2023 to November 30, 2023), the Japanese economy
saw further normalization of economic activities with a recovery in consumer spending and inbound tourist
demand. However, the outlook remains uncertain due to rising prices associated with surging resource andraw material prices caused by prolonged geopolitical risks and the Bank of Japan’s monetary policy
revisions, leading to an upward trend in inflation rates and long-term interest rates.
Under these circumstances, the Company vigorously conducted the business activities, aiming at
developing unique drugs based on unconventional mechanisms and bringing them to the market.
(i)

TMS-007-related activities

Biogen MA Inc. (“Biogen”) was developing TMS-007 (BIIB131) which they acquired from the Company
in May 2021 for the indication of acute cerebral infarction. Biogen planned to initiate, late-stage Phase 2
clinical trials in the first half of 2023, however, they announced on April 25, 2023, in its first quarter 2023
earnings release, that the initiation of the Phase 2 clinical trial was suspended and the development planof TMS-007 (BIIB131) would be reevaluated.
Subsequently, Biogen notified the Company that they considered transferring the option agreement
between the Company and Biogen entered into in 2018 (the “Option Agreement”) to Ji Xing
Pharmaceuticals Hong Kong Limited (“JIXING HK”), a wholly owned subsidiary of Ji Xing
Pharmaceuticals Limited (Cayman Islands) (“JIXING”). The transfer took place on January 11, 2024.
Concurrently, the Company entered into discussions with JIXING and RTW Investments, LP (“RTW”),
an investment company based in New York, USA, which owns more than 80% of JIXING’s shares. The
Company entered into a series of agreements including amendments to the Option Agreement entailing toform an alliance with JIXING and RTW as summarized below (“Alliance”):[Details of the Alliance (Capital and Business Alliance)]
The Alliance consists of A) JIXING HK taking over the contractual position in the Option Agreementfrom Biogen with amendments of the terms thereof (including the Company’s acquiring shares of JIXING),
B) the Company acquiring the development and marketing rights from JIXING HK for a JIXING HK’s
pipeline product, JX09, in Japan at no cost, and C) a fund managed by RTW acquiring shares of theCompany.
JX09 is an oral, novel, small molecule aldosterone synthesis inhibitor being developed by JIXING for thetreatment of patients with treatment-resistant or uncontrolled hypertension and a Phase 1 clinical trial is
expected to begin in the first half of 2024. JX09 has demonstrated excellent aldosterone reduction activity
as well as a good safety profile in preclinical studies, suggesting a potential to become the best-in-classdrug.
RTW is a leading global investor focused on the healthcare industry, with approximately US$5.4 billion
in assets under management as of September 30, 2023. RTW established JIXING in 2019, has led several
subsequent rounds of additional investment, and currently owns over 80% of JIXING through the funds
it manages.
A) Option Agreement
・

JIXING HK shall take over the contractual position of the Option Agreement from Biogen andacquire the worldwide intellectual property rights of the SMTP compounds including TMS-007
and TMS-008.

・

The Company shall acquire the rights to develop and market TMS-007 in Japan from JIXING HK
at no cost. The Company shall also acquire the rights to develop and market the grant-backcompounds, including TMS-008, for specific indications at no cost.

・

The Company shall acquire JIXING common shares worth US$5 million (equivalent to 0.87%
equity interest in JIXING including dilutive shares) as an up-front transaction for TMS-007.

・

The Company and JIXING HK shall establish a Joint Development and Commercialization
Committee to regularly exchange information and hold discussions on the development of TMS-2-

007.
・

The Company may receive the following considerations based on the progress of development
and commercialization of TMS-007 by JIXING HK.
a. Development milestones up to a maximum total of US$12.5 million
b. Sales milestones up to a maximum total of US$355 millionc. Royalties based on a tiered rate in the high single digits to low teens on TMS-007 sales interritories excluding JapanThe specific development policy for TMS-007 shall be discussed at JIXING HK in the future.

・JIXING shall cover 75% of the development expenses in Japan incurred by the Company as partof the global development of TMS-007, up to a maximum of US$10 million.

B) Free License for Development and Marketing Rights of JX09 in Japan・

The Company and JIXING have entered into a binding term sheet, according to which, theCompany would obtain an exclusive, royalty-free license to develop JX09 in Japan from JIXING
HK and JIXING shall cover 75% of the development expenses incurred by the Company in Japan
as part of the global development of JX09, up to a maximum of US$5 million.

・Discussions to finalize the details of a definitive agreement based on the above term sheet willcontinue.

