May 13, 2022

SEIKAGAKU CORPORATION
Consolidated Financial Results (Japan GAAP) (Summary)for the Fiscal 2021
(Year Ended March 31, 2022)
Listed exchanges: Tokyo Stock Exchange (Prime Market)
Stock code number: 4548
URL: https://www.seikagaku.co.jp/en/
Date of ordinary general meeting of shareholders (Planned): June 21, 2022
Date of dividend payment (Planned): June 22, 2022
(All amounts have been rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal 2021(from April 1, 2021 to March 31, 2022)(1) Consolidated Financial Results
Net sales
Millions ofYen(Percentages indicate changes from the prior fiscal year)
Net income attributable toOrdinary income
owners of parent
Millions ofMillions of
%
%
Yen
Yen

Operating income%

Millions ofYen%

Fiscal 2021

34,851

25.7

4,495

99.9

5,395

78.4

3,733

(12.4)

Fiscal 2020

27,734

(5.0)

2,248

(42.3)

3,024(24.0)

4,262-(Note) Comprehensive income:Fiscal 2021:
Fiscal 2020:

4,573 million yen[(10.7) % ]5,119 million yen[- % ]Net income per
share

Diluted net
income per share

Return on equity

Ordinary income
as a percentage of
total assets

Operating income
as a percentage ofnet sales

Yen

Yen

%

%

%

Fiscal 2021

66.32

-

5.7

7.4

12.9

Fiscal 2020

75.54

-

6.9

4.4

8.1

(2) Consolidated Financial Position
Total assets

Total equity

Equity ratio

Millions of Yen

Millions of Yen%

Total equity
per share
Yen

Fiscal 2021

75,244

66,34088.2

1,179.46

Fiscal 2020

69,91563,60491.0

1,127.14

Net cash flows fromoperating activities

Net cash flows frominvesting activities

Net cash flows fromfinancing activities

Cash and cash
equivalents at the endof fiscal year

Millions of Yen

Millions of Yen

Millions of Yen

Millions of Yen(Reference) Shareholders’ Equity:
Fiscal 2021:
Fiscal 2020:

66,340 million yen
63,604 million yen(3) Consolidated Cash Flows

Fiscal 2021

8,193

Fiscal 2020

1,257
1

870

(2,151)

23,3671,023(1,507)

15,767

2. Dividends
1st Quarter
Yen

Dividends per share
3rd Quarter
Yen-

Fiscal Year-end
Yen
14.00

AnnualYen
24.00

Fiscal 2020-

2nd Quarter
Yen
10.00

Fiscal 2021

-

15.00

-

15.00

30.00

Fiscal 2022
(Forecast)

-

11.00

-

11.00

22.00

Total dividend payments(Annual)Millions of Yen

Dividend payout ratio(Consolidated)%

Dividends as a percentage of
total equity (Consolidated)%

Fiscal 2020

1,354

31.8

2.2

Fiscal 2021

1,687

45.2

2.6

Fiscal 2022
(Forecast)-* Notes(1) Changes in the status of material subsidiaries during the period: No(2) Changes in accounting principles, changes in accounting estimates, and retrospective restatements(a) Changes in accounting principles accompanying revisions in accounting standards: Yes(b) Changes other than those in (a) above: No(c) Changes in accounting estimates: No(d) Retrospective restatements: No(3) Number of shares issued (common stock):(a) Number of shares at the end of the period(including treasury stock)(b) Number of treasury stock at the end of theperiod(c) Average number of shares issued during theperiodAs of March 31,2022
As of March 31,
2022
Fiscal 2021

2

56,814,093 shares
567,822 shares
56,299,803 shares

As of March 31,
2021
As of March 31,
2021
Fiscal 2020

56,814,093 shares
384,421 shares
56,425,798 shares

(Reference) Non-Consolidated Financial Results
Non-Consolidated Financial Results for Fiscal 2021 (from April 1, 2021 to March 31, 2022)(1) Non-Consolidated Financial Results(Percentages indicate changes from the prior fiscal year)
Net sales
Millions of
Yen

Operating income
Millions ofYen%

Ordinary income
Millions of
Yen%

Net income
Millions of
Yen

%

%

Fiscal 2021

25,178

19.6

2,273

73.3

3,703

87.4

2,496

(28.5)

