Kidswell Bio Corporation (4584) Financial Results for 3Q FY2023

February 7, 2024

Summary of Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2024
(Non-consolidated)(Excerpt from Japanese version)[Japanese GAAP]

Company name:

Kidswell Bio Corporation

Listing: Tokyo Stock Exchange

Stock code:
Representative:

4584
Shinya Kurebayashi, President & CEO

URL: https://www.kidswellbio.com/en/

Contact:

Takahiro Kurihara, Director, Corporate Planning Dept. Corporate Strategy Div.
Tel: +81-3-6222-9547

Scheduled date of filing of Annual Securities Report:
Scheduled date of payment of dividend:

February 14, 2024-

Preparation of supplementary materials for financial results:
Holding of financial result meeting:

Yes
No

1.

(All amounts are rounded down to the nearest million yen)

Financial Results for the Fiscal Year Ending March 31, 2024 (April 1, 2023 – December 31, 2023)(1) Results of operations (Cumulative)(Percentages shown for net sales and incomes represent year-on-year changes)

Net sales

Operating income

Ordinary income

Net income

Million yen%

Million yen%

Million yen%

Million yen

%

1,566

-9.3

-667

-

-712

-

-747

-

1,726

-

-135

-

-194

-

-194

-

Third quarter of the fiscal year
ending Mar. 31, 2024
Third quarter of the fiscal year
ended Mar. 31, 2023

Net income
per share

Diluted net
income per share

Yen

Yen

Third quarter of the fiscal year
ending Mar. 31, 2024

-21.80-Third quarter of the fiscal year
ended Mar. 31, 2023

-6.18

-

(2) Financial position
Total assets
Million yen

Dividends

equity ratio

Million yen

As of Dec. 31, 2023
5,198
As of Mar. 31, 2023
3,894
(Reference) Shareholders’ equity
Third quarter of the fiscal year ending March 31, 2024: 1,276 million yen
2.

Shareholders’

Net assets
1,443
1,233

Fiscal Year ended March 31, 2023: 1,037 million yen

Dividend per share
1Q-end 2Q-end 3Q-end Year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended Mar. 31, 2023

-

0.00

-

0.00

0.00

Fiscal year ending Mar. 31, 2024

-

0.00

0.00
(forecasts)(Note) Changes to the most recent forecasted dividend amount: None

0.00

Fiscal year ending Mar. 31, 2024

-1-

%

24.6
26.6

Kidswell Bio Corporation (4584) Financial Results for 3Q FY2023

3.

Business Forecast for the Fiscal Year Ending March 31, 2024 (April 1, 2023 – March 31, 2024)(Percentages represent year-on-year changes)

Net sales

Operating income

Ordinary income

Net income

Net income

per share

Million yen%

Million yen%

Million yen%

Million yen

%

Yen

3,500

26.1

-1,500--1,550--1,550--43.87Full year(Notes)Changes to the most recent forecasted dividend amount: None
Since the Company mainly manages annual performance, only full-year performance forecasts are shown.
* Annotations
1. Special accounting treatments used in preparation of financial statements of the quarter: None
2. Changes in accounting policies and accounting-based estimates, and restatements
a. Changes in accounting policies due to revisions in accounting standards, others: Noneb. Changes in accounting policies other than a) above: Nonec. Changes in accounting-based estimates: None
d. Restatements: None
3. Number of outstanding shares (common stock)a. Number of shares outstanding at the end of the period (including treasury shares)
At the third quarter of the fiscal year ending March, 2024: 38,427,113 shares
At the end of the fiscal year ended March, 2023: 32,059,713 sharesb. Number of treasury shares at the end of the period
At the third quarter of the fiscal year ending March, 2024: 93 shares
At the end of the fiscal year ended March, 2023: 93 sharesc. Average number of shares outstanding during the period
At the third quarter of the fiscal year ending March, 2024: 34,290,700 shares
At the third quarter of the fiscal year ended March, 2023: 31,522,423 shares*This summary report on Kidswell Bio Corporation’s financial statements is not subject to audit procedures.
*Cautionary statement with respect to forward-looking statements, and other special items(Notes to information regarding future)
Forecasts regarding future performance in these materials are based on assumptions judged to be valid and the information available to
the Company at the time these materials were made. These materials on future performances are not promises by the Company. Actual
performance may differ significantly from these forecasts for several reasons.
(How to obtain supplemental financial information)
Materials for the supplemental financial information are available on the Company’s website (https://www.kidswellbio.com/en/).

