Security Codeﾞ：4584

Gene Techno Science Co., Ltd.
Financial Results forFiscal Year Ended March 2019
May 10, 2019

Cautionary Statement

This information material is provided for understanding Gene TechnoScience (“GTS”), not for soliciting investment in GTS shares.
Information provided in this material may contain so-called “forwardlooking statements”. These statements are based on current
expectations, forecasts and assumptions that are subject to risks anduncertainties, which could cause actual outcomes and results to differ
materially from these statements. Risks and uncertainties include
success ratio of R&D projects, new regulations, and rules, relations
with partners in the future, etc.

Challenge GTS3.02

Challenge GTS3.03

Overview of Financial Highlight
Financial Highlight in FY2018
Financial results was in line with the forecast Filgrastim biosimilars achieved the sales target as planned

Operating loss reduced
 The reduction of ca. 300 million yen compared to the forecast The main factor was the carrying over of R&D fee into the subsequent
period No impact on R&D schedule

Challenge GTS3.04

Overview of Business Highlight
Business HighlightApril

Signed business alliance contract by three companies: NanoCarrier, Nortitsu Koki
and GTSJuly

Terminated collaboration agreement with Changsheng Bio

July

Signed collaborative research agreement with chromocenter

AugustInitiated collaborative research with SOLA Biosciences and GPC Laboratory todevelop high-yield protein producing cell lines for biologics including biosimilars.

September

Submitted of New Drug Application in Japan of Darbepoetin alfa Biosimilar.

September

Filed International/PCT patent application of Anti-RAMP2 antibodies which inhibit
the formation of new blood vessels with a new mechanism.

January

Executed exclusive licensing agreement with Ocumension in ophthalmologic field

February

Completed the enrollment of the final patient in the Phase III study for
ophthalmologic biosimilar

April

Executed the acquisition of 100% ownership of Advanced Cell Technology andEngineering(ACTE)May

Sign a joint research and development agreement with ORTHOREBIRTH
Challenge GTS3.05

Challenge GTS3.06

Financial Results for FY2018
Sales(in millionsof yen)

Selling, general andadministrative expenses(in millions of yen)

Total

R&D expenses
includedOperatingprofit

Ordinaryprofit(in millionsof yen)(in millionsof yen)Net
income forthe year

Net incomeper share(in millionsof yen)(in yen)Results for FY2018 (A)1,021

1,414(945)

- 805

- 816

- 856

- 43.84

Results for FY2017 (B)

1,059

1,550

(1,107)

- 913

- 903

- 904

- 47.27

- 38

- 136

（- 162)

108

87

48

1,300

- 1,180- 1,180- 1,182

Change (A-B)(Reference)
Forecasts for FY2018

1,060

Key points• Filgrastim biosimilars achieved thesales target as planned• Milestone revenue in biosimilars
portfolio was recorded.

• R&D spending was mainly on thebiosimilar operations.
• Reduced 300M yen due to thecarrying over of R&D expenses
into the subsequent period(Development is going smoothly)Special payment in relation to theretirement of GTS chairman (45million yen: extraordinary loss)• The company split each share into two shares on July 1, 2018. Net income per share for the quarter is calculated
based on the assumption that the split was conducted at the beginning of FY2018.

Challenge GTS3.0

7

Financial Forecast for FY2019
Shift to consolidated financial reporting as GTS acquired 100% ownership of ACTE onApril 1, 2019.

◆ Financial Forecast for FY2019
Sales（Millionyen）

Operatingprofit

Ordinaryprofit

Net profit(Millionyen）（Millionyen）（Millionyen）

Net profit per
share (yen)Consolidated

Forecast for FY2019

1,050- 1,220- 1,260- 7,260- 261.94

Nonconsolidated

Actual in FY2018(reference)

1,021

- 805

- 816

- 856

- 43.84

Key Points

1. Sales
2. R&D: maintain almost the same level as the previous year
: 1,200 million yen (945 million yen for FY2018)
mainly to development of Biosimilar products
3. Goodwill : A goodwill of ca. 6 billion yen will be recorded in relation to the acquisitionof 100% ownership of ACTE
Challenge GTS3.0

8Investment to Increase Enterprise Value
Record 6,000M JPY of goodwill in relation to the acquisition of 100% ownership ofACTE (one-time write-off in FY2019)

Indispensable investment on R&D to enhance the future corporate value

GTS3.0
Promote Regenerative Medicine(Cell Therapy) Business

GTS+ACTE

Challenge
Establish Cell Therapy Platform

ACTE acquisition

Secure R&D resource

Challenge resolved

Expand partners
Obtain cell culture
technologyRequire time, resource, and costto solve all those factors within
the company

