English translation for reference purposes only

FY2021 Financial Results

In case of any discrepancy,
the Japanese version shall prevail

Modalis therapeutics Corporation（TSE︓4883）

February 14, 2022
Copyrights and proprietary to Modalis

Disclaimer

This document has been prepared by Modalis Therapeutics corporation and Modalis Therapeutics Inc. (the “Companies”)
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Copyrights and proprietary to Modalis

MODALIS3•

is pioneering the first CRISPRbased gene modulation
technology•

is the leading company inepigenetic modulation•

develops novel precision
medicines for a genetic
disorders for which there havebeen no cure

Copyrights and proprietary to ModalisEvery life deserves attention

Corporate Philosophy

Every life deserves attention

The company group, through drug discovery using the core platform
technology “non-cutting CRISPR technology” (CRISPR-GNDM ®
technology) to invent therapeutics targeting rare genetic disorders. True
to our corporate philosophy of “every life deserves attention,” we hope
to contribute to society by giving patients hope to overcome their illness.

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Copyrights and proprietary to Modalis

Provides solution for the long tail of disease
It is believed that of10,000* human diseases, about 7,000#are rare diseases which consist of“long tail” diseases. Of these, 80%† overlap with genetic disorders and 95％ remain untreated.

Historical drug targets
are high incidence
diseases (e.g. diabetes)

Long tail of
diseases

Only~600 § therapeutics

Tx D

Tx C

approved to date

Tx B

Therapeutics A

Patient number

The company is committed to identifying cures with our powerful novel technology.

No treatment option
for 95%† ¶ of genetic
disorders

400 Mil pts¶
Diseases

Scalable efficient approach is required to tackle the divided populationreference: *21st Century Cure Act, #NIH GARD †innovation.org ¶GlobalGenes.org§Active therapeutics of 491 NME, 106 BLA, 17 cellular and gene therapy products @FDA as of 2019.7.22 Source from KEGG

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Copyrights and proprietary to Modalis

Table of contents

1. Financial Highlights
2. Key Topics
3. Growth Strategy
4. Q&A

6

Copyrights and proprietary to Modalis1. Financial Highlights

7

Copyrights and proprietary to Modalis１． Financial Highlights ︓ PL & Business Result

PL & Business Result（Million Yen）
FY2020（A）

FY2021
（B）

（B）
－
（A）

Operating revenue

342

1

(341)

Operating expenses

740

1,240

500

R&D

531

1,009

478

SGA

208

231

22

Operating income(398)(1,239)(841)

Ordinary income(439)(1,231)(792)

Profit

(448)

(738)

(290)

Operating expenses
・R&D increased year on year as business progressed(primarily in personnel expenses,
research material expenses, rent fee and expenses for conducting clinical trials of MDL101 )Extraordinary income
・ Income of compensation

485 Million Yen (the Infringement of the Lock-Up System )SGA: Selling and Generally Administrative Expenses

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Copyrights and proprietary to Modalis１． Financial Highlights : Pipeline

Pipeline
Code

Disease/Indication*1

Partner

Structure

MDL-201

MuscleAstellas
Pharma Inc.

LicenseMDL-202

MuscleAstellas
Pharma Inc.

LicenseMDL-205

CNS

Eisai Co .,Ltd

Collaboration

MDL-101

CMD1A*2

Fully controlled
by Modalis

Wholly-owned

MDL-102

CNS

Fully controlled
by Modalis

Wholly-owned

MDL-104

Tauopathy*3

Fully controlled
by Modalis

Wholly-owned

MDL-206

Angelman
Syndrome

Fully controlled
by Modalis

Wholly-owned

Clinicalpreclinicaldiscovery

INDenabling

IND

PhI

PhII

PhIII

Collaboration

In-house

Pipeline Expansion*1: We have adopted a strategy of withholding specific indications until the patent application is published for competitive
reasons.
*2: CMD1A=Congenital muscular dystrophy type 1A*3: Tauopathy belongs to a class of neurodegenerative diseases involving the aggregation of tau protein. Correlation with
Alzheimer’s disease has been suggested.