Fiscal 2020

21,049(12.1)

1,312(56.5)

1,976(37.7)

3,490-

Net income per share

Diluted net income per
share

Yen

Yen

Fiscal 2021

44.34

-

Fiscal 2020

61.86

-

(2) Non-Consolidated Financial Position
Total assets

Total Equity

Equity ratio

Total Equity per share

Millions of Yen

Millions of Yen%

Yen

Fiscal 2021

64,64458,01089.7

1,031.37

Fiscal 2020

62,36857,83692.7

1,024.93(Reference) Shareholders’ Equity:
Fiscal 2021:
Fiscal 2020:

58,010 million yen
57,836 million yen*This financial reports are not subject to audit of the certified public accountant and audit firm.
*The above forecast has been prepared on the basis of economic circumstances, market trends, and other assumptions
made at the time of release of this document. Actual results may differ from the forecast due to a variety of factors.

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1. Analysis of Results of Operations
Results of operations for the current fiscal year
In the fiscal year ended March 31, 2022 (fiscal 2021), net sales were ¥34,851 million, up 25.7% year on year.
The result is attributable to a rebound from the impact of the spread of COVID-19 infection in Japan and abroadin the previous fiscal year as well as a substantial increase in royalty income (reclassified from non-operating
income to net sales beginning in fiscal 2021) and solid growth from the LAL business and overseas products,
factors that offset the impact of National Health Insurance (NHI) drug price reductions in Japan.
Operating income rose 99.9% year on year to ¥4,495 million, with the sales increase more than offsetting
higher SGA expenses—mainly R&D expenses accompanying progress with an additional clinical study
underway in the U.S. for SI-6603, a treatment for lumbar disc herniation—and ordinary income rose 78.4% year
on year to ¥5,395 million. Net income attributable to owners of parent fell 12.4% to ¥3,733 million due tonon-recurrence of deferred tax assets recognized in fiscal 2020, which had a positive impact on prior-year profit.

1) Net sales by segment
Pharmaceutical Business- Domestic Pharmaceuticals (¥11,447 million, down 0.0% year on year)
Deliveries to medical institutions of ARTZ, a joint function improvement agent for knee osteoarthritis, increased
year on year as a result of successful measures to promote switching from competing products coupled with arebound in outpatient services following a decline in the previous fiscal year caused by the spread of COVID-19
infection. The Company’s sales fell slightly due to the impact of NHI drug price reductions.
With regard to the joint function improvement agent JOYCLU, launched on May 19, 2021, although theCompany called attention to the risk of shock or anaphylaxis in the Important Side Effects section of the
JOYCLU package insert, in response to multiple reports of shock or anaphylaxis occurring in patients following
administration of JOYCLU, the Company issued a Dear Healthcare Professionals Letter of Rapid Safety
Communication (Blue Letter) on June 1, 2021 to increase awareness of these side effects among healthcare
professionals. The Company is continuing cooperative efforts with sales partner Ono Pharmaceutical Co., Ltd. toproactively gather side effects reports and other information and provide safety-related information and has also
initiated a physician-led clinical study to identify the cause of the side effects.
Deliveries to medical institutions of the OPEGAN series of ophthalmic viscoelastic devices increased year on
year amid an ongoing rebound in the number of cataract surgeries following a decrease in the previous fiscal
year due to the spread of COVID-19 infection. The Company’s sales fell as a result of NHI drug price reductions
and a decline in shipments from a high level in fiscal 2020.
The Company’s sales of MucoUp, a submucosal injection agent for endoscopic surgery, were at theprior-year level as a result of a sales partner inventory adjustment, despite recovery from the impact of the
spread of COVID-19 infection in the previous fiscal year.
Deliveries to medical institutions of HERNICORE, a treatment for lumbar disc herniation, grew steadily,
and the Company’s sales also rose due to active information provision activities directed at medical
institutions carried out together with the sales partner.

