This document has been translated from the Japanese original for reference purposes only. In theevent of any discrepancy between this translated document and the Japanese original, the original
shall prevail. Sosei Group Corporation makes no warranty of any nature as to the accuracy of thisEnglish translation and assumes no responsibility for this translation or for direct, indirect or any otherform of damages arising from the translation.
TSE Securities Code: 4565
(Sending date) March 3, 2023

To Our Shareholders:(Starting date of the electronic provision) February 24, 2023
2-1 Kojimachi, Chiyoda-ku, Tokyo

Sosei Group Corporation
Representative Executive Officer,
President and CEO

Christopher Cargill

Notice of the 33rd Ordinary General Meeting of Shareholders
Sosei Group Corporation (the Company) would like to inform you that the 33rd Ordinary General
Meeting of Shareholders of the Company (the “Meeting”) will be held as follows.
For this Meeting, we have taken measure of ”the electronic provision system” of theshareholders meeting documents including reference documents for this Meeting. We haveposted the notice of convening the 33rd Ordinary General Meeting of Shareholders on our website
on the Internet. Please access and confirm the following websites.
【Company’s website】

https://www.soseiheptares.com/?ctry=jp
Please access the above website and select 『株主・投資家情報』『株式情報』『株主総会』from the menu in order.

In addition to the above website, the electronic provision system of the shareholders meeting
documents are also available on the website of Tokyo Stock Exchange(“TSE”).
【TSE website】

https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show
Please access the above website, enter and search for 『そーせいグループ』 in 『銘柄名（会社名）』 or our
securities code 『4565』 in 『コード』 and search for 『基本情報』 and 『縦覧書類/PR情報』 in order, and confirm
from the 『株主総会招集通知/株主総会資料』 column in 『縦覧書類』.

If you are unable to attend the Meeting, you may exercise your voting rights via the Internet orin writing (by mail). Please review the reference documents for the Meeting and exercise yourvoting rights by 5:00 p.m. on Wednesday, March 22, 2023 refering to "Exercise of Voting Rights."
Yours sincerely
Date and TimeThursday, March 23, 2023 at 10:00 a.m. (Reception start: 9:30 a.m.)

Venue

Fuji-No-Ma Hall, 4th Floor, Hotel Grand Arc Hanzomon
1-1, Hayabusa-cho, Chiyoda-ku, Tokyo, Japan
Please refer to “Access to Meeting of Shareholders Venue” at the end.

AgendaMatters to bereported:

Matters to be
Determined in
Convocation“Notice on
exercising voting
rights”

1. Business Report, Consolidated Financial Statements, andReports of Independent Auditor and the Audit Committee on theConsolidated Financial Statements for the 33rd fiscal period (fromJanuary 1, 2022 to December 31, 2022)
2. Report on the Non-Consolidated Financial Statements for the 33rd
fiscal period (from January 1, 2022 to December 31, 2022)

Matters to be
Proposal - Election of Nine (9) Directors
resolved:
1. If you do not indicate whether you approve or disapprove of a proposal on the Voting
Rights Exercise Form that you have sent back to us, you will be deemed to have
Approved it.
2. If the voting rights are execised both via the Internet and in writig, the voting rights
execised via the Internet shall be treated as valid.
3. If the voting rights are exercised twice or more times via the Internet, the latest

1

exercise thereof shall be treated as valid.
4. If you intend to engage in split voting, please notify our sock transfer agent to that
effet and state the reasons for split voting at least three days prior to the General
Meeting of Shareholders.
Above◎ If you attend the Meeting, please present the Voting Rights Exercise Form sent with this notice ofconvocation to the receptionist at the venue.
◎ Regarding the shareholders meeting documents provided by the electronic provision system, the following
matters are not included in the documents delivered to shareholders who request delivery of documents
pursuant to the provisions of laws and regulations and Article 14 of the Company's Articles ofIncorporation.
・Of the business report “Current State of the Corporate Group”
Progress and Results of Operations
Assets and Profit/Loss in the previous three fiscal years
Issues to be addressed
Main Business Activities
Main Offices and Factories
Employee Information
Principal Lenders
Other Significant Matters on the Current Status of the Group・Of the business report “Current Status of the Company”
State of Shares
Stock acquisition rights (“stock options”), etc.
Independent Auditors
Outline of the systems for ensuring the appropriateness of operations and their operating status
Policy on determination of Dividends, etc.
Policy on the conduct of persons influencing decision on the Company's financial and business policies

・Consolidated Financial Statements（Consolidated Balance Sheet, Consolidated Statement of Profit or
Loss and Other Comprehensive Income, Consolidated Statement of Changes in Equity and Notes to
the Consolidated Financial Statements）
・ Non-Consolidated Financial Statements （ Non-Consolidated Balance Sheet, Non-Consolidated
Statement of Profit or Loss, Non-Consolidated Statement of Changes in Equity and Notes to the NonConsolidated Financial Statements）
・Audit Report（Accounting Audit Report on the Consolidated Financial Statements, Accounting Audit
Report on the Financial Statements and Audit Report of the Audit Committee）
Therefore, the matters described in the document are part of the business report, financial statements
and consolidated financial statements audited by the Audit Committee and Independent Auditor in
preparing the audit report.
◎ In the event that matters described in the shareholders meeting documents provided by the electronic
provision system is amended, we will post the amendment on Company’s website and TSE website aboveon the Internet.
Information on meetings with shareholders
・In consideration of the health and safety of our shareholders, we will hold the meeting after
taking appropriate measures to prevent the spread of infection.
・ After the general meeting of shareholders, we will hold an informal gathering forshareholders at the same venue.We would like to hear various valuable opinions from ourshareholders, whom we rarely get to meet on a daily basis, so we are waiting for you witha light meal.

2

Exercise of Voting Rights
You may exercise your voting rights using one of the following three methods.
Exercising voting rights on the Internet
Please use a personal computer or smartphone to access the voting website designated by
the Company. Please enter the “Voting code” and “Password” printed on the Voting Rights
Exercise Form sent with this notice to the receptionist at the venue and exercise your voting
rights by following the instructions displayed on the screen.
Exercise due date: No later than 5:00 p.m. on Wednesday, March 22, 2023
Exercising voting rights in writing (by mail)Please indicate your approval or disapproval of each proposal on the Voting Rights Exercise
Form sent with this notice and post it without affixing postage stamps.
Exercise due date: To be received no later than 5:00 p.m. on Wednesday, March 22, 2023
For those attending the Meeting in person
Please submit the Voting Rights Exercise Form at the reception desk at the venue.
Date and Time:Thursday, March 23, 2023 at 10:00 a.m. (Reception start: 9:30 a.m.)
Venue:
Fuji-No-Ma Hall, 4th Floor, Hotel Grand Arc Hanzomon
1-1, Hayabusa-cho, Chiyoda-ku, Tokyo, JapanThe Company designated voting website
https://www.web54.net
You can connect to the voting website via smartphone.
<Smart Vote>
Smartphone users may log in to the voting website without entering the “voting code” and“password” by scanning the QR Code printed on the Voting Rights Exercise Form. For
details, please refer to the leaflet sent with this notice.
<Cautionary matters>
 Each shareholder shall bear any fees for accessing the voting website (Internet connection
fees, communications fees, etc.).
Inquiries related to exercise of voting rights via the Internet
The Sumitomo Mitsui Trust Bank, Limited, Stock Transfer Agency Web Support Helpline
Telephone: 0120-652-031 (toll-free in Japan only; hours: 9:00 a.m. to 9:00 p.m.)
To institutional investors
You may use the Electronic Voting Platform operated by ICJ Inc., as a method of exercising
your voting rights.

3

Measures to prevent the spread of COVID-19
This Meeting will give priority to the health and safety of Shareholders and the prevention of the
spread of COVID-19, and we appreciate your understanding and cooperation as follows.

1.Request to Shareholders
・Shareholders who are feeling unwell or have a fever of 37.5 degrees Celsius or higher, areasked to take care of yourself at home and not attend the meeting. We also request that you
exercise your voting rights in advance via the internet or by post.
・Shareholders attending the meeting are asked to collect epidemic information and checktheir own physical condition, and to take precautions to prevent infection, such as wearing amask.

2.On our response
・Staff shall attend and repond wearing masks.
・Hand sanitizers will be available at the reception and in the venue.
・Please refrain from entering or we may ask Shareholders to leave the venue if they
are deemed to hinder our measures to prevent the spread of COVID-19 infection.

We are pleased to inform you of any significant changes in the management of the Meeting on
our website (https://www.soseiheptares.com/?ctry=jp).

4

Proposal

Election of Nine (9) Directors

The term of office of all of current eight (8) directors will expire at the conclusion of the Meeting.
To strengthen the function of the Board of Directors, in accordance with the decision by the
Nomination Committee, the election of total nine (9) directors which includes one (1) new external
director shall be proposed. Our Nomination Committee shall evaluate candidates for directors on
the required skills, including management experience, expertise, career and achievements, andthe status of concurrent assignments with other companies. The level of performance of duties,
mental and physical health, and compliance awareness are also considered for election.
Candidate selection shall be made to realize a high degree of diversity in gender, nationality andso on. The candidates are as follows:
Number oftimes
CandidateCurrent positions andattended
Name
AttributeNo.
responsibilities at the Company
Board ofDirectors
Meetings
Chairman of the Board,
Chair of the Nomination
Re20/20
1
Shinichi Tamura
appointed
Committee, Member of thetimes
Compensation Committee
Director,
Representative Executive Officer,
14/16
Re2
Christopher Cargill President & CEO
appointed
times
Member of the Compensation
Committee
External Director,
Chair of the Audit Committee,
Re20/20
External Ind
3
Tomohiro Tohyama Member of the Compensation
appointed
times
Committee

4

Kuniaki Kaga

5David Roblin

6

Noriaki Nagai

7

Rolf Soderstrom

8

Miwa Seki

9

Eiko Tomita

External Director,
Member of the Audit Committee
External Director,
Chair of the Compensation
Committee,
Member of the Nomination
Committee
External Director,
Member of the Nomination
Committee,
Member of the Audit Committee
External Director,
Member of the Compensation
Committee,
Member of the Audit Committee,
External Director,
Member of the Nomination
Committee,
Member of the Audit Committee―

5

ReExternal
appointed

Ind

20/20

ReExternal
appointed

Ind

19/20

ReExternal
appointed

Ind

20/20

ReExternal
appointed

Ind

17/20

ReExternal
appointed

Ind

13/16
times

Newly
External
appointed

Ind

―

times

times

times

times

Reappointed

Candidate as Reappointed Director

Newly appointed

Candidate as newly appointed Director

ExternalInd※

Candidate as External Director
Independent Director designated in accordance with the listing regulations ofstock exchanges

Mr. Christopher Cargill and Ms. Miwa Seki were elected as Directors at the 32nd Ordinary General
Meeting of Shareholders held on March 24, 2022, and accordingly, the numbers of times they attended
the Board of Directors meetings held since assuming office are stated in.

6

Reference

The expertise of the nominated director and the committees they are scheduled to become
members of, if agenda proposals are approved, are as follows. Note that the table below does
not necessarily represents all the expertises that the nominated directors have.
Skill

Name

Term ofofficeShinichi Tamura

Corporate
management

Technology/
R&D

Businessstrategy/Marketing

33 years●●●

Christopher Cargil

1 year●TomohiroTohyama

12 years●

Kuniaki Kaga

5 years

●

●

●

Audit

David Roblin

5 years●●●

Nomination/
Compensation

Noriaki Nagai

4 years

Rolf Soderstrom

3 years

Miwa Seki

1 yearEiko Tomita－●

Finance/
Accounting

Legal

Scheduled totake officeNomination/
Compensation●

Compensation●

Nomination/
Audit

●

●

●

●

●

Compensation/
Audit

●

●

●

Nomination/
Audit

●

7

●

●

Compensation/
Audit

－

CandidateNo.

1
Reappointed

No. of shares owned:

Shinichi Tamura(Born 17/Sep/1949)

1,172,152

Term of office as Board Director:

33 years

Attendance at Board Meetings:

20/20 times[Career summary, and positions and responsibilities at the Company]
Apr. 1978
Feb. 1987
Jul. 1989
Jun. 1990
Jun. 2005
Mar. 2012
Jun. 2016
Jan. 2019
Sep. 2021
Mar. 2022

Joined Fujisawa Pharmaceutical Co., Ltd.
(current Astellas Pharma Inc.)
Joined Genentech Inc.
Representative Director & President, Genentech Limited
Representative Director & CEO of the Company
Board Director, Representative Executive Officer and President, CEO of
the Company
Managing Director, Sosei R&D Ltd.
Chairman of the Board of the Company
Representative Executive Officer and Executive Chairman of theCompany
Representative Executive Officer, Chairman, President and CEO of theCompany
Representative Executive Officer, CEO of the Company
Chairman of the Board of the Company (to the present)<Committee membership>
Chair of the Nomination Committee; Member of the Compensation Committee[Significant concurrent posts]
N/A
Reason for selection of the candidate as Director
Mr. Shinichi Tamura is the founder of the Company and has led the Company's businessexpansion by utilizing his extensive experience in corporate management in the pharmaceuticalindustry. Since March 2022, he has concentrated on his role as Chairman of the Board of Directors.
For further development of the Company's business, the Company proposes that he continue tobe elected as a Director.

8

CandidateNo.

2
Reappointed

Christopher Cargill

No. of shares owned:(Born 3/Jan/1984)

21,050Term of office as Board Director:

1 yearAttendance at Board Meetings:

14/16 times[Career summary, and positions and responsibilities at the Company]
Feb. 2009
Apr. 2010
Sep. 2017
Jun. 2018
Jun. 2018
Nov. 2018
Jan. 2019
Apr. 2021
Sep. 2021
Mar. 2022
Aug. 2022

Joined KPMG
Joined J.P. Morgan Chase & Co
Head of IR and Corporate Communication Dept of the Company
Interim CFO of the Company
Director, Sosei R&D Ltd.
Executive Officer and Executive Vice President, CFO of the Company
Director, Heptares Therapeutics Ltd. (to the present)
Executive Officer, COO, CFO of the Company
Executive Officer, CFO of the Company
Representative Executive Officer and President, CEO of the Company(to the present)
Director, Sosei Group USA Inc. (to the present)<Committee membership>
Member of the Compensation Committee[Significant concurrent posts]
Director, Heptares Therapeutics Ltd.

Reason for selection of the candidate as Director
Mr. Christopher Cargill has extensive expertise in finance and accounting based on his businessexperience at a major overseas financial institution, etc. Since joining the Company in 2017, he
was responsible for formulating business strategies as CFO and has demonstrated a high levelof business management skills as a Director of Heptares Therapeutics Ltd., since 2019. Since
March 2022, he has been Representative Executive Officer, President & CEO of the Company.
It is expected that he demonstrates a high level of expertise with his understanding the overallmanagement of the Company. Thus, the Company proposes that he continue to be elected as a
Director.

9

CandidateNo.

3

Tomohiro Tohyama Term of office as External Director:

Reappointed[Career summary, and positions and responsibilities at the Company]

External
Independent

No. of shares owned:(Born 21/Feb/1950)

Apr. 1978
Apr. 1980
May 1984
Feb. 1985
Jun. 1985
Aug. 1985
Oct. 1990
Nov. 1999
Jun. 2010
Jun. 2011
May 2016
May 2016
Jun. 2016

Attendance at Board Meetings:

39,98212years
20/20 times

Entered Legal Training and Research Institute, Supreme Court of Japan
Registered with Dai-ichi Tokyo Bar Association
Joined Nishimura & Sanada Law Office
Mason & Sloane LLP., USA
Pollock, Bloom & Dekom, USA
Pryor, Cashman, Sherman & Flynn, USA
Returned to Nishimura & Sanada Law Office as a partner
Partner (one of founders) at TMI Associates (to the present)
External Corporate Auditor, Nippon Shikizai, Inc.
External Director, Avex Group Holdings Inc.
External Director of the Company (to the present)
External Director, Member of the Audit and Supervisory Committee,
Nippon Shikizai, Inc. (to the present)
External Director, Trust Capital Co., Ltd.
Outside Statutory Auditor , WOWOW Inc.

<Committee membership>
Chair of the Audit Committee; Member of the Compensation Committee[Significant concurrent posts]
Partner at TMI Associates
External Director and Audit and Supervisory Committee Member of Nippon Shikizai,
Inc.
Reason for selection of the candidate as External Director and summary of expectedroles
Mr. Tomohiro Tohyama has extensive experience and expertise in international corporate legal
affairs as a partner at a major law firm in Japan, whilst he has no experience of being involvedin corporate management other than as an External Director and Corporate Auditor. He has
been actively providing useful advice and suggestions on overall management by utilizing his
expert perspective on corporate management and legal affairs. It is expected that his
performance of these important roles will further strengthen the oversight of the management
and the governance system, and thus the Company proposes that he continue to be elected as
an External Director.

10Candidate
No.

