Kidswell Bio (TYO: 4584)
Full report

Focus on SHED (cell therapy) business.
Aiming for launch in 2030, with a view to development abroad.

Healthcare

Summary◇A drug discovery venture company originated from Hokkaido University, which began
research into biosimilars (follow-on bio products) in 2007. Currently develops and markets
three products. Since 2016, the company has been strengthening its cell therapy(regenerative medicine) business, focusing on developing drugs to treat unmet needs using
stem cells from human exfoliated deciduous teeth (SHED). The master cell bank was built
in August 2022. To further expand the SHED business, a strategy is planned for future
expansion abroad. With the start-up of the SHED business, the company looks ataccelerated profitability beyond 2030. In July 2021, the company changed its name to
Kidswell Bio to provide new medical treatments for paediatric diseases and rare diseases of
all generations, emphasising children.
◇Share price: The company's share price fell sharply after the announcement of its
financial results for FY2022/3 showed a postponement of achieving profitability in
FY2023/3. The share price has remained depressed since then, partly due to adjustments inbiotech stocks. The company has also indicated upfront investment in SHED and associatedequity financing, making the environment surrounding the company's share price difficult.
However, in terms of PBR, they are well below the levels of the past three years. Hence,
this may be a good buying opportunity for investors who can hold the shares for a longtime in anticipation of the potential of regenerative medicine to be underpinned by theearnings of biosimilars.
◇The company's three business lines are as follows.
Cell therapy (regenerative medicine) business: The area the company has been focusing
on most in recent years and aims to establish a cell therapy platform using stem cells. The
company currently has a pipeline of nine products in stem cells from human exfoliateddeciduous teeth (SHED) using deciduous teeth and is accelerating out-licensing activities topharmaceutical companies and others. In addition, a master cell bank has been built toestablish a stable supply of deciduous teeth. As a pillar of the company's future growth, theupfront investment is being accelerated, with a view to overseas development.
Biosimilars business: Development of follow-on biopharmaceuticals. Pioneer in this field inJapan. Biosimilars provide an alternative option to biopharmaceuticals, which tend to be
expensive. Partner pharmaceutical companies already market three products, and a fourthis expected to be launched by FY2025. In drug discovery ventures, where large amounts ofcapital are required to develop new drugs, the company's profits from selling biosimilars
lighten the burden of financing and create a solid management base.
New biologics: Several new biologics are in the pipeline, including GND-004 (anti-RAMP2
antibody), which is being investigated as a drug candidate for ocular diseases and oncology.
New biologics are expected to generate significant returns if successful but are still in the
research phase. They are expected to be launched in the early 2030s.
◇Mid-term strategic plan -KWB 2.0-: In May 2022, the company updated its mid-term
strategic plan, announcing that it would further focus on the SHED business and increase
upfront investment to achieve breakthroughs in this business. Due to changes in themarket environment for the biosimilars business, the company plans to actively expand the
SHED business overseas. In the future the company aims to significantly increase its
corporate value based on the revenues generated from SHED.
◇Earnings results: In FY2022/3, sales increased by 58% (1.56 bn yen), R&D costs were 1.15
bn yen and an operating loss was 0.92 bn yen (operating loss of 0.96 bn yen in FY2021).
Strong sales of GBS-007 contributed to earnings. Orders for GBS-007 are expected toincrease rapidly in FY2023/3, and the company sales are expected to increase significantly
to 2.9 billion yen and an operating loss is expected to be 980 million yen.

As of December 19, 2022
Share price(12/16)¥279
52 weeks high/low
Avg Vol (3 month)Market Cap
Enterprise ValuePER (23/3 CE)
PBR (22/3 act)
Dividend Yield (23/3 CE)
ROE (TTM)
Operating margin (TTM)
Beta (5Y Monthly)
Shares Outstanding
Listed market¥503/200
12.3 thou shrs
¥8.78 bn
¥9.08 bn–X
5.85 X–%-32.2 %
-58.6 %
1.16
31.471 mn shrs
TSE Growth

Share price performance
Stock pricevs. TOPIX Index (RHS)

600

120

500

100

400

80

300

60

200

40

100

20

0
12/17/21

0
3/17/22

6/17/22% ofShare prices
Relative share price

9/17/22

1 mo.
-8.1%
-8.7%

3 mo. 12 mo.
15.0% -39.8%
13.2% -39.6%

Points of interest
Drug discovery venture company originatedfrom Hokkaido University. Leading andproven track record in biosimilars. In recent
years, the company has focused onregenerative medicine using stem cells fromhuman exfoliated deciduous teeth (SHED). In
August 2022, the SHED master cell bank wascompleted; plans to invest more than 10
billion yen in SHED to develop SHED overseas
in the future. Development of new biotech
drugs aims to launch products in 2030
onwards. Aiming to deliver new medicines
and treatments to all generations under theslogan "Kids Well, All Well", the company
renamed itself to Kidswell Bio from Gene
Techno Science in July 2021.
This report (Company note) has been prepared onbehalf of Kidswell Bio. For more information,please refer to the Disclamer on the last page.

Kidswell Bio | 2022/12/19

1

Table of contents
Summary

1

Key financial data

2

Business summary
Business model

3

Cell therapy (regenerative medicine: SHED)

5

Biosimilars

8

New Biologics

11
12

Mid-Term Strategic Plan –KWB 2.0–
Financial results trends
FY2022/3 financial results actual14

FY2023/3 Q2 financial results actual15

FY2023/3 financial forecast

15

Stock price trends

16

Financial data

18

Company Profile
Company profile/History

19

Management/Corporate governance system

20

Status of major shareholders/Initiatives for SDGs

21

Key financial data

(Unit: ¥mn)

Fiscal Year2017/3

2018/3

2019/32020/32021/32022/3

Net sales

1,089

1,059

1,021

1,077

996

1,569

2,273

1,973

1,827

2,249

1,966

2,487

1,433

1,107

945

898

963

1,150

Cost of sales/SG&A expenses
R&D expenses

840

865

882

1,350

1,002

1,337

Operating loss

-1,184-913-805-1,161-969-919

Ordinary loss

-1,176-903-816-1,187-991-952

Net loss-1,224-904-856-7,316-1,001-535

Current assets

3,421

2,692

2,821

3,322

3,346

3,325

Others

2,379

1,891

2,009

2,032

1,461

1,187

Total assets

3,706

3,025

3,151

3,592

3,933

3,503

Total shareholder’s equity

3,500

2,604

2,731

1,487

1,610

1,718

Equity ratio (%)

93.8

85.0

85.6

39.8

38.0

43.8

-1,759-438-860-1,325-1,267-1,169Cash flow from investing activities

-149

-50

0

-137

-22

526

Cash flow from financing activities

3,471

–

978

1,221

718

369

Increase/decrease in cash and cash equivalents

2,379

1,891

2,009

2,033

1,461

1,187

Cash and cash equivalents

Cash flow from operating activities

Notes) Consolidated financial statements from the FY2020/3 to the FY2022/3. There is no continuity before.
Cash flow from operating activities：Expenditures such as R&D expenses and SG&A expenses mainly centering on drug development.
Cash flow from financing activities：Income from issuance of shares associated with the exercise of stock rights
Source: Omega Investment from Company materials

