NON-CONFIDENTIAL

H1 FY2020 Financial Results &Strategy Update
Six-month period ended June 30, 2020
August 13, 2020 | Sosei Group Corporation (TSE:4565)

Disclaimer
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unforeseen safety issues resulting from the administration of our products in patients, uncertainties related to product manufacturing, the lack of market acceptance of our products, our inability to manage growth, thecompetitive environment in relation to our business area and markets, our inability to attract and retain suitably qualified personnel, the unenforceability or lack of protection of our patents and proprietary rights, ourrelationships with affiliated entities, changes and developments in technology which may render our products obsolete, and other factors. These factors include, without limitation, those discussed in our public reports filedwith the Tokyo Stock Exchange and the Financial Services Agency of Japan. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonably based on
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considered as replacements or alternatives profit, or operating profit, as an indicator of operating performance or as replacements or alternatives to cash flow provided by operating activities or as a measure of liquidity (ineach case, as determined in accordance with IFRS). Non-GAAP financial measures should be viewed in addition to, and not as a substitute for, analysis of the Company's results reported in accordance with IFRS.
References to "FY" in this presentation for periods prior to January 1, 2018 are to the 12-month periods commencing in each case on April 1 of the year indicated and ending on March 31 of the following year, and the ninemonth period from April 1, 2017 to December 31, 2017. From January 1, 2018 the Company changed its fiscal year to the 12-month period commencing in each case on January 1. References to "FY" in this presentation should
be construed accordingly.
© Sosei Group Corporation. Sosei Heptares is the corporate brand and trademark of Sosei Group Corporation. Sosei, Heptares, the logo and StaR® are trademarks of Sosei Group companies.

2

Agenda1

Overview of Financial Results

2

Operational Highlights

3

Strategy Update

4

Appendix

Note: This material was created to explain the details of our company and is not intended to be used for investment decisions. In addition, the contents reflect the views of our company
at the time of the creation of the material, and the accuracy of the information is not guaranteed. Investments should be made based on the independent views of investors3

1
Overview of Financial Results
Chris Cargill, CFO4

H1 2020 Financial Results CommentarySix-month period ended June 30, 2020

1

COVID-19 pandemic forced us to adapt quickly to ensure business continuity. R&D facility
operational throughout entire UK lockdown to support our partners, with high levels of scientificproductivity maintained. New discovery collaboration executed with AbbVie to drive growth.

2

Revenue of JPY2,516m (USD23.2m) declined 49% primarily due to lack of upfront fees and milestone
income. Prior corresponding period benefitted from a USD15m milestone from the AZD4635 Ph II
start. Royalty Revenue from Novartis increased. Other Revenues stable. New Partnerships are
expected to be announced in H2 2020.

3

Cash Loss of JPY181m (USD1.7m) was small and Net Loss of JPY2,117m (USD19.6m) was due to lower
revenues and a “paper” tax charge of JPY847m (USD7.8m) that is a result of IFRS accounting
methodology. Year To Date tax charge expected to reverse and generate a tax credit at year end.

Note: 1 USD:JPY FX rates used – 108.253 (H1 2020) and 110.064 (H1 2019)5

H1 2020 Financial Results Commentary (continued)
Six-month period ended 30 June 2020

4

Stable cash balance maintained despite accounting loss. June cash balance totalled JPY15,362m(USD142.6m). Unique and diversified business model focused around partnered and in-house drug
discovery and early development resulted in a sustainable profile.

5

Launched successful international capital raising (issuance of new shares and convertible bonds),
Japan’s largest biotech financing during COVID-19, to support aggressive strategic growth agenda.
Net proceeds of JPY20.9b (USD194m) received after the period close will enable us to accelerate longterm revenue growth via acquisition and expand and future-proof drug discovery.