4
Reappointed

No. of shares owned:

Kuniaki Kaga

Term of office as External Director:(Born 1/Sep/1951)

Attendance at Board Meetings:

29,3225 years
20/20 times[Career summary, and positions and responsibilities at the Company]

External

Apr. 1975

Independent

Jun. 2004
Oct. 2005

Jun. 2006

Jun. 2009
Jun. 2010

Apr. 2012
Apr. 2014
Feb. 2015
Jun. 2018
Jan. 2021

Joined Mitsubishi Kasei Kogyo Kabushiki Kaisha (current Mitsubishi
Chemical Corporation)
Deputy Director, Head of Healthcare Planning Department, Mitsubishi
Chemical Corporation
Deputy Director, Mitsubishi Chemical Holdings Corporation (current
Mitsubishi Chemical Group Corporation)
Head of Healthcare Strategy Office
Executive Officer and Head of Healthcare Strategy Office, Mitsubishi
Chemical Holdings Corporation
Executive Officer, Head of Healthcare Business Domain, and General
Manager of Healthcare Planning Office, Healthcare Business Domain,
Mitsubishi Chemical Corporation
Board Director, Mitsubishi Tanabe Pharma Corporation
Representative Director, Managing Executive Officer, General Manager
of International Business Department, Mitsubishi Tanabe Pharma
Corporation
Representative Director, Senior Managing Executive Officer, General
Manager of Research Division and International Business Department,
Mitsubishi Tanabe Pharma Corporation
President and Representative Director, Life Science Institute, Inc.
Board Director, Mitsubishi Tanabe Pharma Corporation
Board Director, The KAITEKI Institute, Inc.
President and Representative Director, The KAITEKI Institute, Inc.
External Director of the Company (to the present)
External Director, SUSMED, Inc (to the present)<Committee membership>
Member of the Audit Committee[Significant concurrent posts]
External Director, SUSMED, Inc
Reason for selection of the candidate as External Director and summary of expected
roles
Mr. Kuniaki Kaga has held several senior positions at leading Japanese chemical andpharmaceutical companies. He has been actively providing useful advice and suggestions on
overall management by leveraging his expertise in corporate management, technology,
research and development, business strategy and marketing. It is expected that his
performance of these important roles will further strengthen the oversight of the management
and the governance system, and thus the Company proposes that he continue to be elected as
an External Director.

11

Candidate
No.

5
Reappointed
External
Independent

No. of shares owned:

David Roblin

2,022
5 years

Term of office as External Director:(Born 25/Sep/1966)

Attendance at Board Meetings:

19/20 times[Career summary, and positions and responsibilities at the Company]
Apr. 1991
Jun. 1997
Jun. 2008
Apr. 2011
Sep. 2013
Feb 2014
Jun. 2015
Feb. 2017
Feb. 2017
Jun. 2018
Mar. 2020
Apr. 2022
Apr. 2022

Medical practice at St George’s and St Bartholomew’s Hospital, London
Head of Therapy Area for Anti-Infectives, Bayer Pharma AG
Senior Vice President, Head of Research, Site Head, Chief Medical
Officer (CMO), Europe R&D, Pfizer Inc.
CMO, Creabilis
Honorary Professor, Swansea University, School of Medicine (to thepresent)
COO, The Francis Crick Institute
Honorary Professor of Translational Medicine, St George’s Hospital
Medical School (to the present)
Chairman of Scientific Translation, The Francis Crick Institute (to thepresent)
President of R&D, Summit Therapeutics
External Director of the Company (to the present)
COO and CEO JuvRX, Juvenescence Ltd
CEO, Relation Therapeutics (to the present)
Chair of Board, Centauri Therapeutics (to the present)<Committee membership>
Chair of the Compensation Committee; Member of the Nomination Committee[Significant concurrent posts]
Chairman of Scientific Translation, The Francis Crick InstituteCEO, Relation Therapeutics Limited
Chair of Board, Centauri Therapeutics Limited
Reason for selection of the candidate as External Director and summary of expected
roles
Dr. David Roblin gained clinical experience as a physician, and later followed with adistinguished career in the pharmaceutical industry, most notably as SVP and Head of R&D in
Europe for a major pharmaceutical company. He has been actively providing useful advice andsuggestions on R&D in general, utilizing his expert perspective on corporate management,
technology, R&D, business strategy and marketing. It is expected that his performance of theseimportant roles will further strengthen the oversight of the management and the governancesystem, and thus the Company proposes that he continue to be elected as an External Director.

12

Candidate
No.

6
Reappointed
External
Independent

No. of shares owned:

Noriaki Nagai

Term of office as External Director:(Born 1/Dec/1957)

Attendance at Board Meetings:

25,8884 year
20/20 times[Career summary, and positions and responsibilities at the Company]
Apr. 1981
Sep. 1998
Jun. 2000
Apr. 2006
Apr. 2010
Apr. 2011
Jun. 2013
Jun. 2013
Apr. 2014
Apr. 2015
Mar. 2019

Joined Nomura Securities, Co., Ltd. (NSC)
Managing Director, Head of European Administration Division of
Nomura International plc
General Manager, Legal Dept., NSC
Executive Officer in charge of Corporate, Nomura Holdings, Inc. (NHI)
Executive Officer in charge of Legal, NSC
Executive Managing Director in charge of corporate planning, legal andsecretary, NSC
Executive Officer and Chief Legal Officer, NHI
Executive Managing Director in charge of legal and secretary, NSC
External Director, Japan Securities Depository Center, Inc.
External Director, Japan Securities Clearing Corporation
Executive Officer in charge of Corporate and Chief Legal Officer, NHI
Executive Managing Director in charge of planning management, NSC
Professor of Law, Doshisha University
External Director of the Company (to the present)<Committee membership>
Member of the Nomination Committee, Member of the Audit Committee[Significant concurrent posts]
N/A
Reason for selection of the candidate as External Director and summary of expected
roles
Mr. Noriaki Nagai held key positions in the corporate division of a major securities company andwas a university professor at faculty of law. He has been actively providing useful advice andsuggestions to the Company's management in general, utilizing his expertise in businessstrategy and marketing, finance and accounting, and legal affairs. It is expected that his
performance of these important roles will further strengthen the oversight of the management
and the governance system, and thus the Company proposes that he continue to be elected as
an External Director.

13

Candidate
No.

7
Reappointed
External
Independent

Rolf Soderstrom

No. of shares owned:
Term of office as External Director:(Born 29/Jul/1965)

Attendance at Board Meetings:

7,425
3 years
17/20 times[Career summary, and positions and responsibilities at the Company]
Jan. 1988
Dec. 2000
Jun. 2002
Jan. 2004
Aug. 2007
Dec. 2008
Jul. 2019
Mar. 2020
Sep. 2020
Jul. 2021

Joined PricewaterhouseCoopers
Corporate Finance Director, Cable & Wireless plc
External Director, MobileOne Ltd. (current M1 Ltd.)
Divisional Finance Director, Cobham plc
Chief Financial Officer, Protherics plc (current BTG plc)
Chief Financial Officer, BTG plc
Senior Independent Director, Ergomed plc
External Director of the Company (to the present)
Non Executive Director, BioPharma Credit plc (to the present)
Chief Financial Officer, Syncona Investment Management Limited (tothe present)<Committee membership>
Member of the Compensation Committee, Member of the Audit Committee[Significant concurrent posts]
Chief Financial Officer, Syncona Investment Management Limited
Non Executive Director, BioPharma Credit plc
Reason for selection of the candidate as External Director and summary of expected
roles
Mr. Rolf Soderstrom is a qualified chartered accountant in the United Kingdom and has extensive
experience and achievements in M&A, risk management and governance as a leader in financerelated matters for companies in Europe, North America and Asia. For the past 15 years he has
worked in various companies in the Life Sciences sector. He has been actively providing usefuladvice and suggestions on overall management by utilizing his expertise in corporate
management, business strategy and marketing, finance and accounting. It is expected that his
performance of these important roles will further strengthen the oversight of the management
and the governance system, and thus the Company proposes that he continue to be elected as
an External Director.

14

Candidate
No.

8
Reappointed
External
Independent

Miwa Seki

No. of shares owned:
Term of office as External Director:(Born 25/Feb/1965)

Attendance at Board Meetings:

1 year
13/16 times[Career summary, and positions and responsibilities at the Company]
Apr. 1988
Apr. 1989
Sep. 1993
Feb. 1997
Jan. 2003
Apr. 2015
Jun. 2018
Jun. 2020
Apr. 2021
May.2021
Mar. 2022

Joined DENTSU INC.
Joined Smith Barney
Joined Morgan Stanley
Joined Clay Finlay Limited
General Manager, Tokyo Branch, Clay Finlay Limited
Associate Professor, Faculty of Foreign Studies, Kyorin University
External Director, World Co., Ltd. (to the present)
External Director, DAIWA HOUSE INDUSTRY CO., LTD. (to thepresent)
Specially Appointed Associate Professor, Faculty of Foreign Studies,
Kyorin University
General Partner MPOWER PARTNERS FUND (to the present)
External Director of the Company (to the present)<Committee membership>
Member of the Nomination Committee, Member of the Audit Committee[Significant concurrent posts]
General Partner MPOWER PARTNERS FUND
External Director, World Co., Ltd
External Director, DAIWA HOUSE INDUSTRY CO., LTD.
Director, Yanai Tadashi Foundation
Director, Fast Retailing Foundation
Reason for selection of the candidate as External Director and summary of expectedroles
Ms. Miwa Seki served as head of Japan at a foreign capital financial institution and is currently afounding partner of an ESG-oriented investment fund. She has been actively providing usefuladvice and suggestions on overall management by utilizing her expert perspective on corporate
management, business strategy and marketing, and finance/accounting. It is expected that her
performance of these important roles will further strengthen the oversight of the management
and the governance system, and thus the Company proposes that she continue to be elected as
an External Director.

15

Candidate
No.

9
Newly appointed
External
Independent

Eiko Tomita(Born 20/Apr/1961)

No. of shares owned:-

Term of office as External Director:-

Attendance at Board Meetings:-[Career summary, and positions and responsibilities at the Company]
Apr. 1984
Sep. 1994
Sep. 1999
Nov. 2000
Sep. 2006
Apr. 2007
Nov. 2017

Joined Eisai Co. Ltd.
Joined IBRD Japan Corporation
Joined Monsanto Japan Ltd. (current Pfizer Inc.)
Joined AstraZeneca K.K.
Joined Pfizer Japan Inc.
Joined Bristol-Myers Squibb K.K.
Bristol-Myers Squibb
Vice President, Global Regulatory Sciences Intercontinental
responsible for Japan, Korea, Taiwan and Intercontinental (Australia,
Brazil, Turkey, India, Middle East and South America, etc.)
Mar. 2020 Bristol-Myers Squibb
Vice President, Global Regulatory Sciences Intercontinental
responsible for Intercontinental (China, Korea, Taiwan, Australia, Russia,
Brazil, Turkey, India, Middle East, South America, etc.)(to the present (Scheduled to retire at the end of March 2023))[Significant concurrent posts]
N/A
Reason for selection of the candidate as External Director and summary of expectedroles
Ms. Eiko Tomita is a qualified pharmacist of Japan and has a remarkable track record and has
been deeply involved in the international pharmaceutical approval process for global
pharmaceutical companies both domestically and internationally. The Company believes that she
will actively provide useful advice and suggestions on overall management by utilizing her
expertise in technology, research and development, business strategy and marketing. It is
expected that her performance of these important roles will further strengthen the oversight ofthe management and the governance system, and thus the Company proposes that she be newly
elected as an External Director.

End

16

Notes 1. There is no special conflict of interests between the Director candidates and the Company.
2. Mr. Tomohiro Tohyama, Mr. Kuniaki Kaga, Dr. David Roblin, Mr. Noriaki Nagai, Mr. Rolf Soderstrom, Ms. Miwa
Seki, and Ms. Eiko Tomita are candidates for External Directors.
3. Summary of liability limitation agreements with the candidates
In accordance with Article 427, Paragraph 1 of the Companies Act, the Company entered into an agreementthat limits liability for damages under Article 423, Paragraph 1 of the said Act with each of Mr. Tomohiro
Tohyama, Mr. Kuniaki Kaga, Dr. David Roblin, Mr. Noriaki Nagai, Mr. Rolf Soderstrom, and Ms. Miwa Seki.
The limit on the liability for damages under the agreements is the minimum amount of liability stipulated in
Article 425, Paragraph 1 of the Companies Act.
4. We have a liability insurance (D&O insurance) policy in which all of our directors are insured. The Company ispaying the full amount of premiums for this policy. To a director who is an insured person being liable for the
execution of his/her duties or a request pertaining to the pursuance of such liability damage that may be causedby such damage is covered. If this proposal is approved at the Meeting, each candidate will be included as aninsured person under the relevant insurance policy. Moreover, we plan to renew D&O insurance with samecontent for the next contract renewal.
5. If this proposal is approved at the Meeting, the Company intends to continue the liability limitation agreementswith Mr. Tomohiro Tohyama, Mr. Kuniaki Kaga, Dr. David Roblin, Mr. Noriaki Nagai, Mr. Rolf Soderstrom and
Ms. Miwa Seki stated in 3. above. and to conclude the liability limitation agreements equivalent to theagreements stated in 3. above with Ms. Eiko Tomita.
6. Mr. Christopher Cargill and Ms. Miwa Seki were elected Director at the 32nd Ordinary General Meeting of
Shareholders held on March 24, 2022, and accordingly, the numbers of times they attended the Board of
Directorsmeetings held since assuming office is stated in.
7. The Company has notified Tokyo Stock Exchange, Inc. of the appointment of Mr. Tomohiro Tohyama, Mr. Kuniaki
Kaga, Dr. David Roblin, Mr. Noriaki Nagai, Mr. Rolf Soderstrom, and Ms. Miwa Seki as Independent Directors
in accordance with the regulations of Tokyo Stock Exchange, Inc.
8. Candidate Ms. Eiko Tomita is scheduled to retire from Bristol Myers Squibb on 31 March 2023 and will assume
the office as an external director of the Company on 1 April 2023.
9. If this proposal is approved at the Meeting, the Company intends to notify the Tokyo Stock Exchange of theappointment of Ms. Eiko Tomita as an Independent Director in accordance with the regulations of Tokyo Stock
Exchange, Inc.

17

Reference

the Independence Standards for External Directors
An external director will be determined to be independent if he or she does not fall under any of
the following categories:(1) A person who is or was an executive director, executive officer or other officer or employee (hereinaftercollectively referred to as "Executive") of our Group (the Company and its affiliated companies);(2) A person who is or was in any of the last three business years an Executive at our Group’s principal
business partner (a company with which the annual amount of transaction (the amount of products andservices provided or procured) exceeds 2% of consolidated net sales of the Company or the partner or afinancial institution from which the amount of borrowing outstanding at the end of fiscal year exceeds 2%of the Company’s consolidated total asset) and its parent and subsidiary companies, and subsidiaries ofsuch parent company;(3) A consultant, or accounting or legal expert who has received in any of the last three business years cash
or other property exceeding 10 million yen from our Group other than the remuneration for a director or
officer (or a person who belongs to an organization if the said property has been received by a juridical
person, partnership or any other organization);(4) A person who belongs or belonged to an auditing firm that is an accounting auditor of the Company or its
consolidated subsidiary in any of the last three business years;(5) A major shareholder of the Company (shareholder holding 10% or more on a voting rights basis of theshares in the Company in its own or other's name) at the end of the most recent business year or its
Executive;(6) A spouse or relative within the second degree of kinship of a person who falls under any of the items (1)to (5) above provided that an Executive shall be in an “Important Position.” For the purpose of this item,a person is in an “Important Position" when the person is a director (excluding external director), executive
officer, officer, employee in senior management position of general manager or higher, or other person
who is objectively and reasonably judged to be in a position of equivalent importance; or(7) A person who is reasonably judged to be unable to perform his or her duties as an independent external
director due to a potential conflict of interest with shareholders.

End

18

1

Current State of the Corporate Group(1) Progress and Results of Operations
1) Group Overview
Sosei Group is a science and technology-led company, specializing in drug discovery and earlystage drug development. Our mission is to make life-changing medicines using world-leading
science and our vision is to become one of Japan’s global biopharmaceutical champions.
The Group has established an innovative and productive StaR® (“stabilized receptor”) andstructure-based drug design (“SBDD”) and discovery technology platform, which is focused
predominantly on, and provides unprecedented access to an important class of proteins called G
protein-coupled receptors ("GPCRs"). GPCRs represent the largest single class of targets for
drug discovery across a wide range of therapeutic areas.
A significant number of novel drug candidates have been generated through the application ofthis platform and are currently in development by global biopharma partners and internally.
Following the creation of a new leadership team in 2022, management has outlined a clear andevolved strategy to leverage the Group’s proprietary platform, pipeline and capabilities to growthe business internationally and in Japan. This strategy is based on four key strategic pillars:
(i)
(ii)

(iii)

(iv)

Extending and enhancing the competitive advantages of the Group’s world-leading
StaR®/SBDD discovery capabilities through continued internal innovation combined withexternal collaborations that provide access to complementary technologies.
Diligently driving forward existing partnerships with global biopharma companies andinitiating new high-value partnerships to ensure the continued flow of revenues throughupfront and development milestone payments, and ultimately royalties from sales of
products that reach the market.
Transforming R&D to a program-centric operational model, entrenching target biology, andenhancing translational medicine capabilities to quickly achieve clinical proof of concept,
which in turn is expected to enable higher quality candidates more cost effectively, larger
out-licensing deals as well as a deeper in-house pipeline and a pathway for clinicaldevelopment in Japan.
Building out an agile, scalable and effective clinical development and commercialization
business in Japan. This new strategic initiative is designed to capitalize on significant
underserved opportunities that the Group sees within this large attractive market. The
Group intends to start this strategy by in-licensing foreign de-risked approved or late-stage
clinical assets and will expand the pipeline with internally generated programs in the future.

