Environmental, Socialand Governance
Report 2022

March 2023 | Sosei Group Corporation

ESG Report 2022
Who We Are

4

About this Report5

Our ESG Approach and Priorities

6

Message from our CEO

7

Environment
Reduction of Emissions and Waste

89Social ­ Safety and Quality Assurance

11

Laboratory Animal Care and Alternatives to Animal­Based
Biomedical ResearchCore Development Stage Activities
Supply Chain Transparency and Quality AssuranceMarketing Authorization in Japan

Social ­ Human Capital Development
Promoting Diversity and Pay Equity
Employee Stock OwnershipBenefits and Work­Life Balance
Development Training
Studentship Programs and Academic Sponsorships

Social ­ Contribution to Society
Meeting Unmet Medical Needs
Right to HealthCharity Initiatives

GovernanceCorporate Governance Structure
Operation of Governance Systems

12
12
13
13
15
16
17
18
19
20
21
22
23
23
25
26
28

Who We Are

About this Report

World­Leading Science, Life­Changing Medicine

Sosei Heptares is a global biopharmaceutical group focusedin­licensed and taken two products to market and haveThis Report provides details on our approach and progress on Environmental, Social and Governance (ESG) initiatives

on the discovery and early development of new medicines

three royalty revenue generating products sold globally bycovering the period 1 January to 31 December 2022.

originating from our proprietary G protein­coupled receptor

Novartis AG*. We plan to build an agile, scalable and(GPCR) targeted StaR® technology and structure­based

eﬀective clinical development and commercialization

Our ESG Report 2022 has been prepared by the ESG Committee, which was established with the support of our

drug discovery (SBDD) platform capabilities. Founded inbusiness in Japan with our late­stage clinical development

Board of Directors in 2022, with the mandate to manage, lead and oversee our ESG initiatives. The Chair of our ESG

1990 by Shinichi Tamura, our Chairman of the Board, weteam focusing on underserved, rare or specialty therapeutic

Committee is Miwa Seki, one of our independent external directors, who is renowned for her ESG expertise andstarted from humble beginnings as a technology transfer

areas to make a diﬀerence to Japanese patients.

experience in Japan. Other committee members include Rolf Soderstrom (independent external director), Noriaki
Nagai (independent external director), Chris Cargill (CEO) and Hironoshin Nomura (CFO).

business to become one of Japan’s most innovative science­
led biopharmaceutical companies. Our mission is to makeSosei Heptares is dedicated to developing life­changing

life­changing medicines with world­leading science.

medicines for the many millions of patients around the

The ESG Committee believes that improving our ESG performance is a vital component for Sosei Heptares’ long­world. We are advancing a broad and deep pipeline of overterm growth and success. With this overarching objective, our ESG Committee will strive to instill our ESG goals

We are headquartered in Tokyo, Japan and listed on the

40 partnered and in­house programs across multiple

across our organization so that environmental, social, and governance topics become foundations of our culture, value

Tokyo Stock Exchange (4565­JP), with over 200 employees

therapeutic areas, including neurology, immunology andand business operations.

worldwide. In the UK, where over 80% of our global

gastroenterology diseases. We have over 20 partnerships

employees are based, our core capabilities leverage ourwith global pharmaceutical companies and emerging

Our ESG initiatives are priority topics for our Board of Directors and Executive Oﬃcers. With the leadership of our

SBDD platform and translational medicine expertise to taketechnology companies, working together on multi­target

ESG Committee, our ESG initiatives are championed and implemented across our organization by our Charity

programs from pre­discovery to early clinical development

discovery collaborations. To date, we have generated overCommittee, Social Committee, Environmental and Sustainability Group and Working Group.

at our R&D facility in Cambridge, UK. In Japan, we have

25 preclinical candidate stage programs.
COMMITTEES & GROUPS

Charity Committee*Novartis AG acquired an exclusive global license from Sosei Group and Vectura Group plc to develop, manufacture and commercialize inhalation
pharmaceutical products formulated with glycopyrronium bromide in 2005. Novartis has developed three products under the license agreement– Ultibro®, Seebri® and Enerzair®.

4© SOSEI GROUP CORPORATION 2023

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

OBJECTIVES

Organize events throughout the year to raise funds forcharities selected through a vote by our employees.

Social Committee

Support increasing employee engagement andboosting the success and well­being of our teams
by hosting internal social events.

Environmental andSustainability Group

Implement sustainability practices at our oﬃces and
R&D facilities by building awareness and working
actively to find and support sustainability initiatives.

Working Group

Improve employee engagement by promoting initiatives,
such as a company­wide poster session and social initiatives.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

©SOSEI GROUP CORPORATION 2023

5

Our ESG Approach and Priorities
Sosei Heptares has worked hard during 2022 to lay theof Directors in March 2023. These Materiality and KPIs

foundations of our ESG commitment and to build a clear

are the initial ESG priority issues and goals that ourroadmap to achieving our ESG goals. This journey beganorganization will strive to achieve in the coming years.

with our inaugural ESG Committee meeting in October

The objective of our ESG Committee will be to instill

2022, which was brought together to understand ourthese ESG goals across our organization and toorganization’s approach to ESG topics. Then, throughcollaborate with both internal and external stakeholders

conversations with our Board of Directors, employees

to ensure these priorities become the foundation of ourand external stakeholders, the ESG Committee identified

culture, values and business operations.