Kidswell Bio | 2022/12/19

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Business summary
Business model: Portfolio construction through three business areas
In drug discovery ventures, it takes more than ten years from basic research to the launch of a new drug
through out-licensing and clinical trials. Securing research and development funding in billions of yen yearly is
generally necessary. The company began researching biosimilars in 2002. Being a pioneer of biosimilars inJapan, it has already launched three products. The biosimilar business generates revenues in the order of 1
billion yen per year, which exceeds the company's working capital (fixed costs). The stable income from thebiosimilar business supports fundraising, one of the biggest challenges for a drug discovery venture, and forms
a solid management foundation.
See the table below for the characteristics and contents of each business.
Comparison of the characteristics of the three business areas
Rate ofBusiness
PeriodRisk
Pipeline, etc.
returnCell therapy(Regenerative
medicine)

Midterm

Biosimilar

Short
term

Low

New biologics

Long
term

High

Middle Mid→High

Nine pipelines for SHED are in progress. Established aplatform for cell therapy using SHED by building a master
cell bank. Aggressive upfront investment with a view tooverseas expansion in the future.

Three products are already on the market, which will be
expanded to 4 by FY2025. Responding to changes in the
Mid→Lowbiosimilars market environment, the company will promote
the development of cost-competitive biosimilars.
Pipelines of multiple products are in the R&D stage.
High
Launching is expected in the early 2030s.

Thanks to the operation of three different businesses, the Company can keep the drug portfolio well-balanced
by proper mix of timespan, risk and return. As a result, it does not suffer long-term deficit due to low or nosales, which is not unusual for drug discovery ventures.
In addition, the dilution by new shares resulting from the exercising of stock rights is of great concern toshareholders. The earnings contribution of biosimilars in the portfolio should moderate this concern.

Business structure

Source: Company materials

Kidswell Bio | 2022/12/19

3

Business model: Virtual business development
Development of new drugs requires significant R&D expenditure, investment in clinical trials andmanufacturing facilities, etc., and venture companies alone cannot bear the burden. Thus, there exists a
system of cooperation among venture companies, academia, CRO/CMO and out-licensed pharmaceuticalcompanies that allocate the burden in accordance with the expertise of each party. In the case of Kidswell Bio,it has built a collaborative system with best partners by utilizing its research and development capabilities, aswell as the experience, know-how, and networking capabilities nurtured through business. By developing avirtual business that needs no manufacturing facilities, the Company delivers high capital efficiency by lightequipment.

ORTHOREBERTH
Nanocarrier
BioMimetics
Sympathies

GCT–
The second- 101
generation
SHED

Gifu Pharmaceutical
University

Optic
nerve
damageMochidaPharmaceutical

GCT–
102

Cell therapy
business(SHED)

Peripheral
nerve
paralysis
Intractablefracture

Oita University

Nagoya University
Tokyo Medical and
Dental University

Cerebralpalsy

Spinalcord
injuryNagoya University

Hokkaido University Spinal
Cord Injury Centre

Fuji Pharma
Mochida Pharmaceutical

Kishi Kasei

GBS–
012
Sanwa Kagaku
Kenkyusho

GBS–
001

GBS–
010

GBS–
008

GND–
007
New biologics
Malignantbusiness
CancerAngiitis

GBS–
004

Biosimilarbusiness

GBS–
011

GND–
004

lymphoma

GBS–
005

Pulmonary
hypertension

GBS–
007

Sapporo Medical
University

Cancer

MabGenesis

Senju Pharmaceutical
Ocumension
Therapeutic

Business Partnership
Nikon

Showa University
Industry-Academica
Partnership

Summit Pharmaceuticals
International Corporation

Eil

Dojin GroupSOLA

chromocenter

GPC

MetcelaChiome Bioscience

Source : Omega investment from various materials

Kidswell Bio | 2022/12/19

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Cell therapy business (regenerative medicine: SHED)In the field of regenerative medicine, the Company aims to establish a cell therapy platform that utilizes stem
cells from human exfoliated deciduous teeth (SHED) .
Regenerative medicine (cell therapy) is a medical treatment that repairs and regenerates the functions of lost
tissues and organs by using the cultured and processed cells and tissues of the patient or others. Research anddevelopment of stem cells are progressing rapidly thanks to the advancement of cutting-edge biotechnology.
Stem cells include pluripotent stem cells (ES cells, iPS cells) and somatic stem cells. The Company is looking atcell therapy (regenerative medicine) and the stem cells from human exfoliated deciduous teeth (SHED) applied
to stem cells.
The Company has been working on regenerative medicine centered on SHED since 2019. In April 2019, theCompany acquired Advanced Cell Technology and Engineering Ltd. (ACTE), which was developing medical
technology and regenerative medicine products using SHED. The Company made it a fully owned subsidiaryand has been accelerating the research and development of SHED-related business. In November 2020, theCompany reorganized ACTE business, focusing only on areas related to cell therapy platforms.
In February 2020, the company made Japan Regenerative Medicine (JRM), which had been researching cardiac
stem cells (CSCs) within the Noritsu Koki Group (JRM’s parent company), a wholly-owned subsidiary. The
company had promoted the development of regenerative medicine using the cardiac stem cells (JRM-001) by
JRM. In April 2022, JRM was transferred to Metcela Inc., aiming to further accelerate the research anddevelopment of JRM-001 and increase its future corporate value. JRM-001 is no longer in the company's
pipeline.

SHED potential
Dental pulp stem cells are collected from the dental pulp found inside the tooth (pulp cavity). Stem cells
collected from deciduous teeth (SHED) are particularly active and have a high capacity for repair andregeneration. They can be harvested from deciduous teeth when children's teeth are changing, and the timingof harvesting is more convenient and less burdensome for the donor. As is well known, bone marrow stem
cells and other types of stem cells are highly burdensome on donors, but SHED has a high advantage andpotential in this respect. Although SHED is a new stem cell technology with a short history of researchworldwide, its potential is noteworthy. The company is a world leader in research, development andinfrastructure. For a comparison with other stem cell types, see the figure below. SHED is also superior in termsof age and donor-derived risk balance.
Comparison of characteristics of various stem cells and other cells forregenerative medicine applications
Umbilical
cord

Dental Pulp
(SHEDs)AdiposeBone
Marrow

Type of Bank

Public/PrivatePrivatePrivatePublicAge of Donor

0 yr old

5 to 12 yrs
oldMostly over
20 yrs old

20 to 55
yrs old

Timing ofExtraction

Time of birth

Usually 20
times atextraction of
deciduous
teeth

When
surgery

WhenTransplantation

Burden on
Donor

Very low

Low

High

High

Proliferating
Ability

Research
stage

Very high

High

High

Source : Omega investment from various materials
In addition, embryologically, dental pulp stem cells are derived from neural crest cells and are expected to beparticularly applicable to diseases of the nervous system and musculoskeletal systems. According to data fromthe company and joint research, the high proliferative capacity of the cells enables the securing of sufficient
cells in a short period. The increased expression of neurogenesis-related genes, secretion of nervous system
growth factors, and the high capacity for nerve regeneration mean that the cells are expected to be applied todiseases related to nerve regeneration, such as spinal cord injury and cerebral palsy. Furthermore, it is also
shown to have a high bone regeneration capacity and is expected to be effective in diseases requiring boneregeneration.