- Overseas Pharmaceuticals (¥7,652 million, up 12.9% year on year)
Local sales volume in the U.S. and the Company’s sales of Gel-One, an intra-articular single-injection
viscosupplement for the treatment of knee osteoarthritis, increased year on year, reflecting continuation of thetrend toward preference for single-injection products and successful measures by the sales partner to promoteswitching from competing products.
Local sales volume in the U.S. of SUPARTZ FX, an intra-articular 5-injection viscosupplement for thetreatment of knee osteoarthritis, increased due to a rebound from the strong impact of the spread of COVID-19
infection experienced in the previous fiscal year, despite continuation of unfavorable market conditions for
multiple-injection products. The Company’s sales increased as a result of bringing forward shipments to avoid
distribution risk.
Local sales volume in China of ARTZ increased because of active sales promotion in regions where
successful bids were submitted in the centralized procurement system and higher orders from medical
institutions, despite fears of sluggish distribution due to the spread of COVID-19 infection. The Company’s sales
4rose sharply, due in part to bringing forward shipments in connection with a change in packaging materials.

- Bulk Products and Contract Development and Manufacturing Organization＊1 (¥2,607 million, up
41.2% year on year)
Although sales of bulk products fell slightly, overall sales rose sharply because of the addition of full-year salesof contract development and manufacturing and other services of overseas subsidiary Dalton Chemical
Laboratories, Inc.
As a result of these developments and a substantial increase in royalty income*2 (¥3,989 million, up 455.6%
year on year), sales from the Pharmaceuticals business segment rose 23.6% year on year to ¥25,696 million.
*1 Starting from the consolidated financial results for the second quarter of the fiscal year ended March 31, 2021
(fiscal 2020), the sales of Dalton Chemical Laboratories, Inc., which became a subsidiary in March 2020, areincluded in the Pharmaceuticals business.
*2 Beginning in fiscal 2021, royalty income has been reclassified from non-operating income to net sales.

LAL Business
Sales from the LAL business segment increased 31.9% year on year to ¥9,155 million because of an increase insales of Bacterial Endotoxin Testing (BET) reagents and Clinical Diagnostic (Fungitell) reagents attributable toreinforcement of sales activities at overseas subsidiary Associates of Cape Cod, Inc. as well as higher orders forcontract research services and steady sales in Japan.

2) Research and Development Activities
To contribute to healthy and fulfilling lives for people around the world, the Seikagaku Group focuses its
research and development on glycoscience as its area of specialization and aims to create original
pharmaceuticals and medical devices.
To achieve early and continuous launching of new products, which hold the key to future business growth,
the Group will engage in efficient R&D activities focused on target compounds and high-priority target diseases
and make efforts to increase the number of projects through reinforcement of unique drug-discovery
technologies and utilization of open innovation.
Total R&D expenses in fiscal 2021 were ¥9,005 million, or 25.8% of net sales (29.2% excluding royalties),
and the number of R&D personnel was 223, or 23.8% of the total number of employees, at March 31, 2022.
The status of progress of principal R&D activities is described below.

SI-6603 (treatment for lumbar disc herniation: developed in the U.S.)
Although a delay occurred in the additional Phase III clinical trial schedule due to the spread of COVID-19
infection, subject enrollment was completed in March 2022. Following a one-year observation period, theCompany plans to perform results analysis and make preparations for a new drug application.
SI-6603, which contains condoliase as its active pharmaceutical ingredient, is a therapeutic agent directly
injected into the lumbar disc. It does not require general anesthesia and is less invasive to the patient thansurgical treatment. Since a single-injection treatment is expected to improve the symptoms of lumbar discherniation, the Company aims to provide SI-6603 as a new treatment option.

SI-614 (treatment for dry eye: developed in the U.S.)
Clinically beneficial effects were confirmed in Phase II/III clinical study and other. Accordingly, in May 2022
the Company initiated a Phase III clinical study to evaluate efficacy and safety.
SI-614 is a substance produced by introducing a hydrophobic group into hyaluronic acid using Seikagaku’s
own proprietary technology. Ocular instillation of SI-614 in patients is expected to improve symptoms of dry eye
by stabilizing the tear film and promoting corneal epithelial wound healing. Through development of SI-614, theCompany aims to provide a new option for the treatment of dry eye.