C) Acquisition of the Company’s shares by RTW
・

The funds managed by RTW to which the shares will be allocated will acquire the shares issued
by the Company at a price of ¥187 per share, for a total of ¥684 million. The share price wasdetermined by the volume weighted average price (“VWAP”) of the Company’s common sharesin regular trading during the last five trading days until January 10, 2024, the business day prior
to the Board of Directors’ resolution regarding the issuance of the shares.

(ii) TMS-008-related activities
TMS-008 is a drug candidate for the treatment of acute kidney injury and cancer cachexia. Progress wasmade in CMC (Chemistry, Manufacturing, and Control) and non-clinical GLP toxicology studies,
preparing for a Phase 1 clinical trial. The manufacturing of the active pharmaceutical ingredient forclinical trials has been completed and the manufacturing of the formulation is in progress. The second
preliminary meeting with the regulatory authorities (Pharmaceuticals and Medical Devices Agency(PMDA)) was held in November 2023, and the preparation for the face-to-face advice meeting after thethird preliminary meeting is ongoing. As the preparation of the Phase 1 clinical trial implementation, theselection of a contract research organization (CRO), a clinical trial site, and a contract laboratory testing
company were completed. The Japanese patent and the Chinese patent were granted in September 2023
and in December 2023, respectively; the patents are scheduled to be examined in major countries. The
Company had obtained a license to use such patents from Biogen at no cost, and after JIXING HK took
over the patents, the Company continues to be granted such license from JIXING HK at no cost.
We are currently evaluating manufacturing methods of TMS-009, which is positioned as a backup to
TMS-008.
(iii) Pipeline expansion
The Company has made substantial efforts to expand its pipeline through internal and external initiatives.
With regard to internal initiatives, the Company continued to search for novel soluble Epoxide Hydrolase(sEH) inhibitors, leveraging the Company’s knowledge and experience on the enzyme accumulated
through development of SMTP compounds (TMS-007 and TMS-008). To achieve this goal, the Company
has been taking multiple approaches including optimization of AI-generated compounds and screening ofa natural compound library.
With regard to external initiatives, the Company continued to search for and evaluate early-stage programs
being developed in academic research institutions and biopharma companies. On May 8, 2023, we-3-concluded an option agreement with Hokkaido University for exclusive evaluation and licensing of a drugcandidate substance, which has completed the first phase of the exclusive evaluation period and is now
under the second phase of evaluation. Furthermore, for this drug candidate, we have concluded a threeway joint research agreement including Kanazawa University. With regard to another project pertaining
to an option agreement with Hokkaido University in July 2022, the Company completed evaluation andadvanced into a next step discussion with the university.
The Company established the Joint Research Chair at Tokyo University of Agriculture and Technology in
April 2023 (see item (iv) below) to cultivate new pipeline candidates by leveraging the collaboration withthe said university where the SMTP compounds were discovered and developed.
(iv) Reorganization of research and development structure to enhance activities
Effective on April 1, 2023, Keiji Hasumi, Ph.D., a co-founder of the Company, was assigned as a fulltime Chief Scientific Officer, following his retirement from the professor position at Tokyo University ofAgriculture and Technology on March 31, 2023. Dr. Hasumi leads the research activities in the Company.
He continues to be the Board Member of the Company. Accordingly, the research and development
activities of the Company are led by Dr. Hasumi, Chief Scientific Officer and Noriaki Inamura, Ph.D.,
Executive Vice President, Development, as summarized below.
In addition, in April 2023, the Joint Research Chair with Tokyo University of Agriculture and Technology
sponsored by the Company was established in order to strengthen its research and development functions.
Name
Keiji Hasumi
Ph.D.
Noriaki Inamura
Ph.D.