In 2022, the Group continued to make progress in extending and enhancing its world-leading
StaR®/SBDD discovery capabilities mentioned in (i). The Group entered a collaboration with Verily,
to leverage its Immune Profiler, a next generation immune mapping platform, to identify novel
targets and generate drug candidates for immune-mediated diseases. The Group also entered acollaboration with Kallyope, which has an innovative gut-brain axis platform, to identify andvalidate novel gastrointestinal GPCR targets. Furthermore, the Group entered R&D agreementswith the University of Oxford and KU Leuven to identify and validate key GPCRs driving
gastrointestinal and immune disorders.
Our partnerships with major biopharmaceutical companies mentioned in (ii) progressed well in
2022 with two new agreements signed and multiple milestones achieved. Notably, the Group
entered into a second collaboration agreement with AbbVie to discover novel medicines targeting
neurological diseases, and it expands the 2020 agreement focused on inflammatory andautoimmune diseases. The Group also entered a new drug discovery collaboration with Lilly indiabetes and metabolic diseases.

19

In the collaboration with Neurocrine Biosciences, the first patient was randomized in its Phase
2 clinical study of NBI-1117568 (formerly HTL0016878) in adults with schizophrenia. Furthermore,in the drug discovery collaboration signed with Pfizer in 2015, three clinical candidates areprogressing well, with PF-07081532 (a GLP-1 agonist for diabetes and obesity) being advanced
by Pfizer into a Phase 2b clinical trial.
The Group also made significant progress in transforming its R&D and operations, asmentioned in part (iii) above, including working in collaboration with Weatherden, a specialist R&D
and clinical development consulting group. The focus of the collaboration has been to embed anagile program-centric operating model and enhance the Group’s discovery and translational
medicine capabilities to deliver higher quality candidates faster and more cost-effectively into its
pipeline. The Group also expanded its UK R&D operations within Granta Park, Cambridge as partof its growth strategy to become a multi-program, early clinical stage business and a partner-ofchoice for leading biopharmaceutical companies.
Furthermore, the Group aims to quickly taking its wholly-owned programs to a clinical proof ofconcept stage, with the following three candidates the forefront:•
EP4 antagonist (HTL0039732) for solid tumors - the Group signed an agreement with
Cancer Research UK to bring this cancer immunotherapy candidate into a first-in-humantrial.
•GPR52 agonist for schizophrenia and psychosis•
EP4 agonist for Inflammatory Bowel Disease
As noted in part (iv), the Group has developed a strategy to leverage its position in Japan andbuild out an agile, scalable and effective clinical development and commercialization business inthis important healthcare market.
The Group is highly motivated and committed to growing and developing its businessinternationally and in Japan over the coming years, and is focusing its investment accordingly. At
the same time, the Group will continue to rigorously manage costs and remain flexible to all valuecreating opportunities.
Financial results for the year ended December 31, 2022 were revenue of 15,569 million yen (adecrease of 2,143 million yen vs. the prior year), operating profit of 3,436 million yen (a decreaseof 339 million yen vs. the prior year) and net profit of 382 million yen (a decrease of 635 million
yen vs. the prior year).
The 32nd Term
January 1, 2021 December 31, 2021

The 33rd Term
January 1, 2022 December 31, 2022

Value

Value

vs. the prior year
Value

Rate ofchangeRevenue(JPY
millions)

17,712

15,569(2,143)(12.1)%

Operating profit(JPY
millions)

3,775

3,436

(339)

(9.0)%Net profit(JPY
millions)

1,017

382

(635)

(62.4)%Net earnings per
share - basic

(Yen)

12.53

4.68

(7.85)(62.6)%

20

The principal management indicators are as follows.
Revenue
Revenue in the year under review totalled JPY 15,569 million (a decrease of JPY 2,143 million
vs. the prior year).
Revenue relating to upfront fees and milestone income in the year under review totalled JPY
12,063 million (a decrease of JPY 2,604 million vs. the prior year). Upfront fees and milestone
income comprises upfront fee revenue, milestone income and deferred revenue releases. Upfront
fees and milestone income can vary considerably year on year and depend on thecommencement of new partnership agreements and the achievement of defined milestone events
within that year. The decrease in revenues primarily reflects the inclusion in the prior year of a
substantial upfront fee from Neurocrine Biosciences in the amount of JPY 11,408 million (USD
100 million) compared to the inclusion in 2022 of upfront fee revenue recognised at deal inception
totalling JPY 4,666 million (USD 35 million) from two new collaborations (AbbVie Neurology and
Lilly). This decrease was partially offset by a rise in milestone income recognised upon theoccurrence of milestone events. There were five milestone events in 2022 generating JPY 6,429
million, as a result of the significant progress including advancement into Phase 2 clinical trials,
vs. 8 milestone events in 2021 generating JPY 1,963 million. Deferred revenue releases
decreased compared to the prior year due maturation of the older platform collaborations. In
addition, as the majority of the Group’s revenues are earned in USDs, the substantially stronger
USD in 2022 also had an offsetting effect.
Revenue relating to royalties in the year under review totaled JPY 2,564 million (an increase of
JPY 253 million vs. the prior year). The Group’s royalty revenue relates to sales of Ultibro®
Breezhaler®, Seebri® Breezhaler® and Enerzair® Breezhaler® by Novartis.
(Note) Glycopyrronium bromide and certain use and formulation intellectual property were
exclusively licensed to Novartis in April 2005 by Sosei and Vectura. Seebri®, Ultibro®,
Enerzair® and Breezhaler® are registered trademarks of Novartis AG.
Cost of sales
Cost of sales in the year under review totaled JPY 926 million (a decrease of JPY 7 million vs.
the prior year). Cost of sales comprises the cost of pharmaceutical product sold in the period plus
the internal costs of delivering research and development services to customers.
Research and development expenses
Research and development (“R&D”) expenses in the year under review totaled JPY 7,454 million(an increase of JPY 1,523 million vs. the prior year). The increase is primarily due to increased
investment in our in-house discovery and early development programs, the cost of a restructuring
program designed to accelerate the development of medicines costs have increased due to
inflation and the impact of the weaker Yen. In addition, the reclassification of share based payment
costs relating to scientists to the R&D expenses line from the G&A expenses line as this isregarded as a better presentation of that spend. In the year under review 98% of R&D spend
related to our UK operations.

21

Selling, general and administrative expenses
Selling, general and administrative (“G&A”) expenses in the year under review totaled JPY 4,377
million (an increase of JPY 437 million vs. the prior year). This was primarily due to the cost of a
restructuring program designed to accelerate the development of medicines, the impact of theweaker Yen and cost inflation. These increases were partly offset by the reclassification of sharebased payment costs relating to scientists from the G&A expenses line to the R&D expenses line
as this is regarded as a better presentation of that spend.
Net other income
Net other income in year under review totaled JPY 624 million (an increase of JPY 3,757 million
vs. the prior year). This was primarily due to the inclusion in the prior year of an intangible asset
impairment charge totalling JPY 3,138 million relating to the decision by a partner not to proceedwith clinical trials for certain out-licensed products. There was no equivalent in 2022. In addition,a higher R&D expenditure related UK tax credit was recorded in 2022.
Operating profit
Operating profit in the year under review totaled JPY 3,436 million (a decrease of JPY 339 million
vs. the prior year). The main reasons for the decrease in the operating loss are the decrease inrevenue and increase in R&D expenditure, for the reasons stated above.
Net finance costs
Net finance costs in the year under review totaled JPY 93 million (a decrease of JPY 3,505
million vs. the prior year). This decrease was primarily due to a non-recurring event in the prioryear which resulted in a substantial contingent consideration charge being recorded relating to
the Neurocrine Biosciences licensing transaction. In addition, interest income has risen due tohigher UK interest rates. These reductions in the net cost have been partially offset by higher
bond amortization costs, which have increased following (i) the issuance of new convertible bonds
with a face value of JPY 30,000 million and (ii) the repurchase and conversion of existing
convertible bonds with a face value of JPY 16,000 million in July 2021.

Share of (loss) profit of associates accounted for using the equity method
Share of loss of associates accounted for using the equity method in the year under review
totaled JPY 429 million (an increase of JPY 479 million vs. the prior year). This was due to MiNA
(Holdings) Limited (MiNA), an affiliated company of the Group, generating no licensing revenue
leading to a net loss for the year under review vs. MiNA recording a net profit in the prior year.
The Group ceased to equity account for its investment in MiNA from October 2022 as
management determined that it no longer exercised significant influence over MiNA from this date.
(Impairment charge) / reversal of impairment charge relating to associates
Impairment charge for investments accounted for using the equity method during the year underreview totaled JPY 1,836 million. This was due to a decrease in the estimated fair value of MiNA.
Gain on reversal of impairment loss for investments accounted for using the equity method in the22

prior year totaled JPY 206 million. This was due to an increase in the fair value of shares in
JITSUBO, an affiliated company of the Group, which was disposed of in April 2021.
Net profit before income tax
Net profit before income tax in the year under review totaled JPY 1,078 million (an increase of
JPY 645 million vs. the prior year). This inrease reflects the combined effect of all of the
movements explained above.
Income tax (expense) / benefit
Income tax expense in the year under review totaled JPY 696 million (vs. an income tax benefitof JPY 584 million in the prior year). This was primarily due to the cessation of entitlement of theGroup’s UK subsidiary to claim certain UK R&D expenditure related tax incentives due to its
sustained growth.
Net profit
Net profit in the year under review totaled JPY 382 million (a decrease of JPY 635 million vs. theprior year). This reduction reflects the combined effect of all of the movements explained above.
Alternative performance measure: Core operating profit / loss
Core operating profit / loss is an alternative performance measure which adjusts for material
non-cash costs and one-off costs in order to provide insights into the recurring cash generation
capability of the core business.
Core operating profit in the year under review totaled JPY 5,856 million (a decrease of JPY 3,048
million vs. the prior year). The main reasons for the decrease are a reduction in revenues in 2022
for the reasons explained above, and an increase in investment in R&D in line with the Group’s
growth strategy. In calculating core operating profit the following adjustments to the IFRS
operating profit have been made:•Depreciation totaled JPY 563 million (an increase of JPY 22 million vs. the prior year).
•
Amortization totaled JPY 782 million (an increase of JPY 45 million vs. the prior year).
•
Stock-based compensation totaled JPY 542 million (a decrease of JPY 171 million vs.
the prior year).
•
Restructuring costs totaled JPY 533 million. These costs related to the management
reorganization announced on February 1, 2022 (including JPY 158 million ofaccelerated stock-based compensation expenses).
•
Impairment charge JPY nil million (JPY 3,138 million charge recorded in the prior year).
This was mainly due to the impairment of intangible assets recorded in the prior year asa result of a decision by a partner not to proceed with clinical trials for certain outlicensed products.

(2) Capital Expenditures
In the year under review, UK R&D Operations in Cambridge was expanded. As a result, a rightof-use asset of 102 million was recorded.

(3) Significant Organizational Restructuring, etc.
Not applicable.

23(4) Assets and Profit/Loss in the previous three fiscal years
Item
Revenue
Operating proft
Net profit
Net earnings or(loss) per share basic
Total assets
Total equity(JPY
millions)(JPY
millions)(JPY
millions)
(Yen)
(JPY
millions)(JPY
millions)

The 30th Term
As of December
31, 2019

The 31st Term
As of December
31, 2020

The 32nd Term
As of December
31, 2021

The 33rd Term(current term)
As of December
31, 2022

9,726

8,842

17,712

15,569

384

928

3,775

3,436

1,432

1,479

1,017

382

18.70

18.77

12.53

4.68

56,68076,46596,98599,41745,07852,381

57,46857,936(5) Issues to be addressed
1) Business advancement and strategy
The Group has outlined a strategy to leverage its proprietary StaR® technology and SBDD
platform, expert R&D capabilities and emerging pipeline to grow the business internationallyand in Japan.
Outside of Japan, the Group intends to take programs from drug discovery throughtranslational medicine into early clinical development internally, and license these in-houseprograms to partners, while retaining its rights to develop such programs in Japan whenpossible.
In Japan, the Group will start its development and commercialization strategy by in-licensing
foreign de-risked approved or late-stage clinical assets and will expand the pipeline withinternally generated programs in the future.
Please refer “(1) Progress and Results of Operations, 1) Group Overview” for our four key
strategic pillars.

2) Risk recognition
The Group is exposed to a range of risks consistent with the industry in which it operates. The
business, financial condition and results of the Group may be adversely impacted by any ofthese risks.The Group has in place an Enterprise Risk Management Program that monitorsand mitigates business specific risks in both Japan and the United Kingdom. The Group hassummarized its most important risks into the following categories: industry; commercial;strategic; financial; legal and compliance; and takes necessary measures to deal with theserisks.
INDUSTRY RISKS
Risks inherent to drug discovery and early-stage development
The Group’s business strategy is focused on drug discovery and early-stage development.
The Group has established an unrivalled platform of technologies and tools, as well as skillful
employees to seamlessly manage its discovery and early-stage development capabilities. The
Group works closely with its partners to ensure success on all high-value partnered programs
and long-term ventures. However, there are increasing challenges for the industry, which24generally include productivity, complexity and cost of research and development, innovative
developments, changing relationships due to rapid consolidation in the industry, patent
expirations, and regulatory changes. Large pharma and biotech companies regularly re-assess
their business strategies to remain competitive in the industry. Drug discovery and early-stage
development always carries inherent risk. There is no guarantee that the Group, together with
its partners will successfully develop and commercialize potential drugs. It is possible economic
returns may not be achieved, or an impairment to the carrying value of the Group’s intangible
assets may be required and that may impact the Group’s statement of financial performanceand financial position. It is also possible that the Group could be responsible for liabilities
resulting from its research, discovery or early-stage development activities, and therefore theGroup is covered by liability insurance to help mitigate these risks.
COMMERCIAL RISKSThe Group continues to be engaged in multiple active drug discovery and early-stage
development programs that it intends to license to large pharma or biotech companies forclinical development and commercialization; however, the Group may not be able to achieve
this goal. Additionally, the commercial environment for licensing might change during the
lifetime of individual projects. The actual timing and commercial values of individual projects,
or the financial proceeds from licensed partnering programs can change significantly from initial
estimates.
The Group’s reliance on partners is subject to additional risks. For example, the Group’s
partners may not devote sufficient time and resources to the Group’s future products or may
not pursue further development and commercialization of the products resulting from thepartnership. The Group mitigates both risks by ensuring it has a diverse balance of partner
types across the drug discovery and development continuum.
STRATEGIC RISKS
Execution of business strategy
The Group continues to focus its in-house activities on leveraging its platform and expertiseto create and develop drug candidates, adding to its broad pipeline with the aim to achieve
important value inflection points that will enable new out-licensing and co-investment
agreements. The Group is also focused on in-licensing foreign de-risked approved or latestage clinical assets to build out a business in Japan. It is possible that investments might beallocated to the development of unsuccessful drug candidates, or failed technologies.
Risks from investment strategy
In the past, the Group has made equity investments in companies with highly promising yet
unproven technologies. These investments may enable the Group to accelerate its businessmodel as they provide a beneficial risk-reward profile through to a significant value inflection.
However, unproven technologies also carry the risk of failure, which may lead to impairment of
the intangible asset and impact the Group’s statement of financial performance and financial
position. To mitigate this risk, the Group, in 2020, established an Investment Committee that is
responsible for conducting diligence and making recommendations to the Group’s Board of
Directors, who are in turn responsible for approving strategic investments. The Group’s
approach to investments is to balance risk and reward appropriately, ensuring excessive capital
is not put at risk.
FINANCIAL RISKSThe Group’s financial risk management focuses on liquidity and currency risks.

25

Liquidity risks
Revenue timing, external events and changes in the business environment might negatively
impact the Group’s profitability and cash. The Group is currently well-financed and able to deal
with these risks. To mitigate this risk, the Group regularly reviews options for capital increases
and for the use of other refinancing tools and in 2019 the Group maintains a commitment line
for liquidity purposes.
Currency risks
The Group is impacted by fluctuations in foreign exchange rates mainly between theJapanese Yen, Pound Sterling and US dollar. The Group mitigates this exposure via closemonitoring to manage the Group’s current and upcoming currency requirements, which isintended to reduce the exchange rate risks in the future.
LEGAL & COMPLIANCE RISKSThe Group operates in a global industry where legal compliance, contractual agreements andintellectual property rights are crucially important. Moreover, there is a trend towards greater
regulatory compliance in the pharma industry. The Group ensures regulatory as well as internal
compliance and employees are obliged to immediately report any incidents they suspect of
having breached regulatory or compliance rules to their manager or to the Chief Compliance
Officer.

3) Value creation
The pharmaceutical industry is undergoing rapid change due to numerous pressures facedby large companies, such as patent expiries, higher burden of approval and increasing costs.
This has led to a reduction in the number of research-based businesses taking the full financial
and commercial risk of drug development.
New strategies across the industry are focused on securing external innovation in an efficientway. Furthermore, ageing populations in many developed countries are driving the need for
differentiated and better treatments. As a result, large pharma and biotech companies are
increasingly seeking innovative solutions to their R&D challenges, and therefore increasingly
executing collaborations across research, discovery and development activities with mid--sized
science and technology-led companies. The Group is positioned to take advantage of thisgrowth trend. The Group regularly identifies and evaluates opportunities for businessexpansion and value creation and is pursuing a capital efficient business model that willsustainably create new commercial opportunities in an evolving industry landscape.

