TRANSLATION FOR REFERENCE PURPOSE ONLYThis English translation has been prepared for reference purpose only. The Company does not make any
warranty as to accuracy or completeness of translation and assumes no responsibility for this translation orfor direct, indirect or any other forms of damages arising from the translation.

TSE Securities Code: 4565
June 3, 2016
Sosei Group Corporation (the “Company”)
2-4 Kojimachi, Chiyoda-ku, Tokyo
To Shareholders:

Notice of the 26th Ordinary General Meeting of Shareholders
We would first like to extend our deepest sympathies to all those impacted by the recent
earthquakes in Kumamoto and offer our prayers for a quick recovery and reconstruction in
the region.
The Company would like to inform you that the 26th Ordinary General Meeting of
Shareholders of the Company (the “Meeting”) will be held as follows, and would be grateful
if you would attend the meeting.
If you are unable to attend the meeting in person, you may exercise your voting rights inwriting or via the Internet. You are kindly requested to review the appended “Reference
Documents for the Ordinary General Meeting of Shareholders” and exercise your voting
rights by indicating your votes for or against each of the proposals no later than 6:00 p.m.
on Thursday, June 23, 2016.
Yours Sincerely,
Shinichi Tamura
Board Director, Representative Executive Officer and President

1. Date and Time

Friday, June 24, 2016 at 10:00 a.m.

2. Venue

Fuji-No-Ma Hall, 4th Floor, Grand Arc Hanzomon Hotel
1-1, Hayabusa-cho, Chiyoda-ku, Tokyo, Japan

3. Agenda
Matters to be reported：
1. Report on Business Report, Consolidated Financial
Statements, and Reports of Independent Auditors andthe Audit Committee on Consolidated Financial
Statements for the 26th fiscal year (from April 1, 2015
to March 31, 2016)
2. Report on the Non-Consolidated Financial Statements
for the 26th fiscal year (from April 1, 2015 to March
31, 2016)
Matters to be Resolved:
Proposal No. 1
Partial amendments to the Articles of Incorporation
Proposal No. 2
Election of Five (5) Directors
 Please submit the enclosed voting rights exercise form at the reception desk when you
attend the Meeting.
 Notes to the Consolidated Financial Statements and Notes to the Non-Consolidated
Financial Statements are provided to shareholders through disclosure on the Company’s-1-Internet website (http://www.sosei.com/) in accordance with the law and Article 14 of the
Articles of Incorporation.
 Should any revisions be made to the Reference Documents for the Ordinary General
Meeting of Shareholders, Business Report, Non-Consolidated Financial Statements or
Consolidated Financial Statements prior to the date of the Meeting, the Company will
provide notice through disclosure on its website (http://www.sosei.com/).

-2-

Business Report
From April 1, 2015
To March 31, 2016

1. Current State of the Corporate Group(1) Progress and Results of Operations
1)

Group Outlook
The Company and its subsidiaries (the “Group”) aim to become a global
biotechnology company anchored in Japan with a focus on global research anddevelopment and licensing activities. In the fiscal year 2015, the Group’s UK
subsidiary Heptares Therapeutics Ltd. (“Heptares”) was very successful, signingcollaborative pipeline deals with big pharma companies AstraZeneca UK Limited(“AstraZeneca”) and Teva Pharmaceutical Industries Ltd. (“Teva”), as well as a
strategic collaboration with Pfizer Inc. (“Pfizer”) to develop new drugs.
Moreover, as sales of COPD therapies Seebri® (NVA237) and Ultibro® (QVA149)
progressed well this fiscal year, royalty income exceeded that of the previous year
and the Group recorded milestone revenue of 22.5 million dollars in connection withthe regulatory approval of both therapies in the US, the world’s largest
pharmaceutical marketplace.
* Ultibro® Breezhaler® (EU) / Ultibro® Inhalation Capsules (Japan) and Seebri®
Breezhaler® 50mcg (EU) /Seebri® Inhalation Capsules 50 mcg (Japan) are theregistered trademarks of Novartis.
Consolidated operating results for the fiscal year under review are shown in the
below chart.
(JPY Millions)Fiscal Year 2014
Fiscal Year 2015
ChangeRevenue

3,671

8,151

4,480

Gross profit

3,602

8,147

4,544

Operating income

1,043

1,075

32

Net income (loss)

510(1,547)(2,057)(Note) The consolidated financial statements for fiscal year 2014 have been
retroactively adjusted due to change to provisional treatment of accounting forbusiness combination in February 2015.
Revenue and gross profit
Revenue for the fiscal year 2015 totaled 8,151 million yen, an increase of 4,480
million yen (122.0%) compared to the previous fiscal year. This was mainly due tomilestones and increased royalty revenue from Seebri® (NVA237) and Ultibro®
(QVA149), and receipt of upfront payments for out-licensing of Heptares pipelines.

-3-

Operating income
Operating income in the fiscal year 2015 totaled 1,075 million yen, an increase of 32
million yen (3.1%) compared to the previous year. This is due to increase in revenue
and gross profit as described above, and increased R&D expenses and SG&A
expenses corresponding to the revenue increase.
Net income or loss
Net loss totaled 1,547 million yen, a decrease of 2,057 million yen from net income in
the previous year. This is due mainly to a loss recognized as a result of changed fairvalue of the contingent consideration of the business combination and interest
expense accrued on debt while operating income increased and income tax expense
was negative.
Consolidated research and development expenses and selling, general andadministrative expenses for the fiscal year under review are shown in the below chart.
Breakdown of research and development; selling, general and administrative expenses(JPY Millions)

Research and development expenses
Selling, general and administrative
expenses
Personnel expenses
Outsourcing expenses
Other

Fiscal Year2014

Fiscal Year
2015

Change

557

3,916

3,359

2,011

3,293

1,281

425

1,222

796

1,051

697

-353

534

1,373

838

(Note) The consolidated financial statements for fiscal year 2014 have been
retroactively adjusted due to change to provisional treatment of accounting forbusiness combination in February 2015.
Research and development expenses; selling, general and administrative
expenses
R&D expenses during the fiscal year 2015 increased 3,359 million yen from theprevious fiscal year, and totaled 3,916 million yen. Also, SG&A expenses increased
1,281 million yen from the previous fiscal year, and totaled 3,293 million yen. Thiswas mainly due to increased expenditure for expanding Heptares’ pipeline.
Financial expenses
The fiscal year 2015 recorded 4,377 million yen of financial expenses. This is mainly
due to a write-down of 3,816 million yen as a result of changed fair value of thecontingent consideration of the business combination, and 438 million yen of interest
expense on debt.
Matters related to corporate income tax expense
Income tax expense of the fiscal year 2015 was negative 1,750 million yen due torecording Heptares’ deferred tax assets.

-4-2) The results by business segments
The Group is composed of domestic and overseas pharmaceutical businesssegments, both of which are comprised of subsidiaries. Information by businesssegment is as follows.
Domestic pharmaceutical business
Revenue in the domestic pharmaceutical business segment amounted to 197 million
yen. This is mainly due to increased royalties from NorLevo compared to the previous
financial year. Operating income fell by 192 million yen, and the operating loss
totaled 537 million yen.
Progress with the main products under development for the domestic pharmaceuticalbusiness is as follows.
In-licensing
 SO-1105 Oropharyngeal Candidiasis: Phase III ongoing
SO-1105 is an antifungal agent, administered as a muco-adhesive buccal tablet
for the treatment of oropharyngeal candidiasis in immunocompromised patients.
Oropharyngeal candidiasis is an inflammatory mucous membrane disease afflicting
the oral cavity and pharynx. It is caused by infection due mainly to a fungus known as
Candida albicans, and it is commonly found in patients suffering from chronic
diseases such as diabetes and immunocompromised patients such as those
suffering from HIV infection. This drug was originally developed by Onxeo (exBioAlliance Pharma of France), and it has been approved for marketing in 24
European countries, the U.S., and Korea since first obtaining approval in October
2006 in France. The Group believes that this product can also contribute to patientcompliance in Japan and thus obtained the exclusive development and marketingrights for SO-1105 in Japan from Onxeo in May 2011.
Presently, Phase III clinical trials for efficacy and safety of this product are in
progress.The Group has already signed an exclusive domestic commercializationagreement with FUJIFILM Pharma Co., Ltd.
Research and development based on platform technologies
 APNT (Activus Pure Nanoparticle Technology): Nanoparticle technology
APNT is technology differentiable from existing technology in that it enables
pulverizing poorly soluble compounds to nano-sized crystal particles ranging from the
50-nm level to the 200-nm level while minimizing contamination. Making use of thisfeature, APNT demonstrates advantages in applications related to injections,
ophthalmic solutions, and inhalations with poorly soluble compounds, which havebeen very difficult or impossible to achieve to date.
Pre-clinical trials are underway for two development candidates with APNT
applications: APP13002 (infectious eye diseases) and APP13007 (inflammatory eye
diseases).
 Molecular Hiving™: A new method of liquid-phase peptide synthesis
Molecular Hiving™ is a new liquid-phase peptide synthesis technology.
Conventional peptide synthesis technologies include SPPS (solid-phase peptide
synthesis) and liquid-phase peptide synthesis (LPPS) but in general, SPPS is
expensive and produces a low volume; meanwhile LPPS is widely used for mass
production but is unable of synthesizing long-chain peptides. Molecular Hiving™ is-5-

