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.

October 13, 2023

Non-consolidated Financial Results
for the Six Months Ended August 31, 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:
October 13, 2023
Scheduled date to commence dividend payments:–
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:
Yes (for institutional investors and analysts)(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Non-consolidated financial results for the six months ended August 31, 2023 (from March 1, 2023 toAugust 31, 2023)(1) Non-consolidated operating results (cumulative)
Operating revenue(Percentages indicate year-on-year changes.)

Operating income

Ordinary income

Net income

Six months ended

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

August 31, 2023

–

–

(345)

–

(342)

–

(342)

–

August 31, 2022

–

–

(268)

–

(469)

–

(468)

–

Basic earnings per share
Six months ended

Diluted earnings per
share

Yen

Yen

August 31, 2023

(9.37)–

August 31, 2022

(14.14)–

Notes: 1. The Company began disclosing the non-consolidated financial results for the first six months of the fiscal year startingfrom the fiscal year ended February 28, 2023. Therefore, the year-on-year changes for the six months ended August 31,
2023 are not shown.
2. Diluted earnings per share is not stated because, although potential shares existed for the six months ended August 31,
2022, the Company’s shares are unlisted and it is therefore not possible to ascertain an average share price during theperiod, and also because, although potential shares existed for the six months ended August 31, 2023, a basic loss per share
was recorded.

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

Net assets

Millions of yen

Equity-to-asset ratio

Millions of yen%

August 31, 2023

3,437

3,376

98.1

February 28, 2023

3,790

3,714

98.0

Reference:

EquityAs of August 31, 2023
As of February 28, 2023

¥3,373 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 six months ended August 31, 2023” onpage 4 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 “(4) Notes to quarterly financial statements” of “2. Quarterly financial statements and significant
notes thereto” on page 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 August 31, 2023

36,594,880 shares

As of February 28, 2023

36,574,880 shares(ii) Number of treasury shares at the end of the period
As of August 31, 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)
Six months ended August 31, 2023

36,582,487 shares

Six months ended August 31, 2022

33,102,080 shares* Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants
or an 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 six months ended August 31, 2023” on page 4 of the attached material.

Attached Material
Index
1. Qualitative information regarding financial results for the six months ended August 31, 2023 .................................. 2(1) Explanation of operating results ......................................................................................................................... 2(2) Explanation of financial position ........................................................................................................................ 3(3) Explanation of earnings forecasts and other forward-looking statements ........................................................... 4
2. Quarterly financial statements and significant notes thereto ........................................................................................ 5(1) Quarterly balance sheet ....................................................................................................................................... 5(2) Quarterly statement of income ............................................................................................................................ 6(Cumulative) ....................................................................................................................................................... 6(3) Quarterly statement of cash flows ....................................................................................................................... 7(4) 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 ........................................................................................................................................... 8-1-1. Qualitative information regarding financial results for the six months ended August 31, 2023
(1) Explanation of operating results
In the first six months of this fiscal year (March 1, 2023 - August 31, 2023), while normalization of
economic activities continued and improvement in private consumption were noted in the Japanese
economy, the economic outlook remains unclear due to foreign currency fluctuations due to the prolonged
geopolitical instabilities and rising prices of goods accompanying soaring resource and raw materials
prices.
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

TMS-007/BIIB131 is a drug candidate for the treatment of acute ischemic stroke which was acquired byBiogen MA Inc. (“Biogen”) in May 2021. A Phase 2b clinical trial was planned to be initiated in the firsthalf of 2023. Details of the study were published in the U.S. clinical trial database, ClinicalTrials.gov, on
March 10, 2023, in which the estimated study start date was stated as April 17, 2023. On April 25, 2023,
Biogen announced in its first quarter 2023 earnings call that it would pause the initiation of the Phase 2b
clinical trial of TMS-007/BIIB131 and reassess whether it should initiate the study. In Biogen’s second
quarter 2023 earnings call on July 25, 2023, the status of TMS-007/BIIB131 remained unchanged, andthat is the current status to date. The information in the ClinicalTrials.gov was updated twice, and presently
the estimated study start date is indicated to be December 1, 2023. The key information of the study issummarized in the table below. The Company continues to maintain close communication with Biogen
and is requesting prompt decision making.
(https://clinicaltrials.gov/ct2/show/NCT05764122)
A Multicenter, Operationally Seamless, Double-Blind, Dose-Ranging,
Placebo-Controlled, Randomized, Parallel-Group, Phase 2b Study to
Official Title
Evaluate the Efficacy and Safety of Intravenous BIIB131 for ParticipantsWith Ischemic Stroke Between 4.5 and 24 Hours After Last Known Well
Estimated Enrollment

760 participants

Estimated Start Date

December 1, 20231

Estimated Completion Date July 7, 2025
[Note] 1. The registered information was updated again on July 25, 2023, from April 17, 2023, toDecember 1, 2023.
(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. Manufacturing of the drug substance for a clinical trial was completed
in the second quarter of this fiscal year. In addition, a consultation meeting with the PMDA
(Pharmaceuticals and Medical Devices Agency) was held in June 2023, and selection of the CRO (Contract
Research Organization) has started.
With regard to TMS-009, a backup compound of TMS-008, the Company is currently investigating
methods for its manufacturing.
(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 of-2-

a natural compound library. With regard to external initiatives, the Company continued to search for andevaluate early-stage programs being developed in academic research institutions and biopharmacompanies. The Company entered into an option agreement with Hokkaido University on May 8, 2023, to
exclusively evaluate and license certain compounds, and evaluation of those compounds has started. With
regard to another program pertaining to an option agreement with Hokkaido University in July 2022, theCompany completed evaluation and has now entered into a next step discussion with the university.

