Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022

May 12, 2023

Summary of Financial Results for the Fiscal Year Ended March 31, 2023 (Non-consolidated)(Excerpt from Japanese version)[Japanese GAAP]

Company name:

Kidswell Bio Corporation

Listing: Tokyo Stock Exchange

Stock code:
Representative:

4584
Masaharu Tani, President & CEO

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

Contact:

Yasuo Sakae, Corporate Officer, CFO
Tel: +81-3-6222-9547

Scheduled date of Annual General Meeting of Shareholders:
Scheduled date of filing of Annual Securities Report:

June 29, 2023
June 30, 2023

Scheduled date of payment of dividend:
Preparation of supplementary materials for financial results:

Yes

Holding of financial result meeting:Yes(All amounts are rounded down to the nearest million yen)

1.

Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 – March 31, 2023)(1) Results of operations (Cumulative)

Net sales
Fiscal year ended March 31, 2023
Fiscal year ended March 31, 2022

(Percentages shown for net sales and incomes represent year-on-year changes)
Ordinary income
Net income
Operating income

Million yen%

Million yen%

Million yen%

Million yen

%

2,776
1,569

76.9
62.3

-550
-651

-

-624
-968

-

-657
-550

-

Net income
per share

Diluted net income
Ordinary income Operating income
Return on Equity
per share
on total assets
to net sales

Yen

Fiscal year ended March.31, 2023
-20.77
Fiscal year ended March 31, 2022
-17.86(Reference) Equity Gains (Losses) of Affiliated Companies
Fiscal year ended Mar.31, 2023: - million yen (- %)Fiscal year ended Mar. 31, 2022: - million yen (- %)

Yen

%

%

%

-

-51.4
-

-17.0
-

-19.8
-

(Notes)1. Even though there is a calculation of dilutive shares available, there is no reporting on net income per share after an adjustment of
dilutive shares as the company recorded net loss.
2. Since the Company shifted to non-consolidated financial statements from the fiscal year ended March 31, 2023, the result in thefiscal year ended March 31, 2022 and percentage for year-on-year changes are not recorded.
(2) Financial position
Total assets

Shareholders’

Net assets

Million yen

Net assets per shareequity ratio

Million yen

Yen%

As of March 31, 2023
3,894
1,233
26.6
As of March 31, 2022
3,470
1,702
43.8
(Reference) Shareholders’ equity
Fiscal year ended March 31, 2023: 1,037 million yen
Fiscal Year ended March 31, 2022: 1,518 million yen(3) Cash flows

As of March 31, 2023

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Million yen

Million yen

Million Yen-1,421

-28

1,356

32.36
48.30

Cash and cash
equivalents at the endof period

Million Yen

1,067

As of March 31, 2022
(Notes) Since the Company shifted to non-consolidated financial statements from the fiscal year ended March 31, 2023, the result in
the fiscal year ended March 31, 2022 is not recorded.

- 1 -Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022

2.

Dividends

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

Total

Dividend on
payout ratio
net assets(Consolidated)

dividends

Yen

Yen

Yen

Yen

Yen

Million Yen%%

Fiscal year ended March 31, 2022

-

0.00

-

0.00

0.00

-

-

-

Fiscal year ended March 31, 2023

-

0.00

-

0.00

0.00

-

-

-

0.00

0.00

Fiscal year ended March 31, 2024
0.00
(forecasts)(Note) Changes to the most recent forecasted dividend amount: None
3.

Dividend

Total

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

Net sales
Million yen%

Operating income

Ordinary income

Million yen

Million yen%%

Net income
per share

Net income
Million yen

%

Yen

-

-48.973,500
26.1-1,500-1,550-1,550
Full year(Notes)Since the Company mainly manages annual performance, only full-year performance forecasts are shown.