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Kidswell Bio Corporation (4584) Financial Results for 3Q FY2023

Table of Contents
I. Financial Results for the current fiscal quarter………………………………………………………………………………

4(1) Business updates …………………………………………………………………………………………………………

4(2) Outlook ……………………………………………………………………………………………………………………

5

II. Financial statements and notes to financial statements………………………………………………………………………

6(A) Balance sheet………………………………………………………………………………………………………………

6(B) Income statement…………………………………………………………………………………………………………

7(C) Notes to financial statements ………………………………………………………………………………………………

8

III. Others …………………………………………………………………………………………………………………………

9-3-

Kidswell Bio Corporation (4584) Financial Results for 3Q FY2023

I. Financial Results for the current fiscal quarter(1) Business updates
As for the third quarter of FY2023 financial results, the sales was 1,566,742 thousand yen (9.3% decrease from the same quarter ofthe previous year), R&D expenses was 807,465 thousand yen (39.4% increase from the same quarter of the previous year),
operational loss was 667,025 thousand yen (operational profit in the same quarter of the previous year was 135,523 thousand yen),ordinary loss was 712,858 thousand yen (ordinary loss in the same quarter of the previous year was 194,023 thousand yen) and net
loss for the current fiscal year was747,400 thousand yen (net loss for the previous fiscal quarter was194,930 thousand yen).
①Cell Therapy (Regenerative Medicine) Business
The Company has been making great progress of the research and development activities by utilizing SHED (Stem cells from
Human Exfoliated Deciduous teeth) in both our own and collaborative research activities with academia and confirmed thepotential of SHED as a source for future drug products while completed Master Cell Bank (MCB) in compliance with GMP(Good Manufacturing Practice) in August 2022 and, consequently, established a SHED drug discovery platform, “S-Quatre®”
which covers the process from sourcing of SHED to manufacturing of MCB.
Regarding the collaborative research of cerebral palsy with the Company and Nagoya University, improvement of movement
disorders for the chronic cerebral palsy model was confirmed by the SHED administration for the first time in the world andbased on this result, the clinical research initiated by Nagoya University for cerebral palsy patients is planned to be launched by
the end of 2023 and the first patient was enrolled in October, 2023. The preparation for starting the clinical research is wellprogressing.
As a result of these accomplishments, the probabilities of licensing out SHED pipelines to business partners has been increasing
and the Company will strengthen partnering activities envisioning a company-led clinical trial to be started from 2025 onwards.
Furthermore, as a future growth strategy, the Company has been promoting research and development of the second generation
SHED (designer cell, reinforced cell therapy with SHED) that enhance the functions of SHED modified by gene transfection anddevelopment of new culture method to achieve higher therapeutic goals. Especially, the Company collaborates with Hamamatsu
University School of Medicine regarding the innovative research results with the second generation SHED in preclinical modelsof brain cancer and is getting pre-clinical data steadily.
As the Company’s announcement released on January 12, 2024, the Company resolved the establishment of a new company, SQuatre Corporation, through an incorporation-type company split in the cell therapy business on the scheduled effective date ofApril 1, 2024 at the Board of Directors meeting.
②Biosimilar Business
Since 2012, the Company launched Filgrastim biosimilars (BS), darbepoetin alfa BS and Ranibizumab BS. By these three
products, the Company is getting more revenue which exceeds its fixed operating costs continuously and established stableprofit foundation for its future growth. Furthermore, Mochida pharmaceutical Co., Ltd. which the Company had beencollaborating with since December, 2016 received manufacturing and sales approval for GBS-010 (Pegfilgrastim biosimilar)
September 25, 2023 and it was launched in November 2023. This is a great progress to achieve FY2025 strategic target.
③New Biologics BusinessIn the new biologics business, the Company entered into the research collaboration agreement with Sapporo Medical University
on anti-cancer drug using antibody with cancer cell invasion ability and with MabGenesis for the acquisition of new antibodies
with cancer cell killing effect in January 2020. The Company executed the research collaboration agreement with Chiome
Bioscience Inc. (Chiome) in May, 2022 for accelerating the antibody-drug research in the oncology field by the combining
knowledge and technologies of the Company and Chiome. Moreover, the Company has received a patent grant from Japan Patent
Office for anti-RAMP2 antibodies (RAMP: Receptor Activity Modifying Protein, project code: GND-004) in December, 2022
and is actively engaged in finding a development partner.
In July 2023, the Company issued stock acquisition rights (with an exercise price amendment clause) through a third-party
allotment for the purpose of allocating the funds to support the above-mentioned increase in production in the biosimilars businessand raised a total of approximately 900 million yen at the end of the third quarter of the fiscal year. In addition, in December
2023, the Company borrowed 600 million yen from Mizuho Bank for working capital for the Comapany’s biosimilars business.