Kidswell Bio | 2022/12/19

5

SHED project list
Development
Product

Target disease
Pediatric
diseaseNumber of patients(Domestic)*2

Partners

Number ofpatients(Global)*2
100,000 patients
per year, 1.7
millions patientsin total

None

Nerve protection,
activation andregeneration

Nagoya University,
Tokyo Medical and
Dental University

2,000 patients per year,
30,000 patients inTotal

Intestinal
obstruction

Enterectomy,
colostomy

Ganglion
regeneration

MochidaPharmaceutical

100 patients－

Including Pediatric
Loss of motor
diseasefunction andSpinal cord injury
sensation

None

Nerve protection,
activation andregeneration

Nagoya University

5,000 patients per
year,
100,000 patientsin total

25,000 patients
per year, 500,000
patients in total(US,EU and Japan)

Non-union
fractures

Chronic pain, gait
disturbance

SurgeryBoneregeneration

Hokkaido University
andSpinal Injuries Center

100,000 patients
per year－

Ophthalmologic
disease

*1

*1

*1

Gifu Pharmaceutical
University*1*1

Peripheral nerve
palsyMotor function
and sensation
disorderNerve reconstruction(Autologous nerve
transplantation)

Peripheral nerve
regeneration

Oita University

8,000 surgeries
per year－

Pediatric
diseaseCleft lip and palate

Eating and speech Lip arthroplasty
disorder+ iliac bone graft

Maxilla boneregeneration

ORTHOREBERTH

2,000 patients per
year

15 out of 10,000
newborns

Brain cancer

Poor life
prognosis

Surgery,
radiation therapy,
chemotherapy

Anticancer,
prevention ofrecurrence

Hamamatsu University
School of Medicine

20,000 patients per
year

830,000 patientsin total

*1

*1

*1

*1

NanoCarrier,
BioMimetics
Sympathies*1*1

Pediatric
diseaseCongenital Isolated
Hypoganglionosis

2nd
generation
SHED

TherapeutictargetQuadriplegia andPosture disorder

Cerebral palsy

1stgeneration
SHED

Existing
Treatment

Symptom

Source : Omega investment from various materials*1: Details not disclosed,*2: KWB research based on public and relevant information

See the table above for details of SHED development projects. The company plans to start clinical trials by
FY2022 and launch three products by FY2030. On November 7, 2022, research articles were published on a newtreatment for brain tumours in collaboration with Hamamatsu University School of Medicine. Steady progressis also being made in the second-generation SHED project (see p. 8 for details).

Construction of the SHED Master Cell Bank (MCB)
In promoting regenerative medicine using dental pulp stem cells, it is essential to establish a stable supply
system for milk teeth, which are the raw material for various regenerative medicine products. The company
has been building MCBs through the acquisition and restructuring of ACTE, partnerships with medical
institutions and Nikon CeLL innovation. In August 2022, the company's SHED clinical MCBs were constructed.
As there is no precedent for the manufacture of MCBs for SHED by other companies, the company's diverse
expertise was utilised to solve the problem. Thus, the foundation for a full-fledged SHED business has been
established.

SHED master cell bank process

Source: Company materials

SHED manufacturing and supply system (S-Quatre)
While completing the MCB is a crucial step, the MCB itself is one process in the company's SHED manufacturing
and supply system. Securing raw material baby teeth requires the development of an overall manufacturing
and supply system: donor recruitment, ensuring the safety of potential baby teeth donors at the dentist,
extraction, culture and production at the MCB, supplying the MCB to the development partner and developing
the final product. The company plans to commercialise the service of providing MCBs, the intermediate
product of SHED, as the SHED Source Supply Service (S-Quatre®). (see next page, above).

Kidswell Bio | 2022/12/19

6

SHED manufacturing and supply system

Source: Company materials

SHED market potential
In the pharmaceutical industry, the increasing speed of technological innovation has led to a rapid
diversification of modalities (types of therapeutic means. See also later in this section the second-generation
SHED: Designer cells). Regenerative medicine using cell-based medicines is expected to expand rapidly. In thiscontext, the market for SHEDs for neurological and musculoskeletal diseases is expected to grow to 700-800
billion yen by 2040. Given the potential of this market and the progress of the SHED business, the company
decided to formulate a mid-term strategic plan - KWB 2.0 - to accelerate SHED research and development (tobe explained later).

Allogeneic stem cell market size forecast (global)

Source: Company materials

The second-generation SHED: Deployment in designer cells
Technological innovation in medicine has led to a diversification of modalities (types of treatment means) inrecent years. Until around 2000, the focus was on traditional 'low-molecular medicines', but from 2000 to 2020,'antibody medicines' made remarkable progress. Subsequently, research on stem cells, as represented by iPS,
has developed, and regenerative medicine using cell therapy is currently attracting attention. As the next stepafter cell therapy using first-generation SHEDs (non-engineered stem cells), the company has started
developing second-generation SHED 'designer cells’ (engineered cell therapy in which functions are added orenhanced by gene transfer or other means). (see next page, above).

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7

Image of the second-generation SHED 'designer cells' and therapeutic modalities.

Source: Company materials

On November 7, the company announced that it had published a paper in collaboration with the Departmentof Neurosurgery, Hamamatsu University School of Medicine, following high research results from basic
research into a new treatment for brain tumours using second-generation SHED, which was being conducted incollaboration with the university. Recent advances in various treatment techniques have improved clinicaloutcomes in brain tumours, but recurrence due to residual tumours significantly impacts prognosis. Therefore,
developing localised therapies at the cellular level is desired to kill all major cells that have invaded the brain.
The present treatment with second-generation SHEDs (engineered SHEDs) suggests that they may be apractical therapeutic approach for brain tumours and brain metastatic cancer.

Biosimilars
The term generic drug has become commonplace. It is a medicine with the same active ingredients, quality,
efficacy and safety as the new drug, and is sold after the patent for the original drug is expired. The
development of new medicine requires huge R&D expense and clinical costs, their prices become very
expensive. Therefore, the use of generic medicines is recommended from the viewpoint of controlling medical
costs.
Traditional pharmaceuticals are for general diseases and are produced mainly by chemical synthesis of small
molecule compounds. But in recent years, bio medicines produced by recombinant proteins has progressed.
Biomedicines are produced by purifying polymer compounds synthesized in microorganisms and cells. They
are therapies for intractable diseases and rare diseases. Biomedicine has become even more expensive due tothe difficulty of its manufacturing process, and there is a need to develop biosimilars, such as generics asagainst the traditional medicines.

Positioning of Biosimilars
Current status

The manufacturing and approval process is sodifficult than generics that it is not widely used.

Ideal

More use of biosimilars will reduce theburden of medical expenses

Source: Company materials

Kidswell Bio | 2022/12/19

8

The production of biomedicine requires high technology, and it is produced by gene recombination technology
or cell culture, therefore, unlike generics for the traditional small molecule drugs, it is not possible to produce
the same product. Compared to the predecessor, it is possible to produce the same protein with similar
efficacy and safety, but it is difficult to show identity due to the complicated molecular structure. Biosimilar isrequired to show equivalence and homogeneity. Unlike generic drugs, biosimilar development must meet therequirements as rigid as those for new drug development, and the hurdles are high.

