Financial Results for 3Q FY 2022
(Fiscal Year Ending March 31, 2023)
February 7, 2023

Kidswell Bio Corporation

Business and FinancialHighlights in 3Q FY 20222

Overview of Financial and Business Highlights
Financial Highlights in 3Q FY 2022

 Expanding to the biosimilar sales contributed by sales and profit growth of GBS-007.
 Expecting to record most of R&D expenses for GBS-007 manufacturing cost reduction and cell therapy business,etc. in 4Q FY 2022.
 Improving operating income from the previous year due to prioritizing investments and continuous cost reduction.

Business Highlights in 3Q FY 2022

Cell Therapy（RegenerativeMedicine）

New Biologics
Biosimilars
Others• Transferred all shares of JRM (Japan Regenerative Medicine Co., Ltd.) to Metcela Inc. (Development ofJRM-001 is led by Metcela, Inc.).
• Completion of GMP-compliant SHED MCB manufacturing and supply system.
• Executed a master service agreement with Showa Denko Materials Co., Ltd. for the development ofmanufacturing process for the regenerative medicine products utilizing SHED and manufacturing
investigational new drugs.
• Patent application on cell therapy for cerebral palsy utilizing SHED with Tokai National Higher Educationand Research System (Nagoya University).
• Publication of the research articles in collaboration with Hamamatsu University School of Medicine (Proof ofconcept of the potential therapeutic application of next generation SHED for brain cancer).
• Proceeding with the preparation for clinical research of SHED with Nagoya University.
• Executed a research collaboration agreement with Chiome Bioscience Inc. (Chiome) on the development ofantibody drugs.
• A patent grant for anti-RAMP2 antibodies which inhibit the formation of new blood vessels with a newmechanism.
• Strong sales due to more orders of GBS-007 than expected.
• Approval of additional indication of GBS-007.
• Sifted to non-consolidated financial result from 1Q FY 2022 due to transfer of the subsidiary• Financing for working capital and facility reinforcement due to increased order of GBS-007

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Financial Results in 3Q FY 2022 (PL): Income Statement
Subject
Gross sales
Cost of goods sold(Cost of sales ratio）
Gross profit
Selling, generaland administrative expe
nses
(Cost of sales ratio)
R&D expenses(Cost of sales ratio)
Other expenses

Results for 3Q
FY2021(Consolidated)

Unit：thousands yen

FY 2022 ending March 31, 2023
(Non-consolidated)
Year-on-year
Result for 3Q
ratio

Highlights

1,383,239

1,726,862

125% •

458,501

654,042

143%

33%

38%

924,737

1,072,819

1,357,696

1,208,342

98%

70%

770,421579,05556%

34%

587,275

629,287

2,900,000

60%

1,700,000

38%

Gross profit expansion due to strong sales in biosimilar business.

1,200,000

89%

89% R&D is generally progressing, and most of development expenses are

2,180,000

55%

75%

107%

•expected to be recorded in the 4Q FY 2022.
• Continuously reducing the manufacturing cost of GBS-007.
• More investment in cell therapy business for development of SHED
products for clinical use.
Other selling, general and administrative expenses• Increased payment of royalty due to strong sales in biosimilarbusiness.
• Continuously streamlining expenses.
•-432,958-135,523--

Net loss-460,046-194,023--••

Net loss for the quarter-94,401-194,930--

Progress
rate

Expanding the biosimilar sales led by sales growth of GBS-007.
Recorded the sales related to completion of GMP-compliant SHED MCB.
Although there is a delay of shipment of some products, the sales are
generally in line with the original plan.

••

116%

Operating loss

Forecast

Good performance of biosimilar business such as strong sales of GBS007
Operating income improved due to prioritizing investments andcontinuous cost reduction.

This quarterly net income decreased due to recording the income fromsale of investment securities as extraordinary income in the FY 2021
but is expected to improve significantly compared with the full-year
forecast.

59%

75%
1,400,000

41%

48%
780,000

81%-980,000---999,000---1,000,000--• The biosimilar business keeps well. The cell therapy business also progresses steadily including the manufacturing
process development of SHED for clinical development.
• Net sales increased. Profit increased at each profit stage, except for quarterly net income, which was due to special
factors in the previous fiscal year.
• Large-scale R&D investment in GBS-007 manufacturing and development of SHED manufacturing processdevelopment for clinical development in 4Q FY 2022.

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Financial Results in 3Q FY 2022: Balance Sheet
Unit：thousands yen

Subject

4Q FY2021
Consolidated

2Q FY 2022
Non-Consolidated

Highlights

Current assets

3,294,940

3,948,993(Cash and cashequivalents）

1,160,934

1,499,615

 Cash increased due to long-termloan from Mizuho Bank and theissuance of convertible bonds (CBs).