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Kidswell Bio Corporation (4584) Financial Results for 3Q FY2023

Regarding future R&D funding, the Company will consider and select appropriate financing methods according to thecharacteristics of each business in addition to a fund from a part of continuous profits from the biosimilars business. For enhancing
the pipelines and establishing a stable revenue base, the Company's will develop the R&D activities while considering theprioritization of products to be developed.
(2) Outlook
No changes in FY2023 financial forecasts disclosed on May 12, 2023.

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Kidswell Bio Corporation (4584) Financial Results for 3Q FY2023

II．Financial statements and notes to financial statements(A) Balance sheet(in thousand yen)

AssetsCurrent assets
Cash and cash equivalents
Trade receivables (Net amount)
Products
In-process inventory
Advance payments
Other current assets
Total current assets
Non-current assets
Tangible fixed assets
Intangible fixed assets
Investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade payables
Long-term debts to be repaid within one year
Account payable
Income taxes payable
Advance received
Other current liabilities
Total current liabilities
Non-current liabilities
Convertible bonds
Long-term debt
Reserve for retirement allowance
Total non-current liabilities
Total liabilities
Shareholders’ equity
Shareholders capital
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders capital
Equity warrants
Total shareholders’ equity
Total liabilities and shareholders’ equity

As of the end of the previous
fiscal year
(March 31, 2023)-6-

As of the end of the current fiscal
quarter(December 31, 2023)

1,067,162
1,088,766
213,007422,308
821,536
84,373
3,697,155

2,186,682
481,855
187,960
1,149,405
819,463
211,4445,036,812

1,476
2,297
193,836
197,609
3,894,765

1,359
1,722
158,641
161,723
5,198,535

155,563
375,000
482,286
32,68010,3081,055,839

72,334550,000
213,943
22,9091,117,774
11,421
1,988,383

500,000
1,075,000
30,4201,605,420
2,661,259

500,000
1,225,000
41,6101,766,610
3,754,993

1,509,497
10,815,098-11,287,004-73
1,037,518
195,987
1,233,505
3,894,765

2,002,610
11,308,210-12,034,404-73
1,276,342
167,199
1,443,541
5,198,535

Kidswell Bio Corporation (4584) Financial Results for 3Q FY2023(B) Income statement(Quarterly cumulative period)(in thousand yen)

Gross sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Research and development expenses
Other expenses
Total selling, general and administrative expenses
Operating loss
Non-operating income
Interest income
Material Sale income
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expense
Interest on corporate bonds
Stock issuance expenses
Loan arrangement fee paid
Foreign exchange loss
Casualty loss
Total non-operating expenses
Ordinary loss (-)
Extraordinary income
Reversal of stock acquisition rights
Total extraordinary income
Extraordinary loss
Valuation loss on investment securities
Total extraordinary loss
Net loss for the quarter before taxes adjustments (-)
Corporate, residential and enterprise taxes
Total corporate and other taxes
Net loss for the quarter (-)

Previous quarterly cumulative
period(April 1, 2022 to December 31,
2022)
1,726,862
654,042
1,072,819

This quarterly cumulative
period(April 1, 2023 to December 31,
2023)
1,566,742
703,808
862,934