Message from our CEO
Dear Stakeholders,
At Sosei Heptares, we are fully committed to realizing a sustainable future
through supporting breakthroughs in medicine. Through our work, our goal ispotential priority issues to address, the impact on whichis expected to have a material benefit (Materiality) andWe recognize that our Materiality and KPIs are long­term

to improve the quality of life and health of people around the world. We

corresponding key performance indicators (KPIs) as aobjectives that we hope will shape our organization’s

practice world­leading science to create life­changing medicine.

measure of our progress.

values, and it is our intention to build on and expand
these as an ongoing commitment. We look forward toWith the support of our Board of Directors, the ESG Committee was

The Materiality and KPIs identified by the ESG

reporting on our progress through our annual ESG

established last year with its inaugural committee meeting held in OctoberCommittee (set out below) were approved by our Board

reports.

2022. Since then, the ESG Committee has worked to assess our organization’s
current ESG practices and identify ESG priorities.

MATERIALITY

1

Environment

Promotingenvironmental
management

2
Diversity, Equity andInclusion (DEI)

Social3
Creating innovative
pharmaceuticals forpatients

Governance

64Equity and transparency
to all stakeholders© SOSEI GROUP CORPORATION 2023

INITIATIVES“It is my ambition that ESG
will be a driving force of ourculture and behaviors and will
become part of everyone’s
working life at Sosei Heptares.”

KPIs

Focus on environmental
management systems andenergy reduction timelines
at our UK R&D Facility toensure our emissions
and waste levels areappropriately managed

Obtain Green Lab
Certification at our
UK R&D Facility
within 5 years

Focus on reducing
Gender Gap

Maintain Female Senior
Management Roles (Global) at>30% over the medium term

I am pleased to share with you our ESG Report 2022, our first ESG publication
outlining our eﬀorts to address and make a positive impact on ourenvironmental, social and governance initiatives. Over the course of 2023,
we will evolve and progress our ESG targets and metrics to further enhance
our ESG performance and disclosure. Part of this work will include ensuringthat our ESG goals are incorporated into our business operations as well as
our values. It is our ambition for ESG to be an embedded part of our culture
and behaviors.

Focus on creating R&D
eﬃciencies that will enable
the development of life­changing medicines forpatients

Promote R&D eﬃciencies– one preclinical compoundand one clinical compound
per year for the next three
years on average from ourin­house pipeline

Enhance and increase
dialogue with ourshareholders

Provide a forum where all
shareholders can join anddiscuss with company
management in an open
and frank manner

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

I am very proud of what we have accomplished so far, however there is more
to do. To this end, we will continue our eﬀorts and focus on driving forward
our ESG initiatives in 2023 and beyond.
Yours sincerely

CHRIS CARGILL
President & Chief Executive Oﬃcer
Sosei Group Corporation<#>

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

©SOSEI GROUP CORPORATION 2023

7

Environment
Reduction of Emissions and Waste

Sosei Heptares is committed to reducing our

reduce energy consumption. Throughout 2022, we

environmental impact through our sustainability

implemented many of the recommendations made ininitiatives and our environmental management systems.

the audit report including ways to improve ourWith eﬃcient energy use a core priority at our oﬃces

standardized practice in areas of consumable use,

and R&D facility, our Environmental and Sustainability

recycling and general reduction of energy use. In

Group members are all My Green Lab Ambassadors,

particular, an electricity conservation system for eachfocused on encouraging our laboratories to bepiece of lab equipment was implemented whereby

more sustainable. In May 2021, an independentcertain instruments are automatically switched oﬀ in theenvironmental sustainability audit of our Cambridge,

evening and on weekends, and temperature of our ultra­

UK R&D facility was conducted to assess ways to

low temperature freezers have been increased by 10 °C.

Some further notable initiatives are:• renewable energy promotion – we continue to selectenergy suppliers with high environmental awareness.
Our current UK electricity supplier is the largest
generator of carbon­neutral electricity in the UK.
• Ecologi® partnership ­ since 2002, we have partneredwith Ecologi Action Ltd on carbon reduction projects
and tree planting initiatives. So far, we have contributed
to 96 tons CO2 reduction (94.08 tons reduced throughgenerating clean electricity from hydropower in India
and 1.92 tons reduced through wind power generationin Bac Lieu Province, Vietnam). Furthermore, we have

96

TONS

contributed to the planting of 5,040 trees in the
mangroves of Marotaola, Madagascar.
• car sharing service – our UK staﬀ at our Cambridge
facilities participate in a car­sharing service.

CO2 REDUCTION• cycle to work – our UK staﬀ can participate in the UK
Government’s Cycle to Work initiative which provides
staﬀ with discounts on new bike purchases.
• energy eﬃcient buildings – our Tokyo headquarter islocated in an energy eﬃcient building with double­
glazed windows and individual air­conditioning
systems. We have also installed LED lighting in ourTokyo oﬃce to reduce power consumption compared
to fluorescent lighting.

<#>

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

©SOSEI GROUP CORPORATION 2023

9

Environment

Reduction of Emissions and Waste, continued
In the UK, we hold an Environment Agency License for the use and disposal of radioactive materials and a Trade
Eﬄuent License, issued by Anglian Water Services Limited, for the discharge of liquid waste into the public sewage
system. Both licenses stipulate strict conditions on how we should manage and dispose of such materials and thesehave been incorporated into our environmental management systems. Furthermore, although Sosei Heptares does
not hold a HAZWOPER certification as such certification is not applicable for the operation of our business, weensure that our waste disposal contractors hold the British Standard ISO 14001:2015 (Environmental Management)
and BS ISO 50001:2011 (Energy Management, under the framework guidance of PAS99:2012 (Management
System). To ensure compliance of our waste disposal contractors’ certifications, we take part in our waste disposal
contractors’ annual waste audit process.
Through our focus on environmental management systems and our energy reduction initiatives, we will continue towork on ways to reduce our operational emissions levels.