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Copyrights and proprietary to Modalis１． Financial Highlights ︓ BS & Financial Position

BS & Financial Position

Current assets
Cash & deposits
Non-current assets
Property, plant and equipment

Right to use patent
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total net assets
Total liabilities and net assets
Capital adequacy ratio

FY2020（A）

FY2021
（B）

5,448
5,421
828
49
767
6,277
58
11
70
6,206
6,277
98.9％

5,067
4,936
1,002
223
704
6,069
181
339
520
5,549
6,069
91.4％

（ Million Yen ）（B）－（A）

(381)
(485)
174
174
(63)
(208)
123
328
450
(657)
(208)

• Stable financial base, High Equity ratio• Recorded access to CRISPR/Cas9 foundational IPs from Editas Medicine, Inc• A portion of the licensing fees were received from the out-licensing party as a
Non-current liability
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Copyrights and proprietary to Modalis1． Financial Highlights ︓ Cash Flow Status

Cash Flow Status
5,421

(747)

171

Balance of Cash and Cash flows from
Cash flows fromcash equivalents
operating activities investing activities（FY2020）Ａ

Ａ Cash flows fromoperating activities
Ｂ Cash flows frominvesting activities
Ｃ Cash flows fromfinancing activities

11

Ｂ

72

Cash flows fromfinancing
activities

Ｃ

17（ Million Yen ）4,936

Effect of exchange Balance of Cash andcash equivalents
rate change on cash
（FY2021）and cash equivalents• Loss before income taxes （△745）• Proceeds from contribution received for right to use patent （329）• Purchase of property, plant and equipment （△107）
Proceeds from issuance of stock acquisition rights （72）

Copyrights and proprietary to Modalis2. Key Topics

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Copyrights and proprietary to Modalis２. Key Topics : Summary in R&D

R&D summaryØ MDL-101n IND enabling study on going• Pilot Tox and PK/PD for designing GLP studies

n Preparing for interaction with FDA• Filing request of INTERACT meeting (1Q)
• File Pre-IND meeting (4Q)n Process development team established and is up and runningØ Other pipelines

n Sets new target area and incubate a few pipelines
n Pursuing research collaboration of MDL-205 with Eisain Termination of MDL-204 research collaboration (Reported on Jan 7.
see Q&A)Ø Othern Multiple articles will be presented at ASGCT*(May 16 - 19th @DC)
*ASGCT: American Society of Gene & Cell Therapy
https://annualmeeting.asgct.org
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Copyrights and proprietary to Modalis２. Key Topics : About MDL-101

CMD1A

Severe muscular dystrophy caused by loss of function mutation in LAMA2 gene

• Frequency: 1 in 30,000*• Inheritance Pattern: Autosomal
CRISPR-GNDM® targeting LAMA1
Recessive• Early onset: apparent at birth or
Muscle cellwithin the first few months of life
Transcription
modulator• Symptoms:
Severe muscle weakness;ON
Coded but silent
Lack of muscle tone (hypotonia);
In normal stategRNA
Little spontaneous movement;
Joint deformities (contractures);
LAMA1
Heart problems and seizures.
dCas9• Life expectancy:
Because of the serious healthproblems that occur in this form of
LAMA2
the disorder, many affected
Not functioning
individuals do not survive pastadolescence.
*Orphanet• Genetic cause: LAMA2 mutation
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Copyrights and proprietary to Modalis２. Key Topics : About MDL-101

Conducting IND enabling studies as well as process development

Path to clinic for CRISPR-GNDM®

Preclinical PoC(in vivo)

In vitro(screening/ evaluation)

GNDM w/
Mouse gRNA

gRNA screening(murine cell line, primary cell)

GNDM w/
NHP gRNAgRNA screening(NHP cell line, primary cell)

GNDM w/human gRNA

gRNA screening(e.g. human cell line,
primary cell,
Patient derived iPS)

