Disclaimer: This translation is prepared and provided for readers’ convenience only. This summary does not constitute any
guarantee, and the Company will not compensate any losses and/or damage stemming from actions taken based on thesestatements. In the case that there is any discrepancy between the Japanese and English versions, the Japanese version is assumed
to be correct.

November 11, 2022

Summary of Consolidated Financial Results
for the First Nine Months of the Fiscal Year Ending December 31, 2022 (JGAAP)
Listed company’s name: RaQualia Pharma Inc.
Listed on:
Tokyo Stock Exchange (TSE)
Stock code:
4579
URL:
https://www.raqualia.com/
Representative:
Hirobumi Takeuchi, President and CEO
Contact:
Hidefumi Sugiyama, General Manager, Finance & Accounting Dept.
Scheduled date of filing of quarterly securities report: November 11, 2022
Scheduled date of dividend payment:―
Supplementary documents for quarterly results:
Yes
Quarterly results briefing:
Yes(TEL) +81-52-446-6100(Amounts are rounded down to the nearest million yen.)

1.

Consolidated financial results for the first nine months of the fiscal year ending December 31, 2022 (January 1, 2022 toSeptember 30, 2022)(1) Consolidated operating results (cumulative)(Percentage figures represent changes from the same period of the previous fiscal year.)Net sales

Operating profit

First nine months ended
million yen%
million yen%
September 30, 2022
1,904
17.3
501
367.6
September 30, 2021
1,623
183.0
107
–
Note: Comprehensive income
Nine months ended September 30, 2022:
Nine months ended September 30, 2021:
Earnings per share (Basic)
First nine months ended
September 30, 2022
September 30, 2021

Profit attributable toowners of parent

Ordinary profit
million yen%

million yen

676
183.8
238
–
443 million yen [126.9%]
195 million yen
[–%]

467
169

%

175.9
–

Earnings per share (Diluted)

yen

yen

22.28
8.08

22.27
8.08

(2) Consolidated financial position
Total assets
Net assets
Equity ratio
As ofmillion yen
million yen%
September 30, 2022
5,849
5,246
89.5
December 31, 2021
5,234
4,788
91.3
Reference: Equity As of September 30, 2022: 5,237 million yen As of December 31, 2021: 4,777 million yen
2.

Dividends
First quarter-end
yenAnnual dividends per share
Second quarter-end Third quarter-end
Fiscal year-end
yen

Fiscal year ended–
0.00–
December 31, 2021
Fiscal year ending–
0.00–
December 31, 2022
Fiscal year ending
December 31, 2022
(forecast)
Note: Revisions to the forecasts of dividends most recently announced: None

yen

Total

yen

yen

0.00

0.00

0.00

0.00

3.

Forecasts of consolidated financial results for the fiscal year ending December 31, 2022 (January 1, 2022 to December 31,
2022)(Percentage figures represent year-on-year changes)

Net sales
million yen

Operating profit%

million yen

Profit attributable to Earnings perowners of parent
share (Basic)

Ordinary profit%

Fiscal year ending
2,605
(6.2)
420 (40.6)
December 31, 2022
Note: Revisions to the forecasts of results most recently announced: None

million yen%

million yen

%

yen

420

(51.3)

342(54.7)

16.34* Notes(1) Changes in significant subsidiaries during the first nine months ended September 30, 2022 (changes in specified subsidiaries
resulting in the change in scope of consolidation): None
(2) Application of special accounting for preparing quarterly consolidated financial statements: Yes
Note: For more details, please refer to the section of “(4) Notes to quarterly consolidated financial statements (Application of
special accounting for preparing quarterly consolidated financial statements)” of “2. Quarterly consolidated financial
statements and significant notes thereto” on page 9 of the attached material.
(3) Changes in accounting policies, changes in accounting estimates, and restatements of prior financial statements
a. Changes in accounting policies due to the revisions to accounting standards and other regulations: Yes
b. Changes in accounting policies due to other reasons: Nonec. Changes in accounting estimates: None
d. Restatements of prior financial statements: None
Note: For more details, please refer to the section of “(4) Notes to quarterly consolidated financial statements (Changes inaccounting policies)” of “2. Quarterly consolidated financial statements and significant notes thereto” on page 9 of theattached material.
(4) Number of issued shares (common shares)
a. Total number of issued shares at the end of the period (including treasury shares)
As of September 30, 2022