an innovative technology with advantages of both SPPS and LPPS, and can enablehigh-volume, low-cost synthesis. Unlike SPPS, Molecular Hiving™ enables
monitoring of the peptide synthesis process, which leads to production of peptides ofhigher quality compared to those produced by conventional methods.
Pre-clinical trials are underway for two generic development candidates with
Molecular Hiving™ applications: JIT-2001 (cardiovascular diseases) and JIT-1007(orphan diseases).
 Peptune™: novel peptide modification technology
Peptune™ is a peptide modification new element technology; it improveseffectiveness and safety by modifying the steric of the peptide, and is useful for
improving the stability of drugs. Moreover, using this technology enables peptides
and small molecule drugs to be synthesized, so it is expected that peptides with newfeatures will be produced.
In addition, Peptune is expected to enable enhancement of the effectiveness andsafety of lead peptides furnished by Heptares’ technology.
Overseas pharmaceutical business
The revenue of the overseas pharmaceutical business segment totaled 7,954 million
yen, an increase of 4,465 million yen compared to the previous year. The difference
from the previous financial year was attributable to the milestones and increased
royalties from Seebri® (NVA237) and Ultibro® (QVA149), and upfront payments fromout-licensing Heptares’ pipeline. In addition, operating income totaled 1,665 million
yen, down 699 million yen compared to the previous year.
Progress made in the overseas pharmaceutical business is set out below.
Pipeline and Products
 QVA149 COPD: Launched in the EU, Japan, etc.
QVA149 (indacaterol maleate/glycopyrronium bromide); brand names: Ultibro®
Breezhaler® (EU), Ultibro® Inhalation Capsules (Japan); “Ultibro”) is a once-daily
inhaled, fixed-dose combination of the LAMA (glycopyrronium bromide) and the
LABA (indacaterol maleate), indicated as a maintenance bronchodilator treatment torelieve symptoms in patients with chronic obstructive pulmonary disease (COPD).
Ultibro is a once-daily LABA/LAMA approved as first-in-class in over 80 countries
including EU, Japan, Canada, Mexico and Australia and launched in over 40
countries including Germany, Japan and Canada.
In the US, QVA149 was approved in October 2015 as a twice-daily inhaled, fixeddose combination of indacaterol 27.5 mcg and glycopyrrolate 15.6 mcg, for the longterm maintenance treatment of airflow obstruction in patients with COPD, including
chronic bronchitis and/or emphysema, and under the brand name Utibron™
Neohaler®.
 NVA237 COPD: Launched in the EU, Japan, etc
NVA237 (glycopyrronium bromide; brand names: Seebri® Breezhaler® (EU),
Seebri® Inhalation Capsules 50mcg (Japan); “Seebri”), is a LAMA indicated as amaintenance bronchodilator treatment to relieve symptoms in patients with COPD
that was exclusively licensed to Novartis in April 2005 by Sosei and its codevelopment partner Vectura. Seebri has been approved in over 90 countries acrossEurope, Japan, Canada, Latin America, Asia, Australia and the Middle East.
In the US, NVA237 was approved in October 2015 as a twice-daily inhaledmonotherapy for the long-term maintenance treatment of airflow obstruction inpatients with COPD, including chronic bronchitis and/or emphysema, under the brand-6-

name Seebri™ Neohaler® (glycopyrrolate 15.6 mcg).
Under the terms of agreement with Novartis, the approval of QVA149 and NVA237 in
the US had triggered a milestone payment to Sosei of USD 22.5 million. In addition,
Sosei is entitled to receive royalties on global net sales of both products. Royalties
are recognized following the quarter in which the products are sold. On 27 January
2016, Novartis announced that sales of Ultibro and Seebri for 2015 (January –December 2015) were USD 260 million and USD 150 million respectively.
 QVM149 Asthma: Currently undergoing Phase III trial
In December 2015 Novartis announced the first Phase III trial of QVM149, a new
inhaled triple therapy for asthma.QVM149 is a fixed dose, once daily combination of
the LAMA glycopyrronium bromide, the LABA indacaterol, and the inhaledcorticosteroid (ICS) mometasone fuorate. Enrolment of the first patients into the trial
programme has triggered the receipt of a milestone payment to Sosei of USD 3.75
million under the terms of the Licence Agreement. First regulatory filings of QVM149
are planned for 2018.
Drug discovery through platform technology
 StaR® (Stabilised Receptor) technology: Drug discovery platform technology
Heptares StaR® technology is the first in the world that is able to produce GPCRs
with improved thermostability (StaR® proteins).
GPCRs (G protein-coupled receptors) are proteins found embedded in the cell
membrane. They act as a bridge between the interior and exterior environment of thecell. As such, they can transfer information in the form of biochemical signals, andplay a role in many physiological and biological processes, including taste, vision,
smell, autonomic nervous system function, behaviour, immunity etc. GPCRs are,therefore, the most important target molecules in medicine. However, when removed
from the cell membrane, the molecular structure grows unstable and unclear, thus it
has been difficult to perform structure-based discovery research. StaR® technology
advances structural analysis of GPCRs and enables powerful and highly selective
drug discovery based on molecular structure design that, to date, has been very
difficult or impossible to do with confidence.
Heptares has a broad and well-stocked pipeline targeting neurological, immunooncology, metabolic and rare disease areas. In research and development, Heptares
is advancing multiple pipeline products. The company is also actively engaged inpartnerships harnessing its platform technology, and licensing of its in-house pipeline.
Main drugs under development by using platform technology are as follows.
・ Conclusion of an alliance agreement with Regeneron Pharmaceuticals Inc.
(hereinafter, Regeneron, Inc.)
In July 2015, Heptares concluded an alliance agreement with Regeneron Inc.
for the development of novel anti-GPCR antibody drugs. Under this agreement,
Heptares will produce StaR® proteins (stabilized receptors) against multiple GPCRs.
Regeneron Inc. will examine and utilize them as antigens to develop therapeutic
antibodies. The agreement allows Regeneron Inc. to develop, manufacture, anddistribute antibodies produced using the StaR® proteins.
・ Initiation of therapeutic antibody program with MorphoSys
In July last year, Heptares exercised an option to initiate a therapeutic antibody
program arising from the alliance it entered with German company MorphoSys AG
in February 2013. This means that the Heptares pipeline, hitherto focused on low--7-

molecular-weight compounds, is expected to expand to include antibodies.
Moreover, through these alliances, Heptares will continue to explore the possibilityof wide-ranging applications of StaR® technology to antibody therapeutics, not justlow-molecular-weight compounds.
・ Adenosine A2A receptor antagonist with AstraZeneca
In terms of licensing its own pipeline, in August, 2015, Heptares entered into alicensing agreement with the global pharmaceutical company AstraZeneca todevelop immuno-oncology treatments for cancer. AstraZeneca acquired exclusive
global rights to develop, manufacture and commercialize the adenosine A2A
receptor antagonist, HTL-1071, a small molecule immuno-oncology candidate, andpotential additional A2A receptor-blocking compounds. AstraZeneca is exploring
HTL-1071 and additional compounds across a range of cancers, including in
combination with its existing portfolio of immunotherapies. The companies will alsocollaborate to discover further A2A receptor-blocking compounds for development
in cancer immunotherapy.
・ Grant to develop Orexin-1 receptor antagonists
In September last year, Heptares was awarded a research and development
grant of 5.5 million dollars from the National Institute on Drug Abuse (NIDA), one of
the US National Institutes of Health, for its Orexin-1 receptor antagonist research
project. The company is planning to use the grant over the next three years for partof the operating costs of the project to adapt selective antagonists of the Orexin-1
receptor to treat cocaine abuse and addiction.
• Agreement to Discover and Develop Novel Small Molecule CGRP Antagonists for
Treatment of Migraine with Teva
In November 2015, Heptares and Teva Pharmaceutical Industries Ltd enteredinto a licensing and drug-discovery agreement under which Teva received exclusive
global rights to develop, manufacture and commercialize novel, small molecule
calcitonin gene-related peptide (CGRP) antagonists discovered by Heptares for thetreatment of migraine.
・ Strategic Drug Discovery Collaboration with Pfizer
In November 2015, Heptares entered into a strategic drug discovery
collaboration with Pfizer Inc. to research and develop potential new medicines
directed at up to 10 GPCR targets across multiple therapeutic areas. Heptares willuse its proprietary GPCR structure-guided platform to help deliver StaR® proteins,high-resolution crystal structures and other technologies to support the discovery ofpotential novel agents directed to the GPCR targets selected by Pfizer. Pfizer will
be responsible for developing and commercializing any potential therapeutic agents(small molecules or biologics derived from StaR antigens) for each target and will
have exclusive global rights to any potential resulting agents.
Relating to this collaboration, Sosei and Pfizer Seiyaku KK (“Pfizer KK”) haveentered into an equity agreement under which Sosei made a third-party allocationof new shares to Pfizer KK to strengthen collaboration between Sosei and Pfizer
KK as stated in 5) “Financing.”
Significant subsequent events・ Agreement with Allergan Pharmaceuticals International Ltd. (“Allergan”) to develop
and commercialize novel therapeutic drugs for Alzheimer’s and other neurologicaldiseasesIn April 2016, Heptares and Allergan entered an agreement to develop and-8-commercialize novel subtype-selective muscarinic receptor agonists for thetreatment of major neurological diseases including Alzheimer’s disease. Allerganwill receive exclusive rights to develop and commercialize Heptares’ broad clinicaland preclinical portfolio of M1, M4 and dual M1/M4 agonists, including HTL9936
and HTL18318, selective M1 agonists currently in Phase 1 clinical development.
3)
4)

Capital Expenditures
There were no significant capital expenditures during

fiscal year 2015.

Significant Business Combinations, Etc.
There were no applicable events in fiscal year 2015.