579,055
629,287
1,208,342-135,523

807,465
722,493
1,529,959-667,025

5
2,250
360
2,615

3
2,939
7
2,949

23,2511,464
1,482
30,0004,364
551
61,115-194,023

26,5362,367
2,209
12,0005,149
520
48,782-712,858

-

3,307
3,307

-194,023
907
907-194,930

35,00035,000-744,550
2,850
2,850
-747,400-7-

Kidswell Bio Corporation (4584) Financial Results for 3Q FY2023(C) Notes to financial statements(Notes on going concern assumption)
There is no reporting item applicable to this matter.
(Notes on material changes of shareholders’ equity)
During the cumulative period of the second quarter, the 7th, 8th, 12th, 14th and 18th series of stock acquisition rights were exercised.
As a result, capital and capital reserve increased by 493,112 thousand yen respectively, and as of the end of the third quarter of the
fiscal year, capital was 2,002,610 thousand yen and capital reserve was 11,308,210 thousand yen.
(Notes on Significant Post-Balance Sheet Events)(Establishment of a subsidiary in the cell therapy business (regenerative medicine))
The Company resolved the establishment of a new company, S-Quatre Corporation, on the scheduled effective date of April 1,
2024 at the Board of Directors meeting on January 12, 2024.
.
(1) Purpose of the incorporation-type company split
To realize the Mid-Term Strategic Plan - KWB2.0 -, the Company is optimizing management resources through selection andconcentration, and is restructuring the organization for the speedy and reliable execution of business strategies under theleadership of Shinya Kurebayashi, CEO. As a part of the restructuring the organization, the Company has decided to separate
the cell therapy business and establish an independent new company for the purpose of flexible financing and promoting eachbusiness and further visualizing the improvement of business value. With the incorporation-type company split, the Company
will focus on its biosimilars business as its core business, and the new company will be a single entity of the cell therapy
business. Therefore, in addition to further optimizing management resources in both companies, it will be possible to accelerate
the growth of each business by diversifying financing methods according to the projects. Furthermore, the Company will pursue
the visualization of improving business value in both companies by showing growth in KWB’s biosimilars business, and bypromoting a wider range of partnering and the acquisition of various subsidies in the new company.
The new company aims to create the world's first SHED (Stem cells from Human Exfoliated Deciduous teeth) cell and genetherapy products based on S-Quatre🄬🄬 (SHED Source Supply Service), a platform for the stable supply of SHED.
S-Quatre🄬🄬 is a stable SHED raw material supply system from registration of donors, who provide their deciduous teeth, to the

production of SHED master cell banks. Through S-Quatre🄬🄬, the Company has already completed manufacturing a SHED
master cell bank in compliance with GCTP and GMP, which are the safety and quality standards for medicines in Japan. In thecurrent situation where many domestic pharmaceutical companies, not just cell therapy, depend on raw materials from overseas,
S-Quatre🄬🄬, which enables a stable supply of domestic raw materials, will be a great advantage for partnering together with theprogress of clinical development of SHED. The new company will continue to promote the R&D activities and clinicaldevelopment for the practical application of SHED with S-Quatre🄬🄬.
(2) Outline of the subsidiary(1)Company name

S-Quatre Corporation(2)

Location

1-2-12, Shinkawa, Chuo-ku, Tokyo, 104-0033, Japan(3)

Yasuyuki Mitani

CEO(Chief Scientific Officer of KWB)

(4)Business Activities

Cell therapy (regenerative medicine) business(5)

Amount of capital

5,000 thousand yen(6)

Scheduled establishment

April 1, 2024

(7)

Major shareholders and their shareholding ratios

Kidswell Bio Corporation

-8-

100%

Kidswell Bio Corporation (4584) Financial Results for 3Q FY2023

III. Others
Important events regarding the going concern assumption
Although the operating surplus in the biosimilars business is secured, which is the Company’s core business, the periodic profit
and loss resulted in negative due to our investment in R&D in the cell therapy business (regenerative medicine).
Regarding the needs for working capital to expand biosimilar business and research activities in the cell therapy business, inaddition to the cash flow from the biosimilars business, the Company borrows from financial institutions, and conducts fundraising
activities necessary for business continuity in a timely manner by issuing convertible bond and stock acquisition rights throughthird-party allotment. Although the operating deficit continued in the cumulative period of this quarter, which raises doubts about
the assumption of a going concern, the Company believes that there are no material uncertainties regarding the going concern
assumptions.

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