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 10, 2023

Summary of Consolidated Financial Results
for the First Nine Months of the Fiscal Year Ending December 31, 2023 (JGAAP)
Listed company’s name: RaQualia Pharma Inc.
Listed on:
Tokyo Stock Exchange (TSE)
Stock code:
4579
URL:
https://www.raqualia.com/en/
Representative:
Hirobumi Takeuchi, President and CEO
Contact:
Hidefumi Sugiyama, General Manager, Finance & Accounting Dept.
Scheduled date of filing of quarterly securities report: November 10, 2023
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, 2023 (January 1, 2023 to
September 30, 2023)(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, 2023
1,495
(21.5)(108)–
September 30, 2022
1,904
17.3
501
367.6
Note: Comprehensive income
Nine months ended September 30, 2023:
Nine months ended September 30, 2022:
Earnings per share (Basic)
First nine months ended
September 30, 2023
September 30, 2022

Profit attributable toowners of parent

Ordinary profit
million yen%

million yen

(36)
–
676
183.8
(79) million yen[–%]
443 million yen [126.9%]

(117)
467

%

–
175.9

Earnings per share (Diluted)

yen

yen

(5.45)
22.28

–
22.27

(2) Consolidated financial position
Total assets
Net assets
Equity ratio
As ofmillion yen
million yen%
September 30, 2023
6,968
6,235
89.1
December 31, 2022
6,257
5,496
87.7
Reference: Equity As of September 30, 2023: 6,207 million yen As of December 31, 2022: 5,488 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, 2022
Fiscal year ending–
0.00–
December 31, 2023
Fiscal year ending
December 31, 2023
(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, 2023 (January 1, 2023 to December 31,
2023)(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
2,799
(4.1)
260 (69.9)
December 31, 2023
Note: Revisions to the forecasts of results most recently announced: None

million yen%

million yen

%

yen

242

(73.2)

183(74.7)

8.74* Notes(1) Changes in significant subsidiaries during the first nine months ended September 30, 2023 (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 10 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 10 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, 2023

21,616,781 shares

As of December 31, 2022

20,977,181 sharesb. Total number of treasury shares at the end of the period
As of September 30, 2023

50 shares

As of December 31, 2022

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, 2023

21,601,715 shares

For the first nine months ended September 30, 2022

20,966,836 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 to thesection of “(3) Qualitative information regarding consolidated earnings forecasts” of “1. Qualitative information regarding
settlement of accounts for the first nine months” on page 4 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 via live webcast on Wednesday, November 15, 2023. 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 .......................................................................... 4

2.