5)

Financing
Financing activities in fiscal year 2015 were as follows.
AmountPeriodDetails
ProcuredIssue of new shares by way of
public offering (2,282,500
shares), and issue of new
Septembershares by way of third-party¥8,755 million
2015
allotment in connection withsecondary offering for overallotment (247,500 shares)

Use of Proceeds
Repayment ofborrowings
associated withacquisition of
Heptares

September
2015

Syndicate loan agreementwith six financial institutions,with Mizuho Bank, Ltd. asarranger and agent¥10,000 million Refinancing

December
2015

Issue of new shares by way ofthird-party allotment to Pfizer
Seiyaku K.K., a subsidiary of
Pfizer Inc. (471, 284 shares)

Research anddevelopment on
new¥4,023 million
pharmaceuticals
using Heptares
technologies-9-(2) Assets and Profit/Loss in the previous three fiscal years

Item

Sales revenue
Operating profit
Net income(JPY
millions)(JPY
millions)(JPY
millions)

26th Fiscal
25th Fiscal
Year (current)
Year (ended(endedMarch 2015)
March 2016)

23rd Fiscal
Year (ended
March 2013)

24th Fiscal
Year (ended
March 2014)

1,958

2,069

3,671

8,151

853

756

1,043

1,075

948

1,526

510

‐1,547

Net income pershare - basic

(JPY)

79.97

126.6537.51‐93.60Total asset(JPY
millions)

8,615

14,582

47,83347,354

Total(JPY
shareholders’
7,947
14,354
14,842
23,269millions)
equityNote1) The Company has prepared the consolidated financial statements in accordancewith the International Financial Reporting Standards (IFRS) from the 25th fiscal year.
The figures for the 23rd and 24th fiscal years shown above are also based on IFRS.
2) The Company conducted a 100-for-1 stock split on April 1, 2013. Therefore, net
income per share – basic is calculated assuming that the stock split was conductedat the beginning of the 23rd fiscal year.
3) The consolidated financial statements for the fiscal year ended March 2015 havebeen retroactively adjusted due to change to provisional treatment of accounting forbusiness combination in February 2015.

- 10 -

(3) Issues to be addressed
1)

Realization of growth through early development of innovative drugs
In order to maintain growth and stable revenue in the future, we believe it is important
to continue making upfront investment in promoting late-stage development ofinnovative, large-scale products like COPD therapies, the pillar of the Group’s
revenue, that fill unmet medical needs. By acquisition of Jitsubo and Heptares last
fiscal year the Company reinforced pipelines that contain possible first-in-class or
best-in-class products with innovative mechanisms of action. We will continue
working to facilitate the research and development activities by capitalizing on unique
technologies of each company and to achieve early realization of licensing
opportunities.

2) Diversification and stabilization of funding
Corporate value can be enhanced by seeking out and introducing products that arepromising candidates for development and then expediting their development to laterstages, but this increases R&D costs. We will continue to consider diversifying andstabilizing the methods of fund-raising in response to needs in order to strengthen thefoundations of our business, including through investment in research anddevelopment.
3) Creation of shareholder value
We believes that investing proactively in promising R&D candidates, and making
strategic investment in corporate acquisitions to strengthen the foundation ofmanagement, will increase corporate value and lead to creation of shareholder value.
In the future, the Group intends to proceed with investigating investments, timing, andmethods while taking the financial situation into account. Furthermore, the Groupcurrently considers it important to prioritize internal reserves for upfront investments,
and will endeavor to deliver a return to shareholders while taking into account theincome position.
4) Strengthening corporate governance
The Group is conducting global operations with bases in Japan and the United
Kingdom, and we recognize that one of the most important tasks of management is
to build an effective system of governance that corresponds to the current system ofbusiness operation. Through effective use of outside directors, and by promoting
cooperation among the audit committee, independent auditors and internal audit
department, ensuring the proper exercise of board functions on planning
management strategies and oversight and also fulfilling accountability, we areworking to increase integrity and transparency of management and gain deeper trustfrom stakeholders.

- 11 -

(4) Main Business Activities (as of March 31, 2016)
The Group’s main business is research, development and sales of pharmaceuticalproducts. The business is divided into two segments, namely, domestic
pharmaceutical business and overseas pharmaceutical business, based mainly on
subsidiary location.
Business Segment
Company-wide(shared)Domestic
Pharmaceuticals

Company NameBusiness Description

Sosei Group Corporation

Planning of management strategies ofSosei Group, and the administrative
works entrusted by group companies

Sosei Co. Ltd.

Research and development, sales ofpharmaceutical drugs

Acivus Pharma Co., Ltd.

Drug development throughnanoparticle technology

Sosei CVC Ltd.

Operation of regenerative medicine
funds

Jitsubo Co. Ltd.

Development of peptide drugs,
licensing regarding active ingredient
manufacturing technology for peptides,
peptide drug discovery research

Sosei R&D Ltd.

Licensing and business development
outside Japan

Heptares Therapeutics Ltd.

Structural analysis of GPCRs,
generation of initial lead compounds,
discovery of drug candidates throughthe original StaR® technology

Overseas
Pharmaceuticals- 12 -

(5) Principal Parent Company and Subsidiaries (as of March 31, 2016)
1) Parent company
Not applicable.
2) Subsidiaries
CapitalRatio of
Voting

Sosei Co. Ltd.

Million yen
250

100.0%

Research and development,
sales of pharmaceutical drugs

Sosei R&D Ltd.

Thousand GBP
929

100.0%

Licensing and businessdevelopment outside Japan

Million yen
97

100.0%

Drug development throughnanoparticle technology

Company Name

Activus Pharma Co., Ltd.

Heptares Therapeutics Ltd.

Sosei CVC Ltd.

Jitsubo Co. Ltd.

Thousand GBP
247

Key Business

Structural analysis of GPCRs,
generation of initial lead
100.0% compounds, discovery of drugcandidates through the original
StaR® technology
Operation of regenerative
medicine funds

Million yen
10100.0%

Million yen
153

Development of peptide drug,
licensing regarding active
69.9% ingredient manufacturing
technology for peptides, peptide
drug discovery research

Note: There were no specified wholly owned subsidiaries as of the end of fiscal year underreview.
.
3) Other significant information
Not applicable.

- 13 -

(6) Main Offices and Factories (as of March 31, 2016)
1) Main Sites of the Company
OfficeLocation

Head Office

Chiyoda-ku, Tokyo

London OfficeLondon, UK

2) Main Sites of Subsidiaries
OfficeLocation

Sosei Co. Ltd.

Chiyoda-ku, Tokyo

Activus Pharma Co., Ltd.

Funabashi, Chiba Pref.

Sosei CVC Ltd.

Chiyoda-ku, Tokyo

Jitsubo Co. Ltd.

Koganei, Tokyo

Sosei R&D Ltd.

London, UK

Heptares Therapeutics Ltd.

Hertfordshire, UK(7) Employee Information (as of March 31, 2016)1) Group Employees
Business Segment

Number of
Employees

Change from the end of
the previous Fiscal Year

Domestic Pharmaceuticals

27 (6.3)+3

Overseas Pharmaceuticals

76 (－)+6

Company-wide

13 (1.0)+2(shared)Total
116 (7.3)+11
Note: The number of employees is the number of people employed full-time and does
not include the number of temporary employees, which is listed in parentheses
as the average for the year.
2) Company Employees
Number of
Employees
13 (1.0)

Change from the end of theprevious Fiscal Year
+2

Average Age

Average
Service Years

43.3

4.0

Note: The number of employees is the number of people employed full-time and does
not include the number of temporary employees, which is listed in parentheses
as the average for the year.

- 14 -

(8) Principal Lenders (as of March 31, 2016)
Lenders

Loan AmountMizuho Bank, Ltd. and 5 other financial
institutions participating in syndicate
loan(9) Other Significant Matters on the Current Status of the GroupNot applicable.

- 15 -¥9,000 million

2. Current Status of the Company(1) State of Shares (as of March 31, 2016)
1) Total number of authorized shares
37,344,000 shares2) Total number of outstanding shares
16,855,284 shares
Note: Total number of outstanding shares increased as follows during the fiscal year
2015.
・ New shares issued via public offering (Sept. 16, 2015): 2,282,500 shares・ New shares issued via third-party allotment in connection with thesecondary offering for over-allotment (Sept. 28, 2015):
47,500 shares・ New shares issued via third-party allotment (December 16, 2015):
471,284 shares・ New shares issued by exercise of stock acquisition rights: 80,000 shares
3) Number of shares constituting one unit
100 shares
4) Number of shareholders
18,8205) Major shareholders (Top 10)
Shareholdings
Ownership
Shareholder’s Name(shares)
Stake
Central Tanshi Co., Ltd.
710,000
4.21%
Pfizer Seiyaku K.K.

471,284

2.80%

Daisuke Gomi
STATE STREET LONDON CARE OF
STATE STREET BANK AND TRUST.
BOSTON SSBTC A/C UK LONDONBRANCH CLIENTS-UNITED KINGDOM
Shinichi Tamura

470,000

2.79%

460,000

2.73%

376,100

2.23%

J.P. MORGAN BANK LUXEMBOURG S.A
380578299,800

1.78%

Matsui Securities Co., Ltd.

293,700

1.74%

Japan Trustee Services Bank, Ltd. (trust
account)

278,100

1.65%

Nomura Securities Co., Ltd.

264,407

1.57%

MSCO CUSTOMER SECURITIES

240,300

1.43%

Note: The Company does not own treasury shares.

- 16 -

(2) Stock Acquisition Rights (“Stock Options”), Etc. (as of March 31, 2016)
1) Stock options owned by the Company’s directors and executive officers thatwere issued as compensation for performance of duties
Date of Board
resolution
Number of stock
options
Number and class ofshares for stock
options
Amount of payment
for stock options
The value of asset to
be provided on
exercise of stock
options
Exercise period

14th Stock Options

25th Stock Options

July 17, 2007

September 6, 2010

330

120

33,000 shares of common stock 12,000 shares of common stock
1 yen per stock option

No money payment is made in
exchange for stock option

191,600 yen per stock option(1,916 yen per share)

64,800 yen per stock option(648 yen per share)from July 18, 2010
to July 17, 2017from September 7, 2012
to September 6, 2020
If a beneficiary loses its
position during the exercise
period, the beneficiary is able
to exercise the rights only
during the period prescribed in“Agreement on Allotment ofStock Option”

Holdings by directors
and executive officers

On losing the position as abeneficiary, the beneficiary can
Terms and Conditions
exercise the number of stockfor exercise
option corresponding to theperiod of service
Directors andexecutive
officers(excluding
outsidedirectors)
Outsidedirectors

Number of stock option
330
Number of shares for stock
option33,000
Number of holders
1--

Number of stock option
120
Number of shares for stock
option12,000
Number of holders
1- 17 -

Date of Board
resolution
Number of stock
optionNumber and class ofshares for stock
optionAmount of payment
for stock option
The value of asset to
be provided on
exercise of stock
optionExercise period

27th Stock Options

29th Stock Options

September 6, 2010

November 13, 201

330

288

33,000 shares of common stock 28,800 shares of common stock
1 yen per stock option