20,976,681 shares

As of December 31, 2021

20,955,142 sharesb. Total number of treasury shares at the end of the period
As of September 30, 2022

50 shares

As of December 31, 2021

50 sharesc. Average number of outstanding shares during the period (cumulative from the beginning of the fiscal year)
For the first nine months ended September 30, 2022

20,966,836 shares

For the first nine months ended September 30, 2021

20,952,322 shares* Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an
audit corporation.
* Appropriate use of financial forecasts and other special remarks(Caution concerning forward-looking statements)
Forward-looking statements provided in this document, including financial forecasts, are based on the information currently
available to the Company and certain assumptions considered reasonable. Such statements are included without any guarantee asto their future achievement. Actual results, etc. may differ materially from the forecasts depending on various factors.
For the suppositions that form the assumptions for earnings forecasts and cautions concerning the use thereof, please refer tothe section of “(3) Qualitative information regarding consolidated earnings forecasts” of “1. Qualitative information regarding
settlement of accounts for the first nine months” on page 3 of the attached material.
(Method of accessing supplementary documents for financial results and details of financial results briefing)
The Company plans to hold a financial results briefing on Wednesday, November 16, 2022.
The Company plans to post the documents used at the briefing on its website promptly after the briefing is held.

Contents of attachment
1.

Qualitative information regarding settlement of accounts for the first nine months .................................................... 2(1) Qualitative information regarding consolidated operating results ............................................................................ 2(2) Qualitative information regarding consolidated financial position........................................................................... 3(3) Qualitative information regarding consolidated earnings forecasts .......................................................................... 3

2.

Quarterly consolidated financial statements and significant notes thereto ................................................................... 4(1) Consolidated balance sheet ....................................................................................................................................... 4(2) Consolidated statement of income and consolidated statement of comprehensive income ...................................... 6
Consolidated statement of income (cumulative)....................................................................................................... 6
Consolidated statement of comprehensive income (cumulative) ............................................................................. 6(3) Consolidated statement of cash flows ....................................................................................................................... 7(4) Notes to quarterly consolidated financial statements................................................................................................ 9
Notes on premise of going concern .......................................................................................................................... 9
Notes on significant changes in the amount of shareholders’ equity ........................................................................ 9
Application of special accounting for preparing quarterly consolidated financial statements .................................. 9
Changes in accounting policies ................................................................................................................................ 9
Additional information ............................................................................................................................................. 9
Segment information, etc. ....................................................................................................................................... 10
Significant subsequent event .................................................................................................................................. 10

-1-

1.