SocialCambridge, UK R&D Facility
3.85
tons

2020

CO2 Emissions
from R&D Facility
per Person

Gas Usage at
R&D Facility

2021

3.45
tons

2020

Electricity Usage
at R&D Facility

2021

2022

3.27
tons

2022

2020

1,179,420
(kWh)

2020

2021
2022

1,302,095(kWh1,240,093(kWh)

Water Usage at
R&D Facility

2021
2022

1,563,605(kWh)1,594,378(kWh)Safety and Quality Assurance

1,650,508
(kWh)

1,467
(m3)
1,405
(m3)
2,000
(m3)

*Data impacted by site occupancy restrictions due to COVID­19 measures starting March 2020 which introduced working from home measures for staﬀ
and lab operations at 50% capacity. Site occupancy restrictions were not lifted until April 2022, when maximum site occupancy increased to 130 people
from 80 people during periods when highest levels of restrictions were being imposed.

10© SOSEI GROUP CORPORATION 2023

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 202210Social ­ Safety and Quality AssuranceSocial ­ Safety and Quality Assurance

Supply Chain Transparency and Quality Assurance

Laboratory Animal Care and Alternatives
to Animal­Based Biomedical Research

We are committed to maintain rigorous quality standards throughout our supply chain network even though our business
uses a virtual model and delegates certain works to external vendors. We have developed a process that maintains oversight

Sosei Heptares is committed to the humane andThrough our internal review processes, we work toof external vendors including steps for assuring the quality of activities through review of data and documents. These

responsible use of animals in biomedical research. No

ensure that all experiments are designed to use thesteps include review and approval of externally generated protocols and reports, review of completed batch manufacturing

animal research is conducted in our laboratories orminimum number of animals possible to deliver therecords for produced batches, review of analytical method development and validation reports, review and approval ofpremises. Instead, we work with experienced andrequired data in the circumstance and minimize or avoid

certificates of analysis, ongoing review and monitoring of clinical trial data while studies are ongoing, and review of Tables

reputable Contract Research Organizations (CROs) tounnecessary pain, distress, or discomfort to the animals.

Figures and Listings (TFLs).

following careful assessment, and we strive to work

Sosei Heptares is committed to the development andFurthermore, all suppliers are assessed to ensure

Suppliers undertaking animal experiments are required towith organizations that conform to the highest standard

use of scientifically validated alternative testing

suﬃcient quality management systems are in place which

maintainof legal and regulatory compliance processes, obtained

methods that are acceptable to regulatory authorities

meet our internal quality assurance procedures and all

Accreditation of Laboratory Animal Care (AAALAC)

through independent accreditation procedures.

and do not compromise patient safety or the

relevant regulatory standards. Relevant suppliers areaccreditation. The AAALAC International accreditationeﬀectiveness of our medicines. Accordingly, we haveprovided training by us on procedures to meet our quality

program evaluates organizations that use animals in

All use of animals is carefully planned and reviewed byinvested heavily in methods to test eﬀects of candidate

management systems. Regulated development stage

research, teaching or testing. Those that meet or exceed

our In Vivo Review Forum (IVRF), which comprises a

drugs on isolated human cells and in clusters of cells

suppliers are expected to comply with GLP, GMP and

AAALAC standards are awarded accreditation.

team of scientists, statisticians and veterinarians before

grown in the laboratory (organoids), and in the use of

GCP as applicable to the activity being undertaken andany research starts. We endeavor to abide by the 3R

state­of­the­art computational modelling to predict theto maintain certification from the relevant national

Finally, our UK Modern Slavery Statement outlines ourprinciples of Replace, Reduce and Refine and only

eﬀective concentration of the drug in the body andauthorities. Certificates are collected during theapproach to managing modern slavery risks in our supply

commission studies involving the use of animals where

biological eﬀects in humans.

assessment and selection of such suppliers and thechain. Our 2023 UK Modern Slavery Statement can besuppliers are contractually and legally obliged to maintainfound here.

conduct any necessary research. Our CROs are selected

there are no scientifically appropriate alternatives.

their Association

for Assessment

andall necessary certifications.

Core Development­Stage Activities

Marketing Authorization in Japan

Sosei Heptares is passionate about improving the quality of life and health of people around the world through thediscovery and development of eﬀective and safe medicines. With this core principle in mind, we have developed
comprehensive procedures that assure the quality and compliance of our core development stage activities. These
procedures are revised every two years or more frequently as required.
Sosei Heptares undertakes clinical trial activities regulated

product manufacture, non­clinical study sponsorship,by Good Clinical Practice (GCP) and is governed by related

clinical study design, medical oversight, drug metabolism,

regulations and guidance concerned with manufacturing

pharmacokinetics and expertise in program management,(Good Manufacturing Practice (GMP)), laboratory and non­regulatory aﬀairs and clinical operations. Therefore, allclinical testing (Good Laboratory Practice (GLP)) anddevelopment­stage staﬀ are trained in procedures needed

pharmacovigilance.

to assure the quality compliance of every aspect of clinical12

and regulation relevant to their role when they join, andmedical and other trained professional staﬀ, supported byperiodic updates thereafter. GMP and GCP training isconsultants. The team provides scientific and operationaldelivered annually. Additionally, employees and relevant

expertise and oversight to facilitate drug development

consultants are required to be trained in the organization’s

including Active Pharmaceutical Ingredient (API) and drug

policies and procedures relevant to their roles.