5SI-613 (treatment for osteoarthritis: developed in the U.S., China, and South Korea)
SI-613-ETP (treatment for enthesopathy: developed in Japan)
SI-613
The Company will consider the future direction for development in the U.S., China, and South Korea whileassessing progress with identification of the cause of shock or anaphylaxis of JOYCLE.
SI-613-ETP
The primary efficacy endpoint in a late-stage Phase II clinical trial in Japan of SI-613-ETP for the treatment
enthesopathy was not met, and the Company will prioritize identification of the cause of shock or anaphylaxis of
JOYCLE. For these reasons, development of SI-613-ETP was discontinued in February 2022.
SI-613 is a formulation in which hyaluronic acid and diclofenac (an anti-inflammatory agent) are chemicallybound using Seikagaku’s own proprietary technology. It is expected to improve symptoms associated withosteoarthritis and enthesopathy by releasing diclofenac by hydrolysis.

SI-722 (treatment for interstitial cystitis: developed in the U.S.)
In the Phase I/II clinical studies of SI-722 conducted in the U.S., subject enrollment was completed in January
2021, and tolerability has been confirmed in the studies. The Company is currently considering the next clinical
trial based on the data obtained.
SI-722 is a novel chemical compound in which a steroid is conjugated with chondroitin sulfate using
Seikagaku's proprietary glycosaminoglycan modification technology and drug delivery systems. SI-722 injected
into the bladder is thought to demonstrate long-lasting improvement in the conditions of frequent urination andbladder pain by releasing a steroid with an anti-inflammatory effect.

SI-449 (adhesion barrier: developed in Japan)
A delay has occurred in the clinical trial schedule of a pivotal study of SI-449 in the field of gastroenterologicalsurgery initiated in May 2020 due to the spread of COVID-19 infection. The Company is continuing to takemeasures to make up for the delay, such as expanding the trial site network and implementing a remote response
for facilities where visiting is restricted.
A pilot study in the field of gynecology was initiated in November 2021 for the purpose of expanding thescope of application of SI-449 by confirming usability and safety in gynecology.
SI-449 is a powdered medical device whose main ingredient is cross-linked chondroitin sulfate developed
using Seikagaku’s own proprietary glycosaminoglycan cross-linking technology. It has the property of absorbing
moisture and swelling, and is expected to prevent post-operative adhesion formation by forming a barrier
between the surgical wound site and surrounding tissues after application. The Company will proceed with
development of SI-449 with a view to introducing it globally, not only in Japan.

2. Forecasts for Fiscal 2022
It is difficult at present to prepare reasonable forecasts of consolidated financial results for the fiscal year ending
March 31, 2023 (fiscal 2022), because it is necessary to assess the progress of efforts to identify the cause ofshock or anaphylaxis occurring in patients following administration of the joint function improvement agent
JOYCLU. Accordingly, the Company will refrain from announcing earnings forecasts at this time. Once it
becomes possible to prepare reasonable forecasts, the Company will promptly announce them.
Current assumptions about the forecasts for fiscal 2022 are as follows:
1. The Company anticipates the National Health Insurance (NHI) drug price reductions implemented in April
2022 will have a negative impact of approximately 11% on domestic pharmaceuticals as a whole on aweighted-average basis (compared to the April 2021 revised drug prices).
2. The Company’s export transactions and the sales of overseas subsidiaries are denominated mainly in U.S.
dollars, and the overseas sales ratio (excluding royalties) reached approximately 56% in fiscal 2021. The
financial results will be affected if the yen appreciates or depreciates sharply from the average exchange rate forfiscal 2021 (112.38 yen to the U.S. dollar).
63. Royalties are expected to decrease due to the non-recurrence of a prior-year, one-time increase.
4. R&D expenses are expected to decrease due to completion in March 2022 of subject enrollment for an
additional clinical study in the U.S. for SI-6603, a treatment for lumbar disc herniation.

3. Issues Facing the Company
While the abrupt changes to the business environment surrounding the pharmaceuticals industry are continues tobe extremely difficult, progress in measures to control medical expenses of starting with a drastic reform of the
NHI drug pricing system in Japan, intensity of competition among firms the diversifying of treatment options,and degree of difficulty of new drug development increases in the inside cost of research and development whichrises. In this situation, the need to lay out a growth path once again makes the continual creation of innovative
new drugs an imperative for the Company. In parallel with this, the Company is embarking on initiatives basedon a speedy transition to rapid earnings improvement and promoting reforms that are not constrained by existing
frameworks.