Qualitative information regarding settlement of accounts for the first nine months(1) Qualitative information regarding consolidated operating results
1) Financial results
During the third quarter of the fiscal year ending December 31, 2022, the Japanese economy showed a moderate recovery trend
due to increased consumer spending and corporate capital investment, etc. However, the seventh wave of COVID-19, rapid yen
depreciation, rising prices, and worsening global economic conditions, among other factors, continued to cast a shadow over the
economy. In the pharmaceutical industry, there are growing concerns about the impact on business of the yen’s depreciation
against the dollar and rising prices of commodities and energy, such as increased procurement costs of APIs and raw materials
and increased overseas clinical trial costs denominated in dollars.
Under such conditions, the Group achieved the following financial results during the first nine months.
Regarding human drug products, sales of K-CAB® (generic name: tegoprazan)—a drug for gastro-esophageal reflux disease
marketed by HK inno.N Corporation (headquarters: Osong, South Korea, “HK inno.N”)—in South Korea continued to perform
well, with sales in the third quarter of the fiscal year from external prescriptions of 31.6 billion won, an increase of 12.5%
compared with the same period of the previous fiscal year, and cumulative sales from external prescriptions of 92.2 billion won
year to date for 2022. Furthermore, in July 2022, HK inno.N received manufacturing and marketing approval in South Korea forthe product as a maintenance treatment for patients with cured erosive gastro-esophageal reflux disease. As a result, there are now
five indications for which the product has received manufacturing and marketing approval in South Korea: erosive gastroesophageal reflux disease, non-erosive gastro-esophageal reflux disease, gastric ulcer, adjuvant therapy for Helicobacter pylori
eradication, and maintenance treatment for patients with cured erosive gastro-esophageal reflux disease.
Global expansion of tegoprazan is also progressing well. During the first nine months of the fiscal year, the product has beenmarketed in China under the trade name 泰欣賛® (Taixinxan), and preparations are underway for its launch in Mongolia and thePhilippines. In addition, the product is under review or in preparation for approval in 29 other countries, including Indonesia,
Thailand, and Mexico.
With regard to pet drugs, sales were strong for GALLIPRANT® (generic name: grapiprant), which is a drug for osteoarthritis indogs, and ENTYCE® (generic name: capromorelin), which has an indication for anorexia management for dogs, and ELURA®
(generic name: capromorelin), which has an indication for weight loss management in cats with chronic kidney disease, all ofwhich were licensed to Elanco Animal Health Inc. (headquarters: Indiana, U.S., “Elanco”). In particular, GALLIPRANT® has
become one of Elanco’s most profitable products, with sales continuing to grow in the U.S., the world’s largest pet drug market,
five years after its launch in 2017.
For the cyclooxygenase inhibitor (COX-2 inhibitor, RQ-00317076/AAT-076), which was licensed out to AskAt Inc.
(headquarters: Nagoya, Aichi, “AskAt”), AskAt has entered into a license and development support agreement with Velo-1, Inc.
(headquarters: Tennessee, U.S.). As a result, the Company received a lump-sum payment from AskAt.
Licensed programs are in the pre-clinical development stage or later at licensee companies. As for programs in preparation forlicensing, pre-clinical studies for the ghrelin receptor agonist, developed in-house by the Company, are progressing. In addition,
we are preparing for clinical development and searching for potential partners with the aim of launching tegoprazan in Japan assoon as possible. Furthermore, as for programs in the discovery research stage, collaborative research with ASKA PharmaceuticalCo., Ltd. is progressing steadily. In parallel, the Group has been promoting internal projects to generate development candidate
compounds. During the first nine months of the fiscal year, the Company entered into a joint research agreement with STAND
Therapeutics Co., Ltd. (headquarters: Minato, Tokyo, “STAND”) and started a joint research project to discover new drugs for
intractable and rare diseases by utilizing the Company’s ion channel drug discovery technology and STAND’s intracellular
antibody production technology.
In addition, clinical trials for the treatment of myelodysplastic syndrome (MDS) and acute myeloid leukemia (AML) are underway
in the U.S. by Syros Pharmaceuticals Inc. (headquarters: Massachusetts, U.S., “Syros”) for a retinoic acid receptor alpha agonist(tamibarotene, TM-411/SY-1425), which was discovered by consolidated subsidiary TMRC Co., Ltd. and licensed to Syros.
Accordingly, financial results for the first nine months, the reporting period, were as follows. Business revenue for the period was
1,904 million yen (up 17.3% year on year), operating profit totaled 501 million yen (up 367.6% year on year), ordinary profit
totaled 676 million yen (up 183.8% year on year), and profit attributable to owners of parent was 467 million yen (up 175.9%
year on year).
Total business expenses were 1,403 million yen (down 7.4% year on year). This total mainly consists of cost of business revenue(167 million yen, a 37.5% decrease from the same period of the previous fiscal year), research and development expenses (840
million yen, a 7.6% increase from the same period of the previous fiscal year) and other selling, general and administrative
expenses (394 million yen, a 15.3% decrease from the same period of the previous fiscal year).

-2-

2)

Research and development activities

Research and development expenses of the Group during the first nine months were 840 million yen. For the first nine months,
there were no material changes to the research and development activities.
(2) Qualitative information regarding consolidated financial position
1) Analysis of assets, liabilities and net assets
AssetsTotal assets as of September 30, 2022 were 5,849 million yen, an increase of 615 million yen (up 11.8%) from the end of
the previous fiscal year. This is mainly attributable to an increase in cash and deposits of 1,207 million yen, a decrease inaccounts receivable - trade, and contract assets of 718 million yen, a decrease in securities of 112 million yen, and an increasein leased assets of 170 million yen.
Liabilities
Total liabilities as of September 30, 2022 were 603 million yen, an increase of 157 million yen (up 35.3%) from the end of
the previous fiscal year. This is mainly attributable to an increase in lease obligations of 189 million yen and a decrease inaccounts payable - other of 32 million yen.
Net assets
Total net assets as of September 30, 2022 were 5,246 million yen, an increase of 458 million yen (up 9.6%) from the end of
the previous fiscal year. This is mainly attributable to the recording of profit attributable to owners of parent of 467 million
yen.
Consequently, the equity ratio was 89.5% (down 1.8 percentage points from the end of the previous fiscal year).
2)