* Annotations
1. 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
2. Number of outstanding shares (common stock)a. Number of shares outstanding at the end of period (including treasury shares)
At the end of the fiscal year ended March, 2023: 32,059,713 shares
At the end of the fiscal year ended March, 2022: 31,437,547 sharesb. Number of treasury shares at the end of period
At the end of the fiscal year ending March, 2023: 93 shares
At the end of the fiscal year ended March, 2022: 92 sharesc. Average number of shares outstanding during the period
At the end of the fiscal year ending March, 2023: 31,654,192shares
At the third quarter of the fiscal year ended March, 2022: 30,660,203 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. Please refer to “III. Outlook” on page 5 and 6 of theattachments for forecast assumptions and notes of caution for usage.
(How to obtain supplemental financial information)
Materials for the supplemental financial information are available on the Company’s website (https://www.kidswellbio.com/en/).

- 2 -Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022

Table of Contents
I. Financial Results in FY 2022…………………………………………………………………………………………………
II. Business update………………………………………………………………………………………………………………

4

III. Outlook ………………………………………………………………………………………………………………………

5
5

IV. Fundamental policy on adoption of the accounting standards…………………………………………………………………

6

V. Financial statements and notes to financial statements………………………………………………………………………
(A) Balance sheet………………………………………………………………………………………………………………
(B) Income statement……………………………………………………………………………………………………………
(C) Statement of cash flows ……………………………………………………………………………………………………

7

- 3 -

7
9
11

Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022

I. Financial Results in FY2022
As for FY2022 financial results, the sales was 2,776,241 thousand yen (76.9% increase compared to the previous fiscal year), operationalloss was 550,929 thousand yen (operational loss for the previous fiscal year was 651,139 thousand yen), ordinary loss (ordinary loss
for the previous fiscal year was 968,535 thousand yen) was 624,769 thousand yen and net loss for the current fiscal year was 657,434
thousand yen (net loss for the previous fiscal year was 550,863 thousand yen).
II. Business updates in FY2022
1. Biosimilar Business
The Company recorded stable profits from the sales of the neutropenia medicine "Filgrastim BS" and the royalties from biosimilarof darbepoetin alfa. While the sales of GBS-007 (Ranibizumab BS) have been performing steady since the launch on December 9,2021, further sales are expected to increase due to approval of additional indication for diabetic macular oedema in January 2023.
The Company expects to contribute to the Company’s stable business foundation as a revenue source. Following the above three
products, the Company has been steadily promoting research and development of the fourth products and new biosimilars.
2. New 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 withcancer 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 andtechnologies of the Company and Chiome. Moreover, the Company has received a patent grant from Japan Patent Office for antiRAMP2 antibodies (RAMP: Receptor Activity Modifying Protein, project code: GND-004), which is one of candidates for abreakthrough new antibody drug that inhibits the formation of new blood vessels with a new mechanism.
3. Cell Therapy (Regenerative Medicine) BusinessTo succeed in the regenerative medicine business, the Company has been aggressively promoting multiple collaborative research
projects with academia as well as business partnering with companies by utilizing SHED (Stem cells from Human ExfoliatedDeciduous teeth) as important research source.
As results of identification of SHED's characteristics, the Company has been striving for creating new treatment methods in thefields of neurological and bone diseases that are evaluated by academia and pharmaceutical companies. While conducting
research and development with academia and pharmaceutical companies, steady progress has been made on the possibility ofdeveloping treatment methods utilizing SHED and the Company aims to create the world’s first regenerative medicine products
utilizing SHED. Regarding the collaborative research of cerebral palsy with the Company and Nagoya University, improvementof movement disorders for the chronic cerebral palsy model was confirmed by the SHED administration for the first time in theworld. Based on this result, the patent on the cell therapy for cerebral palsy utilizing SHED was applied through the collaborative
research with the Company and Nagoya University, and the research results were presented at the annual meeting of the 66th
Japan Society for Neonatal Health and Development in November, 2022.
Furthermore, as a start to the clinical research of SHED, preparations for clinical research on cerebral palsy are currently under
way by Nagoya University. As SHED development stage has been changed from exploration/ basic research to administration tohumans, the Company believes that probability of the launch of SHED product at an early stage has increased.
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. As specific progress, the Company executed thecollaborative research agreement with NanoCarrier Co., Ltd. (NanoCarrier) on September 8, 2021, and the contracted
development agreement with BioMimetics Sympathies Inc. (BMS) on the development of new cell culture method for directivityof SHED to specific diseases on December 6, 2021. Furthermore, research articles were published in collaboration with
Department of Neurosurgery, Hamamatsu University School of Medicine regarding the innovative research results with thesecond generation SHED in preclinical models of brain cancer.
Moreover, regarding the development of a master cell bank (MCB), SHED MCB passed final verification tests and SHED MCB
in compliance with GMP was completed in August 2022. Therefore, the Company released S-Quatre®, a one-stop service from- 4 -

Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022

sourcing of deciduous teeth through collaboration with "ChiVo Net, Future Medical Children's Volunteer Network", Universityof Tokyo Hospital and Showa University Dental Hospital to supply of highly reliable and GMP-compliant SHED MCB as anintermediate product for cell therapy. Additionally, the Company executed a master service agreement with Showa Denko
Materials Co., Ltd. (Showa Denko Materials) for the development of manufacturing process for the regenerative medicine
products utilizing advantage characteristics of SHED and manufacturing investigational new drugs in September, 2022, and theCompany is accelerating the development activities for manufacturing investigational new drugs utilizing high-reliable SHEDMCB. With the above progress, the Company will further accelerate research and development activities for regenerative
medicine products and strengthen the Company’s R&D pipelines in collaboration with academia and companies using SHED
drug discovery platform based on S-Quatre®.
As to CSC (cardiac stem cells, project name: JRM-001), the Company transferred all shares of Japan Regenerative Medicine Co.,
Ltd. (JRM) to Metcela Inc. on April 4, 2022, which would lead the development of JRM-001 by combining experience,
knowledge, and technologies in heart disease field, and continues support to JRM.
III. Outlook
The business forecasts for the following year include sales of 3,500,000 thousand yen, operational loss of 1,500,000 thousand yen,ordinary loss of 1,550,000 thousand yen and net loss of 1,550,000 thousand yen. The Company will pursue to have better results than
the forecasts by working on the opportunities mentioned below.
The sales in the next fiscal year comprise (1) sales and royalties of three biosimilar products (launched), especially, Ranibizumab BS
which sales has been expanding remarkably due to the strong demand, and (2) revenue from the fourth biosimilar product. Therefore,
the sales in the next fiscal year estimate at 3,500,000 thousand yen. The sales of GBS-001 will decrease compared to the previous
fiscal year due to inventory adjustments of the sales company, while GBS-007 will be a stable source of revenue. In addition, as aprofit perspective, GBS-001 is expected to maintain the same profit ratio as in the previous fiscal year, and GBS-007 is expected to
improve further profit ratio by investing in cost reduction measures over the medium term, though the cost of goods sold ratio will
temporarily increase due to changes in the product mix.
Establishing a stable profit base in the biosimilar business, the Company has been pursuing a stable profit and business growth withnew biologics business and cell therapy (regenerative medicine) business as future growth drivers. In particular, the SHED business isthe most important pipeline that supports our growth. While the Company has been working to strengthen its manufacturing andclinical trial infrastructure aiming for launching SHED products in Japan, the Company is further preparing to start clinicaldevelopment of SHED in the U.S. Accordingly, forecasts for the following year include R&D expenses of 1,600,000 thousand yen(the actual R&D expense for the current fiscal year was 1,216,349 thousand yen). The main breakdown is, for biosimilars 1)
additional investments related to strengthening manufacturing capabilities for a longer-term stable supply of GBS-007, which is more
steadily introduced into the market than expected after the launch, and 2) continued investment in manufacturing cost reduction
measures. For SHED pipelines, based on the positive results of nonclinical research of SHED, 3) additional investments in theestablishment of a manufacturing system for mass culture of SHED, 4) expenses for strengthening an organizational structure
including human resources to effectively conduct SHED clinical trials on a company-led basis, and 5)expenses for the newly
established laboratory in Tokyo (Tokyo laboratory) to accelerate development activities of the second generation SHED.
In summary, the Company decided to make a more R&D investment in the growth driver, especially the SHED pipelines. Based on
the results of basic and nonclinical research results of SHED after the acquisition of Advanced Cell Technology and Engineering Ltd.
in 2019, the Company has confidence in the effectiveness of SHED for our target diseases and SHED development stage has beenchanged from exploration/ basic research to administration to humans. With research, manufacturing, clinical trial know-how related
to the regenerative medicine business through the development of JRM-001 and partnering activities such as a business alliance with
Metcela Inc., the Company will supplement human resources and technology resources for the regenerative medicine business withsuch partners and invest in establishment of the infrastructure to facilitate effective and efficient R&D activities and prepare for
implementing clinical trials in a timely manner. Though it should take several years to recover return from these investments andmid-term investments in research and development of SHED are required, based on accumulated R&D experience and results of
SHED after the announcement of the Company’s mid-term strategic plan -KWB 2.0- in May 2022, the Company recognized theimportance of continuous investments in SHED to accelerate SHED R&D activities in Japan and the U.S. and survive the futurecompetition.
The Company believes that it is most important to pursue results that should exceed the profits target from FY2025 and beyond set in- 5 -Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022