Title

New field in charge

Old field in charge

Chief Scientific Officer

Research-

Executive Vice
President, Development

Development

Research anddevelopment

As a result of these activities, operating expenses for the nine months ended November 30, 2023 totaled¥566,505 thousand, which included ¥364,393 thousand in research and development expenses, mainly
development expenses for TMS-008, and ¥202,112 thousand in other selling, general and administrative
expenses.
Based on these results, operating loss was ¥566,505 thousand (compared to operating loss of ¥412,616
thousand in the same period of the previous fiscal year), ordinary loss was ¥563,602 thousand (compared
to ordinary loss of ¥753,942 thousand in the same period of the previous fiscal year), and net loss was¥564,315 thousand (compared to net loss of ¥753,159 thousand in the same period of the previous fiscal
year).
As the Company operates a single segment of drug development business, operating results by segment
are omitted.
(2) Explanation of financial position
AssetsTotal assets as of the end of the third quarter were ¥3,229,837 thousand, a decrease of ¥560,377 thousand
from the end of the previous fiscal year.
This was mainly due to a decrease of ¥522,134 thousand in cash and deposits due to payments for operating
expenses.
Liabilities
Total liabilities as of the end of the third quarter were ¥69,769 thousand, a decrease of ¥6,391 thousand
from the end of the previous fiscal year.
This was mainly due to a decrease of ¥14,223 thousand in accounts payable - other due to payments foroutsourcing expenses and a decrease of ¥13,674 thousand in income taxes payable due to payments for-4-enterprise taxes, despite an increase of ¥17,137 thousand in accrued expenses due to the recording of fee
expenses.
Net assets
Net assets as of the end of the third quarter were ¥3,160,067 thousand, a decrease of ¥553,986 thousand
from the end of the previous fiscal year.
This was mainly due to a decrease of retained earnings, resulting from the recording of ¥564,315 thousandin net loss.
(3) Explanation of earnings forecasts and other forward-looking statements
The Company’s policy for future outlook is to postpone the disclosure of its earnings forecasts for the time
being. It is difficult to carry out earnings forecasts right now, since the Company is presently at a stage of
implementing upfront investment to advance research and development without having products brought
to market, and its financial results are influenced significantly by milestone revenue and other external
events. Once the Company is in the position of being able to forecast stable revenue from royalty and otherrecurrent revenue, it will disclose its earnings forecasts.
In the fiscal year ending February 29, 2024, the Company will continue to develop TMS-008. In addition,
it will work to expand its pipeline by 1) searching for candidate compounds for sEH inhibitors, leveraging
its drug discovery expertise, and 2) introducing early-stage programs from academia, research institutions,and biopharma companies.
In light of this, operating expenses for the fiscal year ending February 29, 2024 are expected to be as
follows.
 Research and development expenses are expected to be in the range of ¥500 million to ¥800 million.
 Other selling, general and administrative expenses are expected to be in the range of ¥350 million to¥450 million.

-5-

2. Quarterly financial statements and significant notes thereto(1) Quarterly balance sheet(Thousands of yen)
As of February 28, 2023

As of November 30, 2023

3,584,667
223
121,715
12,97047,03336
3,766,646

3,062,532–
97,04818,216
31,052350
3,209,200

12,142
4,112
7,314
23,5683,790,215

10,850
3,264
6,521
20,636
3,229,837

28,69019,557
19,3152,447
6,151
76,161
76,161

14,466
36,694
5,640
10,072
2,896
69,76969,7691,160,988
2,337,131
215,933–
3,714,053–
3,714,053
3,790,215

1,162,488
2,338,631(348,381)(2)
3,152,736
7,331
3,160,067
3,229,837

AssetsCurrent assets
Cash and deposits
Supplies
Advance payments to suppliers
Prepaid expenses
Consumption taxes refund receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable - otherAccrued expenses
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Share acquisition rights
Total net assets
Total liabilities and net assets-6-

(2) Quarterly statement of income(Cumulative)(Thousands of yen)
Nine months ended
November 30, 2022
Operating revenue
Operating expenses
Research and development expenses
Other selling, general and administrative expenses
Total operating expenses
Operating loss
Non-operating income
Subsidy income
Interest on tax refund
Other
Total non-operating income
Non-operating expenses
Going public expenses
Share issuance costs
Foreign exchange losses
Total non-operating expenses
Ordinary loss
Loss before income taxes
Income taxes
Net loss-7-

Nine months ended
November 30, 2023––

202,631
209,985
412,616(412,616)

364,393
202,112566,505(566,505)

–
89
–
89

3,202
42
83
3,328

328,186
12,598630
341,415(753,942)(753,942)(783)(753,159)

–
–
425
425
(563,602)(563,602)
712(564,315)(3) Notes to quarterly financial statements
Notes on premise of going concern
Not applicable.
Notes when there are significant changes in amounts of shareholders’ equity
Not applicable.
Adoption of accounting treatment specific to the preparation of quarterly financial statements
Calculation of tax expenses
The Company calculates tax expenses by rationally estimating the effective tax rate after applying the tax
effect on income before income taxes for the fiscal year including the third quarter of the year ending
February 29, 2024, and multiplying income before income taxes by the estimated effective tax rate.
However, in cases where the calculation of tax expenses using the estimated effective tax rate yields a
result that is considered not to be reasonable to a significant extent, the effective statutory tax rate is used.
Segment information[Segment information]
I

Nine months ended November 30, 2022
Segment information is omitted as the Company operates a single segment of drug development
business.