261 yen per stock option

64,800 yen per stock option(648 yen per share)

413,000 yen per stock option(4,130 yen per share)from September 7, 2012
to September 6, 2020

from July 1, 2017
to July 30, 2020

Holdings by the directors
and executive officers

If a beneficiary loses its
position during the exercise
period, the beneficiary is able
Terms and Conditions
to exercise the rights only
for exercise
during the period prescribed in“Agreement on Allotment ofStock Option”
Directors andexecutive
officers(excluding
outsidedirectors)
Outsidedirectors

Number of stock option 330
Number of shares for stock
option33,000
Number of holders2- 18 -(Note)

Number of stock option
228
Number of shares for stock
option22,800
Number of holder
1
Number of stock option
60
Number of shares for stock
option6,000
Number of holders
2

30th Stock Options
Date of Board resolution
Number of stock option

November 13, 2015
1,321

Number and class ofshares for stock option

132,100 shares of common stock

Amount of payment for
stock option

281 yen per stock option

The value of asset to beprovided on exercise ofstock option

413,000 yen per stock option(4,130 yen per share)

Exercise period

Holdings by the directors
and executive officers

Terms and Conditions forexercise

From July 1 2018
to June 30, 2021
(Note)

Directors andexecutive officers(excluding outside
directors)

Number of stock option
991
Number of shares for stock option
99,100
Number of holders
3

Outside directors

Number of stock option
330
Number of shares for stock option
33,000
Number of holders
2

Notes:
1. Stock option holders may exercise stock options when the cumulative total of revenue
on the Company’s audited Consolidated Statement of Comprehensive Income reported
in securities reports submitted by the Company for the fiscal years ending March 2016
and March 2017 is ¥23.0 billion or greater.
2. If during the period from the allotment date to the date the stock option exercise period
expires, the average closing price for regular trading of the Company’s shares ofcommon stock on the Tokyo Stock Exchange for any five consecutive trading days falls
below a price that is 50% of the exercise price (amounts less than 1 yen rounded off)even one time, stock options may not be exercised even if the conditions of 1 above aremet.
3. Stock option holders must be directors, executive officers or employees of the Company
or the Company’s affiliates when exercising stock options, provided, however, that thisdoes not apply in cases of retirement due to expiration of a term of office or eaching the
mandatory retirement age, or when there are other legitimate reasons.
4. Stock options may not be exercised by heirs of stock option holders.
5. Stock options may not be exercised if by exercising the options the Company’s total
number of outstanding shares after exercise would exceed the total number ofauthorized shares at that time.
6. Stock options may not be exercised in fractions of one unit.

- 19 -

2) Stock options issued during the fiscal year to employees, etc. as compensation
for performance of duties
29th Stock Options
30th Stock Options
Date of Board
November 13, 2015
November 13, 2015
resolution
Number of stock
732
4,268
options
Number and class
73,200 shares of common stock
426,800 common sharesof shares for stock(100 shares per stock option)(100 shares per stock option)
options
261 yen per stock option

281 yen per stock option

The value of asset
to be provided on
exercise of stock
options

413,000 yen per stock option(4,130 yen per share)

413,000 yen per stock option(4,130 yen per share)

Exercise period

From July 1,2017
To June 30, 2020

From July 1,2018
to June 20, 2021

Terms andConditions forexercise(Note)(Note)

Number of stock options
207
Number of shares for stock
options
20,700
Number of holders
5
Number of stock options
237
Number of shares for stock
options
23,700

Number of stock options
85
Number of shares for stock
options
8,500
Number of holders
2
Number of stock options 2,862
Number of shares for stock
options
286,200

Number of holders

Number of holders

Equity warrants issued
to employees, etc.

Amount of payment
for stock options

Employeesof Company
Directors
andemployeesofsubsidiaries

1281

Notes:
1. Stock option holders may exercise stock options when the cumulative total of revenue
on the Company’s audited Consolidated Statement of Comprehensive Income reported
in securities reports submitted by the Company for the fiscal years ending March 2016
and March 2017 is ¥23.0 billion or greater.
2. If during the period from the allotment date to the date the stock option exercise period
expires, the average closing price for regular trading of the Company’s shares ofcommon stock on the Tokyo Stock Exchange for any five consecutive trading days falls
below a price that is 50% of the exercise price (amounts less than 1 yen rounded off)even one time, stock options may not be exercised even if the conditions of 1 above aremet.
3. Stock option holders must be directors, executive officers or employees of the Company
or the Company’s affiliates when exercising stock options, provided, however, that thisdoes not apply in cases of retirement due to expiration of a term of office or reaching the
mandatory retirement age, or when there are other legitimate reasons.
4. Stock options may not be exercised by heirs of stock option holders.
5. Stock options may not be exercised if by exercising the options the Company’s total
number of outstanding shares after exercise would exceed the total number ofauthorized shares at that time.
6. Stock options may not be exercised in fractions of one unit.

- 20 -

(3) Directors and executive officers (as of March 31, 2016)
1) Directors
Title

Name

Chairman of
the Board

Shinichi Tamura

Director*Takuya Fujii

Responsibility
Member of
Nomination
Committee &Compensation
Committee
Member of
Nomination
Committee &Audit Committee

Director*Declan Doogan

Member ofCompensation
Committee &Nomination
Committee

Director*Peter Bains

Member of Audit
Committee*Tomohiro Tohyama

Member of Audit
Committee &Compensation
Committee

Director

Significant Concurrent Posts
Managing Director, Sosei R&D
Ltd.
Chairman, Promontory
Financial Group Global
Services, Japan, LLC.
Director & CED, Portage
Biotech Inc.
Chairman & Director, Biohaven
Pharmaceutical Holding
Company Limited
Visiting Professor, Kitasato
University (Tokyo)
Director, Heptares Therapeutics
Ltd.
Non-Executive Board Director,
Syngene International Limited
Non-Executive Chairman,
Fermenta Biotech Limited
Director, Heptares Therapeutics
Ltd.
Partner at TMI Associates,
Outside Corporate Auditor,
Nippon Shikizai, Inc.
Outside Director, Avex Group
Holdings Inc.

Notes:
1. The directors listed above with an asterisk (*) are outside directors. The Company
designates Director Takuya Fujii as an independent director in accordance with theregulations of Tokyo Stock Exchange, Inc. and has notified the Exchange accordingly.
2. Director Peter Bains resigned from the Compensation Committee as of February 12,
2016, and Director Shinichi Tamura was selected and appointed to the Compensation
Committee as of the same date.
3. Director Peter Bains resigned from the Audit Committee as of April 1, 2016, andDirector Declan Doogan was selected and appointed to the Audit Committee as ofthe same date.
4. Director Peter Bains was appointed executive officer and representative executive
officer as of April 1, 2016, and he no longer qualifies as an outside director.
5. The Audit Committee has conducted audits in close coordination with the internal
audit department and employees who assist in the performance of duties of theCommittee, and believes it is not essential that a full-time committee member be
selected. Accordingly, a full-time committee member has not been selected.
6. The Company has no special relationships with the companies at which the outside
directors concurrently serve the offices as listed above.

- 21 -

2) Executive officers
Title
Representative
Executive Officer
and President
Executive Officer
and Executive Vice
President

Name* Shinichi Tamura

Hidetoshi Torami

Responsibility

Significant Concurrent
Posts

CEO

Managing Director, Sosei
R&D Ltd.

CFO

Representative Director,
Sosei Co. Ltd
Representative Director,
Sosei CVC Ltd.
Director, Sosei R&D Ltd.

Executive Officer
Chief R&D
Director & CEO, Heptares
and Executive Vice
Malcolm Weir
Officer
Therapeutics Ltd.
President
Executive Officer
Director & CSO, Heptares
and Executive Vice
Fiona Marshall
CSO
Therapeutics Ltd.
President
Notes:
1. The executive officer listed above with an asterisk (*) serves concurrently as adirector.
2. Executive Officer and Executive Vice President Hiromu Ozaki and Executive Officer
and Executive Vice President Akinori Mochizuki retired from their posts due toexpiration of their terms as of the end of the board meeting held on June 23, 2015.
3. Director Peter Bains was appointed as and assumed office of Representative
Executive Officer and COO as of April 1, 2016.
3) Summary of liability limitation agreements
In accordance with Article 427, Paragraph 1 of the Companies Act, the Company
and outside directors have entered into agreements that limit liability for damages asprovided in Article 423, Paragraph 1 of the Act.
The limit on liability for damages applicable to each outside director under theagreements is the minimum amount of liability stipulated in Article 425, Paragraph 1of the Companies Act.
The above agreement between the Company and Director Peter Bains ceased tobe effective as of April 1, 2016 due to his appointment as Executive Officer andRepresentative Executive Officer.
4)

Principles on determining remuneration for individual directors and executive
officers by the Compensation Committee.
i. Principles
It is the Company’s principles to determine executive remuneration in order toattract and retain talented human resources and to incentivize execution ofbusiness strategy for sustainable growth and raising the Company’s corporate
value. The Compensation Committee, which determines executive remuneration, ismade up of two outside directors and one director who serves concurrently as therepresentative executive officer, and it is chaired by an outside director.
The individual remuneration of directors and executive officers is determined by theCompensation Committee with respect to executive officers based on theirindividual roles and evaluations made by the representative executive officer on
their performance and other contribution to the Company in the previous fiscal year

- 22 -

and with respect to the directors and the representative executive officer based on
their individual roles and evaluations on the performance made by theCompensation Committee considering remuneration levels, etc. in relevant
industries in the country where the recipients live and work, with reference to datafrom outside research institutes.
ii. Director remuneration
For director remuneration, base salary (annual pay) is determined based on
individual roles, whether they serve concurrently as executive officers, their
responsibilities as committee members or chairmen and other such factors.
Directors are not paid bonuses or other performance-related remuneration, or
retirement allowances. Stock options are granted in recognition of their service foreach fiscal year.
Directors serving concurrently as executive offices are not paid remuneration as
directors.
iii. Executive officer remuneration
For executive officer remuneration, base salary (annual pay) is determined basedon individual roles and the performance in the previous year. In addition, bonuses
are paid according to the financial results of the Company and the level ofachievement of objectives within their respective areas of responsibilities by usingbase salary (annual pay) as the base amount, and stock options are granted inrecognition of their service for each fiscal year.
5) Total amount of remuneration paid to directors and executive officers(JPY millions)
Number of payees

