Kidswell Bio Corporation (4584) Financial Results for 2Q FY2023

November 8, 2023

Summary of Financial Results for the Second 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, Head of CEO OfficeTel: +81-3-6222-9547

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

November 14, 2023-

Preparation of supplementary materials for financial results:
Holding of financial result meeting:Yes
Yes(All amounts are rounded down to the nearest million yen)

1.

Financial Results for the Fiscal Year Ending March 31, 2024 (April 1, 2023 – September 30, 2023)(1) Results of operations (Cumulative)
Net sales(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

%

581

-47.9

-719

-

-744

-

-780

-

1,116

-

11

-

-42

-

-42

-

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

Net income
per share
Second quarter of the fiscal year
ending Mar. 31, 2023
Second quarter of the fiscal year
ended Mar. 31, 2022

Diluted net
income per share

Yen

Yen

-24.10

-

-1.36

-

(2) Financial position
Total assets

As of Sep. 30, 2023

equity ratio

Million yen

Million yen

%

3,193

1,075

27.9

1,233

26.6

As of Mar. 31, 2023
3,894
(Reference) Shareholders’ equity
Second quarter of the fiscal year ending March 31, 2024: 892 million yen
2.

Shareholders’

Net assets

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

Dividends
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

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Kidswell Bio Corporation (4584) Financial Results for 2Q 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
Million yen%

Operating income

Ordinary income

Million yen

Million yen%%

Net income

Net income
Million yen

per share
%

Yen

-

-45.233,500
26.1-1,500-1,550-1,550
Full 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 period (including treasury shares)
At the second quarter of the fiscal year ending March, 2024: 35,857,613 shares
At the end of the fiscal year ended March, 2023: 32,059,713 sharesb. Number of treasury shares at the end of period
At the second 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 second quarter of the fiscal year ending March, 2024: 32,378,63 shares
At the second quarter of the fiscal year ended March, 2023: 31,445,380 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 2Q FY2023

Table of Contents
I.

Financial Results for the current fiscal quarter………………………………………………………………………………
(1) Business updates……………………………………………………………………………………………………………
(2) Outlook ………………………………………………………………………………………………………………………

II. Financial statements and notes to financial statements…………………………………………………………………………
(A) Balance sheet………………………………………………………………………………………………………………
(B) Income statement……………………………………………………………………………………………………………
(C) Quarterly Statement of consolidated cash flows ……………………………………………………………………………
(D) Notes to financial statements ………………………………………………………………………………………………
III. Others…………………………………………………………………………………………………………………………

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4
5
5
6
7
8
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Kidswell Bio Corporation (4584) Financial Results for 2Q FY2023

I. Financial Results for the current fiscal quarter(1) Business updates
As for the second quarter of FY2023 financial results, the sales was 581,870 thousand yen (47.9% decrease from the same quarterof the previous year), R&D expenses was 546,693 thousand yen (117.1% increase from the same quarter of the previous year),
operational loss was 719,658 thousand yen (operational profit in the same quarter of the previous year was 11,137 thousand yen),ordinary loss was 744,646 thousand yen (ordinary loss in the same quarter of the previous year was 42,082 thousand yen) and net
loss for the current fiscal year was 780,251 thousand yen (net loss for the previous fiscal quarter was 42,687 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, as the probabilities of licensing out SHED pipelines to business partners which we had
been contacting has been increasing, we 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.
Through these actions, the Company accelerates its own SHED research and development activities as well as strengthen thepipelines by collaborating with academia and drives its growth strategy (KWB2.0) to bring SHED drugs into the market.
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 stable profit
foundation for its future growth. Furthermore, Mochida pharmaceutical Co., Ltd. which the Company had been collaboratingwith since December, 2016 received manufacturing and sales approval for GBS-010 (Pegfilgrastim biosimilar) September 25,
2023 and it will be launched within 2023. In addition to the additional indication of Ranibizumab biosimilar which should
contribute to the further sales growth of Ranibizmab biosimilar, 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 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) in December, 2022 and is actively
engaged in finding a development partner.
(2) Outlook
No changes in FY2023 financial forecasts disclosed on May 12, 2023.