Regenerative
Medicine(Cell Therapy)
business

SHED Bank
Cell culture
technology

Resolved the challenges on time and resource required for the developmentby the acquisition of ACTE (= investment on R&D)
Aiming to create higher value than the acquisition cost by integrating
Challenge GTS3.0
know-how and expertise of GTS

9

Roadmap in GTS3.0
Possible profit expansion

3. Growthpotential

2. Efficient cash management

Possibility of earlier breakeven with regenerative
medicine business and new
biologics business R&D spending on biosimilars peaked out Aim to license out new biosimilar products in early phase Upfront, milestone and milestone payment
Improve efficiency in R&D expenditure andincrease revenue to become profitable

Net Profit(million yen)0

1. R&D investment

One-time write-off of the goodwill
occurred by ACTE acquisition

4. Steady approachto the break-even

- 500
- 856

Biosimilar business- 1,200- 7,200

No significant increase in fixed costs due toour virtual management style
Not including goodwill depreciation : -1,200M yenIncluding goodwill depreciation : -7,200M yen

FY2019FY2020

FY2021

FY2022

FY2025

Challenge GTS3.0 10

Challenge GTS3.0 11

Acquisition of 100% ownership of ACTE
• Established on October 30, 2008 for the developmentof products such as regenerative medicine using stem
cells from human exfoliated deciduous teeth (SHED)• Started to operates SHED cell bank first in JapanFor yourself and for your family(Autogenous)

For your family and for everyone(Allogenic – for research)

Autogenous cell bank service

Allogenic cell bank service➝ Storage of deciduous teeth for future
treatment of children themselves ortheir families➝ Providing research cells to companies
and academia for the development oftherapies that can be applied to others(currently collaborate with Daiichi
Sankyo, Eisai, Sekisui Chemical etc.)

Challenge GTS3.0 12

Research and Development with SHEDs
What are SHEDs ?

One type of dental pulp stem cells
that extracts from a human exfoliateddeciduous teeth

Especially, ACTE runs a stock businessof the stem cells from human
exfoliated deciduous teeth (SHED)

Features of SHED

Benefits in Research and Development

 More opportunities to extract as it
is exfoliated deciduous teeth andless burden on a donor Due to more opportunities for extraction,
possible to secure a wealth of resources for
R&D, and it enables to provide pharmaceuticalcompanies with the stem cells
 Applicable for nervous system diseases suchas spinal cord injury from its differentiation
characteristics
 As it is young stem cells, it has higher capabilityof differentiation, proliferation. Higher tissue
regeneration ability is expected.

 Easy to differentiate into bone,cartilage and nerve cells
 More active as the stem cell is
extracted from exfoliated deciduous
teeth

Enable to realize solid research and development - low-risk and high certainty bysecuring the stable stem cells platform and qualifying the targeted disease area.
Challenge GTS3.0 13

Target Diseases in GTS Cell Therapy Business
Cleft Lip/Cleft
Palate(to regeneratealveolar bone)

Cerebral Palsy（to regenerate nerveand vascular)（to regenerate nerve)

Spinal CordInjury

Hygpoganglionosis（to regenerate ganglion）
Vera-Lopez et al., 2018, Dev Biol 444: S110-S143

Albinism（to regenerate melanocytes）
Challenge GTS3.0 14

Outline of Target Disease
Cleft Lip/Cleft Palate

Pediatric

1. Eating/speech disorder
2. Lip arthroplasty + iliac bone graft
3. 2,000 newborns / year
4. Maxilla bone regeneration

Hygpoganglionosis

Pediatric

1. Quadriplegia
2. Not established3. 2,000 newborns / year
4. Nerve, vascular regeneration

Spinal Cord Injury
Pediatric

1. Intestinal obstruction (mortality : 22%)
(Intestinal peristalsis disorder)
2. Enterectomy, colostomy
3. 100 people (*No. 101)
4. Ganglion regeneration
1.
2.
3.
4.

Cerebral Palsy

Symptom
Existing treatment
Number of patients
Goal for treatment

Notification number in the list designated by Japanese MOH for;* Intractable/rare diseases** grant-in-aid program for chronic diseases in childhood

1. Loss of motor function and sensory perception
2. Not established3. 5,000 people / year, 100,000 people in total
4. Nerve regeneration

Albinism

Pediatric

1. Visual impairment, photophobia
2. Not established
3. 8,000 people (*No.164 and **No.1)
4. Melanocytes regeneration

Challenge GTS3.0 15

Collaboration with ORTHOREBIRTHGTS×ACTE
Cell Therapy PJ
1st ProjectSign a joint research & development agreementwith ORTHOREBIRTH＜ Aim to develop therapeutic treatments for cleft lip/cleft palate＞