Amounts paid

Directors(Outside directors)

4
(4)

55
(55)

Executive Officers

3

318

Total

7

374

Notes:
1. In the term under review, four directors, five executive officers (as a result of
retirement of two of them, only three were in office as of the end of the term)and one director serving concurrently as an executive officer performed theirduties for the Company.
2. Payments made to the director serving concurrently as an executive officer isstated in full in the column of executive officers above.
3. The above table does not include the remuneration of ¥150 million paid tothree of the six executive officers serving during the term because the amount
was paid and borne by subsidiaries.
4. The amounts paid shown above include the following.
Remuneration through stock options:
Four directors and two executive officers ¥41 million
5. The above amounts do not include a bonus of ¥78 million paid to one executive
officer in April pursuant to a resolution adopted at a meeting of theCompensation Committee held in February 2016. Also, the above amounts
include bonuses of ¥81 million paid to two executive officers in May pursuant toa resolution adopted at a meeting of the Compensation Committee held in- 23 -

March 2016.
6) Attendance of outside directors at board and committee meetings, and thestate of activities
Name

Takuya Fujii

Declan DooganPeter Bains

Attendance
Board ofDirectors

23 out of 26 (88%)

Nomination
Committee

2 out of 2 (100%)

Audit
Committee

4 out of 4 (100%)

Board ofDirectors

21 out of 26 (81%)

Compensation
Committee

3 out of 3 (100％)

Nomination
Committee

2 out of 2 (100％)

Board ofDirectors

23 out of 26 (88%)

Audit
Committee

4 out of 4 (100％)Compensation
Committee

1 out of 1(100％)- 24 -

Remarks/Activities
Makes necessary
statements as appropriate
during deliberations onboard agenda items from a
specialized standpoint
related to finance, risk
management, etc.,presides at the Nomination
Committee meetings, andask questions and gives
opinions and otherstatements as appropriate
at the Audit Committee
meetings.
Makes necessary
statements as appropriate
during deliberations onboard agenda items from a
specialized standpoint
related primarily to theoverseas pharmaceuticalindustry and bio-industry,
and asks questions andgives opinions and otherstatements as appropriate
at the Audit Committee andCompensation Committee
meetings.
Makes necessary
statements as appropriate
during deliberations onboard agenda items from a
specialized standpoint
related primarily to theoverseas pharmaceuticalindustry and bio-industry,
and asks questions andgives opinions and otherstatements as appropriate
at the Audit Committee andCompensation Committee
meetings.

Name

Attendance

Remarks/Activities

Makes necessary
statements as appropriate
24 out of 26 (92%)
during deliberations onboard agenda items from a
specialized standpoint as
an attorney, leads audits
Audit
4 out of 4 (100％)
Tomohiro
Committee
as the chairman of the
TohyamaAudit Committee, and asks
questions and gives
3 out of 3 (100％)
opinions and other
Compensation
statements as appropriate
Committee
at the Compensation
Committee meetings.
Note: As Director Peter Bains resigned from a member of the Compensation
Committee during the term, the number of the Compensation Committee
meetings held was different from the other outside directors.
Board ofDirectors- 25 -

(4) Independent Auditors
1) Name

Deloitte Touche Tohmatsu LLC

2) Amounts of remuneration, etc.
Amounts paid
Amount of remuneration, etc. payable to theMillion yen
independent auditors for the service related to this47
fiscal year
Total amount of cash and other property benefits
Million yen
payable to the independent auditors by the47
Company and its subsidiaries
Note: 1. In the audit agreement between the Company and the Independent
Auditors, there is no clear distinction between the remuneration for audits
based on the Companies Act and the remuneration for audits based on the
Financial Instruments and Exchange Act, and no distinction can be madein practice, so amounts of remuneration, etc. for the Independent Auditors
for this fiscal year are the total of these the remuneration.
2. The Audit Committee has confirmed the audit plan of the independent
auditors, the state of execution of duties for accounting audits, and thebasis of estimating remuneration estimates, etc. and considered whether
or not audit remuneration is adequate for the implementation of
appropriate audits and as a result has found that remuneration, etc. isappropriate. Therefore, it has given consent to remuneration, etc. of the
independent auditors in accordance with Article 399, Paragraph 1 of theCompanies Act.
3 Of the Company’s significant subsidiaries, Sosei R&D Ltd. and Heptares
Therapeutics Ltd. have been audited by certified public accountants or
auditing firms other than the Company’s independent auditors
3) Contents of non-audit services
The Company pays compensation to Deloitte Touche Tohmatsu LLC for the services
rendered in connection with comfort letter.
4) Policy on determining dismissal or non-reappointment of the independent
auditors
In case there exists the circumstances that would interfere with the appropriate
execution of duties of the independent auditors or that cause the Audit Committee todeem it appropriate to dismiss or not to reappoint the independent auditors, the Audit
Committee determines the proposal for dismissal or non-reappointment of the
independent auditors that is submitted to the Ordinary General Meeting of
Shareholders. Also, when it deems that any cause stipulated in each item of Article
340, Paragraph 1 of the Companies Act apply to the independent auditors, the Audit
Committee dismisses the independent auditors by agreement of all committee
members.
5) Summary of liability limitation agreements
The Company has not entered into an agreement with the Independent Auditors tolimit their liability for damages under Article 423, Paragraph 1 of the Companies Act.

- 26 -

(5) Systems for ensuring the appropriateness of operations and their operating
status
The following provides a summary of systems for ensuring that execution of duties byexecutive officers as resolved by the Company’s Board of Directors conforms to laws,
regulations and the Articles of Incorporation, and of the operating status of thesesystems.
1. Systems for ensuring the appropriateness of operations
1) Matters related to directors and employees who assist in Audit Committee
dutiesEmployees who assist in the duties of the Audit Committee conduct their duties incoordination with the Internal Audit Department in accordance with the directions of
the chairman of the Committee. Evaluations related to performance of these
employees are conducted by the Committee, and transfers of such employees are
subject to approval by the Committee.
2) Matters to be reported by executive officers and employees to the Audit
Committee and other matters related to reports to the Audit Committee• Directors, executive officers, corporate auditors and employees of the Company
and subsidiaries who learn of facts that may cause material damages to theCompany or acts, etc. that are in violation of the law or Articles of Incorporation
shall report them to the Audit Committee, and those who made such report shallnot be treated to his/her disadvantage for reporting such facts or actions.
• The Internal Audit Department regularly reports to the Audit Committee on theimplementation status of internal audits as well as the status and content ofwhistleblowing.
3) Other systems to ensure that audits are conducted effectively by the Audit
Committee• The Internal Audit Department consults in advance with the Audit Committee
regarding internal audit policies and plans, etc. and closely coordinates with theCommittee, which includes holding discussions related to audits.
• The Company promptly processes requests by the Audit Committee member foradvancement or reimbursement of expenses necessary for performance of Audit
Committee duties.
4) System to ensure the performance of duties by executive officers andemployees and by directors and employees of subsidiaries to conform to thelaw and Articles of Incorporation• Compliance with law and adherence to corporate ethics are stipulated as theGroup’s principles of corporate conduct, and every effort is made to raiseawareness of this among all executives and employees, including at subsidiaries.
An independent whistleblower contact is also established andoperated
appropriately.
• The Internal Audit Department conducts internal audits related to performance of
duties at the Company and its subsidiaries.
5) System related to preservation and management of information related toperformance of duties by executive officers
Information related to performance of duties by executive officers is appropriately
prepared, retained and managed in accordance with internal company rules.

- 27 -

6) Rules and other systems related to management of risk of loss
• Specific policies and measures are determined to deal with risks related to theGroup’s business operations, and risk management is appropriately conducted at
the Company and subsidiaries.
• Important management decisions are made after adequate deliberation by the
Board of Directors, etc. and based on the opinions of outside experts asnecessary.
7) System to ensure that performance of duties by executive officers anddirectors, etc. of subsidiaries is conducted efficiently• Operational responsibilities of executive officers and official authority for
respective executives and employees of the Company and subsidiaries areclearly stipulated, and reporting on operational performance and deliberations onimportant matters are conducted with flexibility in accordance with rules.
• System construction is promoted to improve operational efficiency.
8) System to ensure the appropriateness of operations at the corporate groupconsisting of the Company and its subsidiaries• Reports on operational execution at subsidiaries are received in accordance withinternal company rules, and instructions and support related to the establishmentof systems to ensure operational appropriateness are provided to subsidiaries.
• The Internal Audit Department provides instructions and recommendations for
improvements to subsidiaries based on the findings of internal audits ofsubsidiaries.
• Efforts are made to ensure the appropriateness of the Group’s financial reporting,while evaluation, continuance and improvement, etc. of the reporting should beassured.
2. Operational status of systems for ensuring the appropriateness of operations
1) Compliance system
The Group has established a code of corporate conduct that applies to the entire
Group and works to communicate the code to the Group’s executives andemployees. In addition, whistle-blowing incidents are handled appropriately througha whistle-blower hotline established externally, and internal audits are conducted of
the Group’s companies in accordance with the internal auditing plan of theInternational Audit Department.
2) Information retention and management system
The Company has appropriately created, stored and managed minutes of meetingsof the Board of Directors and committees, etc. and other documents related to the
execution of operations in accordance with the rules of document management andother rules.
3) Risk management system
The Company has conducted sufficient deliberations and made business decisions
at meetings of the Board of Directors, by taking into account the opinions of outside
experts, etc., regarding the Group’s significant investment projects and technicalalliances, etc. In addition, the International Audit Department has provided guidanceon the risk management system of the Company and subsidiaries based on the
results of internal audits.
4) System for efficient and appropriate execution of duties- 28 -

The Group clearly stipulates official authority for executives and employees inaccordance with rules of each company, and in order to ensure that the Group’s
operations are carried out efficiently and appropriately, has stipulated the rule ofmanagement of affiliated companies that require reports by subsidiaries to the parent
company and proper supervision and guidance of affiliated companies by the parent
company and the rule has been appropriately implemented. In addition, theCompany has received reports on the performance of business from subsidiaries atmonthly meetings of the Board of Directors. The International Audit Department has
been giving instructions on necessary improvements based on the findings ofinternal audits.
5) System for execution of duties by the Audit Committee
The Audit Committee and the employees who assist in the performance of duties of
the Audit Committee have been coordinating as appropriate with the International
Audit Department in the execution of their duties. Audit Committee members
attended meetings of the Board of Directors and important meetings, including thebusiness strategy meeting and as necessary requested reports from the directors,
executive officers, corporate auditors and employees of the Company and its
subsidiaries. In addition, they received reports on the handling of report madethrough whistle-blower system.

