First quarter of fiscal 2018
IR meeting

August 8 , 2018
KYORIN Holdings, Inc.
P
President
id t Minoru
Mi
H
HogawaOverview of consolidated results- consolidated results, and progress of the main products

Consolidated Financial Results and Forecast
Changes in Capital Policy2Overview of consolidated
results3

Outline of First Quarter Consolidated Financial Results
for the Fiscal Year Ending March 31, 2019（¥ billion）

First quarter
Jun / 2017

YoY

First quarter
Jun / 2018

Progress toInterim term

Changechange（%）

forecast(%)

Net sales

26.5

25.1

－1.4

－5.0

50.1

Operatingincome

2.6

1.3

－1.3

－49.1

69.5

Ordinary
income

2.8

1.6

－1.2

－43.1

72.6

Net income

2.4

1.1

－1.3

ー55.0

71.8

4

Highlights of Business Performance ① （Sales ）Sales （ Units: ¥ billion）

30

25【 Net Sales ¥ －1.4bln】

26 5
26.5

Healthcare Business¥＋0.1bln

25.1

1.3

・Growth of RUBYSTA and Milton

1.4

6.9

【 Ethical Drugs Sales ¥ －1.4bln】

7.5

20

0.2
0.1

15

【 Ethical Drugs】【 Ethical Drugs】

25.1
10

Generic drugs ¥＋0.6bln

18

23.7

・Increase of MONTELKAST AG sales
・Sales to other companies decreased

Ethical drug sales overseas¥ー 0.1bln

16.1

5

Income related to Gatifloxacin decreased

Ethical drug sales in Japan￥－1.9bln

0

JUN

JUN

/2017

/2018

・Despite steady growth in Flutiform and
Desalex sales
・Decreased by the expiration of the patentfor KIPRES.

5

Main Product Sales Update（ Units: ¥ billion ）change（%）

Progress toInterim term
forecast(%)

＋0.2

＋9.4

52.5%

1.7

－0.2

－8.8

50.1%

0.5

1.5

＋1.0

＋230.8

48.6%

2.0

1.6

－0.4

－23.1

53.7%

31
3.1

17
1.7

－1.4
14

－45.7
45 7

57 6%
57.6%

4.0

3.5

－0.5

－12.4

47.2%

（Mucoregulant）

2.1

1.7

－0.4

－22.5

51.4%

MONTELUKAST Tablets
“KM”

27
2.7

33
3.3

＋0.6

＋21.9

68.1%

Flutiform(Combination drug for asthma treatment)i ）（K
U it （Kyorin）
Uritos(Overactive bladder)

Desalex((Antiallergicg Agent)g)

Kipres（LT receptor antagonist）

For children

Pentasa(Ulcerative colitis andCrohn’s diseasetreatment)

Mucodyne

Jun/2017

Jun/2018

2.8

3.0

1.9

change6

Highlights of Business Performance ② （Income ）（ Units: ¥ billion）【Operating Income ¥－1.4bln】

3Gross Profit decreased
Net Sales：
decreased ¥1.4bln year on year
Cost of sales ratio :Increased 2.6% year on year

2.5

－1.4

2

1.5

・Decreased in sales of drugs due to drug pricerevisions. (Kyorin Pharmaceutical drug pricerevision rate: 7% range)
Rising cost of sales ratio

2.6

0

R&D expenses is flat

ー0.1・¥2.5billion（FY20171Q)¥2 5billion(FY20181Q)⇒ ¥2.5billion(FY20181Q)

1

1.3

0.5

SG&A(excluding R&D)
decreased
・Decrease of Labor costs¥9.5billion(FY2017 1Q）⇒ ¥9 4billion(FY2018 １Q)

0Operating Income Gross Profit(FY2017 1Q)

R&D

Operating Income
SG&A(excluding R&D) （FY2018 1Q ）Progress to Interim term
forecast(%)
Operating Income：69.5%

7

Forecast of Business Performance Second quarter（Income ）（ Units: ¥ billion）【Operating Income ¥＋0.5bln】

2.5

Gross Profit decreased
Net Sales： decreased ¥0.6bln year
on year2

・Despite steady growth in Flutiform and Desalex
sales
l

0

Cost of sales ratio :Increased about1.5% year on year

1.5

・decrease in loss on retirement of inventories.