Quarterly consolidated financial statements and significant notes thereto ................................................................... 5(1) Consolidated balance sheet ....................................................................................................................................... 5(2) Consolidated statement of income and consolidated statement of comprehensive income ...................................... 7
Consolidated statement of income (cumulative)....................................................................................................... 7
Consolidated statement of comprehensive income (cumulative) ............................................................................. 7(3) Consolidated statement of cash flows ....................................................................................................................... 8(4) Notes to quarterly consolidated financial statements.............................................................................................. 10
Notes on premise of going concern ........................................................................................................................ 10
Notes on significant changes in the amount of shareholders’ equity ...................................................................... 10
Application of special accounting for preparing quarterly consolidated financial statements ................................ 10
Changes in accounting policies .............................................................................................................................. 10
Additional information ........................................................................................................................................... 10
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, 2023, the Japanese economy continued to show modest recovery
due to the ongoing normalization of economic activities after the COVID-19 pandemic. According to the Bank of Japan’squarterly short-term economic survey (September survey), business sentiment among large enterprises in the non-manufacturingsector rose for the sixth consecutive quarter on the back of a recovery in inbound demand, while business confidence among large
enterprises in the manufacturing sector improved for the second consecutive quarter.
In the pharmaceutical industry, there have been discussions in various forums about issues such as worsening drug lag/drug loss
and insecurity in the supply of pharmaceuticals, especially generics. At the September 20 meeting of the Special Committee on
Drug Prices of the Central Social Insurance Medical Council (Chuikyo), opinions were once again heard from industry
associations in preparation for the next reform of the National Health Insurance (NHI) drug price system in April 2024. In addition
to industry associations including new drug manufacturers, generic drug manufacturers, overseas drug manufacturers and drug
wholesalers, the SAMURAI Biotech Association, an industry association mainly comprised of drug discovery ventures, was alsopresent. A lively Q&A session was held, with exchanges between members from the treatment side and the payment side, andwith recommendations made to promote both innovation and the sustainability of the universal health insurance system, as well
as for the rapid introduction of innovative new drugs.
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 gastroesophageal reflux disease
marketed by the Company’s licensee, HK inno.N Corporation (headquarters: Osong, South Korea, “HK inno.N”)—in South
Korea continued to increase steadily. Cumulative sales from January to September this year (external prescription data) totaled
114.1 billion won (approximately 11.4 billion yen at 0.10 yen to the won, an increase of 18.7% year on year), with the market
share of anti-ulcer drugs in South Korea reaching 13%.
Global expansion of tegoprazan is also progressing steadily. The Company has executed exclusive license agreements with HK
inno.N for the development, marketing, and manufacturing of tegoprazan with sublicensing rights. As of the end of the first ninemonths ended September 30, 2023, in 35 countries outside of South Korea, the companies that have entered into the license
agreements with HK inno.N (the “sublicensee companies”) are engaged in development, manufacturing, and marketing in theirrespective countries and regions. During the third quarter under review, sales of the product were launched in Indonesia andSingapore. With this launch, tegoprazan is now being marketed in seven countries: South Korea, China, Mongolia, the Philippines,
Mexico, Indonesia, and Singapore. In China, which was the second country following South Korea, product sales of tegoprazan
were launched in 2022 and it is currently sold in 31 provinces and administrative regions. Moreover, in Peru, a sublicensee
company received marketing approval for four indications including erosive gastro-esophageal reflux disease. The filings forapproval are under review by local regulatory authorities in 20 and more countries, including Argentina.
With regard to pet drugs, sales were steady for GALLIPRANT® (generic name: grapiprant) for osteoarthritis in dogs, ENTYCE®
(generic name: capromorelin) for anorexia management for dogs, and ELURA® (generic name: capromorelin) for weight loss
management in cats with chronic kidney failure, all of which were licensed to Elanco Animal Health Inc. (headquarters: Indiana,
U.S.).
Other licensed programs are also in the pre-clinical or later development stage at licensee and sublicensee companies. In the third
quarter under review, regarding the cannabinoid CB2 receptor agonist (RQ-00202730/AAT-730/OCT461201) assigned by theCompany to AskAt Inc. (headquarters: Nagoya, Aichi, “AskAt”) and further licensed by AskAt to Oxford Cannabinoid
Technologies Ltd. (headquarters: London, U.K., “OCT”), OCT initiated Phase I clinical trials in the U.K. OCT plans to pursue
further clinical development with chemotherapy-induced peripheral neuropathy (CIPN) as the primary indication.
For pre-licensing programs, the Company has conducted business development activities aimed at acquiring further licensees
through a flexible combination of face-to-face meetings and online conferences. For tegoprazan, the Company has the rights todevelop, manufacture, and market the product in Japan, and has been in discussions with potential licensee companies since theprevious quarter. For the ghrelin receptor agonist, which the Company is developing in-house with the aim of securing a large
license agreement, the Company has continued to conduct pre-clinical studies and manufacture active pharmaceutical ingredients(APIs) for clinical trials.
In the discovery research stage, the Company is focusing on discovery research programs to generate development compounds,
and is also working to strengthen its drug discovery research capabilities, which are central to its growth strategy. Focusing onfour areas, “modality,” “drug target,” “disease area,” and “basic technology,” the Company is aiming to establish a nextgeneration in-house drug discovery value chain through synergy effects from existing technologies and new initiatives. In addition
to its own independent research, it has been strengthening its collaboration with startups and drug discovery venture companies.

-2-

Clinical trials for the treatment of myelodysplastic syndrome (MDS) and acute myeloid leukemia (AML) are underway by Syros
Pharmaceuticals Inc. (headquarters: Massachusetts, U.S., “Syros”) in the U.S. for a retinoic acid receptor alpha agonist(tamibarotene, AM80/TM-411/SY-1425), licensed by the Company’s consolidated subsidiary TMRC Co., Ltd. to Syros.
Accordingly, financial results for the first nine months, the reporting period, were as follows. Business revenue for the period was
1,495 million yen (down 21.5% year on year), operating loss totaled 108 million yen (compared with operating profit of 501
million yen a year earlier), ordinary loss totaled 36 million yen (compared with ordinary profit of 676 million yen a year earlier),
and loss attributable to owners of parent was 117 million yen (compared with profit attributable to owners of parent of 467 million
yen a year earlier).
Total business expenses were 1,603 million yen (up 14.3% year on year). This mainly consists of cost of business revenue (189
million yen, a 12.8% increase year on year), research and development expenses (934 million yen, an 11.2% increase year onyear) and other selling, general and administrative expenses (479 million yen, a 21.4% increase year on year).
2)