WT
(expression,
LAMA1/2 ratio)

Diseasemodel

IND enablingclinical
Rodent

NHP

PK/PD
Toxicity
Immunogenicity

WT(expression, pilot
Immunogenicity)

PK/PD
Dose estimation
Toxicity
Immunogenicity

expression
off-target

Processdevelopment

pilot
run

GMP runregulatory

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Copyrights and proprietary to Modalis

Dose estimation/escalation
Safety, Immunogenicity
Efficacy２. Key Topics : About MDL-101

Summary of MDL-101
Ø Reported by 3Q/2021–

Mouse disease model data in two strains (dy2j and dyW)
• Upregulation of LAMA–1 gene and protein along with GNDM expression• Improvement in biochemical and physiological readouts as well as prolonged
survival– Sustained expression of GNDM in WT mice for 2 years– Formed a strategic alliance with 1st tier CDMO for GMP manufacturing

Ø Achieved thereafter– Establish process development team to initiate manufacturing activities– Initiated 2nd NHP study with AAV9 with further optimized gRNA
– Further optimization of GNDM cassette and locking in final construct(codon usage, cassette orientation, etc.)

Ø Next steps:– INTERACT meeting and pre-IND meeting– IND enabling GLP tox and PK/PD
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Copyrights and proprietary to Modalis２. Key Topics : Summary in R&D

R&D summaryØ MDL-101n IND enabling study on going• Pilot Tox and PK/PD for designing GLP studies

n Preparing for interaction with FDA• Filing request of INTERACT meeting (1Q)
• File Pre-IND meeting (4Q)n Process development team established and is up and runningØ Other pipelines

n Sets new target area and incubate a few pipelines
n Pursuing research collaboration of MDL-205 with Eisain Termination of MDL-204 research collaboration (Reported on Jan 7.
see Q&A)Ø Othern Multiple articles will be presented at ASGCT*(May 16-19th @DC)

*ASGCT: American Society of Gene & Cell Therapy
https://annualmeeting.asgct.org
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Copyrights and proprietary to Modalis２. Key Topics : CV is our next horizon

CV is our next horizon

Low Invasiveness(侵襲性) High

Target tissue for gene therapy

muscle• Our accumulated
know how allow us to
explorer new disease
area

eye

Liver

Easy

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• Modalis has focused
mainly on CNS andmuscle disease area

Brainby local injection

CV

Brain
by systemic injectionaccessability(送達の難易度)• CV is one of thereachable tissue by
AAV systemic injection

Hard

Copyrights and proprietary to Modalis２. Key Topics : CV is our next horizon

There are huge opportunities in CV area

bn USDWW CV Market size

70
60

Cardiacgenetic disorders

Proposed
Causative genes

Severehypercholesterolemia

LDLR, APOB, ABCG5, ABCG8, ARH, PCSK9Hypertrophic
Cardiomyopathy(HCM)

MYBPC3, MYH7, TNNI3, TNNT2, TPM1, MYL2,
FHL1, MYL3, GLA, PRKAG2, NEXN, ACTC1,
LAMP2, PLN

Dilated Cardiomyopathy(DCM)

TTN, DSP, MYH7 , LMNA, TNNT2, TPM1, VCL
TCAP, LDB3, MYBPC3, ABCC9, DES, TNNI3
ACTC1, SGCD, PLN, TAZ

Arrhythmogenic rightventricular
Cardiomyopathy(ARVC)

PKP2, DSP, DSG2, DSC2CAGR=3.8%

50
40
30
20
10
0
2018

2026

Source: Fortune Business Insight

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Copyrights and proprietary to Modalis２. Key Topics : Other business progresses

Other business progressesØ Partneringn MDL-101: Partnering discussion ongoing with pharma/biotech
companies
n MDL-205: Research collaboration ongoing with Eisai. Opt-in
discussion will be made upon completionn Research collaboration: In discussion with pharma/biotech
companies on new targets

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Copyrights and proprietary to Modalis２. Key Topics : Collaboration pipeline