About

1

1.4

19
1.9

－1.0

0.5

・¥7.2billion（FY2017 2Q)⇒¥5 5billion(FY2018 2Q forecast)⇒¥5.5billion(FY2018
Previous year: R & D expenses increased
due to the development pipeline progress

SG&A(excluding
SG&A(
l di
R&D)
increased

0
Operating Income Gross Profit(FY2017 2Q)

R&D expenses decreased

－1.6

R&D

Operating Income
SG&A(excluding R&D) （FY2018 2Q ）¥19.0billion(FY2017 2Q）⇒Roughly flat against the same period lastyear (FY2018 2Q forecast)8

Consolidated Financial Resultsand Forecast9Consolidated Financial Results Forecast
for the Year Ending March 31, 2019
（ Units: ¥ billion ）FY2017FY2018（forecast）

Y/Y
ChangeChange(%)

110.6

114.4

＋3.8

+3.4

104.7

108.4

＋3.7

＋3.5

77 0
77.0

80 9
80.9

＋3.9
39

＋5.0
50

Japan

73.7

79.9

＋6.2

＋8.4

Overse
as

33
3.3

10
1.0

ー2.3
2.3

ー70.1
70.1

27.7

27.4

ー0.3

ー0.9

Healthcare Business

5.9

6.0

＋0.1

＋1.1

Operating Income

8.8

8.6

ー0.2

ー2.5

Ordinary Income

9.3

9.2

－0.1

－1.6

Net Income

6.6

6.6

0

＋0.4

Net sales

Ethical drugs
business

Sales ofnew
ethicaldrugs

Generic drugs【for reference: year on year】① Increase sales of our main products Flutiform and Desalex,
Desalex and increase sales of Nasonex.
Nasonex② Reduction of gross operating income: The cost rate is up by about 4 point.
③ Reduction of selling, general and administrative expenses (SGA): R&D cost is reduced (forecast a reduction of 2.6 billion yen
from the previous year, to 11.6 billion yen). The rate of SGA (excluding R&D cost) has declined by about 1% from the previous year.
④ Method of depreciation: Expect a change from the declining-balance method to the straight-line method.

10Forecast of Mainstay Product Sales（ Units: ¥ billion ）FY2017

Flutiform

Y/Y

FY2018（forecast）

Changeg

Change(%)
g ( )

11.9

12.3

＋0.4

＋4.1

Uritos（Kyorin）

72
7.2

68
6.8

－0.4
0.4

－4.7
4.7

Desalex

4.9

8.1

＋3.2

＋65.3

Kipres for adult

83
8.3

60
6.0

－2.3
23

ー26.8
26 8

Kipres for children

10.5

7.2

－3.3

－30.9

P t
Pentasa

15.3

14.5

－0.8

－5.0

Mucodyne

8.7

7.2

－1.5

－16.5

Nasonex

ー

10.1

＋10.1

ー

11 7
11.7

98
9.8

－1.9

－16.4

(Combination drug for asthma treatment)(Overactive bladder)(Antiallergic Agent)（LT receptor antagonist）（LT receptor antagonist）(Ulcerative colitis and Crohnʼsdiseasetreatment)（Mucoregulant）（Spray type allergic rhinitis remedy）

MONTELUKAST Tablets “KM”

11

Changes in Capital Policy

12Changes in Capital Policy
Before the change
・While maintaining the sound financial base, we adopt the capital policy ensuring both growthinvestment and stable return to shareholders.
As for the return to shareholders, we aim for “stable dividends” on a basis of the present dividend standard.

Reason of the Changes in Capital Policy◇Considering the perspective of the recovery of the corporate earnings caused by the
implementation of our key strategies.
◇ Taking into consideration the current capital market conditions and the financial situation of
the Company,
Company we decided to change the policy from capital accumulation to capital efficiency
improvement◇We aim to continue this new shareholder return policy unless there is a special change in thebusiness environment.

Changes in Capital Policy and Shareholder Return Policy
Basic idea
■Please note that there is no change in our business strategy towards the realization of the medium-termbusiness plan “HOPE100-Stage 2-”, and we will continue to make our best efforts to achieve our target
figures in that business plan by investing for continuous growth.
■ We aim to further improve the shareholder's value and increase efficiency of capital tostrengthen the return to shareholdersby strengthening shareholder return taking DOE(shareholders' equity dividend rate) into account13

Shareholder Returns
Basic Policy(After the change)
・While maintaining the sound financial base, we aim to improve the capitalefficiency through growth investment and returns to shareholders.
・We will maintain stable dividends taking DOE (Dividend on Equity ratio) into
account.

