Third Quarter Consolidated Financial Results
for the Fiscal Year Ending March 3131, 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 and Forecasts

February 5, 2018

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 due
to various factors in the future.

Outline of Third Quarter Consolidated Financial Results
for the Fiscal Year Ending March 31, 2018（¥ million）

Dec/2014

Dec/2015

Dec/2016

Dec/2017

YoY change(%)

Mar/2018(forecast)

YoY change(%)

Net Sales

83,602

89,46986,83682,923－4.5

111,300－3.5

Operating Income

10,691

14,666

7,313

7,805

＋6.7

10,500＋0.8

Ordinary Income

11,181

14,946

7,716

8,246

＋6.9

10,900

＋0.2

9,571

10,831

4,723

6,119＋29.6

7,800＋6.8

Net Income

Thi d Q
ThirdQuartert C
Consolidatedlid t d Financial
Fii l ResultsRlt forf theth FiscalFil YearYEnding
E di MarchMh 31,31 2018
【Net sales】 Despite steady growth in Flutiform a core product, and Desalex a new product, sales of new ethical drugs in Japandecreased following the expiration of the patent for KIPRES. In contrast, sales of generic drugs increased with a rise in sales ofMONTELUKAST AG (KIPRES), the authorized generic version and also sales of new ethical drugs overseas increased due to receiveof lump sum payment of out-licensed product. As a result, overall net sales were 82,923 million yen (down 4.5% year on year).
【Income】 The gross profit on sales fell 2,064 million yen year-on-year, given the decreased sales of new ethical drugs in Japan andan increase in the loss on the retirement of inventories, etc., although sales of new ethical drugs overseas increased due to receive oflump sum payment of out-licensed product. Meanwhile, SG&A expenses decreased 2,557 million yen year-on-year (including a 802
millionilli yen ddecrease iin R&D expenses)) dued tot costt cutting,ttiandd operatingti iincome rose tto 77,805
805 million
illi yen ((a 66.7%7% year-on-yearincrease). Net income attributable to owners of parent came to 6,119 million yen (a 29.6% year-on-year increase).

Consolidated Financial Results for the Fiscal Year Ending March 31, 2018 (forecast)Th results
Thelt forecasts
ft forf theth full
f ll year announced
d on November
Nb 6,
6 2017 remain
i unchanged.
hd(Progress compared with the forecast for the fiscal year ending March 31, 2018: net sales: 74.5%; operating income: 74.3%)

1Highlights of Business Performance（ Units: ¥ billion ）Net Sales decreased ¥3.9billion year on year.
・Decrease of sales of new ethical drugs(Japan)
・Increase of sales of new ethical drugs (Overseas)
・Increase of sales of Generic drugs

Cost of Sales

38.3

Cost of Sales

36 4
36.4

Cost of Sales Ratio

44.1%

Net sales

Cost of Sales Ratio

43.9%
R&D

10.9
(excluding R&D)

30.4

Dec/2016■Gross Profit decreased ¥2.1billion year onyear

Net sales

R&D

SG&ACost of sales ratio decreased 0.2%.

10.1SG&A

41.3
Operating
IncomeSG&A(excluding R&D)

28.6

SG&A

SG&A expenses decreased ¥2.6billion yearon year.
・ R & D expenses decreased ¥0.8billion
・SG&A(excludingSG&A(l di R&D) ddecreasedd ¥1.8billion¥1 8billi

38.7 ■Operating Income increased¥0.5billion year on year.

Operating
IncomeDec/2017
2

Consolidated Financial Results
for the Third Quarter ending March 31, 2018
（unit : ¥ billion）
Dec/2016

Dec/2017

Change■Net Sales¥82.9bln

Year on Year(－ 3.9)

◆Ethical drugs business¥78.5bln(－ 4.0)¥54 8bln¥54.8bln(－ 9.3)9 3)¥3.1bln(+ 2.8)● Sales of new ethical drugs
Dec/2016⇒Dec/2017

Net Sales (total)