Steady progress in IND enabling of 201 and 202
Decision will be made on 205 in 1H 2022
Collaborative pipeline
Code
Code
Indication

2022/122023〜

MDL-201
muscleNonclinical and IND-enabling studies, CMC activities#

MDL-202
muscleNonclinical and IND-enabling studies, CMC activities#

MDL-205
CNS

partnering*Scheduled milestone events are informational in the future and subject to change#The partner is taking a policy of not disclosing status of projects in preclinical or earlier

Copyrights and proprietary to Modalis

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２. Key Topics : In-house pipeline

Several pipelines are coming out in this year
Code
Code
indication

In-house pipeline
2022/122023/122024/12

適応疾患
MDL-101

CMD1A

PoC

IND

partnering

MDL-102
CNS

partnering

MDL-104
Tauopathy

partnering

MDL-206
Angelmansyndrome

partnering

MDL-XXX
MuscleTo be announced

MDL-XXX
CV*Scheduled milestone events are informational in the future and subject to change

Copyrights and proprietary to Modalis22

3. Growth Strategy

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Copyrights and proprietary to Modalis

３. Growth Strategy : Expansion of pipeline

Growth Strategy

opportunity expands two dimensionallyPotential Growth for GNDM technology

Expansion~2,200 target opportunity
MDL-XXX

pipelines

MDL-XXX>100 core target indications

MDL-104
MDL-102

License opportunity

MDL-101
MDL-206
MDL-205
MDL-202
MDL-201

M/S payment as progress
Stage of development

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Copyrights and proprietary to Modalis

３. Growth Strategy : GNDM

GNDM is efficient approach both for LoF and GoF mutation
In GoF disorders

In LoF disorders
singlePoint of Mutation(s)Base editing

Limited only
to ex vivo
application

DNA

RNA

Protein

Gene editing• GNDM(CRISPR)• ZFP-TF(ZFN)

Gene Therapy

small

1 mutant allele

Multiple copies

variedGNDM

Si RNA
ASO

Protein(Ab)peptideSmall molecule

Editing(K/D)

diversified
Large

Gene Size

LoF: Loss of function
GoF: Gain of (mal)function
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Targets for suppression

K/D: Knock-down

Copyrights and proprietary to Modalis

３. Growth Strategy : GNDM

Modalis is uniquely positioned within the CRISPR field

Gene

CRISPR

Other(e.g. ZFN)

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Editing

EditasCRISPR Tx
Intellia

base

Modulation(epigenetic editing)

BEAM

Sangamo

Copyrights and proprietary to Modalis

３. Growth Strategy : Composition of Modalis’ value and measures for advance

Composition of Modalis’ value and measures for advancemeasures for advancement• Aspiration of good talents• Completion of value chainØ Partnering for futurecommercialization
Ø Establishing development
capabilities(pre/clinical,
CMC, regulatory)• Expanding access to capital,
partner, talent• strengthen financial condition• M&A

Corporate Value• Acquisition of
additional businesscapability• Increased financial
stability

Business
Value

Pipeline
Value• Progress of development• Explorer new targets• Life-cycle management• Progress ofdevelopment• Expansion ofpipeline• Validation of technology• Access to
new/complementary
technology• Strengthening IP portfolio

Platform Value• Obsolescence• Alternative technologies• Shrinking patent life
• Exhausting of low
hanging fruits

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Time

Copyrights and proprietary to Modalis

３. Growth Strategy : GNDM

Upon transition from R to D, which cost time and money, stricter
decision is made for higher ROI and better resource allocation.
CDMO
PoS*
patient number
clinical pathcompetition

management

Discovery/Research Engine
filter

Process
Development
Gate

CRISPR-GNDM®

ClinicalPreclinical

input
KOL

Stricter andupdated criteria
to move forward

PoS: Probability of success28

Copyrights and proprietary to Modalis

4．Q & A

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Copyrights and proprietary to Modalis

Q1: What is the future of your relationship with Astellas? [reprint]A）To date, we have conducted a total of five joint research projects with
Astellas, two of which have resulted in licensing agreements.
With the conclusion of the MDL-204 collaboration, there are no
ongoing research collaborations with Astellas. However, we continue
to maintain a good relationship through collaboration on two licensed
pipelines, MDL-201 and MDL-202, as well as exploring othercollaboration opportunities.
We’ve confirmed that Astellas continues to explore the existing
pipelines licensed to it, MDL-201 and MDL-202, currently in the preclinical stage.