© SOSEI GROUP CORPORATION 2023

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

systems (PQS) based on the International Conference

arm, holds our marketing authorization license in Japanon Harmonization of Technical Requirements forfrom the Ministry of Health, Labor and Welfare (MHLW).

Registration of Pharmaceuticals for Human Use’s ICH

It is also a member of the Pharmaceutical Manufacturers'

Q10 Pharmaceutical Quality Systems.

Association of Tokyo and the Japan Society of Quality
Assurance.

In accordance with guidance issued by MHLW, Sosei Co.,Ltd have implemented internal regulations in relation totrial conduct. Team members receive training in legislation
Development­stage teams are made up of scientists,

Sosei Co., Ltd., our Japan pharmaceutical development<#>
12

In accordance with the Ministerial Ordinance onmarketing information, including clarifying management

Standards for Manufacturing Management and Quality

responsibilities, valuation procedures and record keeping

Control of Pharmaceuticals and Quasi­Drugs (GMP),

systems. Our Monitoring Committee for Marketing

Sosei Co., Ltd ensures relevant suppliers are provided with

Information monitors and assesses the activities ofmanufacturing and quality control training. In addition,

relevant employees and suppliers on a bi­annual basis.

since August 2021, we have worked with each of ourSosei Co., Ltd also conducts internal marketing andrelevant suppliers to establish pharmaceutical quality

advertisement training to all relevant employees.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

©SOSEI GROUP CORPORATION 2023

13SocialHuman Capital Development

Human Capital Development

Social ­ Human Capital Development

Gender Representation

Promoting Diversity and Pay Equity

Vice President and Above

Senior Director

Director

The promotion of diversity and inclusion and the creation of a collaborative working environment are core pillars of

26

Sosei Heptares’ vision to be one of Japan’s global biopharmaceutical champions. As a global company, our Sosei
Group Board of Directors comprise 38% non­Japanese nationals (including our CEO) and 80% of our global workforce

21

20

are non­Japanese nationals (British – 55%, Japanese – 20%, Rest of the World 25%). We are also proud to have a80%
non­Japanesenationals

JAPANESE

20%
55% BRITISHREST OF THE
WORLD

25%

34%
seniormanagement
roles are held
by women

53%

3

FEMALECOLLEAGUES

3FEMALE

MALE

2021

47%

13 14

11

diverse workforce comprising 53% female colleagues, including 55% female new hires in 2022.

MALE
COLLEAGUESWe are committed to pay equality for all colleagues withcreate an inclusive and informed culture within ourour intention to continue to build a diverse and inclusive

organization, we are in the process of establishing aworkforce. Commencing in 2021, a global review of staﬀ

diversity, equity and inclusion council (DEI Council) in 2023.
Sosei Heptares actively forecasts its hiring needs by

experience.

determining the required number of full­time equivalent

MALE

0

FEMALE

MALE

2022

2021

Associate Director/
Principal Scientist

4

3

FEMALEMALE

FEMALE

MALE

2021

2022

FEMALE

MALE

2022

Senior Scientist II
and Below

75

68
40

13 17 13 17

salaries has been conducted on an annual basis against
market benchmarks based on each employee’s role and

FEMALE

036(FTE) employees needed on each program. This practiceIn December 2021, Sosei Heptares introduced a newensures that our programs are well resourced with people

performance calibration process as part of our workforce’s

who have the requisite skill sets. As an organization, we are

performance management framework. The new process isproud to support skilled worker visa applications for non­a business led forum conducted annually to ensure a

British nationals to work at our R&D facility in Cambridge,

consistent and fair approach across the organization for

UK. In 2022, we supported six skilled worker visa

promotions and annual rewards. In 2022, 52 promotions

applications.

FEMALE

MALE

2021

FEMALE

MALE

2022

FEMALE

MALE

2021

FEMALE

MALE

2022

Employee Stock Ownershipwere made, including 30 female promotions which
increased our global female employees in senior

Sosei Heptares believes meaningful progress has been

management roles to 34% compared to 23% in 2021. In

made to promote diversity and pay equity in 2022 andSosei Heptares actively appoints talented people with the aim of encouraging them toaddition, in March 2022, Miwa Seki was elected to thewill continue to make year­on­year progress across theremain with the business in the long­term. We truly believe that employees should have

Sosei Group Board of Directors. As part of our drive toorganization.

a stake in the ownership of the organization, so they can benefit from their directcontribution to the company. Accordingly, since April 2022, all permanent employees are
eligible to be considered for grants of Restricted Stock Units (RSUs) under Sosei Group’sLong­Term Incentive Plan (LTIP) every year. The participation in and the actual grants ofawards and/or payments to our employees are made in accordance with the rules of therelevant LTIP scheme. As of December 2022, 82% of permanent staﬀ hold RSUs of Sosei
Group Corporation. It is Sosei Heptares’ intention to continue to award employees further

82%
permanent staﬀ
hold RSUs of
Sosei Group
Corporation

grants on an annual basis as an additional process of recognizing their performance andcontributions to the organization.