461,854826,845 Due to strong sales growth of GBS-007

200,118

312,683(In-process inventory)

788,696

408,427(Advance payments)

495,544

850,399(Long-term debts to be repaid within
one year from a subsidiary）

600,000－(Other current assets)

161,537

51,022(Allowance for doubtful accounts)-573,745－Non-current assets

175,396

224,380

Total assets

3,470,336

4,173,374

Current liabilities

1,111,168

780,463

656,260

1,704,655

Total liabilities

1,767,428

2,485,118

Total shareholders’ equity

1,702,908

1,688,256

Total liabilities and shareholders’ equity

3,470,336

4,173,374（Trade receivables）(Products)

Non-current liabilities

 Reversal of provision for loss oforders Due to long-term loan from Mizuho
Bank and the issuance of the 4thseries of CBs, etc.

• The net asset ratio has been reduced due to long term loan and issuance of CBs, but the level of liquidity has been improved.
• Accelerating investment in cell therapy business with increased liquidity and operating cash flow from biosimilars.

5Key Updates in Mid-Term Strategic Plan
Progressing asscheduled

Licensing-out

SHEDCSC
JRM-001

R&D

Cell Therapy
SHED CSC

New Biologics

Biosimilar
4th Product
UPDATE！

TechnologyDevelopment

SHED Supply
SystemCompletion of MCB

Designer Cell

High-Yield Protein
Producing CellLines

A patent grant for antiRAMP2 antibodies

CompletedProfitExpansion

GBS-001
Cost Reduction

Stable Profit

GBS-001
SalesUPDATE！

GBS-007
Cost Reduction

Approval of additional
indication of GBS-007
More treatment options forpatients

CompletedGBS-011
Royalties

GBS-007
Sales

Strengthen profit
structure led byGBS-007
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Key updates in celltherapy (SHED) businessEpoch-making progress• Established SEHD products platform based on S-Quatre® with the completion of GMPcompliant SHED MCB.
• Improving SHED business value due to starting preparation for clinical research of the1st generation SHED.
• Accelerating R&D activities of the 2nd generation SHED to maximize the value of SHEDplatforms, pursue synergies between SHED and other modalities and global expansion.

1st Generation SHED
Starting the preparation for initiating clinical research/ clinical trial• Clinical research on cerebral palsy, one of the target diseases of 1stgeneration SHED• Clinical research/ clinical trials for other disease

2nd Generation SHED
GMP-compliant
SHED MCB* Master Cell Bank

Identifying target diseases based on the results from collaborative research withacademia, etc., and proceeding the preparation for starting clinical trials globally
as well as domestically.

Other Modalities
Identifying partners and supporting R&D to create new seeds utilizing SHED as araw material.
8Pipeline Highlights: Cell therapy (Regenerative medicine)
Various SHED research data through collaborative researches with academias
Development
ProductExisting Treatment

Development
stage

Number of patients(Domestic) ※2

Number of patients (Global)※2

Partners

Quadriplegiaand PosturedisorderNone

Preparingfor clinicalresearch

2,000 patients per
year, 30,000
patients in total

100,000 patients peryear, 1.7 millions
patients in total

Nagoya University, Tokyo
Medical and Dental
UniversityIntestinalobstruction

Enterectomy,
colostomy

Preclinical100 patients―

Mochida Pharmaceutical

Spinal cord injury

Loss of motor
function andsensation

None

Preclinical

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

25,000 patients peryear, 500,000
patients in total

Nagoya University

Ophthalmologic
disease, etc.

※1※1Preclinical※1※1

Gifu Pharmaceutical
University

Non-union
fractures

Chronic pain,
gait disturbanceNone

Research

100,000 patients
per year―

Hokkaido University

Pediatric disease

Eating andspeech disorder

Lip arthroplasty +iliac bone graft

Research

2,000 patients
per year

15 out of 10,000
newborns

ORTHOREBIRTH

Poor lifeprognosis

Surgery, radiation
therapy,chemotherapy

Research

20,000 patients
per year

830,000 patients intotal

Hamamatsu University
School of Medicine

Loss of motor
function andsensation

None

Research

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

25,000 patients peryear, 500,000
patients in total

Nagoya University

Target disease

Symptom

Pediatric disease

Cerebral palsy
Pediatric disease

Congenital Isolated
Hypoganglionosis

1stGeneration
SHED

Incl. pediatric disease

Cleft lip and palate
Brain cancer
2ndGeneration
SHED

OtherModalities

Incl. pediatric disease

Spinal cord injury
Neurodegenerative disease, etc.

Researchtarget

Autoallergicdisease, etc.

Researchtarget

Exosomes andmitochondria, etc.

Researchtarget※1: Non-disclosure、 ※2: Created by the Company based on publicly available information and related information9

1st Generation SHED: Launching new treatment method
Identifying target diseases based on preclinical data through in-house andcollaborative research with academias and accelerating a preparation forclinical research10

2nd Generation SHED: Designer Cells
Accelerating SHED modified by gene transfection and culture
methods to enhance therapeutic efficacy

1st GenerationSHED

Synergy effective genetransfection and culture
modifications

2 nd Generation SHED
(Reinforced SHED)* Image of SHED modified by gene transfection

Target Diseases of the 2 nd Generation SHED
1. Brain cancer

Creating epoch-making antitumor drug
to with combined administration of theSHED engineered to express thymidine
kinase (TK), and ganciclovir.