(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 the 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, a research alliance laboratory with Tokyo University of Agriculture andTechnology sponsored by the Company was established in order to strengthen its research anddevelopment 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 six months ended August 31, 2023 totaled¥345,107 thousand, which included ¥213,843 thousand in research and development expenses, mainly for
TMS-008, and ¥131,264 thousand in other selling, general and administrative expenses.
Based on these results, operating loss was ¥345,107 thousand (compared to operating loss of ¥268,513
thousand in the same period of the previous fiscal year), ordinary loss was ¥342,149 thousand (compared
to ordinary loss of ¥469,091 thousand in the same period of the previous fiscal year), and net loss was¥342,624 thousand (compared to net loss of ¥468,070 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(i)

Assets, liabilities and net assets

AssetsTotal assets as of the end of the second quarter were ¥3,437,597 thousand, a decrease of ¥352,617 thousand
from the end of the previous fiscal year.
This was mainly due to a decrease of ¥336,391 thousand in cash and deposits mainly due to payments for
operating expenses.
Liabilities
Total liabilities as of the end of the second quarter were ¥61,238 thousand, a decrease of ¥14,922 thousand
from the end of the previous fiscal year.
This was mainly due to a decrease of ¥14,435 thousand in accounts payable - other due to payments foroutsourcing.

-3-Net assets
Net assets as of the end of the second quarter were ¥3,376,358 thousand, a decrease of ¥337,694 thousand
from the end of the previous fiscal year.
This was mainly due to a decrease of retained earnings, resulting from the recording of ¥342,624 thousandin net loss.
(ii) Cash flows
Cash and cash equivalents (“cash”) as of the end of the second quarter were ¥3,248,275 thousand, adecrease of ¥336,391 thousand from the end of the previous fiscal year. The status of cash flows for thesix months ended August 31, 2023 is as follows.
Cash flows from operating activities
Net cash used in operating activities for the six months ended August 31, 2023 totaled ¥336,694 thousand(compared to ¥364,367 thousand used in the same period of the previous fiscal year). This was mainly due
to the recording of loss before income taxes.
Cash flows from investing activities
Net cash used in investing activities for the six months ended August 31, 2023 totaled ¥1,695 thousand(compared to ¥6,835 thousand used in the same period of the previous fiscal year). This was due topurchase of property, plant and equipment.
Cash flows from financing activities
Net cash provided by financing activities for the six months ended August 31, 2023 totaled ¥1,997
thousand (compared to ¥233,314 thousand used in the same period of the previous fiscal year). This wasdue to proceeds from issuance of shares resulting from exercise of share acquisition rights.
(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.

-4-

2. Quarterly financial statements and significant notes thereto(1) Quarterly balance sheet(Thousands of yen)
As of February 28, 2023
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-5-

As of August 31, 2023

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

3,248,275
349
129,837
18,813
18,53224
3,415,832

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

11,432
3,546
6,785
21,764
3,437,597

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

14,25428,447
9,662
2,601
6,273
61,23861,2381,160,988
2,337,131
215,933–
3,714,053–
3,714,053
3,790,215

1,161,988
2,338,131(126,691)(2)
3,373,426
2,932
3,376,358
3,437,597

(2) Quarterly statement of income(Cumulative)(Thousands of yen)Six months ended
August 31, 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
Foreign exchange losses
Total non-operating expenses
Ordinary loss
Loss before income taxes
Income taxes
Net loss-6-

Six months ended
August 31, 2023––

151,548
116,964
268,513(268,513)

213,843
131,264
345,107(345,107)

–
89
–
89

3,202
42
29
3,274

199,943724
200,667(469,091)(469,091)(1,020)(468,070)

–
316
316
(342,149)(342,149)
475(342,624)

(3)Quarterly statement of cash flows(Thousands of yen)Six months ended
August 31, 2022

Cash flows from operating activities
Loss before income taxes
Depreciation
Increase (decrease) in provision for bonuses
Share-based payment expenses
Subsidy income
Going public expenses
Decrease (increase) in inventories
Decrease (increase) in advance payments to suppliers
Decrease (increase) in consumption taxes refund
receivable
Increase (decrease) in accrued expenses
Increase (decrease) in accounts payable - other
Increase/decrease in other assets/liabilities
Subtotal
Subsidies received
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from issuance of shares resulting fromexercise of share acquisition rights
Payment for going public expenses
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period-7-

Six months ended
August 31, 2023

(469,091)
2,401
565
–
–
199,943(136)(11,995)(342,149)
3,158
154
2,932
(3,202)–(125)(8,122)

68,58728,5001,531(163,220)
7,996(363,417)–(950)(364,367)

8,890(14,623)(14,357)(338,946)
3,202
(950)
(336,694)(6,835)(6,835)(1,695)(1,695)–2,000(233,314)–(233,314)(604,517)
2,598,002
1,993,484

–
(2)
1,997
(336,391)
3,584,667
3,248,275

(4) 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 second 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

Six months ended August 31, 2022
Segment information is omitted as the Company operates a single segment of drug development
business.

II Six months ended August 31, 2023
Segment information is omitted as the Company operates a single segment of drug development
business.

-8-