the original mid-term strategic plan, and increase the corporate value by steadily delivering new medical treatments to patients. The
Company will continue to strive to optimize and facilitate R&D activities.
The financial forecasts are derived utilizing the currently available information obtained by the Company and are based onassumptions the Company deemed reasonable. The forecasts are by no means guarantees of the Company’s performance. The actual
results may differ significantly due to various factors.

IV. Fundamental policy on adoption of the accounting standards
The Group adopts the Japanese Accounting Standards s by considering various burdens to prepare financial statements based on theInternational Financial Reporting Standard.

- 6 -Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022

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

AssetsCurrent assets
Cash and cash equivalents
Trade receivables
Accounts receivable and contract assets
Products
In-process inventory
Advance payments
Prepaid expenses
Long-term debts to be repaid within one year froma subsidiary
Other current assets
Allowance for doubtful accounts
Total current assets
Non-current assets
Tangible fixed assets
Building
Accumulated depreciation
Building (net)
Tools, equipment and fixtures
Accumulated depreciation
Tools, equipment and fixtures (net)Total tangible fixed assets
Intangible fixed assets
Trademark right
SoftwareTotal Intangible fixed assets
Investments and other assets
Investment securities
Stocks of affiliates
Other investments and assets
Total 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
Accrued expense
Income taxes payable
Contract liabilities
DepositReserve for loss on orders
Total current liabilities
Non-current liabilities
Convertible bonds
Long-term debts
Reserve for retirement allowance
Total non-current liabilities
Total liabilities

As of the end of the previous
fiscal year
(March 31, 2022)- 7 -As of the end of the current
fiscal year
(March 31, 2023)

1,160,934
461,854
200,118
788,696495,544
7,833

1,067,162
1,088,766
213,007422,308
821,536
11,957600,000-

153,703-573,745
3,294,940

72,416
3,697,155

2,396
-828
1,568
11,500-7,190
73
1,641

2,396
-957
1,438
6,492
-6,454
37
1,476

1,111
1,952
3,064

995
1,301
2,297

154,6720
16,017
170,690
175,3963,470,336

173,218
20,618
193,836
197,609
3,894,765

45,47975,000252,760
650
37,832
216,000
8,201
475,243
1,111,168

155,563
375,000
482,286
1,262
32,6809,046
1,055,839

100,000
525,000
31,260656,260
1,767,428

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

Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022(in thousand yen)

Shareholders’ equity
Shareholders capital
Common stock
Capital surplus
Capital reserve
Total capital surplus
Retained earnings
Other retained earnings
Earned surplus carried forward to thefollowing term
Total 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, 2022)- 8 -As of the end of the current
fiscal year
(March 31, 2023)