86.8

82.9－3.9

Ethical drugs
Business

82.5

78.5

－4
4.00

◆Sales of newethical drugs

64.4

57.9－6.5●Sales of new ethical drugs in Overseas●Japan64.1

54.8

－9.3
9.3

●SalesS l off GenericGi drugs
d0.3

3.1＋2.8●Overseas◆Generic drugs

Healthcare
Business

18.1

20.6

＋2.5

4.3

4.4＋0.1

Operating
Income737.3

Ordinary
Income7.7

Net
Income78
7.8
8.2＋0 5＋0.5＋0.5

・ Flutiform
・ Uritos
・ Desalex
・ Kipres・ Pentasa
・ Mucodyne

7.6
5.80.726 026.0
12.0
7.5⇒⇒⇒⇒⇒⇒

8.9 (＋1.3)
5.6 (－0.2)
2.1 (＋1.4)
14 2 ((－1114.211.8)
8)
12.2 (＋0.2)
6.6 (－0.9)

received lump sum payment of out-licensed product¥20 6bln¥20.6bln(+ 2.5)2 5)・Seles of the MONTELUKAST”AG” for KIPRES increased
・Sales for other companies decreased.

◆Healthcare Business¥4.4bln( + 0.1)■Operating Income¥7.8bln( + 0.5)◆Operating Income margin decreased 1.0 percentage points to 9.4%
●Cost of Sales Ratio : 44.1%⇒43.9% decreased 0.2 percentage points【Decrease】 received lump sum payment of out-licensed productIncrease in sales of mainstay products (Flutiform,Desalex,Pentasa)【Increase】 Increase in loss on retirement of inventories,
inventories etcetc.

●R&D Ratio : 12.5%⇒12.1% decreased 0.4 percentage points＊¥10.9bln⇒¥10.1bln（－¥0.8bln） Project expenditure expenses were recorded in theprevious fiscal year (KRP－AM1977X,KRP－114V)●SG&A Ratio : 35.0%⇒34.5% decreased 0.5 percentage

4.7

6.1＋1.4＊¥30 4bln⇒¥28 6bln（ ¥1 8bln）＊¥30.4bln⇒¥28.6bln（－¥1.8bln）■Net Income

M i l llabor
Mainlyb costs
t andd generall expenses ddecreasedd¥6.1bln(+ 1.4)・ Extraordinary income：gain of approximately 600 million yen as a result of transfer of sharesof Dr. Program Co., Ltd. Recorded.
・Extraordinary loss：Expenses of around 400 million yen related to the settlement of a lawsuit
for violation of US antitrust laws in connection with an out-licensed product (Gatifloxacin eyedrops)3

Main Product Sales Update
Mar/2017

Mar/2018(forecast)

10.1

12.0－3.3

7.5

7.3

2.1＋1.4 ＋209.3

1.0

3.5

15.0

61
6.1

－8.9
8.9 －59.4
59.4

17.7

9.1

5.1

11.0

8.1

－2.9 －26.3

14.9

10.7

79
7.9

80
8.0

12 0
12.0

12 2
12.2

＋0 2＋0.2

＋1 7
＋1.7

15.5

15.6

Mucodyne（Mucoregulant）

4.4

3.9

7.5

6.6

－0.9 －12.2

9.9

8.4

GenericDrugs

MONTELUKAST
Tablets “KM”

1.8

5.0

5.3

8.2+2.9 +55.5

8.2

10.7

Over-thecounter
drugs

Milton

11
1.1

11
1.1

17
1.7

17
1.700
0.0

22
2.2

22
2.2

（Units: ¥billion）
Flutiform(Combination drug for asthmatreatment)

Uritos（Kyorin）(Overactive bladder)

Desalex
Sales ofnew
ethicaldrugs(Japan)(Antiallergic Agent)

Kipres for adult（LT receptor antagonist）

Kipres for children（LT receptor antagonist）

Pentasa(Ulcerative colitis and Crohn
Crohnʼss
diseasetreatment)(Disinfectant)

Change(%)
ChangeSep/2016

Sep/2017

Dec/2016

Dec/2017

4.5

5.4

7.6

8.9＋1.3 ＋18.3

3.8

3.6

5.8

5.6

－0.2－0.9

0.7

11.5

3.9

6.3＋2 7＋2.74

Main R&D Activities -1 (as of February 5 2018)
Ph III ~ Application submittedStageJapan

OverseasApplication(9/2017)

PhⅡ
clinicaltrial end
Merck &Co.,

Compound/
Code

Therapy area
/ActionOriginFeatures

Comments

KRP-114V

Overactivebladder

Merck & Co.,

-Expectation of high compliance in taking medicine
with less side effects than the conventional drugs foroveractive bladder-- Less drug interaction as β3 receptor agonist - β3agonist including this agonist may constitute the firstline drug for treatment of overactive bladder