Comparison of generic drugs and biosimilars

Definition

Productcharacteristics

Manufacturing

Generic drug

Biosimilar

Drugs with the same active ingredient, route ofadministration, usage/volume, efficacy/effect as
the original drug

If a safe volume exerts a sufficient effect, there arefew side effects.

Small molecule compound

Polymer compound

StableIngenuity required for stabilization

Easy to show identity

The molecular structure is complicated, and it isdifficult to show identity. So, it is necessary toshow equivalence/homogeneity.

Manufactured by chemical synthesis

Manufactured by using cell culture technology,
etc.

Bioequivalence test

Comparison of quality characteristics
equivalence/homogeneity
Comparison of pharmacological actions andconfirmation of safety in non-clinical studies
Equivalence/homogeneity comparison and safety
confirmation in clinical trials
Post-marketing surveillance

50% of the original product

70% of leading biomedicine

Development
requirements

NHI pricelisting

Source : Omega investment from various materials
In recent years, biosame (biomedicines that are produced by the same equipment for the original biomedicine,and have the same molecular structure, but are sold by the original drug pharmaceutical company via its groupcompanies) has emerged. Biosames are currently listed at 70% of the original drug price, which is the same as
biosimilars. The appearance of biosame poses a threat to biosimilars as a competitor, and biosimilar
manufactures are required to take actions such as further reduction of manufacturing costs.
Biosimilar’s revenue model consists of revenue from main drug substance supply to manufacturing
pharmaceutical companies, and milestone revenue paid in accordance with the progress of drug development.
The Company also earns revenue by concluding a joint R&D contract to provide its know-how topharmaceutical companies.
As described above, the development of biosimilars requires advanced R&D capabilities and cost reduction
know-how at the manufacturing stage, so only those with real experience can enter the market. The entry
barrier is high. The Company was one of the first to pay attention to biosimilars and developed it by utilizing
the technology, knowledge and know-how cultivated in new biomedicine development. The launch of GBS-001
in May 2013 marked the Company’s great achievement as a pioneer in the Japanese biosimilar market.
Currently, the Company is the only bio-venture company that sells more than ¥1bn in biosimilars. It is ahead ofother companies in the biosimilar competition.
See the table on the next page for the company's current biosimilar pipeline. It has already launched three
products, GBS-001, GBS-011 and GBS-007.

☆ GBS-001 (Filgrastim BS (biosimilar), target disease area: cancer)
A successor to predecessor GRAN® (Kyowa Kirin)/NEUPOGEN® (Amgen, USA). GRAN is preparation of G-CSF(granulocyte colony stimulating factor) used for neutropenia caused by cancer chemotherapy, which increases
neutrophils. A joint research with Fuji Pharma Co., Ltd. started in October 2007, and Fuji Pharma and MochidaPharmaceutical Co., Ltd. obtained domestic manufacturing and marketing approval in November 2012, and the
medicine was launched in May 2013.

Kidswell Bio | 2022/12/19

9

Biosimilar pipeline

Source: Company materials(As of October 31, 2022)

The Company provides a stable supply of undiluted solution to Fuji Pharma, and Fuji Pharma and MochidaPharmaceutical sell it in two brands and via two channels. The GBS-001-producing cell line is introduced fromDong-A ST Co., Ltd. (formerly Dong-A Pharmaceutical Co., Ltd., South Korea). In July 2022, Mochida announced
that it would discontinue sales of Filgrastim BS.

☆ GBS-011 (Darpeboetin alpha BS, coping disease area: renal disease)
Epoetin Alpha, a treatment for renal anemia, enhances the sustainability of the effect. Its predecessor is NESP®
(Kyowa Kirin) /Aranesp® (Amgen, USA). It was jointly developed with Sanwa Kagaku Kenkyusho Co., Ltd, which
later in September 2019 obtained domestic manufacturing and marketing approval. It was launched in
November 2019. Sanwa Kagaku Kenkyusho is solely responsible for manufacturing and sales, and the Company
shares profits based on the sales.

☆ GBS-007 (Ranibizumab BS, target disease area: Eye Disease)
An angiogenesis inhibitor for treating age-related macular degeneration and other forms of sight loss. The
preceding product is Lucentis (Novartis, Switzerland). In November 2015, a basic agreement on capital andbusiness cooperation was signed with Senju Seiyaku K.K., a company with solid expertise in ophthalmology,
followed by a joint commercialisation agreement in May 2016. In September 2020, Senju applied for approval
to manufacture and market the drug in Japan. This was granted in September 2021, and the drug was marketedfrom December 9, 2021. GBS-007 is the first and only biosimilar in the ophthalmology field, and sales havebeen strong with good customer response. The company has decided to raise approximately 2 billion yen inorder to expand its manufacturing capacity and secure working capital over the medium to long term. GBS-007
was licensed out to Ocumension Therapeutics for the overseas market and will be marketed in China andTaiwan.
In addition to the above three products, the Company schedules to launch the fourth product by FY2025 andplans to promote the development of highly cost competitive biosimilars. Candidates include Nivolumab BS(Opdivo), Pembrolizumab BS (Keytruda), Ravulizumab BS (Ultomiris), Brolucizumab BS (Beobu) and
Ustekinumab BS (Stelara).
The market size of biosimilars is expected to reach 100 billion yen as the patents of biopharmaceuticals(original drugs) continue to expire (source: Fuji Keizai). In the general pharmaceutical market, the share ofgeneric drugs in volume is approaching 80%, and the biosimilar market is expected to grow in the future.
Most recently, however, the market environment for biosimilars has become more challenging earlier than
anticipated with the advent of biosame. Due to deteriorating profitability caused by the NHI price revision,
Mochida Pharmaceutical announced the discontinuation of Filgrastim BS. Kidswell Bio has stated that it will
promote the development of new, more cost-competitive biosimilars in the future.

Kidswell Bio | 2022/12/19

10

New biologics pipeline

Source: Company materials(As of October 31, 2022)

New biologics
The development of antibody drugs has been the main business since the Company was founded. Currently,
biomedicine comprises over 30% of the global pharmaceutical market, and 4 of the top 10 large-scale
pharmaceuticals (blockbusters) are biomedicines.
The revenue model of the new biologics business can be divided into two. One is a service revenue, which isgained by concluding a joint R&D agreement at the research and development stage and providing theCompany’s know-how to pharmaceutical companies. The other revenue comes from out-licensing patent topharmaceutical companies. This includes lump-sum contract payments, milestone payments paid according todevelopment progress, and royalty payments paid in accordance with sales after launch.
See the figure above for the Company’s new biologics pipeline.

☆ GND-004 (Anti-RAMP2 antibody, target disease: eye disease, cancer)
The Company succeeded in creating candidate antibodies for epoch-making new antibody drugs that inhibit
neovascularization on a new mechanism, and applied for domestic and international patents. The Company isproceeding with non-clinical trials for a therapeutic drug candidate for patients with ophthalmology-relateddiseases for which existing preparations do not work and those cancer patients for whom Bevacizumab does
not work. The Company will continue out-licensing activities to pharmaceutical companies.