4) Corporate Governance
The Group has business activities in multiple jurisdictions and takes corporate governance very seriously.
The Group is continuously evaluating ways to enhance its systems and processes, to ensure it complies
with all national regulations. Furthermore, the Group will continue to promote a corporate culture that iscommitted to the highest standards of openness, integrity and accountability.
The Group’s Board of Directors is responsible for overseeing management and conducting
risk management and compliance activities to maintain standards and accountability and amajority of members are independent external directors. Executive Officers work closely with
the Board of Directors to achieve long-term and sustainable growth for the Company and tocreate shareholder value. They make decisions on and execute the Company’s strategy andbusiness transactions that are significant, based on the authority delegated by the Board of
Directors.

26

(6) Main Business Activities (as of December 31, 2022)
The Group’s main business is the research, development and sale of pharmaceutical products.
The Group companies are engaged in the following business activities.
Company NameBusiness Description

Sosei Group Corporation

Responsible for setting the strategy of Sosei Group, andperforming centralized administrative activities on behalf of groupcompanies

Sosei Co. Ltd.

Research and development, sales of pharmaceutical drugs

Heptares Therapeutics Ltd.

Structural analysis of GPCRs, generation of initial leadcompounds, discovery of drug candidates through proprietary
StaR® technology(7) Principal Parent Company and Subsidiaries(as of December 31, 2022)

1) Parent company
Not applicable.

2) Subsidiaries
Company Name

CapitalRatio of Voting

Sosei Co. Ltd.

JPN90 million

100.0%

Heptares Therapeutics Ltd.

GBP 416
thousand

100.0%Key BusinessResearch and development, sales ofpharmaceutical drugs
Structural analysis of GPCRs,
generation of initial lead compounds,
discovery of drug candidates throughproprietary StaR® technology3) Other significant information
Not applicable.

(8) Main Offices and Factories(as of December 31, 2022)

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

Heptares Therapeutics Ltd.

Cambridge, UK27

(9) Employee Information (as of December 31, 2022)
1) Group Employees
Business Segment

Number of Employees

Change from the End of thePrevious Fiscal Year

Pharmaceutical business

170(13.9)+2

Group administration

32

(4.2)

+2

Total

202

(18.1)+4(Note) 1. The number of employees does not include the number of temporary employees, which is listed in parentheses
as the average for the year.
2. Pharmaceutical business increased by 2 compared with the end of the previous year, mainly due to thestrengthening of the research and development department.
3. Group administration increased by 2 compared with the end of the previous year, mainly due to thestrengthening of the organisation.

2) Company Employees
Number of Employees

Change from the End of
the Previous Fiscal Year

Average Age

Average Service Years

32 (4.2)+2

43 years old

2.9 years(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.

(10) Financing
Not applicable(11) Principal Lenders (as of December 31, 2022)
Not applicable.
The Company has entered into a (JPY 5,000 million) commitment line contract with Mizuho Bank,
Ltd. and 3 other financial institutions in order to finance working capital more efficiently. The
Company had no outstanding borrowings related to the commitment line contract at the end of
this fiscal year.

(12) Other Significant Matters on the Current Status of the GroupNot applicable28

2 Current Status of the Company(1) State of Shares(as of December 31, 2022)

1) Total number of authorized shares

149,376,000 shares2) Total number of outstanding shares

81,923,230 shares(Notes)1. The number of outstanding shares increased by 5,200 shares to execize
stock acquisition right.
2. The number of outstanding shares increased by 380,071 shares to issue
new shares by a post-hoc granted stock-based compensation (RSU) plan.
3. The number of outstanding shares increased by 19,643 shares to issue newshares by a post-hoc granted stock-based compensation (PSU) plan.

3) Number of shares constituting one unit

100 shares

4) Number of shareholders

25,5235) Major shareholders (Top 10)
Shareholdings(shares)

Ownership Stake

Daisuke Gomi

6,570,000

8.02 %The Master Trust Bank of Japan, Ltd. (trust account)

4,686,000

5.72 %TAIYO FUND, L.P.

3,545,400

4.33 %

Custody Bank of Japan, Ltd. (trust account)

2,447,800

2.99 %SBI SECURITIES Co.,Ltd.

1,909,109

2.33 %

Pfizer Japan Inc.

1,885,136

2.30 %SSBTC CLIENT OMNIBUS ACCOUNT

1,820,835

2.22 %TAIYO HANEI FUND, L.P.

1,682,800

2.05 %MLI FOR CLIENT GENERAL OMNI NON COLLATERAL NON TREATYPB

1,519,692

1.86 %

STATE STREET BANK AND TRUST COMPANY 505227

1,429,800

1.75 %

Shareholder’s Name

(Notes) 1. Ownership stakes have been rounded off to two decimal places.
2. Ownership stakes are calculated deducting 254 treasury shares which the Company owns.

6) Status of Shares Issued as Consideration for the Execution of Duties to Directors andexecutive officers during FY2022
SharesNumber of
grantees

Directors(Excluding External Directors) and Executive officers

175,204

6

External Directors

41,3085(Notes) 1. Directors(Excluding External Directors) and Executive officers include two retired executive officer.
2. The contents of the Company's share remuneration are described「Policy concerning decisions on thecontent of individual remuneration for Executive Officers, etc. by the Compensation Committee」

29

(2) Stock acquisition rights (“stock options”), etc. (as of December 31, 2022)
1) Stock options owned by the Company’s directors and executive officers that were issued
as compensation for performance of duties as of the end of the fiscal period under review
31st Stock Options

32nd Stock Options

Date of Board resolution

May 15, 2017

May 15, 2017

Number of stock options

3

2

Number and class of shares
1,200 shares of common shares
800 shares of common sharesfor stock options
Amount of payment for stock
1,234,900 yen per stock option (Note 3) 778.211 yen per stock option (Note 3)
options
Value of assets to be
400 yen per stock option
1,227,600 yen per stock option
provided on exercise of stock(1 yen per share)(3,069 yen per share)
options
Exercise period of stockfrom July 1, 2020
from July 1, 2020
options
to April 30, 2027
to April 30, 2027
Terms and conditions for
Notes 1 and 2
Notes 1 and 2
exercise
Directors and2
Number of stock options:executive
Number of shares for stock‐800
officers
options:‐
Holdings by (excluding1
Number of holders:external
directors(Note 4)
directors)
andexecutive
officers
Number of stock options:3
External‐
Number of shares for stock
1,200
directors
options:
Number of holders:
134th Stock Options
Date of Board resolution

November 21, 2017

Number of stock options

2

Number and class of sharesfor stock options
Amount of payment for stock
options
Value of assets to beprovided on exercise of stock
options
Exercise period of stock
options
Terms and conditions forexercise
Directors andexecutive
Holdings by officers(excluding
directors
external
anddirectors)
executive
officers
External
directors

800 shares of common shares
621,400 yen per stock option (Note 5)
1,069,200 yen per stock option(2,673 yen per share)from December 1, 2020
to October 29, 2027
Notes 1 and 2
Number of stock options:
Number of shares for stock
options:28001(Note 4)

Number of holders:‐30(Notes):
1. Stock option holders must be directors, executive officers or employees of the Company or the Company’s
subsidiaries when exercising stock options; provided, however, that this does not apply in cases of retirement due toexpiration of a term of office or reaching the mandatory retirement age, or when there are other legitimate reasons.
2. (1) Stock options may not be exercised by heirs of stock option holders.
(2) 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 of authorized shares at that time.
(3) Stock options may not be exercised in fractions of one unit.
3. The fair value of the stock option granted to directors and executive officers of the Company was offset against thesame amount of their rights to remuneration effective on the date of allotment.
4. Holdings of the 32nd and 34th Stock Options include the options granted to an employee, a director of a subsidiary
before his assumption of the office as executive officer.
5. The stock options were granted to executive officers of the Company as incentive remuneration and the grant without
payment of cash equivalent to the fair value of the stock option granted does not constitute a particularly favorable
condition of issuance.
6. The number of shares for stock options was changed from 100 shares per stock option to 400 shares per stock option
following the stock split as of July 1, 2018 and the value of assets to be provided on exercise of stock options was
adjusted accordingly.

31

(3) Directors and executive officers (as of December 31, 2022)
1) Directors
Title

Name

Responsibility

Chairman of
the Board

ShinichiTamuraChair of Nomination
Committee;
Member ofCompensation
Committee

Significant Concurrent Posts–

Director

Christopher
Cargill

Member ofCompensation
Committee

Director, Heptares Therapeutics Ltd.

Partner at TMI Associates
External Director and Audit and Supervisory
Committee Member of Nippon Shikizai, Inc.

Director*

Tomohiro
Tohyama

Chair of Audit
Committee;
Member ofCompensation
Committee

Director*

KuniakiKaga

Member of Audit
Committee

External Director of SUSMED, Inc*David Roblin

Chair ofCompensation
Committee;
Member of
Nomination
Committee

Chairman of Scientific Translation, The Francis
Crick InstituteCEO, Relation Therapeutics Limited
Chair of Board, Centauri Therapeutics Limited

Director*

Noriaki
Nagai

Director*

Rolf
Soderstrom

Director

Director(Notes) 1.

2.
3.
4.
5.

*

Miwa Seki

Member of
Nomination
Committee;
Member of Audit
Committee
Member ofCompensation
Committee;
Member of Audit
Committee
Member of
Nomination
Committee;
Member of Audit
Committee–

Chief Financial Officer of Syncona Investment
Management Limited
Non Executive Director, BioPharma Credit plc
General Partner MPOWER PARTNERS FUND
External Director, World Co., Ltd
External Director, DAIWA HOUSE INDUSTRY
CO., LTD.
Director, Yanai Tadashi Foundation
Director, Fast Retailing Foundation

The directors listed above with an asterisk (*) are external directors. The Company designates Director
Tomohiro Tohyama, Director Kuniaki Kaga, Director David Roblin, Director Noriaki Nagai, Director Rolf
Soderstrom and Director Miwa Seki as independent directors in accordance with the regulations of Tokyo
Stock Exchange and has notified the Exchange accordingly.
Noriaki Nagai has long-term experience at a major security company, being in charge of corporate
planning as an officer, and has considerable financial and accounting knowledge.
Rolf Soderstrom is a qualified UK accountant, has experience as a head of company finance department,
and has considerable financial and accounting knowledge.
Miwa Seki served as head of Japan at a foreign capital financial institution, then founded an ESG-oriented
investment fund, and has considerable financial and accounting knowledge.
The Audit Committee has conducted audits in close coordination with the internal audit department andemployees who assist in the performance of duties of the Committee, and believes it is not essential thata full-time committee member be selected. Accordingly, a full-time committee member has not been32

selected.
6. The Company has no special relationships with the companies at which the external directors concurrently
serve the offices.

2) Executive officers
Title

Responsibility

Significant Concurrent Posts

Christopher
CargillPresident & CEO

Director, Heptares Therapeutics Ltd.

Executive Officer

Hironoshin
NomuraVice President, CFO–

Executive Officer

KieranJohnsonVice President, CAO(Chief Accounting
Officer)

Director, Heptares Therapeutics Ltd.

Executive Officer

Kazuhiko
Yoshizumi

Vice President, CCO(Chief Compliance
Officer )–Executive Officer

Matthew
BarnesVice President

President of Heptares Therapeutics Ltd.

Executive Officer

Tadayoshi
Yasui

Vice President

Representative Director President, Sosei
Co. Ltd.

Representative
Executive Officer

Name*(Note) The executive officer listed above with an asterisk (*) serves concurrently as a director.

3) Symmary of liability limitation agreements
In accordance with Article 427, Paragraph 1 of the Companies Act (the “Act”) and theprovisions of the Articles of Incorporation, the Company and external directors have enteredinto agreements that limit liability for damages as provided in Article 423, Paragraph 1 of theAct.
The limit on liability for damages applicable to each external director under the agreements isthe minimum amount of liability stipulated in Article 425, Paragraph 1 of the Act4) Outline of the directors and execctive officers, etc. liability insurance policy, etc.
The Company has concluded a directors and officers liability insurance (“D&O insurance”)
policy with an insurance company as provided for in Article 430-3, Paragraph 1 of theCompanies Act with all Directors, Executive Officers, and Corporate Auditors of the Company
and its subsidiaries as insured parties. The Company is paying the full amount of premiums forthis policy.
Regarding the details of this insurance policy, it covers losses arising from the liability borneby the insured party in the course of the execution of his/her duty or claims pertaining to the
pursuit of such liability.

5) Policy concerning decisions on the content of individual remuneration for Executive
Officers, etc. by the Compensation Committee
The Company’s Compensation Committee has set policy on decisions of the contents ofindividual remuneration for Executive Officers, etc. Also, regarding the individual remuneration,etc., of Executive Officers, etc. during the fiscal year under review, as the method for deciding
the content of remuneration, etc., and the content of remuneration, etc. that was decided areconsistent with this policy, it is judged by the Compensation Committee to be in line with policy.

33

i. Basic Policies
・ The basic policy regarding officer compensation is to provide incentives for securing
talented personnel, raising the corporate value of the Group, and implementing
management strategies aimed at sustainable growth.
・ Policy regarding Directors’ remuneration is to secure excellent personnel as Directorsof the Company from a global perspective to strengthen the oversight function ofGroup management and, in addition to fulfilling the oversight function, enableproactive contribution to the enhancement of corporate value by sharing the benefits
and risks of stock price fluctuations with shareholders. Director’s remuneration shallconsist of a fixed amount of base salary and a post-hoc granted stock-based
compensation (RSU).
・ Executive Officers’ remuneration is determined to further increase motivation to realize
the Company’s vision and strategy, promote management that focuses on themedium-to long-term enhancement of corporate value and shareholder value, andreflect individuals’ roles and achievements. Executive Officer’s remuneration shallconsist of a fixed amount of base salary, a bonus determined according to theaccomplishment of the individual’s business objectives, retirement allowances, and a
post-hoc granted stock-based compensation (RSU).
・ The Compensation Committee, of which a majority comprises external rectors,
determines compensation fairly and appropriately, ensuring transparency under thechairmanship of an external director.
ii. Policy for determining the amount or the method of calculation of individual remuneration,etc. (excluding non-monetary remuneration outlined in iii. below)
a. Directors’ remuneration
The amount of base salary (annual salary), which is a fixed remuneration, shall be
the same for all Directors except for the Chairperson, and the remuneration level ofthis base salary shall be determined by taking into consideration the situation at othercompanies, etc. using the available databases of external research organizations asa reference. Directors who also concurrently serve as Executive Officers shall not be
paid Directors’ compensation.
b. Executive Officers’ remuneration
・ Base salary (annual salary), which is a fixed remuneration, shall be determinedbased on the individual’s performance in the previous fiscal year and anevaluation of contribution to the Company, taking into consideration factors suchas the remuneration level of comparable companies in the country where theindividual is acting or resides, using the available databases of external researchorganizations as a reference.
・ For bonuses, a base amount shall be the amount obtained by multiplying theamount of base salary by a certain percentage determined for each individual
according to factors such as his/her responsibilities and performance, and the
difficulty in securing persons fit for the role. The amount of this base amount paid
shall be determined in accordance with the accomplishment of the individual’sbusiness objectives.
・ Retirement allowances shall be equivalent to the sum of the bonus and the annual
salary for the previous business year. However, retirement allowances shall not
be paid to Executive Officers who are not re-appointed or are dismissed due tomisconduct, violation of laws, regulations and the Articles of Incorporation of theCompany, breach of trust, gross negligence, incompetence or inability to execute
duties, disqualification as an Executive Officer under the Companies Act, or any
other justifiable reason. Furthermore, in cases where the law stipulates that adismissal notice allowance is payable following a contract termination, only thedifference between the amount of the annual salary of the previous year and thedismissal notice allowance shall be paid.

34

iii. Contents of non-monetary remuneration, etc., and policy for determining the amount or
number or the method of calculating the amount or number of non-monetary remuneration
The Company has introduced a post-hoc granted stock-based compensation (RSU) as
non-monetary remuneration, etc. An overview of this post-hoc granted stock-based
compensation (RSU) is as follows.
a. Conditions for allotment
Shares of the Company will be allotted on the condition that an individual has served
continuously in the position of Director or Executive Officer of the Company
throughout a performance period. However, in cases where a Director or Executive
Officer ceases to hold office due to the expiration of his/her term of office, othergrounds deemed by the Board of Directors to be justifiable, or death during theperformance period, a number of shares calculated by the Company under theapplicable share-based compensation regulations will be allotted.
b. Maximum number of the Company’s shares to be delivered
The number of shares of the Company to be delivered under the plan, together with
the number of shares to be issued under other share compensation plans, shall not
exceed 10% of the total number of issued and outstanding shares of the Company.
c. Performance period and number of allotted shares
・ The performance period for Directors (excluding Directors who concurrently
serve as Executive Officer) is one year, and after the expiration of said
performance period, a number of shares shall be allotted which shall becalculated by dividing an amount equivalent to 130% of the amount of base salaryby the stock price at the start of the performance period.
・ The performance period for Directors who concurrently serve as Executive Officer
and Executive Officers shall be two years and three years from the first day of theperformance period respectively. After the expiration of said performance period,
one-half of a number of shares shall be allotted respectively and said number
shall be calculated by dividing an amount equivalent to the amount of basic
compensation multiplied by certain ratio (97.5% to 195%) set according toposition by the stock price at the start of the performance period.
d. Method for the allotment of shares
The allotment of shares shall be a payment of a monetary compensation claim to an
officer to whom the shares are scheduled of an amount obtained by multiplying thenumber of allocated shares by the amount to be paid per share determined bydecision of the Board of Directors or a Representative Executive Officer authorized
thereby. Said monetary compensation claim shall be delivered as properties
contributed in kind.
iv. Policy for determining the composition of officer compensation
The composition ratio of the amount of individual remuneration, etc. shall be as follows:

Base salary

Bonus

Stock
compensation
Restricted
Stock Units(RSU).