II Nine months ended November 30, 2023
Segment information is omitted as the Company operates a single segment of drug development
business.

-8-Subsequent events
Capital and Business Alliance and issuance of new shares through third-party allotment
At a meeting of the Board of Directors held on January 11, 2024, the Company resolved to enter into a
capital and business alliance (the “Capital and Business Alliance”) with Ji Xing Pharmaceuticals Limited(“JIXING”) and RTW Investments LP (headquartered in New York State in the United States;
representative: Roderick Wong, Managing Partner; “RTW”), and to issue new shares through third-party
allotment (the “Shares”) whose planned allottees are RTW Master Fund, Ltd., RTW Innovation Master
Fund, Ltd. and RTW Biotech Opportunities Ltd. (the “Planned Allottee(s)”), which are funds managed by
RTW.
The impact of these events on the financial results of the Company is currently being scrutinized.
I.

Overview of the Capital and Business Alliance
1. Reasons for the Capital and Business Alliance
The Company has focused its research and development on the small-molecule compound familycollectively referred to as SMTP (Stachybotrys Microspora Triprenyl Phenol) with thrombolytic
and anti-inflammatory activities. An SMPT called TMS-007 is an important part of the Company’s
pipeline. TMS-007 has been developed as a drug treating acute cerebral infarction. In the Phase
2a clinical trial conducted by the Company in Japan it achieved outstanding outcomes for efficacy
and safety, despite targeting patients up to 12 hours from onset, who are difficult to treat withexisting drugs. In response to the results in the Phase 2a clinical trial, Biogen MA Inc.
(headquartered in Massachusetts State in the United States; representative: Christopher A.
Viehbacher, President and Chief Executive Officer; “Biogen”), with which the Company enteredinto an option agreement in relation to the SMTP compound in 2018 (the “Option Agreement”),
exercised its option rights in May 2021 to acquire rights associated with the SMTP compound,and began preparations for the next clinical trial for TMS-007. However, due to a change in its
strategy, Biogen made the decision to transfer its position in the Option Agreement to a third-party,
for which it selected Ji Xing Pharmaceuticals Hong Kong Limited (headquartered in Hong Kong;
representative: Yanping Mou, CEO; “JIXING HK”), which is a subsidiary of JIXING(headquartered in the Cayman Islands; representative: Yanping Mou, CEO), a biotechnology
company that is based in China and active mainly in the cardiovascular and ophthalmologic fields.
JIXING HK is wholly owned by JIXING, and thus in substance the two constitute a single
organization.
The Company, in light of the matters provided below, and as a result of repeated negotiations withJIXING and RTW, elected to enter into the Capital and Business Alliance, which includes theamendments to the agreement. Firstly, the transfer reflects amendments to the Option Agreement
requested by JIXING. JIXING was established by global investment company and life sciences
specialist RTW, which holds more than 80% of JIXING through the funds it manages, it has
excellent development capabilities and it is an ideal partner for the Company. Secondly, althoughdevelopment milestones have been reduced from a total of $165 million to $12.5 million, after
taking into account the results of a valuation by a third-party organization that reflects theamendments to the agreement and incorporates the assumption that the Company will obtain therights in Japan to conduct development and sales of TMS-007 and the new JX09 program, theCompany has concluded that this sequence of transactions will result in an increase in expected
returns that will exceed the reduction in development milestones, and based on the expected
returns reverting to the Company will lead to an increase in corporate value that is greater thanpreviously forecast. Thirdly, the Company is looking to realize a shorter timeline than the one
required in a scenario in which the Company negotiates the return of the rights from Biogen andsubsequently transfers them to a new partner. Fourthly, the Company sees this as a better
alternative to the costs required for in-house research and development, etc. The Capital andBusiness Alliance includes an agreement for investments in the Company by the Planned Allottees,
which are the funds managed by RTW. RTW has shown its interest in the Company’s pipeline,
especially TMS-007. The Company believes that by becoming a shareholder of the Company,
RTW will not only facilitate the acquisition of knowledge relevant to the global expansion of theCompany’s products under the Option Agreement but also contribute to building and maintaining
a cooperative relationship with JIXING in a sustainable way, which will become a long-term-9-partner for drug development, and also contribute to increases in the corporate value of theCompany.
2. Details of the Capital and Business Alliance
The Capital and Business Alliance consists of (i) JIXING HK taking over the contractual positionin the Option Agreement from Biogen with amendments of the terms thereof (including theCompany’s acquiring shares of JIXING), (ii) the Company acquiring the development andmarketing rights from JIXING HK for a JIXING HK’s pipeline product, JX09, in Japan at no cost,and (iii) a fund managed by RTW acquiring shares of the Company.
(i) Option Agreement
 JIXING HK shall take over the contractual position of the Option Agreement from Biogen
and acquire the worldwide intellectual property rights of the SMTP compounds including
TMS-007 and TMS-008.
 The Company shall acquire the rights to develop and market TMS-007 in Japan fromJIXING HK at no cost. The Company shall also acquire the rights to develop and market
the grant-back compounds, including TMS-008, for specific indications at no cost.
 The Company shall acquire JIXING common shares worth US$5 million (equivalent to0.87% equity interest in JIXING including dilutive shares) as an up-front transaction for
TMS-007.
 The Company and JIXING HK shall establish a Joint Development andCommercialization Committee to regularly exchange information and hold discussions on
the development of TMS-007.
 The Company may receive the following considerations based on the progress ofdevelopment and commercialization of TMS-007 by JIXING HK.
 Development milestones up to a maximum total of US$12.5 million
 Sales milestones up to a maximum total of US$355 million
 Royalties based on a tiered rate in the high single digits to low teens on TMS-007 sales
in territories excluding JapanThe specific development policy for TMS-007 shall be discussed at JIXING HK in the
future.
 JIXING shall cover 75% of the development expenses in Japan incurred by the Company
as part of the global development of TMS-007, up to a maximum of US$10 million.
(ii) Free License for Development and Marketing Rights of JX09 in Japan The Company and JIXING have entered into a binding term sheet, according to which, theCompany would obtain an exclusive, royalty-free license to develop JX09 in Japan fromJIXING HK and JIXING shall cover 75% of the development expenses incurred by theCompany in Japan as part of the global development of JX09, up to a maximum of US$5
million.
 Discussions to finalize the details of a definitive agreement based on the above term sheet
will continue.
 JX09 is an oral, novel, small molecule aldosterone synthesis inhibitor being developed by
JIXING for the treatment of patients with treatment-resistant or uncontrolled hypertension
and a Phase 1 clinical trial is expected to begin in the first half of 2024. JX09 has
demonstrated excellent aldosterone reduction activity as well as a good safety profile inpreclinical studies, suggesting a potential to become the best-in-class drug.
(iii) Acquisition of the Company’s shares by RTW
 The allottees to be managed by RTW will acquire the shares issued by the Company at a
price of ¥187 per share, for a total of ¥684 million. The share price was determined by thevolume weighted average price (“VWAP”) of the Company’s common shares in regular
trading during the last five trading days until January 10, 2024, the business day prior to
the Board of Directors’ resolution regarding the issuance of the shares.