☆ New antibody
The Company concluded a joint research agreement with Sapporo Medical University for developing anticancer drugs using antibodies that invade cancer cells in January 2020. Another joint research agreement for
the acquisition of new antibodies that kill cancer cells was signed with MabGenesis Inc. in January 2020. The
Company aims at out-licensing to pharmaceutical companies from both projects.
Creation of new therapeutic antibodies for malignant lymphomas: Malignant lymphomas are blood cancers
in which some white blood cells (B cells and T/NK cells) become cancerous, accounting for about 10% ofchildhood cancers. There are few curative treatments for highly malignant lymphomas, and the mortality rate
is high. CAR-T cell therapy has been developed for some B-cell lymphomas, but there are problems with
substantial side effects and high treatment costs. The company is researching and developing antibodies with a
new mechanism of action that binds to and directly kills malignant lymphoma cells.
Creation of new therapeutic antibodies against vasculitis: Vasculitis (e.g. Kawasaki disease) is an intractabledisease that causes inflammation of the vessel walls, bleeding and thrombus formation, and impaired organ
and tissue function. Current treatment methods include the administration of immunoglobulins. Still, there aresafety concerns, and their effectiveness is insufficient for some children, so there is an urgent need to develop
a curative therapy. The company is promoting research into the causes of vasculitis to identify the underlying
causative substance. After placing the causative substance, the company aims to create an inhibitory antibody
and a breakthrough treatment for vasculitis. The company estimates that the market for therapy for Kawasaki
disease is worth approximately 4 billion yen, while the market for vasculitis is worth about 100 billion yen.

Creation of new therapeutic antibodies against pulmonary hypertension: Pulmonary hypertension is a groupof progressive diseases that cause high blood pressure in the pulmonary arteries, leading to heart and lungdysfunction. It is a fatal disease with a five-year survival rate of 50% if untreated. Although treatment withvasodilators is available, their effectiveness is limited in patients with advanced disease. The company isdeveloping inhibitory antibodies against a candidate for the underlying cause of pulmonary hypertension. The
number of potential patients is estimated to be around 250,000 in Japan, and assuming 25% of these patients
receive treatment, the market is expected to be worth approximately 250 billion yen.

Kidswell Bio | 2022/12/19

11

Mid-term strategic plan -KWB 2.0In May 2022, the company updated its already published mid-term strategic plan. It was intorduced as a midterm strategic plan - KWB 2.0.
The points are1) Increase upfront investment in the rapid start-up of the SHED business. For this end
・Promote SHED research and development by promoting new international developments.
・Continue domestic business, and accelerate development abroad.
・Bring SHEDs to market and put them into practical use by 2030.
2) The biosimilars and biotech new drug businesses will also continue.
The company cites the following reasons to have revised its mid-term strategic plan.
1) Changes in the external environment of the biosimilars market.
2) Implementation of a share price conscious development strategy.
Concerning (1) changes in the external environment of the biosimilars market, as previously mentioned,
biosame's entry into the market has started to affect the biosimilars market, pushing down the profitability ofbiosimilars. The company launched GBS-007 in December 2021, while Bayer Pharmaceuticals received approval
for biosame (Eylea) in February 2022. A competitor biosame (Nesp) for GBS-011 is also on the market. It is
anticipated that the inevitable competition with biosimilars due to a further increase in the number ofbiosames entering the market will make potential biosimilar partner pharmaceutical companies cautious about
launching new biosimilars. As a result, the number of biosimilar projects with sufficient profitability is expected
to decline.
About (2), an analysis of the share price movements over the past ten years shows that, although the company
has made upfront investments with the funds raised since listing and has steadily launched three biosimilar
products, the launch of biosimilars alone could not be expected to boost the share price. The company has
decided that it cannot expect a significant increase in corporate value (i.e. share price) if the biosimilar businessis the only way to achieve profitability. (See also FY2022/3 handout for the financial results, p 15).

On the other hand, the SHED business is progressing well, with the completion of MCBs. It is a logical choice tochange course to focus more on the SHED business to increase future corporate value.

Growth image of the mid-term strategic plan -KWB 2.0-

Source: Company materials

Kidswell Bio | 2022/12/19

12

SHED's research and development have been carried out in-house in Japan, so the company faces newchallenges in the future, such as establishing overseas offices, raising funds from overseas markets and building
networks with overseas medical institutions and academia. Many of the company's managers have overseas
experience, but a further strengthening of human resources will be necessary.
See the table above for the schedule of upfront investments. The company's basic policy is to raise funds
through equity financing. Considering the current share price level, dilution is a concern for investors. The
ability of the management team to maximise corporate value by steadily implementing the roadmap shown inthe chart below will be tested.

Mid-Term Strategic Plan –KWB 2.0– Roadmap

Source: Company materials

Kidswell Bio | 2022/12/19

13Financial results trends
1) FY2022/3 financial results - 57.5% increase in revenue, operating loss reduced by 0.5 billion yen
The company's full-year results for FY2022/3 show a 57.5% increase in sales (1,569 million yen), an operating
loss of 910 million yen (960 million yen of loss in the previous year) and a net loss attributable to the parent
company of 530 million yen (a loss of 1.0 billion yen in the last year).
Sales of biosimilars (BS) GBS-001 and GBS-011 exceeded the plan, while the third product, GBS-007, which
commenced sales in December 2021, contributed. Some sales of APIs (active pharmaceutical ingredients)
related to the manufacturing process for the fourth BS product were also recorded. On the other hand, sales
related to the SHED Master Cell Bank (MCB), which were initially expected to be recorded, were carried forward
to the next financial year. All in all, the full-year forecast of 1.9 billion yen was not achieved.
In terms of profit, the gross profit exceeded the company forecast due to steady revenue from BSs. In addition,
R&D costs were significantly reduced from the initial forecast of 1.8 billion (1.15 billion yen) due to flexible
revisions of development costs, including a review of development related to JRM-001 following the transfer ofa subsidiary (JRM). As a result, the operating loss was smaller than the initial forecast of 1.72 billion by posting
0.91 billion yen. As previously reported in the 3Q results, a gain of 0.41 billion yen on the sale of investment
securities was recorded, resulting in a net loss attributable to owners of the parent reduced by 0.46 billion yen
from the previous year.

◇Biosimilar business: GBS-007 is now manufactured and marketed*Ranibizumab (GBS-007): The third product in the BS business, ranibizumab BS, an anti-VEGF antibody drug forthe treatment of age-related macular degeneration, was launched on December 9 by development partner
Senju Pharmaceutical. The anti-VEGF antibody drug market in Japan alone is expected to be worth under 100
billion yen in FY2020. The direct competitor Lucentis (Novartis Pharma) alone is expected to be worth
approximately 27 billion yen. Being the first BS in the ophthalmology field, it attracts much attention. Before
sales, the API was sold to Senju Pharmaceutical, contributing to earnings from 3Q.
*Filgrastim (GBS-001) and darbepoetin alfa (GBS-011): For BS, GBS-001 and GBS-011, which have already beenlaunched by the partners, each of the revenues from API sales and royalties outpaced the plan. Ongoing cost
reduction measures are also adding to improving profitability.
*Fourth BS: In addition to the above three products, the company is currently developing a fourth BS, intending
to bring it to market by FY2025, having booked API sales in FY2022/3 related to API manufacturing processdevelopment.