(6) Policy on determination of dividends, etc.
For development of pharmaceutical products by the Group, a great amount of upfront
investment and a long investment period are the prerequisites. Furthermore, it isimportant for us to make strategic investments to expand the pipelines (products
under development) proactively, aiming at securing of stable earnings and businessgrowth.
The Group is to determine how to return profits to shareholders by comprehensively
taking into account the business performance and the financial position andbalancing the situation of strategic investments for business growth and the desired
return of profits to shareholders.

(7) Basic Policy on Company Control
Not applicable.

- 29 -

Consolidated Statement of Financial Position(as of March 31, 2016)(JPY Millions)
Item

Value

Item
liabilities

Non-current assets

Deferred revenue
Tangible fixed assets

Goodwill

270

15,426

Intangible assets

19,313

Deferred tax assets

1,658

Other non-current
assetsTotal of noncurrent
assets21

Deferred tax liabilities

3,688

Conditional prices forbusiness combinations

9,994

Interest-bearing liabilities

6,847

Other non-current
liabilities
Total of non-current
liabilities

74
20,626

Current liabilities
Operating and otherpayables49

36,718Current assets

1,335

Deferred revenue
Corporate income tax
payableInterest-bearing liabilities

1,990

Other current liabilities

42

20
70

Total of current
liabilities

3,458

Total of liabilities

24,084

Shareholders’ equity
Operating and otherreceivables
Other current assets

97

469

Cash and cash
equivalents

10,068

Total of current assets

10,635

Total of assets

47,354

Capital25,955

Capital surplus

14,263Retained earnings-14,184

Other elements ofshareholders’ equity-2,891Equity attributable toowners of the parent
company

23,142

Non-controlling interest
Total of shareholders’equityTotal of liabilities andshareholders’ equity

Note: Amounts less than 1 million yen are rounded off.

- 30 -

126
23,26947,354

Consolidated Statement of Comprehensive Income(

From April 1, 2015
To March 31, 2016)
(JPY Millions)

Item

Value

Sales revenue

8,151

Sales cost

4

Gross operating income or loss

8,147

Other income and expenses
Research and development cost

3,916

Selling, general and administrative expenses

3,293

Other revenues

149

Other expenses

11

Operating income or loss

7,071
1,075

Finance income

4

Finance cost

4,377

Net Income or loss before taxes-3,297

Income tax expense-1,750Net Income or loss

-1,547

Other comprehensive income
Items which may be reclassified into net profit orloss
Exchange differences of foreign operations
Total of items which may be reclassified into net
profit or loss
Other comprehensive income-2,853-2,853-2,853Comprehensive income-2,853-4,400Attribution of net income：Owners of the parent company-1,432

Non-controlling interest-114-1,547

Attribution of comprehensive income：Owners of the parent company-4,285

Non-controlling interest-114

Note: Amounts less than 1 million yen are rounded off.

- 31 --4,400Consolidated Statements of Changes in Equity(

From April 1, 2015
To March 31, 2016)
(JPY Millions)

CapitalOutstanding balance as ofApril1,2015
Vale of retroactive
adjustment after
confirmation of considerationof corporate acquisition
Initial balance after
retroactive adjustment

Capital surplus

Other elementsof shareholders’
Total of Equity
equityattributable to
Exchange
owners of thedifferences ofparent company
foreign
operations

Retainedearnings

19,478

7,774-12,562-37

14,653

-

-

-52

-0

-52

19,478

7,774-12,614-38

14,600Net income or loss--

-1,432--1,432

Exchange differences

-

-

-

-2,853-2,853

Total of comprehensive
income---1,432-2,853-4,285

-

-

-137

-

-137

6,477

6,350

-

-

12,828Dividends
Issuance of new shares
Cost of stock compensation
Total amount of transactions
with owners
Outstanding balance as ofMarch 31, 2016

Outstanding balance as ofApril 1, 2015
Vale of retroactive
adjustment after
confirmation of
consideration of corporate
acquisition
Initial balance after retroactive
adjustment
Net income or loss
Exchange differences
Total of comprehensive
income

－

137

-

-

137

6,477

6,488

-137

-

12,82825,955

14,263-14,184-2,891

23,142

Non-controllinginterest

Total ofshareholders’equity241

14,894

-

-52

241

14,842-114-1,547--2,853-114-4,400

Dividends--137

Issuance of new shares-

12,828

Cost of stock compensation-

137

Total amount of transactions
with owners
Outstanding balance as ofMarch 31, 2016-

12,828126

23,269Note: Amounts less than 1 million yen are rounded off.

- 32 -

Balance Sheet(as of March 31, 2016)(JPY Millions)
Item

Value

Item

Value

AssetsLiabilities
Current liabilities

Current assets

319

Current portion of long-termborrowings

2,000

6,945

Accrued expenses

74

103

Income taxes payable

1

Cash and deposit
Prepaid expenses
OthersFixed assets
Tangible fixed assets
Buildings
Tools, furniture andfixtures

Intangible fixed assets
Software
OthersInvestments and otherassetsInvestments in affiliatedcompanies
Long-term loans
receivable from affiliatedcompanies
Long-term accounts
receivable from affiliatedcompanies
Others2,407

arrearages
7,447

Deposits

8

Bonus payment reserve

1

Others2Long-term borrowing

7,000

399
41,242
5

Fixed liabilities

050

Total liabilities

9,407

Net Assets
Shareholders’ equity

0025,955

Capital surplus

14,072

Legal capital reserve
Retained earnings

40,421

38,975

Capital41,235

1,185

7,000

Other retained earnings

14,072-1,052-1,052Equity warrants

307

Total net assets

39,283

Total liabilities and net
assets

48,690

550
34
-955

Loan loss reserves
Total assets

48,690Note: Amounts less than 1 million yen are rounded off.

- 33 -

Profit and Loss Statement(

From April 1,2015
To March 31, 2016)
(JPY Millions)

Value

Item
Operating income

999

Operating expense

1,726

Operating profit or loss

-726

Non-operating income
Interest income

21

Miscellaneous income

021

Non-operating expense
Cost of issuance of new shares

73

Interest payment

278

Foreign exchange gains

91

Ordinary profit or loss

443
-1,148Extraordinary profit
Extraordinary profits-gain on reversal ofsubscription rights to shares

0

0

0

0

Extraordinary loss
Others

Net income or loss before tax-1,148

Corporate tax, residential tax and enterprise tax
Net profit or loss

-1

-1
-1,147

Note: Amounts less than 1 million yen are rounded off.

- 34 -

Consolidated Statements of Changes
in Shareholders’ Equity(

From April 1, 2015
To March 31, 2016)
(JPY Millions)Shareholders’ equity
Retainedearnings
Other retained
earnings
Retained earnings
carried forward

Capital surplus
CapitalCapital reserve
Outstanding balance as of April
1,2015
Changes in value during the fiscal
year

19,478Dividends
Issuance of new shares

7,594

-

-

6,477

6,477

Total ofshareholders’equity233

27,306

-137

-137

-

12,955

Net income or loss--

-1,147-1,147

Changes in value in items otherthan shareholders’ equity (net)

-

-

-

-

Total of change in value during the
fiscal year
Outstanding balance as of March
31, 2016

6,477

6,477

-1,285

11,66925,955

14,072-1,052

38,975Total
net assets

Equity warrants
Outstanding balance as of April
1,2015
Changes in value during the fiscal
year

175

27,481Dividends--137

Issuance of new share-

12,955

Net income or loss-

-1,147

132

132

132

11,801

307

39,283

Changes in value in items otherthan shareholders’ equity (net)Total of change in value during the
fiscal year
Outstanding balance as of March
31, 2016

Note: Amounts less than 1 million yen are rounded off.

- 35 -

Accounting Audit Report on the Consolidated Financial Statements
Audit Report of the Independent Auditors
May 13, 2016
Sosei Group Corporation
To the Board of Directors
Deloitte Touche Tohmatsu LLC
Designatedlimited liability
employee
Managing
partner
Designatedlimited liability
employee
Managing
partner

CertifiedpublicYasuhiko Endoaccountant•

CertifiedpublicIsao Abeaccountant•

In accordance with the Article 444 (1) of Companies Act, the Auditors have audited theconsolidated financial statements, which are the consolidated statements of financial
position, consolidated statements of comprehensive income, consolidated statements ofchange in equity, and notes on the consolidated financial statements, of Sosei Group
Corporation for the consolidated fiscal year from April 1, 2015 to March 31, 2016.
Responsibility of the management for the consolidated financial statements
The responsibility of the management is the preparation and appropriate presentation of
the consolidated financial statements in accordance with the stipulations of the latter partof Paragraph 1, Article 120 of the Corporate Accounting Rules, which allows thestatements to be prepared excluding some of the disclosure items required under theInternational Financial Reporting Standards. This responsibility includes design andoperation of internal controls judged to be necessary by the management for the
preparation and appropriate presentation of consolidated financial statements that are
free of material misstatements due to fraud or error.
Responsibility of the Auditors
The responsibility of the Auditors is to express an opinion on the consolidated financial
statements from an independent perspective based on the audit that they performed.
The Auditors performed the audit in conformance with generally accepted auditing
standards in Japan. Audit standards require that the Auditors formulate an audit plan andperform the audit on the basis of the plan to acquire reasonable assurance on whether
the consolidated financial statements are free of material misstatement.
The audit involves conducting procedures to obtain audit evidence on the amounts anddisclosures in the consolidated financial statements. The procedures are selected andapplied at the judgement of the Auditors based on an assessment of the risk of material
misstatement in consolidated financial statements due to fraud or error. The purpose of
the audit is not to express an opinion on the effectiveness of internal controls, but the
Auditors in assessing this risk do consider internal controls related to preparation andappropriate presentation of the consolidated financial statements in order to devise audit
procedures that are appropriate for the conditions. In addition, the audit includes
consideration of the overall presentation of the consolidated financial statements,
including an evaluation of the accounting policies and application methods adopted by
the management and the estimates made by the management.