16© SOSEI GROUP CORPORATION 2023

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022<#>
16

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

©SOSEI GROUP CORPORATION 2023

17

Human Capital Development

Benefits and Work­Life Balance

Development Training

Sosei Heptares runs an active benefits package which

Japan colleagues have freedom to choose when and where

We are committed to supporting our colleagues

includes salary sacrifice benefits such as Cycle to Work

to work ­ either from the oﬃce or remotely from home orreaching their full potential by providing opportunities

schemes and pensions. The company also provides private

any other place of their choosing. The flexible working

for growth and development, and through rewarding

health insurance, health cash plan for dental, optical,

arrangements are part of our work style reinvigoration,

performance and leadership. Sosei Heptares ensurescomplementary therapies to all employees and subsidized

which includes the reform of performance management,that each employee has the requisite and up to dategym memberships for all staﬀ including placement students.

training and development and other Human Resources (HR)skills training for their role, facilitated through regular

practices to enable the shift toward employee

personal development discussions and tailored training

Sosei Heptares believes in supporting employees who haveempowerment. As a result, the company is seeing increased

programs based on our training matrix. The company

young families. The company's UK family friendly policies

employee satisfaction related to well­being and work­life

also supports individuals attaining further qualifications(including maternity, paternity and adoption leave) werebalance.

or certifications within their field of expertise. We are<
Tailored Training
Program for each
employee basedon training matrix

Employees
Receiving
Training

OVER

45
ANNUALTRAINING
HOURS

committed to scientific talent development throughrevised in 2022 to provide enhanced packages to
employees compared to the UK statutory requirements. In

In the UK, Sosei Heptares is committed to supportinginternal

2022, 100% of staﬀ returned to work after child­care leave,

employees with flexibility in their work schedules while

attendance.

secondments

compared to 67% in 2021. Continued support to families

allowing us to maintain a progressive and productive workand staﬀ with elderly family members are also provided

environment. The company has provided a formal policy tothrough the roll out of a new childcare and elderly careensure consistency of approach with how roles can operate

support program, which entitles employees to up to ten

flexibly in our working environment. It balances the needdays per year of subsidized childcare and elderly care.

for roles that physically need to be in the oﬃce with thoseandregularconference

Inspiring
Leadership
Programthat can have greater flexibility but still ensuring we
In Japan, Sosei Heptares introduced flexible working

maintain presence at our sites to promote collaboration andarrangements for all oﬃce­based colleagues in 2022,

connectivity across the company.

<

37.5

Employees
Receiving
Training

ANNUALTRAINING
HOURS

oﬀering our colleagues the choice to decide how they work
to balance both our business needs and their personal ones.

<
In 2022, we began a new leadership strategy byManagement
Development
Program

Employees
Receiving
Training

30
ANNUALTRAINING
HOURS

introducing formal management training for all line
managers in addition to the tailored training programs.
There are three programs targeted at diﬀerent levels andexperience of line managers. New managers or soon­
to­become managers are enrolled in the Management
Foundation Program and managers who have had a few
years’ experience are enrolled in the Management
Development Program. Managers who are at Director­
Company Summer 2022 Eventlevel or above are enrolled in the Inspiring Leadership
Program. These three programs are rolled out on anannual basis and new participants are enrolled as they
become promoted, are newly hired into the business, orManagement
Foundation
Program

12
ANNUALTRAINING
HOURS<

Employees
Receiving
Training

are flagged as potential managers in the near term.

18© SOSEI GROUP CORPORATION 2023

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

©SOSEI GROUP CORPORATION 2023

19

Human Capital Development

Development Training, continued
In addition to fostering an environment to encourage our employees to develop as leaders, Sosei Heptares has aformal performance management framework which includes objective setting for every employee in the company
and bi­annual performance appraisals. Performance calibration meetings at the end of the year are conducted withsenior leaders of each team to discuss the performance of every employee. These meetings also include discussions
on promotions and the near­term development pathway as part of the development plans for each individual.

Finally, Sosei Heptares utilizes a specialized third­party

to increase employee satisfaction and development

online platform to deliver an employment engagement

strategies. In 2022, our employee survey response rate

survey annually to measure the connection employees

was 94% globally, with the overall split of responses

have towards their work, team and company, andbeing 60% positive, 34% neutral and 6% negative. We

examine the factors that influence it. We aim to use thehave developed action plans to focus on improvement

survey results to guide us with further developing ways

areas throughout 2023.

Studentship Programs and Academic Sponsorships
Sosei Heptares supports world leading academic institutions and their students
through various research, studentship and sponsorship arrangements. Such programs
are designed to help post­graduate students and academics work on collaborative
research programs in line with their higher education requirements. In somecircumstances, Sosei Heptares supports such students and academics on writing their
theses and publication of their findings. In 2022, Sosei Heptares worked with 19

19
academic
institutions

academic institutions around the world on such sponsorship arrangements.
In addition, Sosei Heptares supports industrial placement student programs inconjunction with UK universities. This is an annual program designed to provide
students with practical experience within their designated field of expertise. In 2022,
Sosei Heptares welcomed 10 industrial placement students to work alongside ourscientists on 12 months placements.