Dividends
FY2017
Dividend pershare (Yen)Consolidated
payout ratio(%)¥58

FY2018（orginal
forecast）

FY2018（revise forecast）

¥58

¥75

（Year-end¥38）（Year-end ¥38）

（Year-end ¥45）

65.9%

65.７％

84.9％

※ We revised the dividend forecast for the ﬁscal year ended March 2007, which was announced on May 10, 18, to July 31, 18.

14

Drug Developmet Pipeline:
Progress in FY2017, schedule of FY2018
schedule of FY18

progress in FY18 1Q

PhⅠ

PhⅡ

PhⅢ

application

Approval/ Launch

KRP-AM1977X

2017/4

FY19 Expected
ReleaseKRP-AM1977Y

preparationpp

KRP-114V

2017/9development code

Ad-SGE-REIC

E d off theEnd
th PhⅠ／PhⅡPhⅡ start

Respiratory

KRP-108P

2017/6

Infections

FY18 Expected
ReleaseKRP-116D
Urological

KRP-N118

PhⅡ start(SK-1404)【 Licensing development】
LicenseeCompound/CodeFPR2 agonist
program
KRP-203※ For KRP-AM 1977 X, additional nonclinical studies are required and will be carried out.
Stage

Features

BMS

PhⅠ

FPR-2 agonists that mainly inhibit the migration of neutrophils and exhibit antiinflammatory action
action. Therapy area：Non-disclosure

Derivation activity restart

PhⅠ

Sphingosine-1-Phosphate Receptor Agonist .

Therapy area：GvHD

Because Novartis (licensee) decided to discontinue development of KRP-203 for strategic reasons,kyorin
receive the return of development rights.

15

Accelerate regrowth with new drug group and new products
・Maximize the dissemination of Flutiform, Desalex, PENTASA Granules, Uritos and Nasonex.
・Launch and disseminate KRP-114V and KRP-1977X.

Ratio off new
drug group（%）[The ratio of the new drugs group should increase as follows]

Regrowth withnew drug

Flutifoam, DESELEX expands
Nezonex released on August 1
56%

Progress in R＆D pipeline

KRP-AM1977X

50

41%

40

KRP-114V
FY18 Expected Release
18年度上市を⽬指す

Nasonex

35%

30

29%

DesalexFlutiform
Uritos20

Pentasa Granule
100

Kipres for children
Kipres for adultFY2015FY2016FY2017FY2018FY2019Medium-term management plan “HOPE100－Stage 2－” （2016-2019）16

Approach to Drug Discovery
and Status of R&D Pipeline

Kyorin Holdings, Inc.
August 8,8 2018
Shigeru Ogihara, Senior Executive Director((Senior Executive Director and General
Manager, Discovery Research HQs, Kyorin
Pharmaceutical Co., Ltd) Approach to first-in-class drug
discovery through “selection
selection andconcentration” scheme: Focus on
fibrosis research Status of R&D pipeline2

Approach to “First-in-class” Drug Discovery

Partnership

ActivX, USA

WRC
WRC: Watarase Research Center

O
Open
Innovationi
Academia andVentures

O
Open
Innovationi

Global and Domestic
Pharma Companies

Selection and Concentration
Research Focuses
KinaseFibrosis

External drug
discovery
programs

Multi-layered approach

Unique Drug Target
World-class Drug Discovery
3Organ Fibrosis Functional damage of organs by excessive accumulation ofcollagens and so on
 Cause of the onset is not clear,
clear and progression is irreversible.
irreversible
 Development of effective drugs is required.
Skin (scleroderma: 20k)b
Lung (IPF: 13k)a
Liver (NASH: 7 million)a
Pancreas (Chronic pancreatitis: 44k)c
Kidney (Diabetic nephritis: 2.8 million)a
Bone marrow: (Myelofibrosis: 1.5k)c
Estimated number of patients in Japan (as of Jan 2018)a: Datamonitor Healthcare
b: Japan Intractable Diseases Information Center
c: Disease guidelines

4Outline of Organ Fibrosis
For organ fibrosis, there are common causes and factors
irrespective of organ and organ specific ones

Organ specific• Virus infections• Alveolar epithelial cell
damageLiver• Virus infections• Fatty liver• Hepatocellular injury• Activation of stellate cells

Kidney• Chronic kidney diseases• Renal tubular cell injury• Activation of mesangial
g
cells