◇Cell therapy business (regenerative medicine): each project progressed
In the cell therapy business, the company's future focus, progress was made in each of the following
areas.
*Master cell bank (MCB) completion: The company has been working on establishing a stable supply system
for the raw materials required for research and development, an essential element in advancing the SHED
business. The company has also established a SHED MCB supply system in partnership with ChiVo Net,

Revenue trends
JPY, mn, %Net sales

YoY
%

Oper.
profitYoY%

Ord.
profitYoY%Profit
ATOP

YoY
%

EPS
(¥)

DPS
(¥)

2019/3

1,021

-3.6

-805

–

-816

–

-856

–

-43.840.00

2020/3

1,077–-1,161–-1,187–-7,316–-264.650.00

2021/3

996

-7.5

-969

–

-991

–

-1,001–-34.790.00

2022/3

1,569

57.7

-919

–

-952

–

-535

–

-17.350.00

2023/3 (CE)

2,900

–

-980

–

-999

–

-1,000–-31.820.00

2022/3 2Q*

–

–

–

–

–

–

–

–

–

–

2023/3 2Q

1,116

–

11

–

-42

–

-42

–

-1.36

–

* Figures through FY2022/3 are on a consolidated basis. Figures for 1Q FY2023/3 and thereafter are on a non-consolidated basis, andyear-on-year comparisons are not shown. Figures for 1Q FY2022/3 are on a consolidated basis and are for reference only.
Source: Omega Investment from Company materials

Kidswell Bio | 2022/12/19

14which recruits donors for producing raw materials, university hospitals, Nikon CeLL innovation and others, andconducted final quality confirmation tests on MCBs produced under GMP standards, all of which were achieved.
*Designer cells: In December 2021, the company signed a contract development agreement with BioMimetics
Sympathies (BMS) Inc. to develop 'designer cells. BMS owns the culture medium development technology. By
combining this with its SHED, the company aims to obtain cells with enhanced disease site-directedness while
retaining the strong cellular characteristics of SHED that make it suitable for bone and neurological diseases.
The company announced in September 2021 that it had signed a joint research agreement with NanoCarrier,and will focus on developing 'designer cells' as part of its response to modality diversification, leveraging its
alliances with other companies.

2) FY2023/3 2Q results - sales of 1,100 million yen, achieved positive operating profit
2Q results were sales 1,116 million yen, an operating profit of 11 million yen and a net loss of 42 million yen.
Sales exceeded 1 billion yen for the first time on a half-year basis, and the company also achieved a surplus
operating profit. (In April 2022, the consolidated subsidiary Japan Regenerative Medicine Co., Ltd. wastransferred to Metcela Inc., so from this financial year, the company has been reporting on a non-consolidated
basis.)In terms of sales, GBS-007, the third BS product, has received more orders than expected since its launch in
December 2021, contributing significantly to sales growth. Sales of existing BSs, GBS-001 and GBS-011, also
remained strong. Moreover, 2Q sales included revenue related to the completion of the MCB for SHED, andmilestone revenue from the fourth BS product appear to have been included.
In addition to an increase in gross profit backed by the growing BS business, the company achieved surplus at
the operating profit level thanks to cost reductions and the curbing of R&D investment until the completion of
MCB.
A bank loan of 1 billion yen was taken out at the end of June to secure working capital for the increased sales of
GBS-007, with interest paid (13 million yen) and commission paid (30 million yen) recorded as non-operating
expenses. Furthermore, a foreign exchange loss (10 million yen) related to the overseas manufacture of active
pharmaceutical ingredients was registered as a non-operating expense, resulting in a recurring loss of 42
million yen.
Establishment of new COO position: As an R&D-oriented drug discovery venture, Masayuki Kawakami has led
basic research and exploration as CTO. The management executive structure has been strengthened to expand
the SHED business and promote clinical development and product strategy with a greater awareness ofcommercialisation in the future. Mr Kawakami has been appointed to the newly created Chief Operating
Officer (COO) position. He will be responsible for translating basic research into clinical development andcommercialisation.

Reinforcement of intellectual property strategy: The company has formulated and promoted R&D andbusiness development strategies as a drug discovery venture company. As the SHED business expands, thecompany plans to focus on IP strategies in conjunction with R&D and business development strategies.
Strategic patent applications and patent lifecycle management are promoted. In addition to domestic patentapplications, the company will also promote the acquisition of patents in Europe, the US and major Asian
countries. Specifically, the company intends to promote its IP strategy by filing 'substance (cell) patents' todifferentiate SHED from other cells, 'use patents' to secure rights for the treatment of target diseases, and'formulation' and 'administration method' patents to extend the patent term.

3) FY2023/3 full-year forecasts - no change in the initial estimates, but operating loss may lessen.
The company's full-year forecasts for FY2023/3 - sales of 2.9 billion yen, an operating loss of 0.98 billion yen
and a net loss of 1 billion yen - remain unchanged from those at the start of the fiscal year. However, as sales of
GBS-007 and other BSs will likely remain strong, the company believes it can achieve its sales forecast. On theother hand, forecasting full-year R&D expenditure of 1.4 billion yen, the company expects an operating loss of
980 million yen. However, up to 2Q, R&D expenditure was 250 million yen. Even considering that R&D
expenditure is heavily weighted towards the second half of the fiscal year, the company will unlikely spend
more than 1 billion in the second half. Therefore, the full-year operating loss will likely be smaller than initiallyforecast.

Kidswell Bio | 2022/12/19

15

Stock price trends
Valuations based on standard financial analysis are difficult to apply for drug-discovery biotech ventures
because of the limited short-term profit opportunities and long periods of losses. Calculations based on various
methods of valuing companies are quite challenging to do rationally, given the unpredictable sales when a drugis launched and uncertainties until the drug is launched. The only way to make a comprehensive judgement
would be to scrutinise the progress of the pipeline and the financing of research and development costs
required for new drug development.
The company's share price had adjusted sharply since the result announcement of FY2022/3 in May when it
announced that it had postponed a return to profitability in FY2023/3. However, the share price rebounded
sharply on the Nov 7 announcement of the publication of a paper on the results of research conducted incollaboration with Hamamatsu University School of Medicine. The share price went up further with theannouncement of an operating surplus in 2Q FY2023/3. The share price hit a limit high on the 9th, the day after
the results were revealed. On the 10th Nov, trading volume recorded 22.9 million shares, an exceptionally highlevel in recent years. In addition to completing the MCB, the company's project to apply SHED to various
diseases has become more concrete, clearing up uncertainty regarding the project. On the other hand, theshare price looks undervalued, considering that the company's PBR is still way below the three year average of
9.01 (see figure on next page). We will keep a close eye on the company's share price to see when it returns to
pre-May levels.