Outline of the mid-term management plan (fiscal 2019 to fiscal 2021)
1) Seikagaku's vision"A company that is valued by the world through its innovative drug discovery"
By leveraging its expertise in the field of glycoscience into proprietary technology and creating innovative
drugs that are in demand, and through a broader global supply of these products, Seikagaku aims to contributeto the health and well-being of people around the world and be a company that is valued. By making this its
foundation, the Company will advance fair and earnest business activities.

2) Basic philosophy & corporate slogan
a. Core values (motto): Creativity, Fairness, Dreams and Passion
b. Mission statement: Glycoscience for Human Well-beingc. Corporate slogan of the new mid-term management plan: ”Innovative Thinking”~Creating value based on innovative thinking~3) Important measures
Under this mid-term management plan, Seikagaku positions the plan period as one for solidifying the profit
foundation in order to delineate a path to growth once again. To this end, the Company will proceed with thefollowing important measures.

a. Accelerating new drug discovery to become the pillar of new profitsStrengthening and making use of the Company's own core technology related to GAGs
Leveraging drug discovery technology held by Seikagaku to the fullest extent and raise the possibilities forinnovative drug discovery.
<Main technologies held by Seikagaku>a. New drug development based on modification, processing, and bioactivity
b. Drug delivery systems (DDS)c. Use of platform technology and a next-generation GAG drug development approach
Accelerating innovative drug discovery using an open innovation strategy
In addition to the technologies in its possession, Seikagaku will proactively undertake initiatives toward
technology having high affinity with other companies, maximize synergies, and expand the number ofprojects in new drug development—all to speed up its work.
Steady expansion of the development pipeline with an eye toward global expansion
Seikagaku will quickly foster the development of SI-613, a treatment for osteoarthritis and enthesopathy, as
a new core product by applying for and successfully obtaining drug approval, and by achieving launching.
Seikagaku also aims to step up clinical studies for SI-722, a treatment for interstitial cystitis and bladderpain syndrome, and SI-449, an adhesion barrier. With regard to SI-6603, an indication for treatment for
lumbar disc herniation, the Company will focus on speeding up additional study for the Phase III clinical7

study as it pursues a full effort toward a U.S. market launching.

b. Solidifying the profit foundation through market expansion for new productsPost-marketing drug development of HERNICORE in Japan
Seikagaku places priority on information provision activities to ensure appropriate use and safety as well as
the collection of after-market safety information. Upon agreement with the authorities while coordinatingwith relevant scientific societies, the Company will work toward gradual expansion of requirements foravailable medical practitioners and facilities together with steady market penetration. The Company will
also advance the disease awareness activities related to lumbar disc herniation for patients.
Accelerating multinational expansion of existing products and products in development
By expediting the cultivation of new markets for existing products and products in development tomaximize product value, Seikagaku seeks to solidify its medium- to long-term profit foundation. It will also
be actively engaged in product improvement and application development in accordance with medical
treatment needs in the targeted expansion regions.
Global expansion of endotoxin-detecting reagents that utilize genetic recombination technology
Overseas development of the Seikagaku Group's LAL business is under its U.S.-based subsidiary, theAssociates of Cape Cod, Inc. (ACC). With expectations of future adoption, ACC aims for global expansionof gene-recombinant endotoxin-detecting reagents, leading to the securing of a new profit foundation.

c. Productivity improvement reforms

Thorough cost reductions
In manufacturing costs, as a result of a project that is already underway, Seikagaku will conduct a review ofprocurement costs and the optimization and streamlining of production, leading to greater assurance of
product profitability.
In selling, general and administrative expenses, the Company will improve work efficiency and make surethat thorough cost reductions are actually done. Furthermore, in order to carry out new drug development
continuously, it will address efficient use of R&D expenses determined by priority.
Diversifying the profit model
Regardless of the business model up to now, the Company will carry out a vigorous examination of ways inwhich to produce new profit.
Creating an organization for maximizing the value of resources
Seikagaku will advance organizational reform that enables flexible responses to changes in the businessenvironment and the nurturing of talent that can create new value, and which also lets each person
demonstrate their potential to the fullest.