Despite uncertain times, we are well financed and positioned to execute on our growth plan
Note: 1 USD:JPY FX rates used – 108.253 (H1 2020) and 110.064 (H1 2019)6

H1 2020 revenue decline driven by low upfront fee and milestones,
with the prior period benefitting from a USD15m milestone
JPY m

2,516

USD m
5,056

45.9

547
135

5.0
1.2

3,173

544
753

23.2

28.8

5.0
6.9

1,219

1,201

11.3

10.9

H1 2020

H1 2019

H1 2020

H1 2019

Royalties

7• Upfront Fees (UF) &Milestones: prior
H1 2019 period contained
a one-time USD15m
milestone from
AstraZeneca

STRICTLY PRIVATE & CONFIDENTIAL

UF & Milestones

Product Sales

Other Revenue

Costs carefully managed – ‘technical’ Q2 tax charge accentuates net loss
Consolidated Income Statement
JPY mCommentary

USD m

6m ended1230 Jun 2020

6m ended1230 Jun 2019

6m ended1230 Jun 2020

6m ended1230 Jun 2019

Revenue

2,516

5,056

23.2

45.9

Cash Cost of Sales

(304)

(375)

(2.8)

(3.4)

Cash R&D(1,500)(1,862)(13.9)(16.9)Cash G&A(925)(1,239)(8.5)(11.3)

32

16

0.3

0.2

Cash Loss

(181)

1,596

(1.7)

14.5

Non-Cash Costs

(955)

(865)

(8.8)

(7.9)

Financing Costs

46

(385)

0.4

(3.5)

Equity Accounted
Investments

(180)

(54)

(1.7)

(0.5)

Tax Expense

(847)

103

(7.8)

1.0

(2,117)395(19.6)

3.6

Other Cash Income

Net Loss

Note: 1 USD:JPY FX rates used – 108.253 (FY2020) and 110.064 (FY2019); 2 Unaudited management reporting values

8• Cash R&D: declined due to successful recovery ofexcess charges from former supplier, plus general
COVID-19 related delays to pipeline programs
resulted in deferral of planned expenditure• Cash G&A: reduction mainly due to UK National
Insurance contribution credit related to share pricemovement• Tax charge: calculated in accordance with IFRS
Effective Tax Rate methodology (IAS12/IAS34) –counterintuitive result given P&L loss, expected toreverse and generate a tax credit at year end

Diversified biotech business model generated significant cash
inflows from operating activities
Consolidated Balance Sheet
JPY m

USD m

Cash Flow Bridge (6m to 30 Jun 2020)2

As of
30 Jun202012As of
31 Dec20191

As of
30 Jun202012As of
31 Dec20191

Goodwill & intangibles

25,30427,364

234.9

249.8

Property, plant & equip.

3,604

4,120

33.5

37.6

Cash at hand

15,362

15,375

142.6

140.3

Equity Acc. investments

3,093

3,539

28.7

32.3

Other financial assets

1,030

2,053

9.6

18.7

Other assets

2,685

4,229

24.8

38.6

Total Assets

51,07856,680

474.1

517.3

Other liabilities

10,13911,602

94.1

105.8

Total Liabilities

10,13911,602

94.1

105.8

Net Assets

40,93945,078

380.0

411.5

USD m

Cash balance
31 Dec 2019

Note: 1 USD:JPY FX rates used – 107.74 (FY2020) and 109.55 (FY2019) 2 Unaudited management reporting values 3 Includes cash flows from investing and financing activities

9

Cash flows
fromOperating
Activities

Other
cash flows +FX3

Cash balance
30 Jun 2020

Unchanged FY2020 Financial Guidance (12m to 31-Dec-20)

Guidance(FY2020)

Cash R&D expenses

Cash G&A expenses

JPY 4,200 to 4,700m

JPY 1,800 to 2,300m

 Increase number of programs fully
funded by partners

 New ERP* project has commenced
with Oracle Netsuite selected Extract savings from enhanced
procurement practices

 Drive Group-wide efficiencies andenhance controls

 15+ new hires to be made tosupport growth in pipeline

 Replace legacy IT systems and focus
on digital transformation

Investing for the future whilst maintaining a focus on costs and extracting efficiencies
Note: * Enterprise Resource Planning (ERP)10

Successful International Offering raised net proceeds of JPY 20.9bn
Long-term growth capital to fast track our corporate ambition

Proforma Cash Flow Bridge11Largest biotech-focused capital raise out of Japan
during COVID-19 pandemicDespite uncertain global economic outlook, stronglevels of investor support enabled successfultransaction

Significantly improved level of financial flexibility andenhances our strategic options



Funds will be deployed, with a focus on accelerating
long-term revenue growth through M&A and futureproofing and expanding our drug discovery platform