Bone
marrow• Hematopoietic stem cell genemutation• Megakaryocyte / monocytederived humoral factor• Inflammatory cell
infiltrationt at o• Growth of myofibroblasts• Macrophage activation• ECM over deposition

TGF-β
PDGF-bb
PDGF
bb
LPA
CTGF
VEGF
FGF
IL-1β
IL-10

Org
gan-speecific ddysfunc
ction

Lung

C
Common5

Drug Discovery for Pulmonary Fibrosis

Pathology
Stage

Specific causes/factors
Early cell
damageDysfunction ofcells

Common causes/factors
Fibrotic factor
production

Progress offibrosisType 2 alveolar epithelial cells
Cells
involved

MolecularTtTargetMacrophage
Fibroblasts●Novel target A●Novel target B<Kyoto Univ.>

Aim for radical treatment forearly onset cases●Novel target C(Nucleic acid drug)●Novel target D●Novel target E

Aim for suppression of severe
symptoms in progressive
fib osis
fibrosis6

St t
Statusoff R&D Pipeline
Pi li

7

Status of R&D Pipeline
Highlights in FY2018
Projects
Respi
ratoryAd-SGE-REIC

As of July 31, 2018

Ph1

Ph2

Appr/Launch

Ph2 start June
2018

Gene therapy (MPM)

KRP-108P

P.9

June 2017

KRP AM1977X
KRP-AM1977X

Apr 2017

KRP-AM1977Y

Preparation

KRP-114V

Sept 2017

Fluoroquinolone

Fluoroquinolone

OAB treatment

Urolo
gy

NDA

Ph1／Ph2 ended

Asthma combo. inhaler

Infections

Ph3

KRP-116D

Aim for launch in
FY2019Aim for launch in
FY2018P.13

Mar 2017

IC treatment

KRP-N118

Ph2 started(SK-1404)

Nocturia treatment※Additional non-clinicalnon clinical studies for KRP-AM1977XKRP AM1977X ongoing【Statusoff out-licensing【Sliiiitems】】
Projects

Licensed toStage

Features

FPR2 agonists

BMS

Ph1

FPR2 agonist: Mainly suppresses the migration of neutrophils
and shows anti-inflammatory action
T
Targett disease:
diUndisclosed
U di ld

KRP-203

Re-start ofout-licensing

Ph1

S1P receptor agonist
Target disease: GvHD

Novartis ceased the development from the strategic viewpoint and returned development rights to Kyorin.

P.15

8

Outline of Ad-SGE-REIC

Expression of REIC protein in various cancer cells
2.0

DKK3 mRNA expression

1.0

Non-cancer Cells

MDA MB231
1

Hela
a

786-O
O

PANC-1
1

DU145
5

HepG2
2

PC3
3

LNCaP clone FGC
L
C

A549
9

NCI-H460
0

NCI-H28
8

NCI-H226
6

MSTO-211H
H

NHBE
E

HFL1
1

IMR90
0

0.0

LL47(MaDoo)

Igaku no ayumi
ayumi. 2018; 265(5); 422-428.
422 428

HMEC
C

Malignant mesothelioma cells

0.5

HUVEC
C

relative

1.5

Cancer Cells

Internal data

Expression of REIC in normal and cancer cells

It has been confirmed that expression of REIC protein isdownregulated in various cancer cells.
9Outline of Ad-SGE-REIC
Mechanism of Action

Ad-SGE-REIC is a gene therapy product in which the cancersuppressing gene REIC/Dkk-3 discovered in Okayama Univ ismounted on an adenoviral vector as a therapeutic gene
gene.
Selective cytotoxicity against
cancer cells

Activation of anticancer immunity

By forcibly expressing REIC in cancer cells
cells,
selective cell death (apoptosis) of cancer
cells is induced.

By differentiation induction of dendritic cells
andad cytotocytotoxicc T cecellss (C(CTL cecells),s), act
activation
at oof anticancer immunity is induced.

AntigenCancer cells

AntigenCytotoxic T cells
presentation

Apoptosis
Ad-SGE-REIC
Dendritic cells

Metastatic lesion

REIC protein
Figure: Attributed to Okayama Univ.

It is expected that the REIC proteins are forcibly expressed in tumor cells, resulting in the direct
effect on the cancer lesion spreading in the thoracic cavity of malignant pleural mesothelioma
and the indirect effect on the remote lesion due to the activation of anticancer immunity.