20© SOSEI GROUP CORPORATION 2023

10
industrial placement
students

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

SocialContribution to SocietyContribution to Society

Social ­ Contribution to Society

Right to Health

Meeting Unmet Medical Needs

Sosei Heptares takes its responsibility to work towards providing access to medicines andhealthcare to all people around the world seriously. The company provides access to some

Our proprietary StaR® technology and SBDD platform has enabled us to develop small molecules, peptides and antigens
for antibody discovery. To date, we have leveraged our technologies and expertise to create a pipeline of drug candidates
targeting GPCRs that we believe have potential to become first­in­class or best­in­class medicines in therapeutic areas
such as neurology, immunology and gastroenterology diseases.

of its scientific discoveries in order that others may use them for their own research to
improve the understanding of diseases and accelerate the development of new medicines.
For example, our scientists have solved over 340 GPCR structures from more than 30
diﬀerent GPCR targets using our innovative StaR®/SBDD drug discovery technology, which
we have published in order to contribute to the scientific community.

Alongside our in­house programs, we are collaborating with world leading partners, including major biopharmaceuticalcompanies, emerging technology companies and innovative venture capital funds to address diseases with high unmet
medical needs, and for which there are no suitable treatments currently available.

the world.

that selectively inhibit the main protease of SARS­CoV­2 (MPro), which has beensmall molecules that could be eﬀective against predicted future variants of SARS­CoV­2
and other related human viruses. In December 2021, Sosei Heptares received grantfunding from the Wellcome Trust to advance the MPro program for the treatment of

NEUROLOGICAL DISORDERSIMMUNOLOGICAL DISORDERSOTHER

GPCR structures
solvedFurthermore, in April 2020, we initiated a new R&D program to design drug candidates
designated as an important potential target for drug development. We have also designed

We are dedicated to developing life­changing medicines for the many millions of patients with these diseases around340+

SARS­CoV­2. As part of the grant award, Sosei Heptares has committed to endeavor toprovide a percentage of any relevant manufactured products to be oﬀered to low and

from

30+
GPCR targets

OUR CANDIDATESNUMBER OF PATIENTS*

INDICATION

middle­income countries (LMIC) as per the World Bank's definition of LMICs.

Dementia

Schizophrenia

Substance
use disorders

Narcolepsy

Other

CancerIBD

AtopicDermatitis

Type
2Diabetes/Obesity

Anorexia

Charity Initiatives

~55

~20

~10.4

~3

­

~42

~10

~13.3

~420

~10

Sosei Heptares actively seeks to contribute to the development and enhancement of our communities as well

millionmillionmillionmillionmillionmillionmillionmillionmillionM1 agonist, M4 agonist,
M1/M4
M1/M4
agonistagonist

mGlu5
NAM

OX2
agonist

A2a
CCR6
H4
antagonist, antagonist, antagonist,
EP4
GPR35
PAR2 mAb
antagonist, agonist, EP4
CXCR4
agonistmAb

GLP1
agonistMC4
antagonist

CGRP
antagonist,
GPR52
agonist*Source of Number of Patients: World Health Organization, Evaluate Pharma, The European Federation of Crohn‘s & Ulcerative Colitis Associations (EFCCA),
Narcolepsy Network, Inc., GBD 2015 Disease and Injury Incidence and Prevalence Collaborators (October 2016). “Global, regional, and national incidence,prevalence, and years lived with disability for 310 diseases and injuries, 1990­2015: a systematic analysis for the Global Burden of Disease Study 2015”.
Lancet. 388 (10053): 1545–1602.1602.

as to the broader society. In 2022, we made charitable donations amounting to £15,043 to the following
organizations and initiatives:

2022 DONATIONS BY SOSEI HEPTARES£10,000 £3,024
DEC Ukraine
Humanitarian
Appeal

St Nicholas Hospice£500£1,249£270

Rethink Mental
Illness

Ecologi

In2ScienceUKOur Charity Committee raised £4,374 for St Nicholas Hospice, UK in 2022 through various
initiatives such as running a step challenge, quiz evening, bake­oﬀs, World Cup pontoon and a
Christmas raﬄe. St Nicholas Hospice provides help, advice and support to patients and families
in the final chapters of their lives, who are living with long­term and life­threatening illnesses.
These employee­raised donations are in addition to the Company donation mentioned above.
In 2023, our Charity Committee will be raising money for In2Science UK, a charity that provides
young people from low­income and disadvantaged backgrounds an opportunity to gain practicalinsight into the Science, Technology, Engineering and Math (STEM) sector as well as knowledge
and confidence to progress to university.

22© SOSEI GROUP CORPORATION 2023

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

©SOSEI GROUP CORPORATION 2023

23

GovernanceGovernance

Governance

LEADERSHIP GROUPSAND COMMITTEES

Corporate Governance StructureWith our vision to be one of Japan’s global

Companies Act of Japan in order to strengthen our Board

biopharmaceutical champions, we recognize that buildingof Directors’ oversight, increase transparency and speed

an eﬀective system of corporate governance is an

up the decision­making of management, among otherimportant management priority to enhance corporate

reasons. Under this structure, we have separated thevalue over the medium to long term. We have therefore

oversight function and business execution function ofcontinued to strengthen our governance structure andmanagement and have largely delegated business

management system through the appointment ofdecision making authorities to our Executive Oﬃcers.

independent external directors and the establishment

We believe this structure supports our focus toof cooperation between the Audit Committee, theincrease management oversight and eﬃciencies and our

external auditor and the Internal Audit Department togovernance principles are set out in our Corporate

support the strategic management and oversightGovernance Guidelines.

functions of our Board of Directors. At the same time, wehave strived to increase the integrity and transparency

Our Scientific Advisory Board consists of leading scientificbyexperts from the pharmaceutical industry and academia,

maintaining accountability to and communication with all

who ensure management decisions are based on

stakeholders, including shareholders, employees, businessscientific expertise. Our significant investment decisions

partners, customers, creditors, consumers and local

are made by our Board of Directors based oncommunities.

recommendations made by our Investment Committee.

of

our

management

governancestructure

Lastly, our ESG Committee was formed in 2022 with the26

We have adopted a governance structure comprisingmandate to make recommendations to our Board of

the Nomination Committee, Audit Committee andDirectors and oversee our overall ESG strategy, policies

Compensation Committee as stipulated by theand practices.