Application(4/2017)

KRPAM1977X(Oral agent）

New quinolone
synthetic
antibacterial
agent

In-house

PhⅢ(3/2016)

KRPAM1977Y(Injection）

New quinolone
synthetic
antibacterial
agent

In-house-Superior ability to combat drug-resistant grampositive bacteria (incl. MRSA)-has a powerful antimicrobial activity against
anaerobic bacteria- Expectation of high clinical effects with excellent
tissue penetration-High degree of safety expected since safety hurdles
cleared prior to clinical trials

PhⅢ(3/2017)

KRP-116D

Interstitialcystitis―Evaluation committee on unapproved or off-labeled
drugs with high medical needs“Dimethyly sulfoxide(DMSO)”()

PhⅢ(6/2017)

KRP-108P

Anti-asthmatic(U.K.)
Vectura

Expand the indication of Flutiform to pediatric patients・License agreement with Merck & Co., Inc.,(7/2014)
・Co-Development and Co-Marketing Agreement withKissei Pharmaceutical Co., Ltd. affiliate (3/2016)･License agreement with Merck & Co., Inc., for Asia
(4/2017)

POC Project (Ph I ~ Ph II)
StageJapan

Overseas

PhⅠ,Ⅱ（7/2015）(US)
MomotaroGene
prostatecancer(5/2014)

Compound/Code

Therapy area/Action

Ad-SGE-REIC

malignantpleuralp
mesothelioma

OriginFeatures

Comments

Okayama
UniversityyA gene-therapy product using a novel tumor suppressor gene of reduced expression in
immortalized cells/ Dickkopf-3 (REIC/Dkk-3), which was discovered by researchers from
Okayama 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 gene-therapy product that simultaneously induces tumor
cell-selective apoptosis and the activation of antitumor immunity respectively.

Adopted to Next
generation Technology
Transfer Program(NexTEP)(6/2014)5Main R&D Activities -2 (as of February 5 2018)
Licensing development
Stage//StOverseas※PhⅠ

Compound/Cd/
CodeFPR-2 agonist
programLicensee /Collaborative
researchBMSTh
Therapyarea/Action
Nondisclosure※Changes from the previous announcement (Nov 6 2017)

OriginIn-house

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

Comments
License agreement with BMS(12/2015)※KRP-203 : deleted it from Main R&D Activities
Novartis (licensee) decided to discontinue development of KRP-203 for strategic reasons6Reference7Segment information
for the Third Quarter Ending March 31, 2018
Sales,, Profit or Loss of each report
psegmentg
Saleschange Y/Y（unit : ¥billion）

Profitchange Y/Y

Net Sales (total)

82.9

－3.9

7.8＋0.5

Ethical drugs business

78.5

－4.0

7.3

＋0.2

57.9

－6.5

○Overseas

54.8
3.1－9.3+2.8◆Generic drugs

20.6＋2.5

4.4＋0.1

0.2＋0.2－0.3＋0.1◆Sales of new ethical drugs
g○JapanHealthcare businessAmount of adjustment－8Consolidated Financial Resultsfor the Third Quarter ending March 31, 2018
Sep/2016

Sep/2017

Dec/2016

Dec/2017

Change% Y/Y

Mar/2017

Mar/2018

Sales

54,62850,75886,83682,923－3,913－4.5

115,373

111,300

Ethical drugs
g business

51 936
51,93647 97747,97782 50882,50878,484－4,024,－4.9
4.9

109 566
109,566

105,300

ethical drugs

41,61534,97264,407

57,902－6,505－10.1

84,542

77,200●Japan

41 272
41,27234 44934,44964 116
64,11654 79854,798－9,318
9 318

－14.5
14 5

83 777
83,77774 20074,200

343

523

290

3,104＋2,814＋970.3

764

3,000

10,321

13,005

18,101

20,582＋2,481＋13.7

25,02428,000healthcare business

2,691

2,781

4,327

4,438＋111＋2.6

5,807

5,900

Operating Income

3,663

1,443

7,313

7,805

＋492

＋6.7

10,413

10,500Ordinary Income

3,921

1,693

7,716

8,246＋530＋6.9

10,874

10,900NetIncome

2,684

1,240

4,723

6,119＋1,396

＋29.6

7,305

7,800

（unit : ¥million）◆Sales of new●Overseas◆Genericdrugs(forecast)9