Progress with the Mid-Term Management Plan (fiscal 2019 to fiscal 2021)
Main areas of progress and remaining issues with the mid-term management plan are as follows.
“Accelerating new drug discovery to become the pillar of new profits” is the first of the three importantmeasures set out in the management plan. The Company was able to achieve steady advancement ofdevelopment pipelines, launching the joint function improvement agent JOYCLU (development code: SI-613 inJapan) in May 2021, completing subject enrollment for Phase I/II clinical studies in the U.S. of SI-722, atreatment for interstitial cystitis in January 2021, and advancing SI-449, an adhesion barrier, to the pivotal study
stage in May 2020.
SI-6603, a treatment for lumbar disc herniation, is a key to future business growth. Although a delay has
occurred in the plan for an additional Phase III clinical study underway in the U.S. due to the impact of the
spread of COVID-19 infection, subject enrollment was completed in March 2022, and the study entered a
one-year observation period. The Company aims to achieve expeditious and steady progress toward NDA
submission and approval for SI-6603 in collaboration with SEIKAGAKU NORTH AMERICA CORPORATION,
a subsidiary established in Canada in January 2022.
At the research stage, activities aimed at boosting the prospects for drug discovery and further businessdomain expansion progressed. These activities involve utilization of unique GAG-related basic technologies to8

pursue approaches to new disease fields and development of drug discovery modalities as well as pursuit of anactive open innovation strategy together with academic institutions and other partners.
Although the Company called attention to the risk of shock or anaphylaxis in the Important Side Effects
section of the JOYCLU package insert, in response to multiple reports of shock or anaphylaxis occurring inpatients following administration of JOYCLU, the Company issued a Dear Healthcare Professionals Letter ofRapid Safety Communication (Blue Letter) on June 1, 2021 to increase awareness of these side effects among
healthcare professionals. The Company will continue cooperative efforts with sales partner Ono PharmaceuticalCo., Ltd. to proactively gather and provide safety information. In addition, the Company will endeavor to
identify the cause of these side effects to make the use of JOYCLU safer for patients.
The second important measure is “Solidifying the profit structure through market expansion of products.” Aspart of efforts to accelerate multinational expansion of existing products and products in development, theCompany achieved introduction of a single-injection joint function improvement agent into an additional market
by launching HyLink in Taiwan in August 2021. Also, with regard to SI-613, a treatment for osteoarthritis,
although the Company concluded with Eisai Co., Ltd. an agreement concerning co-development and a marketingalliance in China in April 2020 and an agreement concerning a marketing alliance in South Korea in September
2020, the Company has decided to prioritize identification of the cause of shock or anaphylaxis occurring among
patients in Japan following administration of JOYCLU and will consider the future development plan whileassessing how the situation with JOYCLU develops.
In the LAL business, overseas subsidiary Associates of Cape Cod, Inc. (“ACC”) launched PyroSmart
NextGen recombinant LAL reagent, an endotoxin-detecting reagent, in April 2021. ACC will market PyroSmart
NextGen globally, and Seikagaku launched the product in Japan in May 2021.
The Company is proceeding with post-marketing development of HERNICORE, continuing to gather andprovide information to ensure proper use and safety and generating additional evidence in cooperation withacademic societies. Use of HERNICORE in Japan at facilities without full-time supervisory physicians
accredited by the Japanese Society for Spine Surgery and Related Research (JSSR) became possible inNovember 2019, and the number of facilities capable of using HERNICORE increased.
“Productivity improvement reforms” is the third important measure in the management plan. The acquisition of
Dalton Chemical Laboratories, Inc. (“Dalton”) of Canada and its consolidation as a subsidiary in March 2020, as
part of efforts to diversify the profit model, marked the addition of the Contract Development and Manufacturing
Organization business to the Seikagaku Group’s business domains. The Company is pursuing production
optimization and efficiency improvement by gradually switching from outsourced manufacturing of chemical
synthetics to in-house production and transferring manufacturing of investigational drugs and some Seikagaku
products to Dalton.
Also, to flexibly cope with changes in the business environment, notably the spread of COVID-19 infection,
the Company took measures such as establishing new HR systems, including a work-from-home system, andimproving the IT environment. In the area of cost reductions, although progress was made with reviews ofprocurement costs and sales-related expenses, some issues remain with respect to fundamental cost structure
improvement.
As mentioned above, during the period of the mid-term management plan the Company was affected bymarket stagnation in Japan and overseas, delays in R&D activities, and other consequences of an unforeseen
crisis, namely the spread of COVID-19 infection. Nevertheless, the Company was able to achieve a certain
measure of results with respect to the three important measures in the plan and to achieve all numerical targets
announced when the plan was formulated. Although some issues remain after completion of the three-year
period of the plan, positioned as a time for solidifying the profit foundation to return Seikagaku to a growthtrajectory, the Company believes that it has successfully laid a foundation for the next mid-term management
plan.
Strategic direction for the next mid-term management plan
The business environment facing pharmaceutical companies is expected to continue to become increasingly
9difficult, and the Company recognizes that it is necessary to further strengthen the profit foundation that will
support Seikagaku in the years ahead. During the period of the next mid-term management plan, the Company’s
highest priority will be to dependably bring SI-6603, a treatment for lumbar disc herniation, to market in the U.S.
and rapidly ramp up sales. In addition, the Company will assiduously implement measures to make the use of
JOYCLU safer for patients. The Company will also continue efforts to expand the LAL business and Contract
Development and Manufacturing Organization business and to accelerate overseas expansion of existingproducts and new products. The Company intends to focus effort on these high-priority tasks and also consider
other matters including cost reductions for the purpose of dependably generating profits and a review of the
profit structure.
In the area of R&D, the source of Seikagaku’s growth, the Company will advance development pipelines,
including SI-449, an adhesion barrier, and also pursue business domain expansion utilizing basic technologies
through entry into new business domains and new modalities and active utilization of open innovation.
Furthermore, on the basis of high corporate ethical standards that reflect profound awareness the social
mission and responsibilities of a pharmaceutical company, the Company will aim to sustainably develop together
with society by engaging in business activities centered around material sustainability issues.
In view of the fact that business plans and future earnings forecasts will vary substantially depending on
progress with the safety-related measures being implemented for JOYCLU and the trend in the U.S. of SI-6603,
a treatment for lumbar disc herniation, as of May 2022, the Company has decided to postpone announcing boththe next mid-term management plan, which is set to start in the fiscal year ending March 31, 2023 (fiscal 2022),
and numerical targets. Seikagaku plans to announce the next mid-term management plan around the autumn of
2022.