Director

1

-

1~2

-

Representative
Executive Officer
& CEO

1

0.75

2

1.75

Executive Officer

1

0.4~0.61

1.4~1.6

Retirement
allowances

In the above table, the model for the amount of bonus to be paid is a payment of standard
amount determined by the Company. This ratio may change in accordance with factors

35such as the Company’s business results and share price.
v. Policy on determining the timing or conditions for granting remuneration, etc. to officers
・ One twelfth of base salary will be paid monthly.
・ Bonuses will be paid in February every year.
・ Post-hoc granted stock-based compensation (RSU) will be granted in April of eachyear, and shares will be allotted after the end of the performance period.

6) Total amount of remuneration paid to directors and executive officers
Item

Total
remuneration

Directors(External
directors)

Amount of remuneration

Total number of
directors/executi
ve officers

BasesalaryBonus

Non-monetary
remuneration¥208 million(¥159 million)¥101 million(¥77 million)(-)¥107 million(¥82 million)

7(6)

Executive
Officers¥587 million¥194 million¥186 million¥207 million

5

Total

¥795 million(¥159 million)¥295 million(¥77 million)¥186 million(-)¥314 million(¥82 million)

12(6)(Notes) 1.
2.
3.
4.

5.

6.

7.

8.

9.

Renumeration of Christopher Cargill, Director and Executive Officer is excluded from Directors remuneration.
Renumeration of Christopher Cargill, Director and Executive Officer is included in Executive Officers
remuneration.
Renumeration of Shinichi Tamura until March 2022 is included in Executive Officers remuneration, andrenumeration from April 2022 is included in Directors remuneration.
Remuneration of four Executive Officers whose expenses were borne by the Company subsidieries, including
two Executive Officers who retired in March 2022, are not included in above table. Please refer to Note 5 fordetails on their remuneration.
The table above does not include the following:
・Retirement allowance of ¥185 million paid for one Executive Officer in March 2022 in accordance with theresolution of the Remuneration Committee held in March 2022.
・Retirement allowance of ¥155 million paid to two Executive Officers paid by subsidiary in March 2022 inaccordance with the resolution of the Remuneration Committee held in March 2022.
・Salary of ¥84 million, bonus of ¥39 million paid in February 2023 in accordance with the resolution of theRemuneration Committee held in January 2023, and non-monetary remuneration of ¥24 million, all of which
are paid by the Company subsidiaries to four Executive Officers including two Executive Officers who retired
in March 2022.
The remuneration of the two retired Executive Officers until March 2022 is reflected in the above numbers
until March 2022, as well as the remuneration of the two Executive Officers who assumed the office in April
2022.
Non-monetary remuneration includes the Company's shares. The terms of allocation are as described in " iiiContents of non-monetary remuneration, etc., and policy for determining the amount or number or the methodof calculating the amount or number of non-monetary remuneration". In addition, details of the allocation
during the current fiscal year are described in "2 (1) 6) Status of Shares Issued as Consideration for the
Execution of Duties to Directors and executive officers during FY2022”.
We use Total Shareholders Return (TSR) as indicator for performance based share compensation (PSU) plan.
The reason we use TSR is to enhance awareness of competition with other companies in the same industry,
share the benefits and risks of stock price fluctuations with our shareholders, and provide incentive tomanagement to focus their efforts on maximizing shareholder value. The number of shares to be allotted is
set at the beginning of the evaluation period for each allottee. At the beginning of the evaluation period thenumber of base shares is determined. After the expiration of the evaluation period, the number of shares tobe allotted is calculated by multiplying the base number of shares by the performance index and the TSR
percentile (relative TSR) of multiple domestic peer companies.The achievement level of the performancetarget was 12.5%.
The amount of non-monetary compensation in the table above shows the amount recorded as expenses in36

the current fiscal year.

7) Attendance of external directors at meetings of the Board of Directors and Committees
during the fiscal year under review and the status of their remarks and activities
Name

Tomohiro Tohyama

Board ofDirectors
meetings

20 out of 20(100%)

Compensation
Committee
meetings

6 out of 6
(100%)

Audit
Committee
meetings

18 out of 18(100%)

Board ofDirectors
meetings

20 out of 20(100%)

Audit
Committee
meetings

18 out of 18(100%)

Board ofDirectors
Meetings

19 out of 20(95%)

Nomination
Committee
meetings

0 out of 1(0%)

Compensation
Committee
meetings

6 out of 6
(100%)

Board ofDirectors
Meetings

20 out of 20(100%)

Nomination
Committee
meetings

1 out of 1
(100%)

Audit
Committee
meetings

18 out of 18(100%)

Board ofDirectors
Meetings

17 out of 20(85%)

Compensation
Committee
meetings

6 out of 6
(100%)

Kuniaki KagaDavid Roblin

Noriaki Nagai

Remarks/Activities/Summary of duties performed inrelation to the role expected of an external director

Attendance

Makes statements at the Board meetings as necessary
for deliberations on agenda items from a professional
viewpoint as an attorney, leads audits as the chair of the
Audit Committee, and asks questions and gives opinions
and other statements as appropriate at each Committee
meeting.

Makes statements at the Board meetings as necessary
for deliberations on agenda items from a professional
viewpoint based on the experience of management ofleading chemical and pharmaceutical companies inJapan and asks questions and gives opinions and otherstatements as appropriate at Audit Committee meeting.

Makes statements at the Board meetings as necessary
for deliberations on agenda items from a professional
viewpoint based on the clinical experience as aphysician and R&D experience of pharmaceuticalcompanies, and asks questions and gives opinions andother statements as appropriate at each Committee
meeting.

Makes statements at the Board meetings as necessary
for deliberations on agenda items from a professional
viewpoint based on his legal knowledge and his career
experience in important positions in corporate
departments at major securities companies and as aprofessor of law, and asks questions and gives opinions
and other statements as appropriate at each Committee
meeting.

Makes statements at the Board meetings as necessary
for deliberations on agenda items from a professional
viewpoint based on his financial knowledge and his
career experience in the field of finance at companies in
Europe, North America, Asia, etc., and asks questions
and gives opinions and other statements as appropriate
at each Committee meeting.

Rolf Soderstrom

37

Miwa Seki

Audit
Committee
meetings

16 out of 18(89%)

Board ofDirectors
Meetings

13 out of 16(81%)

Nomination
Committee
meetings

1 out of 1
(100%)

Audit
Committee
meetings

12 out of 12(100%)

Makes statements at the Board meetings as necessary
for deliberations on agenda items from a professional
viewpoint based on her career experience in head ofJapan at a foreign capital financial institution andfounding partner of an ESG-oriented investment fund,and asks questions and gives opinions and otherstatements as appropriate at each Committee meeting.

※ Ms. Miwa Seki ware elected Director at the 32nd Ordinary General Meeting of Shareholders heldon March 24, 2022, and accordingly, the number of times she attended meetings of the Board of
Directors and committees held since assuming office is stated in.

(4) Independent Auditors
1) NameErnst & Young ShinNihon LLC

2) Amounts of remuneration, etc.
Amount of remuneration, etc. payable to the independent auditors for services
related to this fiscal period
Total amount of cash and other property benefits payable to the independent
auditors by the Company and its subsidiaries¥ 60 Million¥ 60 Million(Notes) 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 made in practice, so amounts ofremuneration, etc. for the Independent Auditors for this fiscal year are the total of these remunerations.
2. The Audit Committee has confirmed the audit plan of the independent auditors, the state of execution of duties
for accounting audits, and the basis of remuneration estimates, etc. and considered whether audit
remuneration is adequate for the implementation of appropriate audits and as a result has found that
remuneration is appropriate. Therefore, it has given consent to remuneration, etc. of the Independent Auditorsin accordance with Article 399, Paragraph 1 of the Companies Act.
3. One of the Company’s significant subsidiaries, Heptares Therapeutics Ltd. has been audited by an auditing
firm that belongs to a member firm of Ernst & Young LLC., Which is a member of our accounting auditor, andthe audit fee is ¥47 million.
4. In addition to the above, the Company paid JPY 8 million of remuneration to the organization within the
network same with the Company's independent auditors. This primarily consists of support on manual
preparation etc. for an expatriate.

3) Policy for dismissal or non-reappointment of the independent auditors
If circumstances arise that would interfere with the appropriate execution of the duties of the
independent auditors or cause the Audit Committee to deem it appropriate to dismiss or not toreappoint the independent auditors, the Audit Committee will make a proposal for dismissal or
non-reappointment of the independent auditors for submission to the Ordinary General Meetingof Shareholders. Also, when it deems that any cause stipulated in each item of Article 340,
Paragraph 1 of the Companies Act applies to the independent auditors, the Audit Committee
can dismiss the independent auditors by agreement of all committee members.

4) Summary of liability limitation agreements
The Company has not entered into an agreement with the Independent Auditors to limit their
liability for damages under Article 423, Paragraph 1 of the Companies Act

38

(5) Outline of the systems for ensuring the appropriateness of operations and their operating
status
The following provides a summary of the systems for ensuring the appropriateness of operations as
resolved by the Company’s Board of Directors, and of the operating status of these systems.

1) Systems for ensuring the appropriateness of operations<<Matters required for execution of duties by the Audit Committee>>① Matters related to directors and employees who assist in Audit Committee duties
Employees who assist in the duties of the Audit Committee conduct their duties in coordination with
the Internal Audit Department in accordance with the directions of the chairman of the Committee.
Evaluations related to the performance of these employees are conducted by the Committee, andtransfers of such employees are subject to approval by the Committee.
② Systems regarding matters to be reported by directors (excluding directors who are Audit
Committee members), executive officers, and employees to the Audit Committee and other mattersto be reported to the Audit Committee
・ Directors, executive officers and employees of the Company and subsidiaries who learn of facts
that may cause material damages to the Company or acts, etc. that are in violation of laws andregulations or Articles of Incorporation shall report them to the Audit Committee, and those who
make such reports shall not be treated unfairly for reporting such facts or actions.
・ The Internal Audit Department reports timely and properly to the Audit Committee on theimplementation status of internal audits.
・ The Legal and Compliance Department reports timely and properly to the Audit Committee on
the status of whistleblowing system.
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 the Committee, which includes holding
discussions related to audits.
・ The Company promptly processes requests by the Audit Committee members for advancement
or reimbursement of expenses necessary for the performance of Audit Committee duties.
<<Systems for ensuring that the execution of duties by executive officers conforms with laws andregulations and Articles of Incorporation, and other systems required to ensure the appropriateness of
the Company’s operations>>④ System to ensure the performance of duties by executive officers and employees and by directors
and employees of subsidiaries to conform with laws and regulations and Articles of Incorporation
・ Compliance with laws and regulations and adherence to corporate ethics are stipulated in theGroup’s code of corporate conduct, and every effort is made to raise awareness of this among
all executive officers and employees, including at subsidiaries. An independent whistle-blower
hotline exists and is operated appropriately.
・ The Internal Audit Department conducts internal audits related to performance of duties at theCompany and its subsidiaries.
⑤ System related to preservation and management of information related to performance of duties byexecutive officers

39

Information related to performance of duties by executive officers is appropriately prepared,
retained and managed in accordance with internal company rules.
⑥ Rules and other systems related to management of risk of loss
・ Specific policies and measures are determined to deal with risks related to the Group’s business
operations, and risk management procedures are appropriately conducted at the Company andits subsidiaries.
・ Important management decisions are made after adequate deliberation by the Board of
Directors, etc. and based on the opinions of outside experts as necessary.
⑦ System to ensure that performance of duties by executive officers and directors, etc. of subsidiaries
is conducted efficiently
・ Operational responsibilities of executive officers and official authority for respective executives
and employees of the Company and subsidiaries are clearly stipulated, and reporting on
operational performance and deliberations on important matters are conducted with flexibility inaccordance with these rules.
・ System construction is promoted to improve operational efficiency.
⑧ System to ensure the appropriateness of operations at the corporate group consisting of theCompany and its subsidiaries
・ Reports on operational matters at subsidiaries are received in accordance with internal company
rules, and instructions and support relating to the establishment of systems designed 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 of subsidiaries.
・ Efforts are made to ensure the appropriateness of the Group’s financial reporting, which isevaluated, maintained, and improved.

2) Outline of the operational status of systems for ensuring the appropriateness of operations① Compliance system
The Group has established a code of corporate conduct that applies to the entire Group, and isproceeding with further revisions, which include exhaustive efforts to promote awareness, in order to
respond to recent changes in the business environment. In addition, whistle-blowing incidents arehandled appropriately through a whistle-blower hotline established externally, and internal audits are
conducted by the Internal Audit Department at the Group’s companies in accordance with the internal
auditing plan.
② Information retention and management system
The Company has appropriately created, stored, and managed minutes of meetings of the Boardof Directors and committees, etc. and other documents related to the execution of operations inaccordance with the rules on document management and other rules.
③ Risk management system
The Company has conducted sufficient deliberations and made business decisions at meetings ofthe Board of Directors, by taking into account the opinions of outside experts, etc., regarding theGroup’s significant investment projects and technical alliances, etc. In addition, the Internal Audit
Department has provided guidance on the risk management system of the Company and its
subsidiaries based on the results of internal audits.

40

①

System for efficient and appropriate execution of duties
The Group stipulates authority levels for executives and employees in accordance with formal
authority rules at each company. In order to ensure that operations are carried out efficiently andappropriately, the Group requires management of affiliated companies to provide reports to theparent company in accordance with the relevant rules, and provides suitable supervision andguidance by the parent to affiliated companies. In addition, the business performance of subsidiaries
is reported as necessary at meetings of the Board of Directors. The Internal Audit Department
provides guidance on recommended improvements identified through internal audits.

②

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 coordinated, as appropriate, with the Internal Audit Department in the execution of theirduties. The Audit Committee members attended important meetings, including meetings of the Boardof Directors, and requested reports from the directors, executive officers, corporate auditors andemployees of the Company and its subsidiaries as necessary. In addition, they receive reports on
the handling of any reports made through the whistle-blower process.

(6) Policy on determination of Dividends, etc.
The declaration and payment of any dividends in the future will depend on the results ofoperations, financial conditions, cash requirements, future prospects, profits available for
distribution and other factors deemed by the Board to be relevant at the time.
At present, the Group is making prudent investments to build a globally competitive
biotechnology business and, therefore, does not expect to pay any dividends in the nearto medium term. The Board will continue to reassess this position based on the factors
above(7) Policy on the conduct of persons influencing decision on the Company's financial andbusiness policies
Not applicable41

Consolidated Balance Sheet(Millions of yen)Item

The 33rd term
At December 31,2022

Item

The 33rd term
At December 31,2022

Non-current assets

29,475

Non-current liabilities

37,389Property, plant andequipment

3,791

Deferred tax liabilities

2,922

Goodwill

15,306

Corporate bonds

27,981Intangible assets

8,577

Lease liabilities

1,577

Other financial assets

1,737

Other non-current liabilities

4,909

Current liabilities

4,092

Trade and other payables

1,628

Other non-current assets

64

Current assets

69,942

Income taxes payable

260

Trade and other receivables

2,462

Lease liabilities

176

Income taxes receivable

58

Other financial liabilities

36

Other current assets

865

Other current liabilities

1,992

Total liabilities

41,481

Cash and cash equivalents

66,557

EquityTotal assets

99,417

Note: Amounts less than JPY 1 million are rounded.

42

Capital stock

41,335

Capital surplus

29,525

Treasury stock(1)

Retained earnings(8,911)Other components of equity(4,012)Equity attributable toowners of the parent

57,936

Total equity

57,936

Total liabilities and equity

99,417

Consolidated Statement of Profit or Loss andOther Comprehensive Income(Millions of yen)
The 33rd term
Financial year ended December 31, 2022

Item
Revenue

15,569

Cost of sales(926)

Gross Profit

14,643

Other income and expenses
Research and development expenses(7,454)

Selling, general and administrative expenses(4,377)

Other income

626

Other expenses(2)

Operating profit(11,207)
3,436

Finance income

663

Finance costs
Share of loss of associates accounted for using theequity method
Impairent loss for investments accounted for using theequity method
Profit before income taxes

(756)
(429)
(1,836)
1,078

Income tax expense(696)

Net profit

382

Other comprehensive income
Items that will not be reclassified subsequently to profit orloss:
Net change in fair value of financial assets measured atfair value through other comprehensive income
Items that may be reclassified subsequently to profit orloss:
Exchange differences on translating foreign operations

(928)

291

Total comprehensive loss

(637)
(255)

Net profit for the year attributable to
Owners of the parent

382

382

(255)

(255)

Total comprehensive loss attributable to:
Owners of the parent
Note: Amounts less than JPY 1 million are rounded.

43Consolidated Statement of Changes in Equity(Millions of yen)

CapitalStock

CapitalsurplusTreasurystock

Retainedearnings

Other
components ofequityEquityattributable toowners ofthe parent

Total
equity41,03629,100(0)(9,768)(2,900)57,46857,468Net profit

-

-

-

382

-

382

382

Other comprehensive
loss

-

-

-

-

(637)

(637)

(637)

Total comprehensive loss

-

-

-

382

(637)

(255)

(255)

Issuance of new shares

299

(299)

-

-

-

0

0

Share-based payments

-

724

-

-

-

724

724

-

-

(1)

-

-

(1)

(1)

-

-

-

475

(475)

-

-

299

425

(1)

475

(475)

723

723

41,33529,525(1)(8,911)(4,012)

57,93657,936

Balance at January 1,
2022

Purchase of treasury
stock
Transfer from othercomponents of equity
Total transactions withownersBalance at December
31, 2022

Note: Amounts less than JPY 1 million are rounded.