2. Spinal cord injury

Creating “reinforced SHED” by newgene transfection(Collaborative research with Nagoya Univ.)(Research articles in collaboration with Hamamatsu
Univ. School of Medicine)

Reinforced SHEDCancer Gene Ther. 2022

運動機能スコア

Motor function score

Disappeared brain tumor byadministration of SHED TK

3. Other target disease(Alzheimer disease, ALS, muscular
dystrophy, etc.）
Creating SHED with cell directionality fordisease sites by new gene transfection
and culture method modification.
(In-house research or collaborative.
research with BioMimetics Sympathies)

SHEDControl
day1 1w

2w

3w

4w

5w

Non-disclosure

6w

11S-Quatre® Business development: Synergies with other modalities

Creating other modalities using SHED as a raw material with partners
Company B
Company A

Company C

Tie-upAccelerating R&D
activities utilizing
SHED with partners

GMP-compliant
SHED MCB*

Creating and launching newmodalities utilizing SHED

* Image from partner companies’ R&D activities to launching* Master Cell Bank

Synergies with other modalities utilizing SHED
1. Oncology

Utilizing SHED as a delivery
system for oncolytic viruses*Imageoncolytic viruses

2. Autoallergic disease(Type 1 diabetes,rheumatism, multiplesclerosis）
Utilizing SHED as a manufacturing
tool for Treg cell medicine*Image3. Other target diseases(Heart failure, respiratory failure,
mitochondrial disease)
Utilizing SHED as a raw material for
new drug candidates, such as
exosomes and mitochondria*ImageSHEDSHEDTreg

SHEDNew
modality

Active discussions are ongoing with several potential partners.

12Roadmap
Accelerating our R&D activities to realize our vision forpatients who are waiting for new medical treatments
・ Proceeding with the preparation for

KIDS WELL, ALL WELL

clinical research/ clinical trial
・ Accelerating the launch of SHED
regenerative medicine products

Launching cellular medicine /celltherapy products

SHED MCB Competed
Accelerating cell therapy products
development
Focusing on SHED development

Establishment of revenue base
Establishment of biosimilar
development technology• Acquisition of biopharmaceuticaldevelopment know-how• Strong sales of GBS-007• Started development of the 4th BSproduct• New BS pipeline development

Founded (2001) to FY 2021

• Accelerating development in overseas inaddition to domestic development• Active investment in human resources
and capital• Accelerating R&D by fund-raising fromoverseas investors and public researchfunds such as AMED

Aiming to launch the world's first
SHED medicine/ therapy by FY2030• Steady development progress in Japanand overseas• Establishment of SHED platform• Strengthening SHED business activities• Diverse personnel structure, including
experts of cell medicine development andhuman resources with knowledge of newmodalities

SHED + Human Resource Development
Maintaining stable revenue of biosimilar business
FY 2022

FY 2025（3 billion yen of sales and 1 billion
yen of operating profit ）FY 2030 onward
13All for Kids, Kids for All

Technical Terminology
TermExplanation

Cell therapy (RegenerativeMedicine)

Cell therapy is the transplantation of human or animal cells to replace or repair damaged tissue. It
includes utilizing immune cells in the blood, adipose-derived and born-derived mesenchymal stem cells.

Designer cells

Designer cells can enhance therapeutic efficacy and cell directionality for disease sites. They are ofinterest in the field of diseases without radical cure as a medical treatment of next generation.

ExosomeA tiny vesicle created and released from the plasma membrane of various types of cells,
especially immune cells, and capable of inducing antigen-specific immune responses. Exosomes are ofspecial interest in the field of medicine with their special ability.

GMP

Good Manufacturing Practice (GMP) is minimum required guidelines that a manufacturer must meet toassure that their products are consistently high in quality and work for their intended use. GMP is a partof a quality system covering the manufacture and testing of pharmaceutical ingredients, foods,pharmaceutical products, diagnostics, and medical devices.

Master Cell Bank (MCB)

Master Cell Bank (MCB) is cells for medical treatments that are expanded under the constant culture
condition and divided into several vials for long frozen storage. Frozen MCB can be expanded again
after thawing and utilized for regenerative medicine products as a raw material.

SHED

SHED：Stem cells from Human Exfoliated Deciduous teeth
SHED is a mesenchymal stem cell (MSC) extracted from a dental pulp cavity inside exfoliated deciduous
teeth and is easy to differentiate into bone and nerve cells. Especially SHEDs from young donors haveshown higher proliferative activity and secretory capacity of various growth factors (particularlyneurotrophic factors) compared to stem cells from other tissues.

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Cautionary Statement
This information material is provided for understanding Kidswell Bio
Corporation (“KWB”), not for soliciting investment in KWB shares.
Information provided in this material may contain so-called “forward-lookingstatements.” These statements are based on current expectations, forecasts
and assumptions that are subject to risks and uncertainties, which could cause
actual outcomes and results to differ materially from these statements. Risks
and uncertainties include success rate of R&D projects, new regulations andrules, relations with partners in the future, etc.
This material includes information on pharmaceutical products andregenerative medicine (or related products), etc., which is being developed orlaunched. However, this is not intended to promote our products or provide
medical advices.
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