- 36 -

The Auditors believe that audit evidence has been obtained that is sufficient andappropriate as the basis for expressing an opinion.
Audit Opinion
The Auditors find that the aforementioned financial statements, which have been
prepared excluding some disclosure items required by International Financial ReportingStandards in accordance with the stipulations of the latter part of Paragraph 1, Article
120 of the Corporate Accounting Rules, appropriately present on all major points thestatus of assets and income of the corporate group comprised of Sosei Group
Corporation and the consolidated subsidiaries for the period of the consolidated financial
statements.
Interest Relationships
There are no interest relationships that must be disclosed under the provisions of theCertified Public Accountants Act between the Company and the Auditors or the
managing partners.

- 37 -

Accounting Audit Report on the Financial Statements
Audit Report of the Independent Auditors
May 13, 2016
Sosei Group Corporation
To the Board of Directors
Deloitte Touche Tohmatsu LLC
DesignatedlimitedCertifiedliability
publicYasuhiko Endo•
employeeaccount
Managing
ant
partner
DesignatedlimitedCertifiedliability
publicIsao Abe•employeeaccount
Managing
ant
partner
In accordance with the Article 436 (2) (i) of Companies Act, the Auditors have audited thefinancial statements, which consist of the balance sheet, income statement, statement ofchanges in shareholders’ equity and notes on the non-consolidated financial statements,
and the supplementary schedules of Sosei Group Corporation for the 25th fiscal year
from April 1, 2015 to March 31, 2016.
Responsibility of the management for the financial statements, etc.
The responsibility of the management is the preparation and appropriate presentation of
the financial statements and supplementary statements in accordance with auditing
standards generally accepted in Japan. This responsibility includes design and operationof internal controls judged to be necessary by the management for the preparation andappropriate presentation of financial statements and supplementary schedules that are
free of material misstatements due to fraud or error.
Responsibility of the Auditors
The responsibility of the Auditors is to express an opinion on the financial statements andsupplementary schedules from an independent perspective based on the audit performedby the Auditors. The Auditors performed the audit in conformance with generally accepted
auditing standards in Japan. Audit standards require that the Auditors formulate an audit
plan and perform the audit on the basis of the plan to acquire reasonable assurance on
whether the financial statements and supplementary schedules are free of material
misstatement.
The audit involves conducting procedures to obtain audit evidence on the amounts anddisclosures in the financial statements and supplementary schedules. The procedures are
selected and applied at the judgement of the Auditors based on an assessment of the riskof material misstatement in the financial statements and supplementary schedules due tofraud or error. The purpose of the audit is not to express an opinion on the effectivenessof internal controls, but the Auditors in assessing this risk do consider internal controls
related to preparation and appropriate presentation of the financial statements andsupplementary schedules in order to devise audit procedures that are appropriate for theconditions. In addition, the audit includes consideration of the overall presentation of thefinancial statements and supplementary schedules, including evaluations of theaccounting policies and application methods adopted by the management and theestimates made by the management.

- 38 -

The Auditors believe that audit evidence has been obtained that is sufficient andappropriate as the basis for expressing an opinion.
Audit Opinion
The Auditors find that the aforementioned financial statements and supplementaryschedules appropriately present on all major points the status of assets and income forthe period of the financial statements and supplementary schedules in conformance withcorporate accounting standards generally accepted in Japan.
Interest Relationships
There are no interest relationships that must be disclosed under the provisions of theCertified Public Accountants Act between the Company and the Auditors or the managing
partners.

- 39 -

Audit Report of the Audit Committee
Audit Report
The Audit Committee of Sosei Group Corporation (the “Company”) have audited theperformance of duties by directors and executive officers for the 26th fiscal year from
April 1, 2015 to March 31, 2016. The methods and findings are reported as follows.
1. Methods and content of the audit by the Audit Committee
The Audit Committee received reports from directors, executive officers andemployees, etc. on a regular basis of the content of resolutions of the Board of
Directors related to items provided in Article 416, Paragraph 1, Item 1 (b) and (e) of
the Companies Act and of the structures and operation of the systems established inaccordance with the resolutions (internal control systems), requested and expressed
opinions explanations as necessary, and conducted audit as follows.
1) In accordance with the audit policy and the division of responsibilities, etc.
determined by the Audit Committee, each member of the Committee attended
meetings of the Board of Directors and other important meetings, regularly received
reports from directors, executive officers and others on the performance of theirduties, etc., and requested additional explanations as necessary, and reviewed the
documents relating to the important decisions, and investigated the state of thebusiness and assets of the Company in cooperation with the Internal Audit
Department.
Regarding subsidiaries, the Audit Committee sought to achieve a mutual
understanding with and exchanged information with the directors and corporate
auditors, etc. of subsidiaries and received reports on the business from subsidiaries
as necessary.
2) The Audit Committee monitored and verified whether the Independent Auditors
maintained an independence and conducted appropriate audits, received reports
from the Independent Auditors on the performance of their duties, etc., andrequested explanations as necessary. Also, the Audit Committee received
notification from the Independent Auditors that they had established the “Structure
for Ensuring Appropriate Operation” (matters provided in each item of Article 131 of
the Ordinance for Company Accounting) in accordance with the “Quality Control
Standards for Audits” (Business Accounting Council, October 28, 2005).
Based on the aforementioned methods, the Audit Committee examined the business
report and supplementary schedules thereof, non-consolidated financial statements(balance sheet, profit and loss statement, statement of change in shareholders’ equity
and notes thereto) and supplementary schedules thereof, and consolidated financial
statements (consolidated statement of financial position, consolidated statement ofcomprehensive income, consolidated statement of change in equity, and notes
thereto) for the fiscal year under review.
2. Results of Audit(1) Results of audit of business report, etc.
1) The Committee found that the business report and supplementary schedules
accurately present the status of the Company in accordance with the laws,
regulations and the Articles of Incorporation.
2) The Committee did not find any inappropriate conduct related to the execution ofduties by directors or executive officers or any material facts indicating violation oflaw or the Articles of Incorporation.
3) The Committee found that the contents of resolutions of the Board of Directors
related to the internal control systems is appropriate. In addition, the Committee did
not find any matter requiring us to comment on the contents of the business reportor execution of duties by directors or executive officers regarding the internal control
systems.
(2) Results of audit of non-consolidated financial statements andsupplementary schedules- 40 -

The Committee found that the methods and results of the audit performed by the
Independent Auditors, Deloitte Touche Tohmatsu LLC were appropriate.
(3) Results of audit of consolidated financial statements
The Committee found that the methods and results of the audit performed by the
Independent Auditors, Deloitte Touche Tohmatsu LLC were appropriate.
May 13, 2016
Sosei Group Corporation Audit Committee
Audit Committee Chair Tomohiro Tohyama(seal)
Audit Committee
Takuya Fuji
(seal)
MemberAudit Committee
Declan Doogan(seal)
MemberNote: All members of the Audit Committee are outside directors stipulated in Article 2,
Item 15 and Article 400, Paragraph 3 of the Companies Act.

- 41 -

Reference Documents for Ordinary General Meeting of Shareholders
Proposal No. 1

Partial amendments to the Articles of Incorporation

1. Reasons for proposal
It is proposed that the current provisions of Article 15 of the Articles of Incorporation
related to the person who shall convene and act as chairman of the Ordinary
General Meeting of Shareholders be changed in connection with change in the
management team by having two representative executive officers as of April 1,2016 for the purpose of strengthening management system. Also, it is proposedthat errors in Article 8 of the Articles of Incorporation related to the rights ofshareholders owning fractional shares constituting less than one unit be corrected.
2. Content of change
The proposed changes are as follows.
(The underlined portions show the changes.)
Current Provisions
Proposed Changes(Rights of fractional shareholders)((Rights of fractional shareholders)
Article 8 The Company’s shareholders Article 8 The Company’s shareholders
may not exercise rights except the
may not exercise the rights except therights enumerated as follows.
rights enumerated as follows withrespect to the fractional shares lessthan one unit.
(1) Rights stated in each item of Article (1) (Same as current version)
189, Paragraph 2 of the Companies
Act(2) Right to receive allotment of shares (2) (Same as current version)or stock acquisition rights forsubscription(3) Right to request sale of fractional (3) (Same as current version)
shares stipulated in the previous
article(Convocation and chair)
Article 15 The Ordinary General Meetingof Shareholders shall be convened by
the Representative Executive Officer
and President in accordance with aresolution by the Board of Directors,
unless otherwise stipulated by law. If
the office of the Representative
Executive Officer and President isvacant or he/she is unable to act, themeeting shall be convened by anotherexecutive officer in the order to be
determined in advance by the Board of
Directors.
2. The Representative Executive Officer
and President shall preside at an
Ordinary
GeneralMeetingof
Shareholders. If the Representative(Convocation and chair)
Article 15 The Ordinary General Meetingof Shareholders shall be convened andchairedby
theRepresentative
Executive Officer designated by aresolution by the Board of Directors,
unless otherwise stipulated by law.
2. If there are more than one
representative executive officers, therepresentative
executive
officer
determined in advance by the Board of
Directors shall convene and preside at
the meeting as provided in thepreceding paragraph.
3. If the person who shall preside at a
meeting pursuant to the preceding two
paragraphs is unable to act, anotherexecutive officer shall in accordance- 42 -

Executive Officer and President isunable to act, the meeting is chaired byanother executive officer in the order tobe determined in advance by the Boardof Directors.