44

Notes to the Consolidated Financial Statements
1.
(1)

Basis of preparation of the consolidated financial statements
Standards for preparation of the consolidated financial statements
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards(hereinafter “IFRS”) based on Paragraph 1, Article 120 of the Corporate Accounting Rules. Some statements and notes
required by IFRS have been omitted pursuant to the provisions of the latter part of the Paragraph.

(2)

Scope of consolidation
1) Consolidated subsidiaries
i. Number of subsidiaries: 5
ii. Names of principal consolidated subsidiaries:
Sosei Co. Ltd.
Heptares Therapeutics Ltd.

(3)

Scope of equity accounting
1)

Associates accounted for using the equity method

i. Number of associates accounted for using the equity method: 0
The Group ceased to account for MiNA (Holdings) Limited (MiNA) as an affiliate accounted for using the equity methodfrom Octorber 2022. The Group determined in October 2022 that it no longer exercised significant influence over MiNA
because the Group holds less than 20% of the voting rights of MiNA and it ceased to have an appointed Director on the
MiNA Board from this date.
(4)

Accounting policies
1)

Valuation standards and methods for significant assets and liabilities

i. Financial assets (excluding derivatives)
Initial recognition and measurement of financial assets
Trade receivables and other receivables are recognized initially on their settlement dates. Other financial assets arerecognized on their transaction dates. At initial recognition, the Group measures a financial asset at its fair value plus, inthe case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to theacquisition or issue of the financial asset. At the time of initial recognition, the classification of financial assets is determined
as follows:
Debt instruments•

Financial assets measured at amortized cost
A financial asset is measured at amortized cost when both of the following conditions are met:(a) the financial asset is held in a business model whose objective is to hold financial assets in order tocollect contractual cash flows, and(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.

•Financial assets measured at fair value through profit or loss are financial assets other than those defined
above.

Equity instruments•

Financial assets measured at fair value through other comprehensive income
The Group may irrevocably elect to classify equity investments, other than those held for trading, upon initialrecognition as financial assets measured at fair value through other comprehensive income.

•Equity financial assets measured at fair value through profit or loss are equity financial assets other than thosedefined above.

45

Subsequent measurement of financial assets
After initial recognition, the Group measures a financial asset according to its classification as follows:(a)a financial asset measured at fair value through profit or loss is recognized as the change in the amount of the(b)a financial asset measured at fair value through other comprehensive income is recognized as the change in thefair value.
amount of the fair value. When the financial asset is derecognized, the cumulative gain or loss in othercomponents of equity is transferred to retained earnings. Dividends from a financial asset are recognized as partof financial income in net income (loss) for the current period, except for those portions considered to be part ofthe cost of investment.
(c)a financial asset measured at amortized cost is recognized by the effective interest method.

Derecognition of financial assets
The Group derecognizes a financial asset when, and only when:(a)the contractual rights to cash flows from the financial asset expire, or(b)

it transfers the contractual rights to receive cash flows from the financial asset and transfers substantially all therisks and rewards of ownership of the financial asset.

Impairment of financial assets
For financial assets measured at amortized cost expected credit losses are recorded through an allowance for doubtful
accounts. At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased
significantly since initial recognition. The Group measures the loss allowance for a financial instrument at an amount equal
to the expected annual credit loss where the credit risk on that financial instrument has not increased significantly sinceinitial recognition. Alternatively, the Group measures the loss allowance for a financial instrument at an amount equal to thelifetime expected credit loss if the credit risk on that financial instrument has increased significantly since initial recognition.
The Group uses the change in risk of a default occurring over the expected life of the financial instrument instead of thechange in the amount of expected credit losses. To make this assessment, the Group compares the risk of a default
occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument
as at the date of initial recognition and considers reasonable and supportable information, that is available without undue
cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Group measures the loss
allowance for trade receivables at an amount equal to the lifetime expected credit losses. The Group assumes that thecredit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument isdetermined to have low credit risk at the reporting date.
Whether or not a financial asset is credit impaired is determined by the default of the borrower, or if the lender, for economic
or contractual reasons relating to the borrower’s financial difficulty, grants to the borrower a concession(s) that the lenderwould not otherwise have granted, or when other factors occur, such as the disappearance of an active market. Expectedcredit losses are measured as the difference between contractual cash flows that are due to the Group in accordance witha contract and the cash flows that the entity expects to receive, discounted at the original effective interest rate. The Group
directly reduces the value of a credit impaired-financial asset when it, or a part of it, cannot realistically be expected to berealized and its collateral is realized or transferred to the Group. Where an impairment loss is reduced after initial recognition,
the decrease in impairment loss (decrease to the allowance for doubtful accounts) is reversed in profit or loss. The
impairment loss is reversed up to the value of the amortization at the time the impairment loss was recognized.
ii. Financial liabilities (excluding derivatives)
Initial recognition and measurement of financial liabilities
Financial liabilities are recognized on the transaction date. At initial recognition, the Group measures a financial liability at
its fair value minus, in the case of a financial liability not measured at fair value through profit or loss, transaction costs thatare directly attributable to the acquisition or issue of the financial liability. The Group classifies financial liabilities upon initialrecognition as financial liabilities subsequently measured at fair value through profit or loss, or financial liabilities measured
at amortized cost.

46

Subsequent measurement of financial liabilities
After initial recognition, the Group measures a financial liability as follows:(a)a financial liability measured at fair value through profit or loss is recognized as a change in fair value.

(b)a financial liability measured at amortized cost is recognized by the effective interest method.

If the discontinuation of amortization and derecognition using the effective interest method occur, a gain or loss is recognizedwithin net profit or loss for the current period as part of finance costs.
Derecognition of financial liabilities
The Group removes a financial liability (or a part of a financial liability) from its balance sheet when, and only when, it isextinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expires.
iii. Derivatives
The Group uses forward exchange contracts to manage its foreign exchange risk. These derivatives are initially recognizedat fair value on the date the contract is entered into, and are remeasured at fair value at each balance sheet date after initialrecognition. Changes in fair value are recognized through profit or loss. These derivatives do not qualify for hedge
accounting.
iv. Presentation of financial assets and financial liabilities
The Group offsets financial assets and financial liabilities showing the net amount only when the Group has the legal rightto offset the balances, and either settles the balances on a net basis or intends to simultaneously realize the asset andsettle the liability.
v . Valuation standards and methods for non-financial assets and liabilities
Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
Cost comprises those costs directly attributable to the acquisition of the asset, the initial estimate of costs for dismantling
and removing the asset and the costs of restoring property to its original state.
Goodwill and intangible assets
Goodwill
Goodwill arising from an acquisition of a subsidiary is recorded at cost less accumulated impairment losses. Upon initialrecognition goodwill is measured at the fair value of the transfer consideration, including the amount recognized for noncontrolling interests, less the net recognized value (normally, the fair value) of identifiable assets and assumed liabilities at
the time of the acquisition. Goodwill is not amortized. It is allocated to cash-generating units and an annual impairment test
is conducted at the same time in each financial year or whenever there is an indication that goodwill may be impaired.
Impairment losses on goodwill are recognized in the consolidated statement of profit or loss and other comprehensive
income and are not reversed subsequently.
Intangible assets
Separately acquired intangible assets with finite useful lives are measured at cost less accumulated amortization andaccumulated impairment losses. Cost comprises those costs directly attributable to the acquisition of the intangible asset.
Internally generated intangible assets
Expenditure on research activities is recognized as a cost in the period in which it occurs. Internally generated intangible
assets that occur at the development stage are recognized only when all the following criteria can be substantiated:• Technical feasibility of completing an intangible asset that can be used or sold• Intention to complete the intangible asset and then use it or sell it• Ability to use or sell the intangible asset• Method by which the intangible asset will create future economic benefit with strong potential• Possibility of using financial or other resources that will be necessary to complete the intangible asset and use it orsell it• Ability to reliably measure expenditure required to develop the intangible asset
The amount initially recognized for internally generated intangible assets is the total of costs incurred from the date that the47

intangible asset initially met the above recognition standards. When an internally generated intangible asset cannot berecognized, development outlays are expensed in the period they occur. Intangible assets generated after initial recognition
are stated at acquisition cost less cumulative amortization and cumulative impairment. Intangible assets acquired throughbusiness combinations and recognized separately from goodwill are stated at acquisition cost less cumulative amortizationand cumulative impairment after initial recognition at fair value as of the acquisition date.
Lease (as a lessee)
Management assesses whether new contracts include a lease at inception of the contract. If the contract conveys the rightto control the use of an identified asset for a period in exchange for consideration, the contract is, or contains, a lease.
Initial recognition and measurement
At the commencement date of the contract, a right-of-use asset is measured at an amount equal to the initial measurementof the lease liability, adjusted by an estimate of costs to be incurred in dismantling and removing the underlying asset,
restoring the site on which it is located or restoring the underlying asset itself. The lease liability is measured at the present
value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the commencement
date.
Subsequent measurement
A right-of-use asset is depreciated using the straight-line method over the shorter of the lease term or the useful life of theright-of-use asset. Interest on the lease liability is calculated to be the amount that produces a constant periodic rate ofinterest on the remaining balance of the lease liability. The lease liability is reduced by lease payments net of the interest
expense.
Presentation
In the Consolidated Balance Sheet, the Group presents right-of-use assets in “Property, plant and equipment” and leaseliabilities in “Lease liabilities”. In the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the Group
presents interest expense at an amount that produces a constant periodic rate of interest on the remaining balance of thelease liability in “Financial costs”.
Short-term leases and leases of low-value assets
For low-value asset leases and short-term leases with lease terms of 12 months or less, the Group has adopted theexemption provisions of IFRS 16 Leases, and has elected not to recognize right-of-use assets and lease liabilities. The
Group recognizes lease payments for these leases as expenses over the lease term using the straight-line method.
vi . Impairment of non-financial assets
The book values of non-financial assets are reviewed for indications of impairment at each reporting date. If any such
indications exist, the asset’s recoverable amount is estimated. For goodwill and intangible assets with indefinite useful lives
or intangible assets not yet available for use, the recoverable amount is estimated at the same time in each financial year.
The recoverable amount of assets or cash-generating units is the higher of value in use or fair value less disposal costs. In
the calculation of value in use, estimated future cash flows are discounted to present value using a discount rate that reflects
the time value of money and risks inherent to the asset. In respect of cash-generating units, assets are grouped into thesmallest units generating largely independent cash flows from other assets or units, through continued usage.
In respect of cash-generating units for goodwill, goodwill is assessed based on those business units defined for the
purposes of internal reporting. In principle, a cash-generating unit is classified as a type of business and geographicalregion. Corporate assets do not generate independent cash inflows. Therefore, when there are indications of impairment
in corporate assets the recoverable amount of the cash-generating unit to which the corporate asset belongs is calculated
for the impairment test. Assets that do not have external cash flows are included within the cash-generating units of thebusiness units that they support. Impairment loss is recognized in profit or loss when the book value of the asset or cashgenerating unit exceeds the recoverable amount. Impairment loss recognized in connection with cash-generating units isallocated first to reduce the book value of goodwill relating to that cash-generating unit. Any additional impairment requiredis allocated next to reduce the book values of other assets within the cash-generating unit proportionally.
Impairment losses related to goodwill are not reversed. In respect of impairment losses on other assets recognized in thepast, the existence of indications showing that the loss has decreased or been eliminated is assessed on each reporting48

date. If there are indications of a reversal of impairment and the estimate used for determining the recoverable amount haschanged, the impairment loss is reversed. The previously recognized impairment loss is reversed to the extent that thecarrying amount of the asset does not exceed what the carrying amount would have been (net of amortization anddepreciation) had no impairment loss been recognized for the asset in prior years.
2)

Depreciation methods for significant depreciable assets

i. Property, plant and equipment
Property, plant and equipment are depreciated based on their depreciable amounts by the straight-line method over the
expected useful life of each asset. The normal expected useful lives of major asset categories are as follows:•

Buildings and structures: 3 to 18 years•

Machinery and equipment: 4 to 8 years•

Furniture and fixtures: 3 to 18 years

The expected useful lives, residual values and depreciation methods are reviewed at the end of each financial year, andchanges in these items, if any, are applied prospectively as changes in accounting estimates.
ii. Intangible assets
Intangible assets are amortized based on their amortizable amounts by the straight-line method over the expected usefullife of each asset. The amortization method, expected useful lives, and residual values are reviewed at the end of eachfinancial year, and changes in these items, if any, are applied prospectively as changes in accounting estimates. Expected
useful lives of major asset categories are as follows:•

Product-related assets: 18 years•

Core technology: 12 to 20 years•

Customer-related assets: 20 years

Intangible assets with indefinite useful lives and intangible assets that are not yet available for use and therefore not yet
amortized, are tested for impairment at the same time in each financial year and whenever there is an indication of
impairment.
3)

Accounting standards for significant income and expenditure

i. Revenue recognition
Each research and licensing agreement is analyzed to identify the consideration receivable (the transaction price) and theunderlying performance obligations. Such obligations can include the promise to grant a license, the provision of researchand development services and the supply of product. The transaction price is then allocated to these performanceobligations and revenue is recognized at a point in time or over time as the performance obligations are satisfied.
If variable consideration arises under a contract, the Group includes in the transaction price only those amounts in respectof which it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when
the uncertainty associated with the variable consideration is subsequently resolved. Revenue excludes amounts collected
on behalf of tax authorities (for example, sales taxes and value added taxes).
The promise to grant a license is regarded as a distinct performance obligation if the customer can benefit from the license
either on its own or together with other resources that are readily available to the customer, and the Group’s promise totransfer the license to the customer is separately identifiable from other promises in the contract.
The promise to grant a license under a contract is a promise to provide a right to access intellectual property if all thefollowing criteria are met:•

the contract requires, or the customer reasonably expects, that the Group will undertake activities that significantly
affect the intellectual property to which the customer has rights.

•

the rights granted by the license directly expose the customer to any positive or negative effects of the Group’s
activities identified in the above criterion; an•those activities do not result in the transfer of a good or a service to the customer as those activities occur.

Where the above criteria are met, the promise to grant a license is accounted for as a performance obligation satisfied over49

time and revenue is recognized over time accordingly. Where these criteria are not met the promise to grant a license isdetermined to provide a right-to-use intellectual property accounted for as a performance obligation satisfied at a point intime.
ii. Cost of sales
Cost of sales comprises (i) the fully loaded cost of those employees providing research and development services for
specific customers under contracts (including other costs directly associated with these activities such as lab consumables
and an allocated share of depreciation of lab equipment) and (ii) the costs directly associated with product supply.
4)Standards for conversion of significant foreign-denominated assets and liabilities into Japanese currency

i. Foreign-denominated transactions
Transactions denominated in foreign currencies are translated into the functional currency of each Group company at therates of exchange prevailing at the dates of the transactions. Foreign-denominated monetary assets and liabilities aretranslated into the functional currency of each Group company using the exchange rate at the end of the period. Nonmonetary assets and liabilities denominated in foreign currencies measured at fair value are retranslated into the functional
currency at the exchange rates on the date fair value is determined. Non-monetary items measured at cost are translated
at the exchange rate on the transaction date. Exchange differences resulting from retranslation or settlement are recognizedin profit or loss in the period incurred.
ii. Financial statements of foreign operations
The assets and liabilities of the Group’s foreign operations (such as overseas subsidiaries) are translated into Japanese
yen at the exchange rates prevailing at the end of the period. Income and expenses are translated into Japanese yen at
the average annual exchange rates for the period as long as there is no significant exchange rate fluctuation. Exchange
differences arising from the translation of the financial statements of foreign operations are recognized in “Other
comprehensive income” in the consolidated statement of profit or loss and other comprehensive income and accumulatedin “Other components of equity” in the consolidated balance sheet.
5)

Business combinations

Business combinations are accounted for using the acquisition method. The consideration transferred in a businesscombination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets
transferred by the Group, liabilities assumed, and equity instruments issued by the Company in exchange for control of theacquiree. If the consideration transferred exceeds the fair value of identifiable assets and liabilities, the excess is recorded
as goodwill in the consolidated balance sheet. Conversely, if the fair value of such assets and liabilities exceeds theconsideration transferred, the excess is immediately recognized as a gain in the consolidated statement of profit or loss
and other comprehensive income. If the initial accounting for a business combination is incomplete by the end of the period
in which the business combination occurred, the Group reports provisional amounts for items for which the accounting is
incomplete. Those provisional amounts are adjusted retrospectively during the measurement period which lasts no morethan one year from the acquisition date. Acquisition costs are expensed as incurred.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from acontingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value andincluded as part of the consideration transferred in a business combination. Changes in the fair value of the contingent
consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments
against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during
the “measurement period” (which cannot exceed one year from the acquisition date) about facts and circumstances thatexisted at the acquisition date.

50

2.