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Kidswell Bio Corporation (4584) Financial Results for 2Q FY2023

II．Financial statements and notes to financial statements(A) Balance sheet(in thousand yen)
As of the end of the previous
fiscal year
(March 31, 2023)
AssetsCurrent assets
Cash and cash equivalents
Trade receivables
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
Other current liabilities
Total current liabilities
Non-current liabilities
Convertible bonds
Long-term debts
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-5-

As of the end of the current fiscal
quarter(June 30, 2023)

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

622,231
578,193258,596
671,905
816,463
84,4683,031,859

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

1,398
1,913
158,665
161,978
3,193,837

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

56,672425,000
199,698
34,624
15,439731,434

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

500,000
850,000
37,2901,387,290
2,118,724

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

1,827,120
11,132,721-12,067,255-73
892,512
182,600
1,075,113
3,193,837

Kidswell Bio Corporation (4584) Financial Results for 2Q 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 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 September 30,
2022)
1,116,111
420,954695,156

This quarterly cumulative
period(April 1, 2023 to September
30, 2023)
581,870
351,901
229,968

251,787
432,230
684,018
11,137546,693402,933
949,627-719,658

5
2,250
360
2,615

3
2,289
7
2,299

13,664676
389
30,00010,553551
55,835-42,082

18,842
1,836
1,277
4,813
517
27,287-744,646-42,082605
605-42,687

35,00035,000-779,646
605
605-780,251-6-

Kidswell Bio Corporation (4584) Financial Results for 2Q FY2023(C) Quarterly Statement of consolidated cash flows(in thousand yen)Previous quarterly cumulative
period(April 1, 2022 to September 30,
2022)

This quarterly cumulative
period(April 1, 2023 to September
30, 2023)-42,082466--779,646
460
35,000-475,243--5
13,664676
30,000-188,842
270,537-259,746
71,865-60,810-216,000
167,330-688,1895-19,607-1,210-709,001-3
18,842
1,836
510,573-295,186
5,073-98,891-283,330
22,699-862,571
3-13,372-1,210-877,150-50,000
26,254
0-23,745-970,000-25,000
499,7201,610
1,446,330-175,000
584,420
22,800432,220

713,584-444,930

1,160,934
1,874,518

1,067,162
622,231

Cash flows from operating activities
Net loss for the year before taxes adjustments (-)
Cash flows from operating activities
Gain/loss on valuation of securities (- means increase)
Increase/decrease in reserve for loss on orders (- means
decrease)
Interest or dividends received
Interest expense
Bond interest
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 liabilities (- means increase)
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
Other payments
Cash flows from investing activities
Cash flows from financing activities
Proceeds from long-term loan
Repayment of long-term loan
Income from issuance of shares by warrants exercise
Proceeds from issuance of convertible bonds
Proceeds from issuance of warrants
Other changes
Cash flows from financing 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 quarter-7-

Kidswell Bio Corporation (4584) Financial Results for 2Q FY2023(D) 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 and 18th series of stock acquisition rights were exercised. As aresult, capital and capital reserve increased by 317,622 thousand yen respectively, and as of the end of the second quarter of the
fiscal year, capital was 1,827,120 thousand yen and capital reserve was 11,132,721 thousand yen.
(Important subsequent event）
With regard to the 18th series of stock acquisition rights (with an exercise price amendment clause) issued by the Company
on July 26, 2023 through a third-party allotment, the following rights were exercised between October 1, 2023 and October
31, 2023.
(1) Number of exercised stock acquisition rights

14,700 shares(2) Types and number of issued shares

Ordinary stock, 1,470,000 shares(3) Total cash amount by stock acquisition rights

202,580 thousand yen(warrants) exercise(4) Increase in capital

102,407 thousand yen(5) Increase in capital reserve

102,407 thousand yen(Note)
1.
Increase in capital and capital reserve include the transferred amount of 1,117 thousand yen respectively.
2.

As a result of issuance of shares by exercising stock acquisition rights, number of issued shares is 37,309,113 shares,
capital is 1,929,527 thousand yen and capital reserve is 11,235,128 thousand yen.

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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