Mr. Shinichi Tamura
Chairman of the Board

Chris Cargill
Representative
Executive Oﬃcer

Mr. Tomohiro Toyama
Independent
External Director

Mr. Kuniaki Kaga
Independent
External Director

Dr. David Roblin
Independent
External Director

Mr. Noriaki Nagai
Independent
External Director

Mr. Rolf Soderstrom
External Independent
Director

Ms. Miwa Seki
Independent
External Director© SOSEI GROUP CORPORATION 2023

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

Board ofDirectors andExecutiveOﬃcersDESCRIPTION AS OF 31 DECEMBER 2022
Our Articles of Incorporation stipulate that there may be no more than ten directors.
Our Board of Directors comprises eight directors (two internal directors and six
independent external directors). Our Board of Directors sets basic management
policies, supervises the execution of duties by our Executive Oﬃcers and directors,
and deliberates on management strategies to realize sustainable growth and add
corporate value. One of the directors serves concurrently as our representative
executive oﬃcer (CEO).
We currently have six Executive Oﬃcers, including our CEO, who have been
mandated by the Board of Directors with business execution authorities.
We have six independent external directors. There are no personal, capital, ortransactional relationships or other special interests that may aﬀect their independentand objective decision making between the independent external directors andSosei Heptares.

Independent
External
Directors

In electing our independent external directors, we recognize the importance ofensuring the eﬀectiveness of corporate governance and ensuring independence fromthe management team. We have established our Independent Standards forindependent external directors. Based on their career histories and relationships toSosei Heptares, we have determined that each independent external director canensure adequate independence to execute their duties as an independent external
director from an independent standpoint.

Nomination
Committee

Our Nomination Committee comprises our Chairman of the Board and three
independent external directors. The Committee assesses whether candidates have
suﬃcient expertise and experience to support our global strategy and puts
nominations forward to our shareholders for such candidates to be elected
as directors. Furthermore, the Nomination Committee makes candidate
recommendations to the Board of Directors for the appointment of executiveoﬃcers.

Compensation
Committee

Our Compensation Committee comprises three independent external directors, oneof whom is the Chair of the Committee, our CEO and our Chairman of the Board.
The Committee sets the remuneration policy for directors and Executive Oﬃcers,
and based on that policy determines their individual remuneration in view of
performance and other contributions to Sosei Heptares.

Audit Committee

Our Audit Committee comprises five independent external directors. The Audit
Committee works closely with the Internal Audit Department and is responsible for
auditing finance and internal control mechanisms, overseeing the execution of duties
of directors and executive oﬃcers, as well as the appointment and dismissal of
external auditors.

Investment
Committee

Our Investment Committee comprises our CEO, Chairman of the Board, three
independent external directors and four Executive Oﬃcers. The Investment
Committee evaluates prospective investments and divestments projects and makes
investment recommendations to the Board of Directors.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

©SOSEI GROUP CORPORATION 2023

27

Governance

LEADERSHIP GROUPSAND COMMITTEESDESCRIPTION AS OF 31 DECEMBER 2022

R&D Committee

Our R&D Committee comprises our CEO, Chairman of the Board, two independent
external directors and three Executive Oﬃcers. The R&D Committee promote an
open, transparent and respectful cross­border working culture, and to support bestpractice knowledge sharing regarding innovation and R&D.

ESG Committee

Our ESG Committee comprises our CEO, three independent external directors andone Executive Oﬃcer. The ESG Committee was established in 2022 with themandate to make recommendations to the Board of Directors and oversee our overall
ESG strategy, policies and practices.

QXR Committee

Our QXR Committee comprises our CEO, two independent external directors andfour Executive Oﬃcers. The QXR provides quarterly executive review of R&D
decisions and ensures appropriate checks and balances are made on resource andbudget allocation across our R&D portfolio.

Scientific
Advisory Board

Our Scientific Advisory Board consists of a total of 11 world­leading experts,
including one independent external director. The SAB provides valuable insight andperspective relevant to drug discovery, development and strategic areas of focus for
Sosei Heptares.

GOVERNANCE
SYSTEMS

Supply Chain Due Diligence
Along with our Supply Chain Transparency and Quality Assurance measures, weundertake due diligence when considering taking on new suppliers and continuously
review our existing suppliers. All our suppliers undergo a supplier approval processthat includes risk assessments based on qualitative and economic factors to identify
any indicators of supply chain risks. Such risk assessment includes checks against
association with “anti­social forces” (hanshakaiteki seiryoku) and organized crimegroups. In addition, since the war in Ukraine began in February 2022, we have taken
measures to ensure that we do not trade directly with any Russian suppliers and do
not breach any internal sanctions.

Business
Ethics andCompliance
Systems

Operation of Governance Systems

DESCRIPTION

Sosei Heptares is committed to ensuring ethical business practices across ourbusiness and acting as a responsible member of society in all our business endeavors.
Our principles of corporate behavior are instilled throughout the organization
through our Code of Conduct. Mandatory training of relevant laws, regulations andpolicies are provided to our staﬀ and compliance with training requirements aremonitored on an ongoing basis.