Notes relating to key accounting judgements and estimates
In preparing consolidated financial statements in accordance with IFRS, management is required to make judgements,
estimates, and assumptions that affect the application of accounting policies and the amounts of assets, liabilities, revenue,
and expenses. Actual results may differ from these estimates due to their nature. The estimates and underlying assumptions
are reviewed on an ongoing basis. The effects of revisions to accounting estimates are recognized in the period in which
the estimate is revised and in any future periods affected. The key judgements and estimates made by management thathave had a significant effect on the amounts recognized in the consolidated financial statements are as follows:
Carrying amounts of Goodwill and Intangible Assets
The carrying amounts of Goodwill and Intangible Assets were JPY 15,306 million and JPY 8,577 million, respectively, as at
December 31, 2022. The valuation principles that apply to Goodwill and Intangible Assets are set out in Note 1.(4) 1) v:
Valuation standards and methods for non-financial assets and liabilities, and Note 1.(4) 1) vi: Impairment of non-financial
assets. Significant judgement is exercised by management in estimating the future cash flows used in the valuation models
through which impairment is tested, including assumptions over the timing of the achievement of milestones, the probabilityof success of R&D programs, revenue forecasts relating to developed products and the WACC. Management uses its
experience, external sources, knowledge of the activities of competitors and industry trends in forming these assumptions.
If there are material adverse differences between management’s projected cash flows and the actual cash flows (forexample, the occurrence or timing of milestone receipts could differ), impairment charges may be required to reduce thecarrying amounts of goodwill and intangible assets down to their recoverable amounts.
Revenue recognition
The closing balance of deferred revenue (contract liabilities) was JPY 6,221 million as at December 31, 2022, and theamount released from deferred revenue recognized as revenue during the current financial year was JPY 968 million.
Consideration relating to performance obligations other than the grant of a license that are not satisfied at a point in time isinitially recorded as deferred revenue when the Group receives consideration before the performance obligations are
satisfied. Revenue is measured, and the same amount is derecognized from deferred revenue, based on the ratio of actual
hours incurred at the period end to the estimated total hours expected to be incurred in the period from the commencementof the R&D plan until its expected completion date. The estimation of total hours is subject to uncertainty because (i) R&D
generally takes a long period of time and each project is highly individualized, (ii) the total hours required will depend upon
the progress of the R&D activity, which is not guaranteed, and (iii) these estimates are subjective because they dependon the judgement of project managers with expertise and R&D experience. Therefore, fluctuations in the total estimatedhours during the R&D period may have a significant impact on the amount of revenue recognized in the consolidated
financial statements during the next financial year.

3.

Notes to consolidated statement of financial position
Cumulative depreciation on property, plant and equipment was JPY 2,428 million .

4.

Notes to the consolidated statement of changes in equity(1)

Total shares outstanding

Share class

Shares at beginningof the financial year

Increase in shares
during the financialyear

Decrease in shares
during the financial
year

Shares at end of
the financial year

81,518,316

404,914-

81,923,230

Common shares

Note: The increase in common shares outstanding is due to the exercise of stock options (5,200 shares), the allotment of
Restricted Stock Units (“RSUs”) (380,071 shares) and the allotment of Performance Stock Unites (“PSUs”) (19,643 shares).
(2)

Subscription warrants, etc. as at December 31, 2022

Type and number of shares for subscription warrants as at December 31, 2022:
Common shares 13,507,218

51

5.

Notes on financial instruments(1)
1)

Financial instruments
Policies for management of financial instruments

The Group limits its investments to short-term instruments with minimal risk and does not engage in speculative transactions.
Funds are primarily procured through issuing new stock and bonds, borrowing from banks, and through leasing.
2)

Financial instruments – content, risks and risk management framework

Trade and other receivables are exposed to customer credit risk. To mitigate this risk payment deadlines and balances aremonitored for each customer. Trade and other payables have payment deadlines of less than one year. The Group limits
its investments to short-term deposits to reduce risk.
(2)

Fair value of financial instruments

Amounts stated in the consolidated balance sheet as at December 31, 2022, their corresponding fair values and thedifferences between these amounts are as follows:
Amount stated inconsolidatedbalance sheet¥m

Fair value

Difference¥m¥m

Other financial assets

1,737

1,737

-

Trade and other receivables

2,462

2,462

-

Cash and cash equivalents

66,55766,557-

Corporate bonds

27,981

28,580599

Trade and other payables

1,628

1,628

-

36

36

-

Other financial liabilities(3)

Fair value of financial instruments

The classification of financial instruments within the fair value hierarchy from Level 1 to Level 3
is as follows:
Level 1: Quoted prices (unadjusted) in an active market for identical assets or liabilities.
Level 2: Fair value determined using inputs other than quoted prices included within Level 1 that are observable for theasset or liability, either directly or indirectly.
Level 3: Fair value determined using valuation techniques including measurement based on unobservable inputs.
(1)

Financial instruments that are measured at fair value on a recurring basis
Level 1¥m

Level 2¥m

Level 3
¥m

Total
¥m

-

-

268

268

Financial assets:
Financial assets measured at fair value through profit orloss
Other financial assets
Financial assets measured at fair value through othercomprehensive income
Other financial assets
Financial liabilities:
Financial liabilities measured at fair value through profit
or loss
Other financial liabilities

52

428

-

983

1,411

428

-

1,251

1,679

-

36

-

36

-

36

-

36

(2)

Financial instruments measured at amortized cost
Level 1¥m

Level 2¥m

Level 3
¥m

Total
¥m

-

28,580-28,580-28,580-28,580Financial liabilities:
Corporate bonds

Notes: Explanation of valuation methods and inputs used in determining fair value
1. Financial assets
Financial assets comprise listed securities, unlisted securities, and contingent consideration receivable relating to abusiness disposal, which is shown under other financial assets.
a. Listed securities
The fair value of listed securities is assessed using the market price at the end of the period, and changes in fairvalue are recorded in “Net change in fair value of equity instruments designated as measured at fair value throughother comprehensive income” in the consolidated statement of profit or loss and other comprehensive income. The
fair value of listed securities is categorized as Level 1, as securites are traded in an active market.
b. Unlisted securities
The fair value of unlisted securities is assessed using an appropriate valuation model based on number of variables
including net assets, future cashflows and estimated profits, and changes in fair value are recorded in profit or loss,
or in “Net change in fair value of equity instruments designated as measured at fair value through othercomprehensive income”. The fair value of unlisted securities is categorized as Level 3 as it is determined by avaluation method utilising unobservable inputs.
c. Contingent consideration receivable relating to a business disposal
The fair value of contingent consideration receivable relating to a business disposal is assessed using a probability
adjusted discounted cashflow model.

The fair value is categorized as Level 3 as it is determined by valuation

methods utilising unobservable inputs. Changes in fair value are recorded in profit or loss.
2. Financial liabilities
Financial liabilities comprise derivative financial liabilities from foreign exchange forward contracts shown under otherfinancial liabilities, and corporate bonds.
a. Derivative financial liabilities (forward contracts)
Derivative financial liabilities are from foreign exchange forward contracts. They are categorized as Level 2 as thefair value is determined based on the amount delivered by the corresponding financial institution.
b. Corporate bonds
The fair value of the debt element of convertible bonds is calculated by discounting the total amount of principal andfuture interest payments at an interest rate that considers the remaining maturity of the bonds and credit risk. They
are categorized as Level 2 of the fair value hierarchy.
(3)

Repayment schedule for Corporate bonds and Lease liabilities
Due within
1 year¥m

Due more than 1 year
and less than 5 years¥m

Due more than 5
years
¥m

230

30,000760

1,062

Corporate bonds
Lease liabilities53

6. Notes on revenue recognition
The Group earns revenue through selling a fully developed pharmaceutical product, granting licenses that provide the rights
to develop and market pharmaceutical products and through the provision of research and development services to customers.
These activities are classified into the following types of revenue based on their purpose and performance obligations:
(1)

(2)

Types of revenue classified by purpose•

Upfront fees and milestone income: Upfront fees, Development milestone income, Sales milestone income•

Royalty income: Sales royalty income•

Pharmaceutical product sales: Revenue from product sales•

Other: Revenue from contracted research and development services

Types of revenue classified by performance obligation

Grant of Licenses
When a license is distinct from other goods or services and evaluated as a right to use license:•

Upfront fees are recognized at the time of the grant of the license if the performance obligation is satisfied at apoint in time.

•

Development milestone income is only recognized when it is determined that the achievement of milestones
agreed between the parties, such as regulatory filings, are assured, taking into consideration the probability of asubsequent significant reversal of revenue.

•

Sales royalty income and sales milestone income are measured based on the sales recorded by the counterparty
when (or as) the later of (i) a sales transaction has occurred or a contractually agreed target is achieved, and (ii)the performance obligation is satisfied.

When a license is distinct from other goods or services and evaluated as a right to access license:
Not applicable.
Research and Development services
Revenue from Research and Development services is recognized over time because the customer simultaneously
receives and consumes the benefits provided by the Group’s performance as the Group performs.
(a) Research and Development services – compensated through upfront fees and development milestones
When upfront fees and development milestone income is allocated to performance obligations other than the grant of
a license:
Consideration relating to performance obligations that are not satisfied at a point in time is initially recorded as deferred
revenue when the Group receives consideration before the performance obligations are satisfied. Revenue ismeasured, and the same amount is derecognized from deferred revenue, based on the ratio of actual hours incurredat the period end to the estimated total hours expected to be incurred from the commencement of the research anddevelopment plan until its expected completion date. However, development milestone income, which includes
variable consideration, is recognized only to the extent that it is highly probable that a significant reversal in the amountof cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently
resolved.
(b) Research and Development services – compensated through FTE charges
Full Time Equivalent (“FTE”) revenue earned from providing research and development services to customers is
recognized over time by multiplying the amount of time worked by the contracted charge-out rate.
Pharmaceutical product sales
Pharmaceutical product sales are recognized upon the customer’s acceptance.
The transaction price for granting licenses is allocated to each performance obligation based on the stand-alone selling
price calculated using the residual approach. The consideration is the amount receivable within one year from satisfactionof the performance obligations or fulfillment of contractual terms and conditions.
Variable consideration is allocated to a specific performance obligation only if both of the following conditions apply:•

Variable payment terms relate specifically to the entity's effort to satisfy the performance obligation or transfer
the distinct good or service.

54

•

Allocating the variable amount of consideration entirely to the performance obligation or the distinct good orservice, is consistent with the following allocation objective when considering all of the performance obligations
and payment terms in the contract: an entity should allocate the transaction price to each performance obligation
or distinct good or service in an amount that depicts the amount of consideration to which the entity expects tobe entitled to in exchange for transferring the promised goods or services to the customer.

There are no significant financing components included in any license contracts or any research and development
contracts.
(3)

Breakdown of revenue
Performance obligations
Research andDevelopment

Product supply

Grant of Licenses

services

revenue

Total

¥m

¥m

¥m

¥m

11,095968-

12,0632,564

Types of Revenue
Upfront fees and milestone
incomeRoyalty income

2,564

-

-

Product supply revenue

-

-

80

80

Other

-

862

-

862

13,6591,830

80

15,569Performance obligations satisfied in past periods amounting to JPY 8,993 million are included in revenue for the year ended
December 31, 2022.
(4)

Contract balances

Receivables from contracts with customers are included in the balance sheet as “Trade and other receivables”.
Deferred revenue is included in the balance sheet under “Other non-current liabilities” and “Other current liabilities”.
Opening and closing balances of deferred revenue from contracts withcustomers

At December 31, 2022¥m

Opening balance

1,141

Of the opening balance, the amount recognized as revenue(473)

Exchange differences on translation(72)

Amount newly recognized as contract liability and carried forward to the next
period5,625

Closing Balance

6,221

Other non-current liabilities

4,791

Other current liabilities

1,430

(5)

Transaction price allocated to the remaining performance obligations

Research and development services related performance obligations arising under contracts may be unsatisfied or partiallysatisfied at the reporting date. Milestone income allocated to research and development services is not included in thetransaction price allocated to the remaining performance obligation because the uncertainty of reaching the agreed
milestone, such as a regulatory filing, will not be resolved until the actual achievement of the milestone. Since the Group
has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of theGroup’s performance of services completed to date, the transaction price allocated to the remaining performance obligations
relating to research and development services is omitted as a practical expedient in accordance with paragraphs 121(b)and B16 of IFRS15.

55

7.

Notes on per-share information¥
Equity attributable to owners of parent - per share

707.20

Basic earnings - per share
8.

4.68

Other notes(1)

Interest-bearing debt

As of the end of the current consolidated financial year, there is no outstanding loan balance.
On December 30, 2022, the Company entered into a commitment line agreement for one year (maximum loan amount:
JPY 5,000 million) with Mizuho Bank and three other banks. Under the commitment line agreement, the Company is subject
to a financial covenant requiring it to maintain its consolidated net assets at 75% or more of the level at the second quarterof the financial year ending December 31, 2022 at every second quarter after the financial year end and at the financial
year end. In addition, the Company has the following rights under the commitment line agreement:(1) Extend the maturity of the commitment line for a period of one year on the anniversary of the contract date and foranother one year on the anniversary of the second year, for a total of two extensions.
(2) Convert the commitment line at each anniversary date up to December 30, 2025 into an installment term loan of thesame value with a repayment period of four years.
(2)

Impairment

The carrying amount of MiNA (Holdings) Limited, which was accounted for by the equity method up to October 2022, hasbeen reduced to its estimated recoverable amount. A charge of JPY 1,836 million was recognized as “Impairment loss on
investments accounted for using the equity method" in the Interim Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income for the current year ended December 31, 2022. The estimated recoverable amount ismeasured at fair value which is based on a third-party appraisal. This investment is classified under level 3 of the fair value
hierarchy. Please refer to Note 8 Financial Instruments for an explanation of the fair value hierarchy.
(3)

Impact of COVID-19

The Group deployed a number of counter-measures to mitigate the potential impact of COVID-19 on its operations and thesituation has now largely normalized in the countries in which the Group operates. Consequently, COVID-19 did not havea significant impact on the Group’s operations during the current financial year.

56

Non-Consolidated Balance Sheet(Millions of yen)Item

The 33rd term
At December 31,
2022

AssetsCurrent assets
Cash and deposits

Prepaid expenses

Others39,195
39,10357

35

Non-current assets
Property, plant andequipment
Buildings
Tools, furniture andfixtures50,190Intangible assets
Software
OthersInvestments and otherassets4
4
0

Shares of subsidiaries
and associates
Long-term loans
receivable fromsubsidiaries andassociates
Investments in capital

OthersItem
Liabilities
Current liabilities
Accounts payable-otherAccrued expenses
Income taxes
payableDeposit received
Provision for bonuses
Allowance for stockbased compensation
OthersNon-current liabilities
Corporate bonds
Asset retirement
obligations
Allowance for stockbased compensation

38
27

Total liabilities

49,973

1,019
218
132
113
22
69
447
18
30,82230,53513274
31,841Net Assets

11

50,148The 33rd term
At December 31,
2022

Shareholders’ equity

57,306

Capital stock
Capital surplus
Legal capital surplus
Retained earnings
Other retained
earnings
Retainedearnings
brought
forwardTreasury stock

41,33529,452
29,452(13,480)(13,480)(13,480)(1)

2,918Valuation/translationdifference
Unrealized holding
gains or loss on
securities
Stock acquisitionrights

117

58

(5)
(5)
243

Allowance for doubtful
accounts(2,918)

Total net assets

57,544

Total assets

89,385

Total liabilities and net
assets89,385

Note: Amounts less than JPY 1 million are rounded.

57

Non-Consolidated Statement of Profit or Loss
(Millions of yen)

The 33rd term
Financial year ended December 31,2022

Item
Operating revenue

1,118

Operating expenses(2,213)Operating loss

(1,095)Non-operating income
Interest income

79

Miscellaneous income

079

Non-operating expenses
Interest expenses(1)

Commission expenses(41)

Provision of allowance for doubtful accounts for
subsidiaries and associates(500)

Foreign exchange loss

(25)

Miscellaneous loss

(3)

Ordinary loss

(570)
(1,586)Extraordinary income
Gain realized on contingent consideration
receivable relating to business disposals
Gain on reversal of stock acquisition rights toshares136
5

Loss before income taxes

141(1,445)

Corporate tax, residential tax and enterprise tax
Net loss

(52)

(52)
(1,497)

Note: Amounts less than JPY 1 million are rounded.

58

Non-Consolidated Statement of Changes in Equity(Millions of yen)

Shareholders’ equity
CapitalsurplusCapital stock

Retainedearnings

Legal capitalsurplus

Other retained
earnings

Total
shareholders’equityTreasurysharesRetainedearnings brought
forward41,03629,153(11,983)(0)58,206

299

299

-

-

598

Net loss for the year--

(1,497)-(1,497)Purchase of treasury stock

-

-

-

(1)

(1)

Net changes of items other thanshareholders’ equity

-

-

-

-

-

Total changes during the period

299

299

(1,497)

(1)

(900)

Balance at December 31, 2022

41,33529,452(13,480)(1)

57,306

Balance at January 1, 2022
Changes during the period:
Issuance of new shares

Valuation/translationdifference
Unrealized
holding gains
or loss on
securities

StockacquisitionrightsTotal net assets-

264

58,470Issuance of new shares

-

-

598

Net loss for the year--

(1,497)Purchase of treasury stock

-

-

(1)

Net changes of items other thanshareholders’ equity

(5)

(21)

(26)

Total changes during the period

(5)

(21)

(926)

Balance at December 31, 2022

(5)

243

57,544

Balance at January 1, 2022
Changes of during the period:

Notes: Amounts less than JPY 1 million are rounded.

59

Notes to the Non-Consolidated Financial Statements
1.