Analysis of cash flows

The balance of cash and cash equivalents (“net cash”) as of September 30, 2022 amounted to 3,355 million yen (compared with
2,209 million yen a year earlier), an increase of 1,115 million yen (up 49.8%) from the end of the previous fiscal year.
The respective cash flows in the first nine months and the factors thereof are as follows.
Cash flows from operating activities
Net cash provided by operating activities was 952 million yen (up 69.7% year on year). This is mainly attributable to therecording of profit before income taxes of 673 million yen and depreciation of 108 million yen, a cash inflow from a decreasein trade receivables of 718 million yen, and income taxes paid of 183 million yen.
Cash flows from investing activities
Net cash provided by investing activities was 57 million yen (compared with net cash of 487 million yen used a year earlier).
This is mainly attributable to payments into time deposits of 200 million yen, purchase of investment securities of 351
million yen, proceeds from sale of investment securities of 315 million yen, and proceeds from redemption of investment
securities of 210 million yen.
Cash flows from financing activities
Net cash used in financing activities was 11 million yen (down 65.5% year on year). This is mainly attributable to proceedsfrom long-term borrowings of 13 million yen and repayments of lease obligations of 27 million yen.
(3) Qualitative information regarding consolidated earnings forecasts
At the present time, there are no changes to the full-year consolidated earnings forecasts for the fiscal year ending December 31,
2022 presented in “Summary of Consolidated Financial Results for the Fiscal Year Ended December 31, 2021 (JGAAP)”
published on February 14, 2022.

-3-

2.

Quarterly consolidated financial statements and significant notes thereto(1) Consolidated balance sheet(Thousands of yen)
As of December 31, 2021

As of September 30, 2022

2,345,306
1,205,401–
313,807–
10,547
15,93990,382
22,3904,003,775

3,552,852–
486,980
201,531
1,210
7,967
91,146
166,891
85,7494,594,329

70,479180,500
48,409299,389

64,602
141,866
218,977
425,445

3,839
29,227731
33,7994,012
22,295731
27,039887,932
9,300
897,233
1,230,422
5,234,197

794,7218,400
803,1221,255,607
5,849,936

AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Accounts receivable - trade, and contract assets
Securities
Work in process
Supplies
Advance payments to suppliers
Prepaid expenses
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings, net
Tools, furniture and fixtures, net
Leased assets, net
Total property, plant and equipment
Intangible assets
Trademark right
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Total investments and other assets
Total non-current assets
Total assets-4-

(Thousands of yen)
As of December 31, 2021

As of September 30, 2022

45,996–
21,547112,768
63,00480,40537,47528,884
10,442400,524

69,9242,620
50,53680,37949,24877,099–5,140
16,975351,924–
17,52012,12916,018–45,668446,193

9,825
177,798
12,197
5,235
46,709251,766
603,691

2,256,920
2,446,703
49,631(21)
4,753,234

2,265,545
2,455,328
516,802(21)
5,237,654

23,91923,91910,8504,788,004
5,234,197

100
100
8,490
5,246,245
5,849,936

Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term borrowings
Lease obligations
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Deposits received
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Lease obligations
Asset retirement obligations
Deferred tax liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Total accumulated other comprehensive income
Share acquisition rights
Total net assets
Total liabilities and net assets-5-(2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income (cumulative)(Thousands of yen)First nine months ended
September 30, 2021
Business revenue
Business expenses
Cost of business revenue
Research and development expenses
Other selling, general and administrative expenses
Total business expenses
Operating profit
Non-operating income
Interest income
Interest on securities
Foreign exchange gains
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commitment fees
Share issuance costs
Loss on valuation of compound financial instruments
Loss on valuation of derivatives
Settlement package
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of investment securities
Gain on redemption of investment securities
Total extraordinary income
Extraordinary losses
Retirement benefits for directors (and other officers)
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