 Develop therapeutic product for alveolar cleft by the combination of SHED and ReBOSSIS (artificial bone filling material)• Cleft lip/cleft palate is a disease caused by an abnormality in neural crest cells, therefore SHED is considered to be an
optimal cell source as it is derived from neural crest cells.
• Artificial bone filling material, ReBOSSIS, is compatible with SHED from its characteristics, and expected to have superior
osteogenesis capability.
• Point : Non-invasive, treatment in earlier stage (preschool), low cost

＜Target disease and treatment concept＞

Apply both SHED and REBOSIS (scaffold), and promote better bone regeneration

Cleft lip/Alveolus cleft (approx. 1000 people/yr）
・regurgitation of nasal discharge
・mastication disorder・dysphonia

Mix

Current treatment is grafting autologous (own) bone,which is highly invasive

SHED

ReBOSSIS

Alveolarcleft
Alveolar cleft

Regeneration

Cleftpalate

Cleft lip

Challenge GTS3.0 16

Challenge GTS3.0 17

Progress in each pipeline(1) Biosimilars Business
Project

Therapeutic
Area

GBS-001

Oncology

GBS-004

Oncology

Filgrastim

Bevacizumab

GBS-005

Immunologicaldisease

GBS-007

Ophthalmicdisease

GBS-008
Palivizumab

Infectious
disease

GBS-010

Oncology

GBS-011

Renal disease

Adalimumab

PEG-filgrastim

Darbepoetin alfa

Development
ResearchClinical Trial
Phase 1

Phase 3

Application/
Marketing/Approval/
LaunchPartner

Fuji Pharma Co., Ltd.
Mochida Pharmaceutical Co., Ltd.

Terminating an agreement with Changchun
Changsheng Life Sciences Limited (China)
and searching new partners

UPDATE!!

UPDATE!!

Senju Pharmaceutical Co., Ltd.
License out to Ocumension Therapeutics(China and Taiwan)

Sanwa Kagaku Kenkyusho Co., Ltd.

Challenge GTS3.0 18

Progress in each pipeline(2) New biologics business
Therapeutic
AreaProject

GND-001
Anti alpha-9 integrin antibody

GND-004
Anti RAMP2 antibody

GND-007

Basic
Research

Development
Research

Clinical Trial
Phase 1

Phase 2Phase 3

Application/
Marketing/Approval/
LaunchImmunologicaldisease,
Oncology

Partner

Kaken Pharmaceutical Co., Ltd.

Ophthalmic
disease,
Oncology

Looking for partners

Immunologicaldisease(3) New biotech business (regenerative medicine)
ProjectBasic ResearchClinicalTrial

MarketingConditional and(FurtherTime-limited
confirmation onAuthorization※ safety and efficacy)MarketingAuthorization

GCT-101

Cell therapy using SHED for alveolar cleft

JRM-001

Cell therapy using cardiac stem cell for
hypoplastic left heart syndrome

MarketingContinues

Partner

Orthorebirth Co., Ltd.
Japan Regenerative
Medicine Co., Ltd.

Induction of immune tolerance for organtransplant

Juntendo University
Junten Bio Co., Ltd.

Cell therapy using mesenchymal stem cell
derived from bone marrow for diabetic
nephropathy

Sapporo MedicalUniversity
Minerva Medica Co., Ltd.

※Expedited approval system for regenerative medicine
Post-marketing safety measures must be taken, including prior informed consent of risk to patients.

Challenge GTS3.0 19

Challenge GTS3.0 20

Financing status (as of the end of April 2019)
Share price (yen)Trade Volume

Share Price （●Date of Exercise Equity Warrant）

Trade Volume (Share)

1,200

800,000
700,000

1,000

600,000
800

500,000

600

400,000
300,000

400

200,000
200

100,000

007/2 7/17 7/31 8/14 8/28 9/11 9/27 10/1210/26 11/9 11/2612/1012/25 1/15 1/29 2/13 2/27 3/13 3/28 4/11 4/25
Cumulative number exercised(as of the end of April)

6,257

1,251,400 shares

Remaining

8,743

1,748,600 shares

Total amount paid-in（exercise ratio 41.71%）

1,012,153,640 yen

Challenge GTS3.0 21

Financing Policy
 Continue the current financing with moving-strike warrant Scrutinize financing plan in line with the changes in business strategy
 Respond flexibly to the impact of shifting the focus of business frombiosimilars to new biologics, regenerative medicine / cell therapy（million yen）

Cash balance simulation (in case the current financing is completed this year)

3000

2000

1000

0
3/2019Additional 2,000M

3/20203/2021

Additional 1,500M

3/2022

Additional 1,000M

Challenge GTS3.0 22

Gene Techno ScienceGTS
3.0
Biotech Engineering Company,
striving for value creation