1,421,212

1,509,497

10,726,813
10,726,813

10,815,098
10,815,098-10,629,570-11,287,004-10,629,570-73
1,518,382
184,525
1,702,908
3,470,336-11,287,004-73
1,037,518
195,987
1,233,505
3,894,765

Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022(B) Income statement(in thousand yen)
Current fiscal year
Previous fiscal year
(April 1, 2022 to March 31, 2022) (April 1, 2022 to March 31, 2023)
Gross sales
Product sales
Income from intellectual property rights, etc.
Income from services
Total gross sales
Cost of goods soldCost of finished goods soldBeginning product inventory
Procut manufacturing cost of current term
Total cost of finished goods sold
Closing product inventory
Cost of finished goods soldTotal cost of goods sold
Gross profit
Selling, general and administrative expenses
Depreciation
R&D expenses
Royalty to be paid
Salaries and allowances
Other expenses
Total selling, general and administrative expenses
Operating loss (-)
Non-operating income
Interest income
Commission fee
Material Sale income
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expense
Interest on corporate bonds
Allowance for doubtful accounts
Stock issuance expenses
Loan arrangement fee paid
Foreign exchange loss
Miscellaneous loss
Total non-operating expenses
Ordinary loss (-)
Extraordinary gain
Profits on Investment securities soldReversal of equity warrant
Total extraordinary gain
Extraordinary loss
Loss on valuation of investment securities
Total extraordinary loss
Net loss for the year before tax adjustment (-)
Corporate, residential and enterprise taxes
Total corporate and other taxes
Net loss for the year (-)- 9 -1,447,568
121,663－
1,569,232

2,331,444
248,433
196,3632,776,241

70,712
679,762
750,475
200,118
550,357
550,357
1,018,875

200,118
1,263,443
1,463,561
213,0071,250,553
1,250,553
1,525,688

2,254
903,062
101,902249,420
413,374
1,670,014-651,139928
1,216,349
182,930
255,703420,706
2,076,617-550,929

936
39,6002,801
43,337

12
2,250
1,718
3,980

15,460324,377
6,998
9,366
4,530
360,733-968,535

32,7602,076
1,790
31,2009,441
551
77,820-624,769

417,736
1,144
418,881-－－-549,653
1,210
1,210
-550,863

31,454
31,454-656,224
1,210
1,210
-657,434

Kidswell Bio Corporation (4584) Financial Results for 4Q FY2022(C) Statement of cash flows(in thousand yen)
Current fiscal year
(April 1, 2022 to March 31,
2023)
Cash flows from operating activities
Net loss for the year before taxes adjustments (-)
Depreciation expenses
Loss on valuation of investment securities (- means increase)
Increase/decrease in reserve for loss on orders (- means decrease)
Interest or dividends received
Interest expense
Interest on corporate bonds
Commission paid
Changes in trade receivables (- means increase)
Changes in inventory (- means increase)
Changes in advance payments (- means increase)
Changes in trade payables (- means decrease)）
Changes in accrued expenses (- means decrease)
Changes in contract liability (- means decrease)
Other changes
Sub-totalInterest and dividends received
Interest payment
Payment of corporate and other taxes
Cash flows from operating activities
Cash flows from investing activities
Purchase of Investment securities
Proceeds from the collection of loans from affiliates
Guarantee deposits
Cash flows from investing activities
Cash flows from financing activities
Proceeds from long-term borrowings (- means decrease)
Repayment of long-term debt
Proceeds from issuance of convertible bonds
Proceeds from issuance of stocks through exercising equity
warrants
Proceeds from issuance of equity warrants
Expenses due to acquisition of treasury stock
Cash flows from investing activities
Increase/decrease in cash and cash equivalents (- means decrease)
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

- 10 --656,224
932
31,454-475,243-12
32,7602,076
31,200-626,912
353,498-325,992
110,084
229,373-216,000
127,006-1,381,999
12-38,062-1,210-1,421,259-50,000
26,254-5,080-28,825
970,000-150,000
499,720
34,6941,898-01,356,312-93,772
1,160,934
1,067,162