JPY m

Cash
30 Jun 2020

Capital Raise
Net Proceeds

Pro Forma Cash
30 Jun 2020

Capital Raise
Net Proceeds

Pro Forma Cash
30 Jun 2020

USD m

Cash
30 Jun 2020

2
H1 FY2020 Operational Highlights
Shinichi Tamura, Chairman and CEO

12

Summary Operational Highlights
Six-month period ended June 30, 2020

New Discovery Collaboration and Option to License Agreement with AbbVie discover, develop andcommercialize novel small molecules targeting inflammatory and autoimmune diseases

Enerzair® Breezhaler® (QVM149) was approved in Japan and recommended for approval in theEuropean Union (subsequently approved in July-20) for treating uncontrolled asthmaSignificant scientific progress with orexin agonist program in conjunction with spin-off companies
Orexia and Inexia, triggering the next tranche of funding from Medicxi

Note: Enerzair® and Breezhaler® are registered trademarks of Novartis AG

13

Summary Operational Highlights (continued)
Six-month period ended June 30, 2020



Initiated COVID-19 R&D Program to identify novel compounds that block the activity of the
SARS-CoV-2 MPro protease and future variants, a protein essential for the viral life cycle

Search underway for potentially transformative acquisitions, as well as investments in novel andcomplementary technologies as a result of a successful US$194m capital raise

Excellent progress seen across our business and pipeline development
despite operating in an unprecedented and uncertain COVID-19 environment

14

Swift action kept our R&D facility open and operational throughout
lockdown, maintaining high levels of drug discovery productivity
90%
Drug Discovery
Productivity*
H1 2020
vs. H2 2019

No closure or shutdown of core UK R&D
facility throughout lockdown
Note *: Based on the average of a collection of internal measures of productivity in platform, chemistry and pharmacology

151

Remote working procedures in place.
Essential R&D staff working optimized rotas

2

Social distancing and enhanced hygiene
measures enacted at all offices

3

Operations focused on business-critical workand prioritizing key partners/collaborations

4

Business and corporate development
transactions all executed virtually5

Weekly SARS-CoV-2 testing in place for
essential employees at UK facilityOn track to meet FY2020 goals outlined in February






1

2

3

4

5

6

Maintaintechnology
and platform
leadership in
our chosen
fieldEnter new highvalue drug
discovery anddevelopment
partnerships
with pharma/biotechAchieve
importantmilestones on
existing
partneredprograms

Seed multiple
new in-housedrug
candidates instrategic areas
for futurehigh value
partnering

Advanceselected inhouseprograms inearly-stage
clinical studies
for higher value
partnering

Create newlong-term
asset-centriccompanies
backed byventure capital

Solved several
important GPCR
molecular structures(incl. Orexia
breakthrough)Executed New
Global Discovery andDevelopment
Collaboration with
AbbVieEnerzair®
Breezhaler®
approved in Japan

H4, EP4, and GPR35
candidatenominations
completed and will
advance forward

Note: Enerzair® and Breezhaler® are registered trademarks of Novartis AG

16



3
Strategy update

Shinichi Tamura, Chairman and CEO

17Organic growth plan focused on building a broad pipeline to fuelmultiple high value partnerships and co-owned investments

ORGANICGROWTH PLAN



Extend technology / SBDD platform leadershipGenerate novel candidates, with the aim of 2 new
preclinical candidate nominations per yearAdvance broad drug discovery and early
development pipeline to fuel value creation



Execute multiple high value partnerships & coowned investments, targeting 2-3 deals per year

Funded from existing cash flows

18

Productive StaR®/SBDD drug discovery engine continues togenerate multiple high quality candidates for the pipeline
LAST 10 YEARS (StaR® / SBDD GENERATED)DRUG DISCOVERY

Generated

24

high quality novel
preclinical candidates

MEDIUM-TERM OUTLOOKEARLY DEVELOPMENTTECHNOLOGYDRUG DISCOVERY

Produced

Deliver at least

Generate on average

IND1 clinical candidates
that have enteredhuman trials

new programs to lead
optimization stage every
2 years

new preclinicalcandidates
every year

7

4

2

Focus on first-in-class targets across immunology, neurology and gastroenterology, with validated
translational biology. Further emphasis on small molecule chemistry with efficient synthesis.
Note: 1 IND = Investigational New Drug

19

Broad and deep pipeline will continue to fuel future value creation
Pre-Discovery /Discovery
Discovery
Collaborations

Preclinicaldevelopment

Phase 1

Seebri® Breezhaler®

M4 ag.