- 43 -

with the order to be determined inadvance by the Board of Directors
convene and preside at the Ordinary
General Meeting of Shareholders.

Proposal No. 2

Election of Five Directors

The terms of office of all five directors will expire upon conclusion of the Meeting.
Accordingly, in accordance with the decision of the Nomination Committee, the electionof the five candidates of directors is proposed.
The candidates are as shown below.
No. ofName
Career summary, positions, responsibilities
Candidateshares(Date of birth)and significant concurrent posts
No.
owned
Apr. 1978 Joined Fujisawa Pharmaceutical Co.,Ltd (current Astellas Pharma Inc.)
Feb. 1987 Moved to Genentech Limited
Jul. 1989 Representative Director & President,
Genentech Limited
Jun. 1990 Representative Director & CEO of theCompany
Shinichi Tamura
Jun. 2005 Board Director, Representative
376,100
1(9/17/1949)
Executive Officer and President, CEOof the Company (to the present)
Mar. 2012 Managing Director, Sosei R&D Ltd. (tothe present)<Committee membership>
Member of Nomination Committee andCompensation CommitteeMar. 1996 General Manager of Smithkline
Beecham plc. (current Glaxo
Smithkline)
Jan. 2001 Senior Vice President of International
Commercial Development,
GlaxoSmithkline plc.
Jan. 2010 Non-Executive Director, Syngene
International Limited
Apr. 2010 Non-Executive Chairman, Fermenta
Biotech Limited (to the present)Peter Bains
2
Jun. 2010 Board Director of the Company (to the(7/26/1957)
present)
Feb. 2015 Director of Heptares Therapeutics Ltd.
(to the present)
Apr. 2015 Executive Director & CEO of Syngene
International Limited
Mar. 2016 Non-Executive Director of Syngene
International Limited (to the present)<Committee membership>None- 44 -

Candidate
No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent posts
Apr. 1968
Jun. 1974

3

4

Joined Bank of Japan
Obtained MBA at The University ofPennsylvania Wharton School
Dec. 1998 President and CEO, The Nippon Credit
Bank, Limited
Mar. 2001 Chairman & President, March &McLennan Companies
Jan. 2005
Representative of Business Brain
Takuya Fujii
Jun. 2005 Outside Director of the Company (to the(7/5/1945)
present)
Oct. 2005 CEO & President, Promontory Financial
Group Global Services Japan, LLC
Jan. 2016: Chairman, Promontory Financial Group
Global Services Japan, LLC. (to thepresent)<Committee membership>
Member of Nomination Committee and Audit
Committee
Feb. 1978 Joined Duphar BV.
Feb. 1982 Moved to Pfizer Inc.
Feb. 2005 Head of Worldwide Development of
Pfizer Inc.
Oct. 2005: Visiting professor of Kitasato University
in Tokyo (to the present)
Jun..2007 Outside Director of the Company (to thepresent)
Nov. 2009 Interim CEO of Amarin Corporation plc
Sep. 2010 Chief Medical Officer of Amarin
Declan Doogan
Corporation plc(3/22/1952)
Jun. 2013 Director & CEO, Portage Pharma Inc.
(to the present)
Jun. 2013 Chairman & Director, Biohaven
Pharmaceutical Holding Company
Ltd.( to the present)
Feb. 2015 Director, Heptares Therapeutics Ltd. (tothe present)< Committee membership>
Chairman of Compensation Committee, Memberof Nomination Committee

No. ofsharesowned- 45 -

3,600-

Candidate
No.

5

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent posts

No. ofsharesowned

Apr. 1978 Entered Legal Training and ResearchInstitute, Supreme Court of Japan
Apr. 1980 Registered with Dai-ichi Tokyo Bar
Association
Joined Nishimura & Sanada Law Office
May 1984 Mason & Sloane LLP. USA
Feb. 1985 Pollock, Bloom & Dekom, USA
Jun. 1985 Pryor, Cashman, Sherman & Flynn, USA
Aug. 1985 Returned to Nishimura & Sanada Law
Tomohiro Tohyama
Office as a partner(2/21/1950)
Oct. 1990 Partner at TMI Associates (to the present)
Nov. 1999 Outside Corporate Auditor of Nippon
Shikizai, Inc. (to the present)
Jun. 2010 Outside Director of Avex Group Holdings(to the present)
Jun. 2011 Outside Director of the Company (to thepresent)<Committee membership>
Member of Audit Committee and Compensation
Committee

Notes:
1.There are no special conflict of interests between the director candidates and theCompany.
2.Mr. Takuya Fujii, Dr. Declan Doogan, and Mr. Tomohiro Tohyama are candidates foroutside directors.
3 Reasons for selection of the candidates as outside directors(1) Mr. Takuya Fujii has extensive business experience and expertise in risk
management. The Company believes that by leveraging his expertise andexperience and receiving advices from an objective viewpoint on the management it
will be able to further reinforce the management structure, and so proposes his
appointment as outside director. The term of office of Mr. Fujii as an outside director
will be eleven years as of the conclusion of the Meeting. The Company has
designated him an independent director under the rules of the Tokyo Stock
Exchange and notified the Exchange accordingly.
(2) Dr. Declan Doogan has experience of serving as the head of the research anddevelopment division of the world’s largest pharmaceuticals company. The
Company believes that leveraging his expertise and experience related topharmaceutical research and development will serve to further reinforce theCompany’s management structure and so proposes his appointment as outside
director. The term of office of Dr. Doogan as outside director will be nine years as of
the conclusion of the Meeting.
(3) Mr. Tomohiro Tohyama has no experience in corporate management other thanas an outside director or corporate auditor, but he does have extensive experienceand expertise in international legal affairs as a partner at a major law firm in Japan.
The Company believes that by leveraging his expertise and experience andreceiving views and opinions on the Company’s overall management from thisspecialized perspective, the Company will be able to further strengthen the
management and governance structures and so proposes his appointment as an
outside director. The term of office of Mr. Tohyama as outside director will be five
years as of the conclusion of the Meeting.
4. Summary of liability limitation agreements with the candidates- 46 --

(1) In accordance with Article 427, Paragraph 1 of the Companies Act, the Company
entered into with each of Mr. Takuya Fujii, Dr. Declan Doogan, and Mr. Tomohiro
Tohyama an agreement that limits liability for damages under Article 423,
Paragraph 1 of the said Act. The limit on the liability for damages under theagreements is the minimum amount of liability stipulated in Article 425, Paragraph 1of the Companies Act.
The above agreement that the Company entered into with Mr. Peter Bains ceased
to be effective on his assumption of office as executive officer and representative
executive officer on April 1, 2016.
(2) If this proposal is approved at the Meeting, the Company intends to continue theaforementioned liability limitation agreements with Mr. Takuya Fujii, Dr. Declan
Doogan and Mr. Tomohiro Tohyama.

- 47 -

How to Exercise Voting Rights via the Internet
If you exercise your voting rights via the Internet, please do so
following instructions.
1.

in accordance with the

Voting rights may be exercised via the Internet by using the following site forexercising voting rights (“voting site”) that has been specified by the Company. The
site may also be used by mobile phones.
Voting Site URL

http://www.web54.net

The voting site can be accessed using a mobile phone with abarcode reader function by scanning the QR Code® at right. For
operating details, refer to your mobile phone’s user’s manual.
(QR Code is the registered trademark of Denso Wave Inc.)
2.

In exercising voting rights via the Internet, please use the voting code and password
listed on the enclosed Voting Form and register your votes for or against the
proposals by following the instructions on the screen.

3.

Voting rights may be exercised via the Internet until 6:00 p.m. on Thursday, June 23,
2016. We ask your kind cooperation in as early vote as possible.

4.

The following system environment is needed to use the voting site to exercise yourvoting rights via the Internet
For use of the voting site, connection fees charged by the Internet service provider
and applicable communications fees (such as phone rates) charged by the telecom
carrier shall be paid by you.
1) If you exercise voting rights using a computer, you need to have Microsoft®
Internet Explorer 6.0 or a later version as your browser software. For hardware
requirements, the computer needs to be able to run the above browser software.
(Microsoft® is a registered trademark in the United States and other countries ofMicrosoft Corporation of the U.S.)
2) If you exercise voting rights using a mobile phone, the model of phone you use
needs to be capable of 128-bit SSL communication (encrypted communication).
(For security reasons, the site can only be used with models capable of 128-bit
SSL communication (encrypted communication) and so cannot be used with somemodels. It may also be possible to exercise voting rights using the full browser
function found on mobile phones, including smartphones, but this may not be
possible depending on the model of phone. Your understanding on this point isappreciated.

5. If you exercise voting rights redundantly in writing and via the Internet, the votes cast
via the Internet will be regarded as the effective votes.
6. If you exercise voting rights multiple times via the Internet, the final time vote casted
will be regarded as the effective vote.
[Inquiries related to exercise of voting rights via the Internet]
If you have questions regarding exercising voting rights via the Internet, please inquire withthe following contact.

- 48 -

Transfer Agent: Sumitomo Mitsui Trust Bank, Limited[Helpline]
0120-652-031 (9:00 a.m. – 9:00 p.m.)
Inquiries other than on exercising voting rights
0120-782-031 (weekdays, 9:00 a.m. – 5:00 p.m.)[About the Digital Voting Platform]
The digital voting platform managed by Investor Communications Japan, which is partiallyowned by the Tokyo Stock Exchange, may be available for exercising voting rights at the
Meeting by nominal shareholders (including standing proxies) if an application has been
made in advance.

- 49 -

Notes- 50 -

Access to the Shareholder Meeting Venue

Subway access

Grand Arc Hanzomon 4F Fuji-No-Ma
1-1 Hayabusacho, Chiyoda-ku, Tokyo
03-3288-0111
2-min. walk from Hanzomon Station (Exit 1) on Hanzomon Line
8-min. walk from Kojimachi (Exit 1) on Yurakucho Line

- 51 -