4. Dividend Policy
As a means of ensuing sustainable profit growth and improving corporate value, Seikagaku believes in the
sharing of profits with its shareholders.
Seikagaku considers the return of profits to shareholders to be an important management challenge and has
made paying dividends linked to business performance a basic policy. Seikagaku will also consider the purchaseof treasury stock as appropriate, taking into consideration future business expansion and the total return ratio.
Under the mid-term management plan, Seikagaku paid annual dividends of ¥26 per share and ¥24 per share forfiscal 2019 and fiscal 2020, respectively.
To strengthen the profit foundation and improve capital efficiency, Seikagaku will make business
investments in the areas of R&D and production system development for the purpose of creating new value andalso actively pursue strategic investments with prospects for future growth and synergistic effects.
Seikagaku plans to pay a year-end dividend for fiscal 2021 of ¥15 per share, to consist of an ordinary dividend of¥10 and a special dividend of ¥5 on the occasion of the launch of JOYCLU. This will result in an annual
dividend of ¥30 per share (representing a dividend payout ratio of 45.2%), including the interim dividend of ¥15(including a special dividend of ¥5). Seikagaku plans to pay annual cash dividends for the fiscal year ending
March 31, 2023 (fiscal 2022) of ¥22 per share (including an interim dividend of ¥11).
Also, in order to implement a flexible capital strategy in response to various changes in the businessenvironment, the Board of Directors resolved at a meeting held on May 13, 2022 to purchase, during the period
from May 16, 2022 to December 30, 2022, up to 2,000,000 shares of treasury stock at a maximum amount of¥1,500 million, pursuant to the provisions of the Articles of Incorporation under Article 165, paragraph 2 of theCompanies Act.
Seikagaku is currently formulating the next mid-term management plan and is considering the dividend
policy in conjunction with this. Seikagaku plans to announce the next mid-term management plan around theautumn of 2022.
#######

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