Anti­Corruption Measures
We strive to undertake our business fairly with honesty and transparency andtherefore are committed to maintaining the highest possible standards of businesspractice. Consequently, in accordance with our Anti­Bribery and Corruption Policy,
Sosei Heptares observes and upholds a zero­tolerance approach to acts of bribery
and corruption.
We do not tolerate fraud, corruption or abuse of position for personal gain by any
member of staﬀ or any other person associated with us. Accordingly, through our
Anti­Fraud and Anti­Facilitation of Tax Evasion Policies, we have establishedmechanisms to minimize the risk of fraud and criminal facilitation of tax evasion.

28© SOSEI GROUP CORPORATION 2023

As at the date of this 2022 ESG Report, we currently are not aware of any areas thatwould be considered high risk and we are not aware of any third­party company
and/or supplier activity that may contravene our ethical business practices.

Our Whistleblowing Policy encourages staﬀ and external stakeholders to raise any
concerns that they may have about our conduct or the way in which our business
operates. All our staﬀ have a duty to report any concerns they may have about
potential breaches of our Code of Conduct, the laws and regulations of the countries
we operate in, or our policies, procedures and guidelines. Our policy outlines ourinternal mechanism for reporting, investigating, and remedying any wrongdoing in
the workplace and encourage individuals to raise their concerns and any grievancesinternally in the first instance. Along with our internal whistleblowing mechanism, we
have external whistleblowing hotline services that can be used in Japan and the UK
by both internal and external stakeholders. The external independent whistleblowing
services oﬀer confidential reporting services, which allows staﬀ and external
stakeholders to raise any issues or concerns in complete confidence and if they wish,
on an anonymous basis.

operational structures are in place. A summary of our governance systems is as follows:Business
Ethics andCompliance
Systems

We require all our contracting partners, suppliers and other third parties to operate
in line with internationally recognized legal, regulatory and human rights frameworks.
We are committed to ensuring that we identify and eliminate to the fullest extent
possible all potential modern slavery risks related to our business. We do not tolerate
forced labor either within our business itself or within our supply chain. For further
details of our actions to prevent modern slavery in our business dealings, please refer
to our 2023 Modern Slavery Statement.

Whistleblowing Policy

We are committed to conducting our business with integrity and our governance systems ensures that appropriate

GOVERNANCE
SYSTEMSDESCRIPTIONENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

Document
Management
SystemDocument management rules and policies ensure strict controls for the management
and storing of documents.

Risk
Management
SystemDecision making by our Board of Directors are made based on discussions anddeliberations considering, where relevant, opinions of external experts. Based oninternal audit findings, our Internal Audit Department also provides guidance andrecommendations on risk management systems to our Board of Directors.

Job Execution
SystemAuthority of oﬃcers and employees are defined and managed in accordance with
our governance policies. To ensure operations are conducted eﬃciently andappropriately, subsidiaries have delegated authorities with structured governancereporting responsibilities to Sosei Group and our Board of Directors.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

©SOSEI GROUP CORPORATION 2023

29

Governance

GOVERNANCE
SYSTEMSDESCRIPTION

Our Internal Audit Department continuously evaluates the design and operation ofinternal controls to comply with relevant laws and regulations. Our Internal Audit
Department conducts internal audits with the aim of maintaining and strengthening
our internal controls whilst ensuring appropriate and eﬀective business operations.
Specifically, the activities of the Internal Audit Department include:

Assurance and Recommendations• Decide audit themes on a risk­based approach, execute internal audits, and report
the results to the CEO and the Audit Committee.
• Issue audit recommendations for remediation and support the audited units todevelop action plans.
• Continue to work together with the audited units and follow up on the remediation
actions.

Internal
Controls
Systems

Internal Controls• Evaluate the design and operation of internal controls over financial reporting every
year to ensure eﬀectiveness according to the guidelines of the Financial Services
Agency (J­SOX).
• Prepare an annual Internal Control Report pursuant to the Financial Instruments
and Exchange Act.

Independence and Objectivity• The Head of Internal Audit Department reports administratively to the CEO andfunctionally to the Audit Committee, and also reports directly to the Board of
Directors, thus maintaining independence and objectivity.
• The Internal Audit Department has meetings with both the CEO and the Audit
Committee on a frequent basis to share information and provide updates on risks
and controls.

Data Protection& Privacy
Systems

30© SOSEI GROUP CORPORATION 2023

We consider the protection of personal data and privacy a vital part of ourgovernance structure. We have implemented a comprehensive global data protection
framework along with General Data Protection Regulation (GDPR) policies in order
to comply with both the EU and UK GDPR in addition to personal information
management regulations in Japan. The handling and monitoring of EU and UK
personal data is managed by our Privacy Team comprising members from key
departments including Legal, Information Technology, HR and Investor Relations andour Privacy Lead is our Chief Accounting Oﬃcer. We have appointed Shoosmiths
LLP as our external Data Protection Oﬃcer.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2022

Group Corporate Headquarters

Corporate Oﬃce

Cambridge R&D Facility

PMO Hanzomon 11F
2­1 Kojimachi, Chiyoda­ku
Tokyo 102­0083
Japan

North West House
119 Marylebone Road
London NW1 5PU
United Kingdom

Steinmetz Building, Granta Park
Great Abington,
Cambridge CB21 6DG
United Kingdom

Tel: +81 (0)3 5210 3290

Tel: +44 (0)1223 949 392

Tel: +44 (0)1223 949 100