Stock price transition (last 5 years)(¥)

Moving average (13 weeks)Moving average (26 weeks)Moving average (52 weeks)(million shares)

TOPIX Chart for TSE (last 3 years)
140

12/17/2019=100

TOPIX

120
100
80
60

Kidswell Bio(4584)

40
20
0
12/17/19

Kidswell Bio | 2022/12/19

3/17/20

6/17/20

9/17/20

12/17/20

3/17/21

6/17/21

9/17/21

12/17/21

3/17/22

6/17/22

9/17/22

16

Historical PBR (4584, last three years, LTM)
(X)

Average =8.78

5.11

Kidswell Bio | 2022/12/19

17

Financial data
FY (¥mn)[Statements of income]Net sales
Cost of sales
Gross profit
SG&A expenses
R&D expenses
Operating loss
Non-operating income
Non-operating expenses
Ordinary loss
Extraordinary income
Extraordinary expenses
Loss before income taxes
Total income taxes
Net loss[Balance Sheets]
Current assets
Cash and cash equivalents
Non-current assets
Tangible assets
Investments and other assets
Total assets
Current liabilities
Short-term borrowings
Non-current liabilities
Total liabilities
Total net assets
Total shareholders’ equity
Capital stock
Legal capital reserve
Retained earnings
Evaluation/conversion difference
Subscription rights to shares
Total liabilities and net assets[Statements of cash flows]
Cash flow from operating activities
Loss before income taxes
Cash flow from investing activities
Purchase of investment securities
Cash flow from financing activities
Proceeds from issuance of commonshares
Net increase in cash and cash equiv.
Cash and cash equiv. at beginning of
periodCash and cash equiv. at end of period
FCF

Kidswell Bio | 2022/12/19

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/3

60
15
45
403
206
-358
0
16
-373

301
141
159
671
412
-512
0
5
-516

321
147
174
998
689
-824
34
0
-790

1,160
500
660
1,480
1,075
-820
50
15
-785

1,089
397
692
1,876
1,433
-1,18435
27-1,176

1,059
422
637
1,550
1,107
-913
11
0
-903
0

1,569
550
1,018
1,937
1,150
-919
2
36
-952
418

-517
2
-519

0
-790
1
-792

-785
1
-787

45
-1,222
2-1,224

-902
1
-904

1,077
653
424
1,585
898
-1,161
1
27-1,187
5
6,132-7,3142-7,316

996
119
876
1,846
963
-969
2
24
-991

-373
3
-377

1,021
412
609
1,414
945
-806
3
14
-816
7
45
-854
1
-856

919
887
3
1
2
922
24

1,881
1,610
4
0
3
1,886
50

1,092
599
54
0
53
1,146
92

9
34
888
888
1,239
1,143
-1,495

783
833
1,052
1,031
1,571
1,474
-2,014

783
876
270
249
1,576
1,479
-2,806

922

21
1,886

3,322
2,032
269
1
267
3,592
880
25
1,223
2,104
1,487
1,451
611
9,917
-9,077
-21
57
3,592

-304
-373
-0

-729
-517
-1

907
917

8
-999
1
-1,001

3,346
1,461
587
3
581
3,933
1,114

-533
1
-535

3,421
2,379
284
1
282
3,706
189

2,692
1,891
332
1
330
3,025
404

2,821
2,009
329
1
328
3,151
400

21
1,146

1,520
817
173
2
171
1,694
1,279
810
11
1,290
403
383
2,037
1,940
-3,594
-0
21
1,694

16
205
3,500
3,472
4,194
4,097
-4,818
3
23
3,706

16
421
2,604
2,568
100
3,372
-904
2
32
3,025

19
420
2,731
2,695
591
3,864
-1,760
1
34
3,151

-607
-785
-121
-116
946

-1,759-1,222
-149
-149
3,471

-438
-902
-50

-860
-854
-0

1,454

-970
-790
-49
-49
9

234

9

486

3,932

601

722

-1,010

217

1,562

-488

118

-240

-571

-273

285

887

1,610

599

817

2,379

1,891

2,009

2,032

1,461

887
-305

1,610
-732

599
-1,021

817
-729

2,379
-1,909

1,891
-488

2,009
-860

2,032
-1,462

1,461-1,289

1,187
-643

1,209
2,323
1,610
1,291
1,032
10,337-10,078
202
116
3,933

3,325
1,187
177
1
172
3,503
1,128
75
656
1,784
1,718
1,533
1,421
10,726-10,613
184
3,503-1,267-999-22-1,169
-533
526

978

-1,325-7,314
-137
-100
1,221

718

369

973

40

138

369

18

Company Profile
Company Profile

Main business image

Kidswell Bio Corporation【Head Office】
1-2-12, Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan
https://www.kidswellbio.com/en/【Laboratory】
Kita 21-jyo, Nishi 11-chome, Kita-ku, Sapporo
Center for Promotion of Platform for Research on
Biofunctional Molecules, Creative Research Institution,
Hokkaido University
Number of Employees : 39
HistoryMonth/Year

Mar. 2001
Jun. 2002
Nov. 2003
Jun. 2007
Oct. 2007

Apr. 2008
May 2008
Jun. 2008
Nov. 2012
Dec. 2012
Sep. 2013
Jan. 2014
Mar. 2016
Jun. 2016

Apr. 2019
Jul. 2019Feb. 2020
Nov. 2020
Jul. 2021
Apr. 2022
Apr. 2022
Aug. 2022
Sep. 2022

Event
Gene Techno Science Co., Ltd. in Kita-ku, Sapporo City, with the aim of developing the results of functional research on
immune-related proteins at the Institute for Genetic Medicine, Hokkaido University as diagnostic and therapeutic
agents, and providing contract service services in drug development. Established (capital 10,000 thousand yen)
Established a new research institute in the Hokkaido Center of the National Institute of Advanced Industrial Science andTechnology to strengthen research and development of new biopharmaceuticals and start considering entry into thebiosimilars business.
Moved the head office to the laboratory
Licensed out anti-α9 integrin antibody to Kaken Pharmaceutical Co., Ltd. in the new biopharmaceutical businessIn the biosimilar business, licensed in with Fuji Pharma Co., Ltd. for production cells and basic production technology forfilgrastim biosimilars.
Moved the head office to Chuo-ku, Sapporo
Relocated to the Institute for Genetic Medicine, Hokkaido University
Established Tokyo office in Chuo-ku, Tokyo
Fuji Pharma Co., Ltd. and Mochida Pharmaceutical Co., Ltd. acquired domestic manufacturing and sales products forfilgrastim biosimilar products jointly developed with Fuji Pharma Co., Ltd. (launched in May 2013)
Listed on the Tokyo Stock Exchange Mothers
Relocated the research institute to the Center for Promotion of Biological Functional Molecular Research andDevelopment, Hokkaido University Research Organization
Concluded a joint development contract with Sanwa Kagaku Kenkyusho Co., Ltd. for darbepoetin alfa in the biosimilarbusiness (launched in November 2019)Concluded a capital and business alliance agreement with NK Relations Co., Ltd. and Launchpad 12 GK (both areaffiliated companies of Noritsu Koki Co., Ltd. and are currently absorbed and merged with Noritsu Koki Co., Ltd.).
As a result of a tender offer for the Company’s shares by Noritsu Koki Bio Holdings GK (a company whose trade namewas changed from GK Launchpad 12), the voting rights of the Company became over 50%, and Noritsu Koki Bio Holdings
GK became the parent company of the Company together with NK Relations and Noritsu Koki.
Made Advanced Cell Technology and Engineering Ltd. a wholly owned subsidiary of the Company through a shareexchange. Due to the issuance of new shares in connection with the share exchange, Noritsu Koki Bio Holdings LLC and
Noritsu Koki Co., Ltd. will have less than 40% of voting rights, and will no longer be the parent company and will become
other affiliated companies.
Moved the head office to Chuo-ku, Tokyo
Made Japan Regenerative Medicine Co., Ltd. a wholly owned subsidiary by transferring shares from Noritsu Koki Co., Ltd.
Advanced Cell Technology and Engineering Ltd. no longer an affiliated company as the Company sold all the stock.
Company name changed to Kidswell Bio Corporation.
Transfer from the Mothers market to the Growth market of the Tokyo Stock Exchange due to a review of the TSE's
market segment.
Japan Regenerative Medicine Co. was excluded from the scope of consolidation following the transfer of all shares.
Completion of the establishment of the stem cells from human exfoliated deciduous teeth (SHED) master cell bank.
Basic transaction agreement with Showa Denko Materials K.K. for developing manufacturing methods for regenerative
medical products and the manufacture of investigational drugs.