- 10 -

 RTW established JIXING in 2019, has led several subsequent rounds of additional
investment, and currently owns over 80% of JIXING through the funds it manages.
 RTW is a leading global investor focused on the healthcare industry, with approximately
US$5.4 billion in assets under management as of September 30, 2023.
II. Issuance of new shares through third-party allotment
1. Overview of offering(1)

Payment date

January 31, 2024

(2)

Number of newshares to be issued

3,659,487 common shares(3)

Issue price¥187 per share(4)

Amount of funds tobe procured(approximate net
amount to beobtained)¥674,324,069 (Note)(5)

Shares shall be allotted by way of third-party allotment to each Planned
Method of offeringor allotment (Planned Allottee as follows:
RTW Master Fund, Ltd.
2,083,830 shares
Allottees)
RTW Innovation Master Fund, Ltd.
1,524,886 shares
RTW Biotech Opportunities Ltd
50,771 shares

(6)

Other

Note:

Each of the above items shall be subject to the notification filed under
the Financial Instruments and Exchange Act coming into effect.

The amount of funds to be procured is the total amount to be paid in for the Shares, less theapproximate cost of issuing the Shares.

2. Purpose and reasons for offering
Please refer to “I. Overview of the Capital and Business Alliance, 1. Reasons for the Capital andBusiness Alliance” and “I. Overview of the Capital and Business Alliance, 2. Details of the Capitaland Business Alliance” above.

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