First nine months ended
September 30, 2022

1,623,136

1,904,302

268,927
780,550
466,478
1,515,956
107,179

167,984
840,102394,992
1,403,080
501,222

1,352
16,154
127,264
5,785
2,817
153,373491
11,664
182,461–388
195,005

905
–
120
2,820
8,760
9,600
–
22,207238,345

4,253
4,083
287
4,220
6,896
–
0
19,740676,486

3,382
2,267
5,650

10,2684,203
14,472––
243,996
74,662
169,333–
169,333

17,80017,800673,159
205,986
467,172–
467,172

Consolidated statement of comprehensive income (cumulative)(Thousands of yen)First nine months ended
September 30, 2021
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests-6-

First nine months ended
September 30, 2022

169,333

467,172

26,09626,096
195,430(23,819)(23,819)443,353

195,430

443,353––

(3) Consolidated statement of cash flows(Thousands of yen)First nine months ended
September 30, 2021
Cash flows from operating activities
Profit before income taxes
Depreciation
Interest income
Interest income on securities
Foreign exchange losses (gains)
Subsidy income
Loss (gain) on valuation of compound financial
instruments
Interest expenses
Commitment fees
Share issuance costs
Loss (gain) on valuation of derivatives
Loss (gain) on sale of investment securities
Loss (gain) on redemption of investment securities
Retirement benefits for directors (and other officers)
Settlement package
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in advance payments to suppliers
Decrease (increase) in prepaid expenses
Increase (decrease) in accounts payable - other
Increase (decrease) in accrued expenses
Increase (decrease) in income taxes payable - factor
based tax
Decrease (increase) in accounts receivable - other
Decrease (increase) in consumption taxes refund
receivable
Increase (decrease) in accrued consumption taxes
Increase (decrease) in deposits received
Other, net
SubtotalInterest and dividends received
Interest paid
Subsidies received
Commitment fees paid
Income taxes paid
Payments of retirement benefits for directors (and otherofficers)
Settlement package paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of securities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment securities
Proceeds from redemption of investment securities
Other, net
Net cash provided by (used in) investing activities-7-

First nine months ended
September 30, 2022

243,996
103,842(1,352)(16,154)(98,967)(5,785)673,159
108,291(491)(11,664)(111,358)
–

2,820

4,220

905
–
120
8,760
(3,382)(2,267)–9,600
349,495(5,326)53,866
12,573(84,250)(5,017)(2,614)

4,253
4,083
287
6,896
(10,268)(4,203)17,800–718,4211,370
23,928(75,207)(63,032)(37,092)(13,755)(5,293)(26,251)

12,045–

51,770(47,231)

–
3,308
2,708
625,403
15,581
(905)
5,785
–
(74,694)(37,475)(23,744)
48,224
1,149,158
15,893(4,278)–(7,000)(183,182)–(17,800)(9,600)561,570–
952,791(317,510)–(100,000)(82,303)(12,983)(200,649)
110,923
115,065424(487,032)(200,000)
110,130–(25,968)(745)(351,856)
315,249
210,512–57,321(Thousands of yen)First nine months ended
September 30, 2021
Cash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of shares resulting fromexercise of share acquisition rights
Repayments of lease obligations
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period-8-First nine months ended
September 30, 2022

10,000(10,000)––––
13,100
(655)