10Anti-cancer Immunity Activation by Ad-SGE-REIC
Mouse subcutaneous tumor model

(2)

(1)

Strain: E.G7-OVA. Igaku no ayumi 2018; 265(5); 422-428.

(1) Increase in cancer antigen-specific cytotoxic T cells was confirmed both in the tumor treatedwith the product and in the spleen.
(2) Increase in cancer antigen-specific cytotoxic T cells and anti-tumor effect were confirmed in
the tumor in untreated side.
It was confirmed that Ad-SGE-REIC
Ad SGE REIC shows anticancer effect locally in the product-treatedproduct treatedtumor and systemically via activation of anticancer immunity by induction of antigenspecific cytotoxic T cells.

11Development status of Ad-SGE-REIC
Ph1/2
Study period
S bj tSubjects
Objects
Administration

Dose
No. of cases

July 2015〜
Japanese MPM patient with standard treatment ineffective or without
appropriate treatment
Primary endpoint: Safety, Estimation of maximum tolerated dose
Secondary endpoint: Efficacy
Local administration to pleural tumors
Level 1: 3×1011 vp Level 2: 1×1012 vp Level 3: 3×1012 vp
To be presented at WCLC 201813

MPM: Malignant pleural mesothelioma(September 23̶26, 2018, Toronto,
Canada)Objectives of Ph 1/2 achieved and Ph2 started.
Ph2
S d period
Study
i d

July
l 2018〜
20 8

Subjects

Patients with MPM in the second treatment

ObjectsjPrimary endpoint: Efficacy (PFS)
Seconda endpoint:
Secondary
endpoint Efficac
Efficacy (ORR,(ORR OS),OS) Safety,
Safet etc
etc.

Administration

Dose
No. of cases

PFS: Progression-free survivalprate
ORR: Overall response
OS: Overall survival

Local administration to pleural tumors
3×1012 vp
30 (targeted)• Completed responses to Cartagena Act and Clinical Trial Notification submission• Joining in the Master Key Project• Promote development by industry-government-academia collaboration (JST, Okayama Univ., Momotaro Gene)

P.8へ

12

Expansion of product line-up in urology field
Causes of frequenturination andincontinence

Overactive Bladder(OAB)
Uritos® (antichorinergic)
KRP 114V (β3 agonist)
KRP-114V
i t)

Nocturia

Nocturia

KRP-N118(vasopressin V2
Agonist)And for Interstitial cystitisyKRP-116D under development

Offer treatment options for urination trouble(Tips)■No. of OAB patients
10.4 million (≥40 y/o) ※1■No. of nocturia patients
45 million (once/night), 8.5 million (≥3 times/night)※2
Ref. ※1:OAB guideline ※２:Honma, et al. (2003)

13

Outline of KRP-N118◆Indication:◆MOA:◆Dosage:◆Features

Nocturia caused by night polyuria
Antidiuretic effect by promoting
water re-absorption from renalcollecting tubule by vasopressin V2
receptor agonistic action
Once daily before bedtime, oraldissolution tablets

 A small molecular compound, expecting a possibility of alleviating thevariation of effects among individuals by improving oral absorbability.
 It is expected that it can be used by elderly people who have reduced
renal function as this compound was mainly excreted via liver.
 By excreting promptly from the blood, the effect is exerted only during
sleep,
l
there
th
is
i a possibility
ibilit th
thatt side
id effects
ff t can b
be reduced.
dd
P.8へ 14

Development status of KRP-203
GvHD

Ref: ClinicalTrials.gov (March 2018)

Stage

Part 1
Ph1bPart 2

Targeted

Recruited

10

10Intervention
Methotrexate＋Ciclosporin

 Novartis conducted Ph.1b (from 2013) to evaluate the preventive effect of GvHD after
hematopoieticpstem cell transplantationpin ppatients with hematologic
g malignancy.
gy GvHD prophylactic effect and the engraftment promoting effect of transplanted cells
were seen and initiated part 2.

20

Terminated【KRP-203 low dose】
Methotrexate＋Ciclosporin【KRP-203 high dose】
Methotrexate＋tacrolimus• Novartis ceased Ph1b before the completion of scheduled cases due todevelopment strategy reasons.
• In addition to the GvHD preventive effect, an effect of suppressing therecurrence of the blood tumor and the improvement of the survival rate
were newly found. (patent filed)

Re-start of out-licensing

P.8へ15