＊ Please note that this information is subject to change without notice. Please
understand.

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Copyrights and proprietary to Modalis

Q2: What is the difference between MDL-206, which Modalis
regained rights and put into in-house pipeline in August 2021,
and the current MDL-204? [reprint]A）While both pipelines use the same CRISPR-GNDM® technology
approach to create gene therapies, each pipeline has its own
technical challenges specific to the target gene, patient population
size, and competition from other modalities.
In the case of MDL-206, the decision to continue the pipeline as ourown was based on reasons such as the target Angelman Syndrome's
affinity to the technology and the difficulty of approaching it withother modalities, as well as the assumed efficacy based on existing
data. However, the decision to discontinue MDL-204 was based on acomprehensive judgment that it was not sufficiently superior orreasonable.

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Copyrights and proprietary to Modalis

Q3: Do you foresee any increase or decrease in the pipelines in the
future? [reprint]A）We have several new candidates, including those for which we are
currently exploring the possibility of collaboration and those that are
being incubated in-house. We plan to promote these to the pipelineat an appropriate stage.
Among existing pipelines, we will promptly discontinue those for which
we believe there is no longer a possibility to continue research anddevelopment, such as MDL-204.
We believe that it is reasonable to optimize the size and quality of ourportfolio by conducting an appropriate metabolism.
We also believe that making decisions at an early stage, especially at
the research stage, is effective in increasing the chances of success inthe costly development stage.

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Copyrights and proprietary to Modalis

Q4: Several epigenetic modulation companies were established at
the end of last year, will this affect the competitive environment?
A） We are delighted to see that
epigenetic modulation is
now widely recognized as aneffective drug discovery
technique.
The Company believes that,in addition to the protection
provided by our existing
intellectual property, we cancontinue to maintain ourleading position by based on
the collective experience wehave gained in the six years
since our establishment.

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Gene

CRISPR

Editing

EditasCRISPR Tx
Intellia

base

Modulation(epigenetic editing)

BEAM

Other
(e.g. ZFN)

Copyrights and proprietary to Modalis

SangamoQ5: Does the outcome of CTGTAC meeting impact on Modalis’development?
A） FDA’s Cellular, Tissue, and Gene Therapies Advisory Committee (CTGTAC) held ameeting on September 2nd and 3rd, 2021

(https://www.fda.gov/advisory-committees/advisory-committee-calendar/cellular-tissue-and-gene-therapiesadvisory-committee-september-2-3-2021-meeting-announcement#event-information)

This was to discuss the toxicity risks of adeno-associated virus (AAV) vector-based
gene therapy product.
The meeting was held in response to toxicities observed in animals and humans
after administration of gene therapy products including (1) hepatoxicity, (2)Thrombotic Microangiopathies (TMA), (3) Dorsal Root Ganglia neuronal loss, (4)brain MRI abnormalities, and (5)AAV vector integration and oncogenicity. We
understand that the objective of the meeting was to provide recommendations
for strategies to minimize the risk to patients receiving gene therapy products.
This will not significantly affect our development guidelines or timeline as most of
the toxicities are not new to us and we have set up certain countermeasures, but
we will take appropriate action based on our understanding of the authorities'
awareness of the issue.
The Company has been following up on necessary regulatory guidance, reports,
meetings, and the latest papers related to gene therapy in a fairly extensive andtimely manner, including this meeting, so the information can be reflected in the
Company's strategy as needed.
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Copyrights and proprietary to Modalis