Oravi®

CXCR4 mAb

GLP-1 ag.

CGRP ant.

mGlu5 NAM

H4 ant.

SSTR5 ag.

Endocrine[Undisc.]

I/O

Migraine / Cluster Headaches

Immunology

Atopic Dermatitis

EP4 ant.

Immuno-oncology

GPR35 ag.

mCRPC

AsthmaAD

Profit-share
Collaborations

GI / Inflammation

Ultibro® Breezhaler®

M1 ag.

GLP-1 ant.

Neurology

Enerzair® Breezhaler®

Single target

Solid tumors

Co-owned
Investments

ongoing

Marketed

A2A ant.

MetabolicA2a ant. combo(s)Approved

Single target

Undisclosed

10+ programs

Phase 2

Inflamm. Bowel Disease

COPD

COPD

AD

Mouth candidiasis

T2DM/Obesity

Neurology

M1 ag1DLB

Endocrine

Target achieved with three
new PCC nominations in 2020Partnered GPCR Program
In-house GPCR Program
Other Medicines

Our platform has produced in total over 20 pre-discovery and discovery programs, 13 programs in preclinical studies,and multiple programs advancing through clinical development
20

Note: Seebri®, Ultibro®, Enerzair® and Breezhaler® are registered trademarks of Novartis AG. 1 Phase 2 trial of HTL0018318 for DLB in Japan has been withdrawn. The Group plans to resubmit a
new clinical trial notification for HTL0018318 (or another novel M1 agonist) to the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) in the future.

Executing high value partnerships and co-owned investments arecore to our balanced strategy
Approaches to drug discovery and development

RISK



Self-developedandcommercialized
Highest risk /Highest valueFee-for-service

Partnered/ co-owned

Low risk /Low valueModerate risk /Higher value



OUR
FOCUS

VALUE

Strategic focus on generating programs
that will attract large partnership
opportunities with global pharma andbiotech or venture fundsPrimary goal is for us to achieve outlicensing economics of $500m+ per
partnered target / program



Alternatively, we will seed novel
candidates into co-owned asset-centricvehicles with long-term value upside

Targeting 2-3 new high value partnerships and co-owned investments every year
21Newly announced deal with AbbVie consistent with strategy to
execute high value partnerships and co-owned investments

221

Initial focus on novel small molecules targeting autoimmune andinflammatory diseases

2

Sosei Heptares to apply its StaR®/SBDD capabilities and take candidates
through to end of IND-enabling studies

3

AbbVie may then exercise its exclusive license options and assume
global development and commercialisation responsibilities

with researchers

4

Sosei Heptares to receive up to US$32 million in upfront and near-term
payments, plus US$377 million in fees and milestones, plus royalties

technologies…”

5

AbbVie has the option to expand and select up to 3 additional targets“Combining AbbVie’s morethan two decades ofexpertise in Immunology
developing cutting-edge

New deal with AbbVie the latest of three major deals in the past
12 months
Partner3

23

ProgramUpfront / Near
Term Payments

Potential
Total Deal Value1

Additional Details

2020 Discovery
Collaboration andOption to License2$32m$400m+Inflammatory and autoimmune
diseases2019 Multi-target
Collaboration$26m$1.2bn+Initial focus on GI disorders

2019 Multi-target
Collaboration$26m$1.0bn+Exclusive global rights to novel agents2016 Alzheimer’s Disease
Collaboration$125m$3.2bn+$55m R&D funding committed to date2015 Multi-target
Collaboration

Nil$1.8bn+Directed at up to 10 GPCR targets

2015 Immunooncology Collaboration$10m$500m+

Exclusive global rights to AZD4635,
an A2AR antagonist

1 Potential option fees, development, regulatory and commercial milestone payments, plus royalties on global commercial sales; 2 AbbVie has the option to expand the collaboration by anadditional three targets; 3 Collaboration originally signed with Allergan plc in 2016. Allergan plc was acquired by AbbVie Inc. in May 2020.