Kidswell Bio | 2022/12/19

19

Management (Officer)
President & CEO: Masaharu Tani

Corporate Officer, COO, Research & Development Div.: Masayuki Kawakami
Kyoto Univ. Graduate School of Engineering, Ph.D
Worked for research laboratories of FUJIFILM
Corp. mainly in oncology area with Harvard Univ.
and Novartis (then Sandoz). Worked for Toyama
Chemical Corp. and then for FUJIFILM
Pharmaceuticals USA to promote an anti-influenza
drug clinical development. Joined GTS (currently
KWB) in April 2017 and appointed as CTO in April
2018.

The Univ. of Tokyo, MSc, MBA
Joined the Clinical Development Dept. at Suntory,
implementing clinical trials and moved to Takeda
Pharmaceutical, where worked at the Business
Development Dept. and Strategic Product
Planning Dept. After Takeda, joined Whiz Partners,
a Japanese investment company in 2013 andjoined GTS (currently KWB) in 2014. Appointed as
CFO in 2015 and CEO in 2017 at GTS.

Corporate Officer, CFO, Business Administration Div.: Yasuo Sakae

Corporate Officer, CBO, Business Development Div.: Shinya Kurebayashi

Graduated from the Faculty of Sociology,
Hitotsubashi University. After being in charge of
securities sales at the Tokyo branch ofCommerzbank (a subsidiary of Commerzbank) andthe head office in Germany, Sakae joined
Yamanouchi Pharmaceutical Co., Ltd. (currently
Astellas Pharma Inc.), mainly promoting the
globalization of the finance division andestablished CVC (Corporate Venture Capital) andtook the lead. Joined the Company in 2018 afterworking as CFO at Astellas US, General Manager ofProcurement Department and General Manager ofManagement Promotion Department (in charge ofbudget and finance) at Astellas Pharma Inc., andVice President, Corporate Strategy &Communications at Astellas Europe.

Massachusetts Institute of Technology, MSc,
Physics
Worked in Investment Banking Div. at Goldman
Sachs Japan and involved in M&A, IPOs and bondofferings of pharmaceutical and medical devicecompanies at Morgan Stanley (Mitsubishi UFJ
Morgan Stanley Securities). A member oflaunching ImPACT of Cabinet Office. In 2015,
joined Advanced Cell Technology And Engineering
Ltd. (ACTE) and established Administration Dept.
and led business development and IPO
preparation at ACTE. Joined GTS (currently KWB)
in March 2019.

Corporate governance system
General meeting of shareholders

Appointment /dismissal

Appointment /dismissal

ReportAlignment
ReportInstructions

Audit

Internal audit
department

Representative director/president
Instruction /supervision

Alignment

ReportReportReportInternal audit

AdviceEach department

Corporate lawyer, etc.

Consultation

Management meeting
Instruction /supervision

Alignment

Audit

Accounting auditor

Board of Corporate
Auditors

Board of directors
Appointment /dismissal

Appointment /dismissal

Members of each institution (◎ is the chair)
Title

Name

Board of directors

Board of Corporate
Auditors

Management
meeting

Representative director

Masaharu Tani◎

Outside director

Norikazu Eiki〇◎

Outside director

Aya Chiba〇

full-time auditor

Osamu Sugawara◎

outside auditor

Masato Mori○

outside auditor

Hiroshi Shinagawa○

Operating officer

Masayuki Kawakami○

Operating officer

Shinya Kurebayashi○

Operating officer

Yasuo Sakae○

Note) KWB is a company with a board of auditors, separated the management supervision function and theexecutive function, and introduced an executive officer system. There are three directors, including two
outside directors. Of the total of six directors and corporate auditors, one is female.

Kidswell Bio | 2022/12/19

20

Status of major shareholders

Name
Noritsu Koki Co., Ltd.
Koichi Otomo
NanoCarrier Co., Ltd.
Nomura Trust & Banking Co., Ltd. (Trust Unit 2052241)
JSR Corporation
NINE Corporation
Senju Pharmaceutical Co., Ltd.
Taro Koike
Kinsei Tsuda
SBI Securities Co., Ltd.
Total

Number of shares owned
9,471,832
1,206,150
1,000,000
721,000
686,814610,000
555,200
460,000
436,800
346,918
15,494,714

Ratio of thenumber of shares
owned to thetotal number ofissued shares (%)
30.10
3.83
3.18
2.29
2.18
1.94
1.76
1.46
1.39
1.10
49.23

Note) The ratio (%) of the number of shares owned to the total number of issued shares excludes treasury stock.
Source : The Company quarterly report (FY2023/3 Q2)Initiatives for SDGs

The company aims to create an organisational culture full of creativity and innovation, and to contribute tosociety by securing and developing human resources and organisational structures that lead to sustainablevalue enhancement. The company also states that it will seek to contribute to S (Social = Society) by providing
new medical services.
Specifically, the Company will maintain the health of children, families, and people in the local community
while providing necessary therapeutic agents and treatments. It will continue healthy growth as an enterpriseand contribute to maintaining the sustainable social security system.
To realize new medical care from the perspective of children, as expressed in the corporate slogan “Kids Well,
All Well”, the Company provides inexpensive and high-quality medical services by biosimilar business andreduces medical expenses for the elderly. The reduced costs can be allocated to pediatric diseases that tend tobe neglected. This enhances pediatric disease medical care. Young stem cells that many children, including
those saved by the improved medical care, can provide new medical care for intractable diseases that peopleof all ages could suffer. In its new company name, Kidswell Bio puts its wish to save children responsible fortomorrow by maintaining this cycle, and this is in addition to the wish to provide therapies for intractable andrare diseases, which the Company has been chasing since its inception. The Company is decided to contributeto developing new medicines and cures by making full use of its biotechnology nurtured up to now.

Kidswell Bio | 2022/12/19

21

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