Significant accounting policies(1) Asset valuation standards and methods
1) Marketable securities
Shares of subsidiaries and affiliated companies are carried at cost determined by the moving-average method.
(2) Fixed asset depreciation methods
1) Property, plant and equipment (except lease assets):
The declining balance method is used. However, the straight-line method is used for facilities attached to buildings
and acquired on or after April 1, 2016. The normal estimated useful lives are as follows:•

Buildings (facilities attached to buildings): 6-18 years•

Tools, furniture and fixtures: 5-18 years

2) Intangible fixed assets (except lease assets):
The straight-line method is used.
For internal-use software, the straight-line method is used based on an estimated useful life of 5 years.
3) Lease assets: Finance lease transactions without a transfer of ownership
The straight-line method is used over the term of the lease with a residual value of zero.
(3) Accounting for deferred assets
Share issuance cost: Expensed in full at the time of payment.
Bond issuance cost: Expensed in full at the time of payment.
(4) Recognition standards for provision
1) Allowance for doubtful accounts
Allowance is made for credit losses on accounts receivable and other accounts. An estimate of irrecoverable amounts
is set aside based on historical credit loss rates for ordinary receivables and based on individual considerations forother receivables regarded as doubtful.
2) Provision for bonuses
Provision is made during the financial year for the payment of employee bonuses.
3) Provision for directors’ bonuses
Provision is made during the financial year for the payment of director bonuses.
4) Provision for stock-based compensation
Provision is made for stock-based compensation based on an estimation of the expense incurred in the financial year.
(5) Revenue recognition criteria
The Company's revenues consist of management fees charged to its subsidiaries. The Company recognizes revenue
from management fees when a contract is executed, since the Company's performance obligation is to provide
contracted services to a subsidiary and the Company's performance obligation is satisfied when those services are
performed.
(6) Standards for conversion of significant foreign-denominated assets and liabilities into Japanese currency
Foreign-denominated monetary claims and obligations are converted into Japanese yen based on spot exchange rates
on the period-end date, and translation differences are accounted for within profit or loss for the period.

60

2.

Notes on changes in accounting policies(1)

Application of "Accounting Standard for Revenue Recognition" and others

The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020; hereinafter referred to as
the "Accounting Standard for Revenue Recognition") and the "Guidance on Accounting Standard for Revenue Recognition"(ASBJ Guidance No. 30, March 26, 2021) were adopted in the current financial year. Effective from the beginning of thecurrent financial year, the Company adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29,
March 31, 2020) and the "Guidance on Accounting Standard for Revenue Recognition" (ASBJ Guidance No. 30, March 26,2021), and recognized revenue at the amount expected to be received in exchange for promised goods or services whencontrol over those goods or services has been transferred to customers. The Company recognizes revenue at the amount
expected to be received in exchange for the promised goods or services when control of the goods or services is transferredto the customer.
The Company followed the transitional treatment prescribed in Revenue Recognition Accounting Standard No. 84, whichallows the cumulative effect of retrospective application of the new accounting standard prior to the beginning of the current
financial year to be added to or deducted from retained earnings at the beginning of the current financial year, and for the
new accounting policy to be applied from such beginning balance. However, there has been no effect on the beginningbalance of retained earnings for the current financial year. Therefore, the adoption of the revenue recognition standard has
not had any impact on the Company's financial statements.
(2) Application of the "Accounting Standard for Calculation of Fair Value" and others
The "Accounting Standard for Calculation of Fair Value" (ASBJ Statement No. 30, July 4, 2019; hereinafter referred to as
the "Fair Value Calculation Standard") and others are applied from the beginning of the current financial year. The"Accounting Standard for Calculation of Fair Value" (ASBJ Statement No. 30, July 4, 2019) and others are applied from the
beginning of the current financial year, and new accounting policies prescribed by the "Accounting Standard for Calculationof Fair Value" (ASBJ Statement No. 19) and the "Accounting Standard for Financial Instruments” (ASBJ Statement No. 10,
July 4, 2019), paragraph 44-2 are followed for transitional treatment as prescribed by the "Accounting Standard for
Calculation of Fair Value" and other standards. The Company has applied the new accounting policy prospectively. Thischange has not had any impact on the Company’s financial statements.
3.

Notes on changes in Accounting Estimates
Valuation of Shares of subsidiaries and associates
Ending balance ¥mShares of subsidiaries

49,973A valuation loss is recorded on non-marketable securities, such as unlisted subsidiaries and associates, when their net
equity values drop significantly, unless there is sufficient evidence to support their recoverability. A net equity value on
impairment test is performed based on the latest available financial statements. Where the net equity value decreases
dramatically, a valuation loss is not recognized when recoverability is supported by sufficient evidence.
As a result of the above valuation methodology, no valuation loss has been recognized in the current financial year.
Although the valuation is processed appropriately based on the latest available financial statements, there is a possibility
that a valuation loss could be recognized due to uncertain events in the future.

61

4.

Notes to the Balance Sheet¥m(1) Cumulative depreciation on property, plant and equipment

39(2) Guarantee liabilities
Debt guarantees totaling JPY1,938 million have been provided in relation to land and building lease agreements signed by theCompany’s subsidiary, Heptares Therapeutics Ltd.
¥m(3) Monetary liabilities to directors and executive officers

5.

186

Notes to the Statement of Profit or Loss
Operating transactions with subsidiaries and affiliates totalled JPY 1,129 million.

6.

Notes to the Statement of Changes in Equity
Share class

Shares at beginning

Increase in shares

Decrease in shares

Shares at endof financial year

during financial year

during financial yearof financial year

Ordinary Treasury shares

213

41

-

254

Notes: The increase in common shares is due to the purchase of shares less than one unit (41 shares).
7.

Notes on revenue recognition
The Company’s revenue recognition policy is shown in Notes to the Non-consolidated Financial Statements under “1.
Significant accounting policies (5) Revenue recognition criteria”.

8.

Tax
The main factors giving rise to deferred tax assets are as follows:
Tax losses carried forward

2,499

Stock in subsidiaries and affiliates

3,135

Allowance for doubtful debts

893

Other

354

Deferred tax assets subtotal

6,881

Valuation allowance(6,881)

Total deferred tax assets

-

62

9.

Related party transactions(1)

Subsidiaries

Type

Name of

Share ofTransaction

company

voting rights

type

Sosei Co. Ltd.

Direct holding

Provision of100%

management

Transaction

holding (held)
Subsidiary

Account

amountEndingbalance

¥m

¥m

84

Accounts-

receivable

services tosubsidiary
Loan to500

Long-term loans

2,918

to subsidiaries

subsidiary

and affiliates
Subsidiary

HeptaresDirect holding

Provision of

Therapeutics

100%

management

Ltd.

1,034

Accounts-

receivable-

services tosubsidiaries andsubsidiaryaffiliates

Debt guarantees

1,938

-

-

Notes:
1.

Prices and other transaction terms are determined upon discussion and agreement by the counterparties on terms equivalent
to other parties unrelated to the Company.

2.

Intercompany receivables and interest are collected based on the available cash position of each company.

3.

Loans to Sosei Co., Ltd. are made at market interest rates. Collateral has not been requested.

4.

At the end of the current financial year, JPY 2,918 million was set aside as an allowance for doubtful debts in respect of along-term loan receivable from a subsidiary company, Sosei Co., Ltd. During the current financial year JPY 500 million wasrecorded as an allowance for doubtful accounts for subsidiary companies.

5.

Debt guarantees have been provided in relation to land and building lease agreements and building contracts signed by theCompany’s subsidiary, Heptares Therapeutics Ltd. No fee for the provision of the guarantees has been charged to thesubsidiary.

(2)

Officers and major individual shareholders

Type

Name

Voting rights

RelationshipTransaction

holdingwith related

type(held)

parties

Transaction

Account

Endingamountbalance

¥m

¥m

(%)
Officer

ShinichiDirectly

Tamuraheld

1.43

Chairman

Exercise of

0

-

-

91

-

-

56

-

-

stock options
In-kindcontributionof monetarycompensation
claim

Officer

Christpher

Directly

Cargill

held

0.03

Director

In-kind

Representative

contribution

Executiveof monetary

Officer,compensation

President and

claim

CEO

63

Type

Name

Voting rights

RelationshipTransaction

holdingwith related

type(held)

parties

Transaction

Account

Endingamountbalance

¥m

¥m

(%)
Officer

Tomohiro

Directly

Tohyama

held

0.05

Director

In-kind

11

-

-

11

-

-

11

-

-

19

-

-

19

-

-

16

-

-

18

-

-

9

-

-

19

-

-

contributionof monetarycompensation
claim

Officer

KuniakiDirectly

Kaga

held

0.04

Director

In-kindcontributionof monetarycompensation
claim

OfficerDavid

Directly

Roblinheld

0.00

Director

In-kindcontributionof monetarycompensation
claim

Officer

NoriakiDirectly

Nagai

held

0.03

Director

In-kindcontributionof monetarycompensation
claim

Officer

Rolf

Directly

Soderstorm

held

0.01

Director

In-kindcontributionof monetarycompensation
claim

Officer

KieranDirectly

Johnson

held

0.01

Executive

In-kind

Officer andcontribution

CAO

of monetarycompensation
claim

Officer

Kazuhiko

Directly

Yoshizumi

held

0.01

Executive

In-kind

Officer andcontribution

CCO

of monetarycompensation
claim

OfficerMatthew

Directly

Barnesheld

0.00

Executive

In-kind

Officer

contributionof monetarycompensation
claim

Officer

Tadayoshi

Directly

Yasui

held

0.02

Executive

In-kind

Officer

contributionof monetarycompensation
claim

Notes:
1. Transaction prices and other conditions are determined by reference to similar third-party contracts.
2. The exercise of stock options by Mr. Tamura in the current financial year relates to the 31st stock acquisition rights approvedby the Board of Directors on May 15, 2017.
3. The in-kind contribution of monetary compensation claim relates to the Restricted Stock Units (RSUs) and Performance
Share Units (PSUs).

64

10.

Notes on per-share information¥(1) Net assets - per share

699.45(2) Net loss - per share(18.30)65

Accounting Audit Report on the Consolidated Financial Statements
This document has been translated from the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.

Independent Auditor’s ReportFebruary 15, 2023
The Board of Directors
Sosei Group Corporation
Ernst & Young ShinNihon LLC
Tokyo, Japan

Hironao Yazaki
Designated Engagement Partner
Certified Public Accountant

Yutaka Mishima
Designated Engagement Partner
Certified Public Accountant
OpinionPursuant to Article 444, paragraph 4 of the Companies Act, we have audited the accompanying
consolidated financial statements, which comprise the consolidated balance sheet, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes inequity, and notes to the consolidated financial statements of Sosei Group Corporation and its
consolidated subsidiaries (the Group) applicable to the fiscal year from January 1, 2022 to December
31, 2022.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position and results of operations of the Group applicable to the fiscal year
ended December 31, 2022, in accordance with accounting principles that omit certain disclosure items
required under International Financial Reporting Standards, pursuant to the provision of Article 120,paragraph 1, latter clause of the Regulations on Corporate Accounting.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Auditof the Consolidated Financial Statements section of our report. We are independent of the Group inaccordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Other Information
The other information comprises the information included in the Group’s business report and its
supplementary schedules. Management is responsible for preparation and disclosure of the otherinformation. The Audit Committee is responsible for overseeing the Group’s reporting process of theother information.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent withthe consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be66

materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles that omit certain disclosure items required underInternational Financial Reporting Standards, pursuant to the provision of Article 120, paragraph 1, latter
clause of the Regulations on Corporate Accounting, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free frommaterial misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern and disclosing, as required by accounting principles that omits
certain disclosure items required under International Financial Reporting Standards, pursuant to theprovision of Article 120, paragraph 1, latter clause of the Regulations on Corporate Accounting, mattersrelated to going concern and using the going concern basis of accounting unless management either
intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Audit Committee is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances for our risk assessments, while the purpose of the audit of the consolidated
financial statements is not expressing an opinion on the effectiveness of the Group’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s reportto the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation in accordance with accounting
principles that omits certain disclosure items required under International Financial ReportingStandards, pursuant to the provision of Article 120, paragraph 1, latter clause of the Regulations on
Corporate Accounting.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control

67

that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the consolidated financial
statements in Japan, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required
to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

68

Accounting Audit Report on the Financial Statements
This document has been translated from the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.

Independent Auditor’s ReportFebruary 15, 2023
The Board of Directors
Sosei Group Corporation
Ernst & Young ShinNihon LLC
Tokyo, Japan

Hironao Yazaki
Designated Engagement Partner
Certified Public Accountant

Yutaka Mishima
Designated Engagement Partner
Certified Public Accountant
OpinionPursuant to Article 436, paragraph 2, item 1 of the Companies Act, we have audited the accompanying
non-consolidated financial statements, which comprise the non-consolidated balance sheet, the nonconsolidated statement of profit or loss, the non-consolidated statement of changes in net assets, andnotes to the non-consolidated financial statements and supplementary schedules of Sosei Group
Corporation (the Company) applicable to the 33rd fiscal year from January 1, 2022 to December 31,
2022.
In our opinion, the accompanying non-consolidated financial statements present fairly, in all material
respects, the non-consolidated financial position and results of operations of the Company applicable tothe fiscal year ended December 31, 2022, in accordance with accounting principles generally acceptedin Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Auditof the Non-Consolidated Financial Statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to our audit of the non-consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Other Information
The other information comprises the information included in the Company’s business report and its
supplementary schedules. Management is responsible for preparation and disclosure of the otherinformation. The Audit Committee is responsible for overseeing the Company’s reporting process of theother information.
Our opinion on the non-consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the non-consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent with
the non-consolidated financial statements or our knowledge obtained in the audit or otherwise appears69

to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit Committee for the Non-Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these non-consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of non-consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the non-consolidated financial statements, management is responsible for assessing theCompany’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Audit Committee is responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Non-Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the non-consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these non-consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the non-consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・Consider internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances for our risk assessments, while the purpose of the audit of the non-consolidated
financial statements is not expressing an opinion on the effectiveness of the Company’s internal
control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the non- consolidated financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Company tocease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the non-consolidated financial statements,
including the disclosures, and whether the non-consolidated financial statements represent theunderlying transactions and events in a manner that achieves fair presentation in accordance withaccounting principles generally accepted in Japan.
We communicate with the Audit Committee regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the non-consolidated financial
statements in Japan, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company which70is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

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Audit Report of the Audit Committee
Audit Report
The Audit Committee of Sosei Group Corporation (the “Company”) has audited the performance of duties bydirectors and executive officers for the 33rd fiscal period from January 1, 2022 to December 31, 2022. The
methods and findings are reported as follows.
1. Methods and Content of the Audit
The Audit Committee received reports from directors, executive officers and employees, etc. on a regular basisof 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 in accordancewith the resolutions (internal control systems), requested explanations and expressed opinions as necessary,and conducted an 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,
received reports from directors, executive officers and others on the performance of their duties, etc., andrequested additional explanations as necessary, and reviewed the documents relating to the important
decisions, and investigated the state of the business and assets of the Company in cooperation with theInternal Audit Department. Regarding subsidiaries, the Audit Committee sought to achieve a mutual
understanding of subsidiaries, exchanged information with the directors and corporate auditors, etc. of
subsidiaries and received business reports from subsidiaries as necessary.
2) The Audit Committee monitored and verified whether the Independent Auditors maintained independence andconducted appropriate audits, received reports from the Independent Auditors on the performance of theirduties, etc., and requested explanations as necessary. Also, the Audit Committee received notification fromthe Independent Auditors that they had established the “Structure for Ensuring Appropriate Operation” (mattersprovided in each item of Article 131 of the Regulation on Accounting of Companies) 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 andsupplementary schedules thereof, non-consolidated financial statements (non-consolidated balance sheet, nonconsolidated statement of profit or loss, non-consolidated statement of changes in equity and notes thereto) andsupplementary schedules thereof, and consolidated financial statements (consolidated balance sheet,consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes inequity, and notes thereto) for the fiscal period 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 statusof the Company in accordance with laws, regulations and the Articles of Incorporation.
2) The Committee did not find any inappropriate conduct related to the execution of duties by directors or
executive officers or any material facts indicating violation of laws and regulations or the Articles ofIncorporation.
3) The Committee found that the contents of resolutions of the Board of Directors related to the system ofinternal control to be appropriate. In addition, the Committee did not find any matter requiring it to commenton the contents of the business report or execution of duties by directors or executive officers regarding thesystem of internal control.
(2) Results of audit of non-consolidated financial statements and supplementary schedules
The Committee found that the methods and results of the audit performed by the Independent Auditors, Ernst& Young ShinNihon 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, Ernst& Young ShinNihon LLC were appropriate.
February 15, 2023
Sosei Group Corporation Audit Committee
Chair of Audit
Tomohiro Tohyama*
Committee
Member of Audit
Kuniaki Kaga*
Committee
Member of Audit
Noriaki Nagai*
Committee
Member of Audit
Rolf Soderstrom*
Committee
Member of Audit
Miwa Seki*
Committee
Note: All members of the Audit Committee are external directors as stipulated in Article 2, Item 15 and Article 400,
Paragraph 3 of the Companies Act.

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Access to Meeting of Shareholders Venue
Shareholders are asked to consider forgoing attending the General meeting of
Shareholders and at the same time, exercise voting rights in advance as much as
possible, either by returning the voting form by post or voting on the internet.

Venue

Fuji-No-Ma Hall, 4th Floor, Hotel Grand Arc Hanzomon
1-1, Hayabusa-cho, Chiyoda-ku, Tokyo, Japan
TEL: 03-3288-0111

Access2-min. walk from Hanzomon Station (Exit 1) and3-min. walk from Hanzomon Station (Exit 6) on Hanzomon Line
8-min. walk from Kojimachi Station (Exit 1) on Yurakucho Line* We kindly ask you to refrain from coming by car since parking lots are not available.