1,855

4,040

(8,571)(6,716)(27,600)(11,114)80,641

116,195

148,462
2,061,316
2,209,778

1,115,193
2,240,661
3,355,854

(4) Notes to quarterly consolidated financial statements
Notes on premise of going concern
No items to report.
Notes on significant changes in the amount of shareholders’ equity
No items to report.
Application of special accounting for preparing quarterly consolidated financial statements(Calculation of tax expenses)
Tax expenses are calculated by multiplying the profit before income taxes by the reasonably estimated effective tax rates after
the application of tax effect accounting to the profit before income taxes for the fiscal year including the quarter under review.
However, in cases where calculations using said estimated effective tax rate yield a result that is notably lacking rationality,
tax expenses are calculated by multiplying profit (loss) before income taxes by the statutory effective tax rate, taking into
consideration the recoverability of deferred tax assets.
Income taxes is the amount inclusive of income taxes - deferred.
Changes in accounting policies(Application of accounting standard for revenue recognition, etc.)
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020)
and relevant ASBJ regulations from the beginning of the first quarter of the fiscal year under review, and it has recognizedrevenue at the time the control of promised goods or services is transferred to the customer at the amount expected to bereceived upon exchange of said goods or services.
The Group earns revenues (upfront payments, milestone-related revenues, royalty income, etc.) from licensing agreementsthat allow third parties to research, develop, manufacture and sell pharmaceuticals and other products and to use theirtechnologies.
With regard to upfront payments and milestone-related revenues, when performance obligations are satisfied at a point in time,
contractual performance obligations are deemed to be satisfied at the time when development, marketing, and other rights are
granted, or at the time when the contractually stipulated milestone is achieved. These revenues are recognized as businessrevenue at the point when contractual performance obligations are deemed to be satisfied.
Royalty income is consideration based on license agreements, etc., calculated based on the sales revenue of the contract partner,
etc. This income is recognized as business revenue with consideration to the point in time at which it is incurred.
The application of the Accounting Standard for Revenue Recognition and its guidance is subject to the transitional treatment
provided in the proviso to paragraph 84 of the Accounting Standard for Revenue Recognition. The cumulative effect of theretrospective application assuming the new accounting policy had been applied to periods prior to the start of the first quarter
ended March 31, 2022, was added to or subtracted from the opening balance of retained earnings of the first quarter ended
March 31, 2022, and thus the new accounting policy is applied from such opening balance; provided, however, that the new
accounting policy is not retrospectively applied to contracts where recognitions of nearly all the revenue amounts for periods
prior to the start of the first quarter ended March 31, 2022, are subject to the previous treatment by applying the method
provided for in paragraph 86 of the Accounting Standard for Revenue Recognition. Furthermore, by applying the method set
forth in item (1) of the supplementary provisions of paragraph 86 of the Accounting Standard for Revenue Recognition,
modifications to contracts carried out prior to the beginning of the first quarter of the fiscal year under review were accounted
for based on the contractual terms after all contract modifications were reflected. Consequently, this cumulative effect wasadded to or deducted from the opening balance of retained earnings of the first quarter of the fiscal year under review.
As a result, there was no effect on the quarterly consolidated financial statements for the first nine months of the fiscal year
under review. In addition, there was no effect on the opening balance of retained earnings.
In accordance with the transitional treatment provided for in paragraph 89-2 of the Accounting Standard for Revenue
Recognition, figures for the previous fiscal year have not been restated in accordance with the new approach to presentation.
(Application of accounting standard for fair value measurement, etc.)
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)and relevant ASBJ regulations from the beginning of the first quarter of the fiscal year under review, and it has applied the
new accounting policy provided for by the Accounting Standard for Fair Value Measurement, etc. prospectively in accordancewith the transitional measures provided for in paragraph 19 of the Accounting Standard For Fair Value Measurement, andparagraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019).
Note that there was no effect on the quarterly consolidated financial statements.
Additional information(Application of tax effect accounting for transition from consolidated taxation system to group tax sharing system)
As for items regarding the transition to the group tax sharing system introduced in the “Act Partially Amending the Income
Tax Act” (Act No. 8 of 2020) and items revised on non-consolidated taxation system in connection with the transition to thegroup tax sharing system, the Company and its consolidated subsidiaries have not applied the provisions of paragraph 44 of
the “Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018) as allowedby the provisions of paragraph 3 of the “Tax Effect Accounting for the Transition from the Consolidated Taxation System to
the Group Tax Sharing System” (ASBJ PITF No. 39, March 31, 2020). Accordingly, amounts of deferred tax assets anddeferred tax liabilities are determined in accordance with the provisions of the tax law before revision.

-9-(Accounting estimates amid the spread of COVID-19)
The Group has determined the accounting estimates for impairment accounting of non-current assets, etc. based on information
available when preparing the quarterly consolidated financial statements. The effects of the spread of COVID-19 on the Groupare limited at the present time and the Group has determined that there will not be a significant impact on the accounting
estimates.
Segment information, etc.
[Segment information]
I. For the first nine months ended September 30, 2021 (January 1, 2021 to September 30, 2021)
This information is omitted because the Group consists of a single business segment dealing with research and developmentof pharmaceutical and related businesses.
II.

For the first nine months ended September 30, 2022 (January 1, 2022 to September 30, 2022)
This information is omitted because the Group consists of a single business segment dealing with research and developmentof pharmaceutical and related businesses.

Significant subsequent event
No items to report.

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