Strategic growth plan focused on acquiring a revenue generating
asset, and investing in technologies at the forefront of science

STRATEGICGROWTH PLAN



Seek out a transformative revenue-generating
acquisition

Future-proof drug discovery platform byinvesting in novel technologies



Expand beyond GPCRs into new drug target
classesIn-licensing late-stage assets for Japan

Funded from recent capital raising24

We are searching for a transformative revenue-generating
acquisition
Illustrative Example – Pro Forma Revenue Impact



Acquisition search has commenced forrevenue-generating companies, products orassetsCore target criteria includes minimum revenue
generation of at least JPY 5bn (USD 50m) per
year and growingMultiple therapeutic areas and/or
complementary business types are being
considered

JPY 10bn+(USD 100m+)
per year

Current Base
AnnualRevenues

Plus Acquisition
Target Annual
Revenues

Pro Forma
Combined Annual
Revenues

Potential Future
Revenue
GrowthAim is to create a global business with combined annual revenues of over JPY 10bn or USD 100m
25

We plan to future-proof our drug discovery platform, and also
expand into new drug target classes
FUTURE-PROOFING DRUG DISCOVERY BY INVESTING IN NEW TECHNOLOGIESOUR CURRENT APPROACH
TO DRUG DISCOVERY

Novel StaR®
GPCR Targets
Small Molecule
Discovery

Clinical Trials

AI / Machine Learning

SBDD platform

EXPANDING DRUG DISCOVERY BEYOND GPCRs INTO NEW TARGET CLASSES

Bioinformatics

Proteomics

SBDD platform

Novel StaR®
GPCR Targets

Other Membrane Targeted Protein
Proteins
Degradation
Small Molecule
Discovery

Clinical Trials

Transcriptomics

Genomics
Clinical/Patient Data

Maintain drug discovery leadership by expanding and leveraging our SBDD platform and know-how
26

We plan to in-license late-stage assets from global pharma anddevelop them specifically for the Japanese market
DRUG DISCOVERYEARLY DEVELOPMENTLATE STAGE DEVELOPMENT

PRE-DISCOVERYDISCOVERYPRECLINICAL

PH 1a

PH 1b/2a

StaR® Technology

SBDD

DMPK

SAD

Dosing assessment

Structure

Chemistry

Toxicology

MAD

Proof of Concept

Hit ID

Pharmacology

Translation

Experimental
MedicineTarget Validation

PH 2b/3

APPROVAL•

Bring novel global treatments
to Japanese patients•

Development plans target
approvals and domestic
launch by 2025 timeframe





PMDA

PMDA

Clinical Efficacy

PharmacovigilanceStrategic
ClinicalDevelopment
Group

Leveraging our clinical development group in Japan to bring novel US/EU treatments to Japanesepatients with high unmet medical need27

Strongly enabled to fast-track our corporate ambitions
ORGANIC GROWTH PLAN

28

STRATEGIC GROWTH PLAN

Extend technology /platform leadership

Generate high quality
novel candidates

Seek out revenuegenerating acquisitions

Invest / collaborate innovel technologies

Advance discovery anddevelopment pipeline

Execute high value
partnerships

Expand drug target
classes beyond GPCRs

In-license late-stage
assets for Japan

4
Appendix29

Proforma Unaudited Balance Sheet (As of 30-Jun-20)

Adjusted for net proceeds (USD194m) of Int’l Offering of new shares and convertible bonds
JPY million
As of 30 Jun 2020

As of 31 Dec 2019

As of 30 Jun 2020

As of 31 Dec 2019

Goodwill & intangibles

25,30427,364

234.9

249.8

Property, plant & equip.

3,604

4,120

33.5

37.6

Cash at hand

36,285

15,375

336.8

140.3

Equity Acc. investments

3,093

3,539

28.7

32.3

Other financial assets

1,030

2,053

9.6

18.7

Other assets

2,685

4,229

24.9

38.6

Total Assets

72,001

56,680

668.4

517.3

Bank loans

－

－

－

－

Convertible Debt

15,047

－

139.7

－

Other liabilities

10,13911,602

94.1

105.8

Total Liabilities

25,186

11,602

233.8

105.8

Net Assets

46,81545,078

434.6

411.5

Note: USD:JPY FX rates used – 107.74 (FY2020) and 109.55 (FY2019)30

USD million

Locations
SOSEI HEPTARESPMO Hanzomon 11F

Steinmetz Building

North West House

2-1 Kojimachi, Chiyoda-ku

Granta Park, Cambridge

119 Marylebone RoadTokyo 102-0083

CB21 6DG

London NW1 5PU

Japan

United Kingdom

United Kingdom