Research and development activities

Research and development expenses of the Group during the first nine months were 934 million yen, an increase of 94 million
yen (up 11.2% year on year). This is mainly attributable to an increase in clinical development expenses of 46 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, 2023 were 6,968 million yen, an increase of 710 million yen (up 11.4%) from the end of
the previous fiscal year. This is mainly attributable to an increase in cash and deposits of 319 million yen, a decrease inaccounts receivable - trade, and contract assets of 133 million yen, an increase in prepaid expenses of 189 million yen, andan increase in tools, furniture and fixtures of 115 million yen.
Liabilities
Total liabilities as of September 30, 2023 were 732 million yen, a decrease of 27 million yen (down 3.7%) from the end of
the previous fiscal year. This is mainly attributable to an increase in lease liabilities of 87 million yen and a decrease inaccounts payable - other of 131 million yen.
Net assets
Total net assets as of September 30, 2023 were 6,235 million yen, an increase of 738 million yen (up 13.4%) from the endof the previous fiscal year. This is mainly attributable to an increase in share capital and capital surplus of 786 million yen
due to capital increase through third-party allotment, and the recording of loss attributable to owners of parent of 117 million
yen.
Consequently, the equity ratio was 89.1% (up 1.4 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, 2023 amounted to 3,915 million yen (compared with
3,355 million yen a year earlier), an increase of 236 million yen (up 6.4%) 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 used in operating activities was 405 million yen (compared with net cash of 952 million yen provided a year earlier).
This is mainly attributable to the recording of loss before income taxes of 37 million yen and depreciation of 120 million
yen, a cash inflow from a decrease in trade receivables of 133 million yen, cash outflows from an increase in prepaid
expenses of 172 million yen and a decrease in accounts payable - other of 137 million yen, and income taxes paid of 119
million yen.
Cash flows from investing activities
Net cash used in investing activities was 268 million yen (compared with net cash of 57 million yen provided a year earlier).
This is mainly attributable to payments into time deposits of 100 million yen, the purchase of property, plant and equipmentof 189 million yen, the purchase of investment securities of 160 million yen, and proceeds from redemption of investment
securities of 200 million yen.
-3-

Cash flows from financing activities
Net cash provided by financing activities was 812 million yen (compared with net cash of 11 million yen used a year earlier).
This is mainly attributable to proceeds from long-term borrowings of 50 million yen, proceeds from issuance of shares of
782 million yen, and repayments of lease liabilities of 32 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,
2023 presented in “Summary of Consolidated Financial Results for the Fiscal Year Ended December 31, 2022 (JGAAP)”
published on February 14, 2023.

-4-

2.

Quarterly consolidated financial statements and significant notes thereto(1) Consolidated balance sheet(Thousands of yen)
As of December 31, 2022

As of September 30, 2023

3,675,450
602,311
250,599
978
7,522
89,820108,633
86,777
4,822,094

3,994,878
468,712
170,737
1,685
6,070
83,938297,808
143,063
5,166,894

62,642
119,093
209,288
391,024

60,996
234,511287,899
583,407

4,268
19,98472
24,325

4,784
28,48672
33,344

987,962
24,0738,172
1,020,208
1,435,559
6,257,653

1,100,259
74,012
10,2191,184,491
1,801,242
6,968,136

AssetsCurrent assets
Cash and deposits
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
Long-term prepaid expenses
Other
Total investments and other assets
Total non-current assets
Total assets-5-

(Thousands of yen)
As of December 31, 2022

As of September 30, 2023

128,066
2,620
42,887206,20960,47930,95718,922
3,635
493,778

71,478
12,62060,70574,511
54,63513,808
6,864
43,168337,792

9,170
167,661
12,22260,59042,205
237,098
12,29662,431

14,49819,031

2,750
266,893760,671

21,975395,037
732,8292,265,697
2,455,480
773,021(21)5,494,178

2,664,763
2,854,546
655,383(21)
6,174,672(5,569)(5,569)8,372
5,496,981
6,257,653

33,01733,017
27,6176,235,307
6,968,136

Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term borrowings
Lease liabilities
Accounts payable - otherAccrued expenses
Income taxes payable
Deposits received
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Lease liabilities
Asset retirement obligations
Provision for share awards
Provision for share awards for directors (and otherofficers)
Deferred tax liabilities
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-6-

(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, 2022
Business revenue
Business expenses
Cost of business revenue
Research and development expenses
Other selling, general and administrative expenses
Total business expenses
Operating profit (loss)
Non-operating income
Interest income
Interest on securities
Foreign exchange gains
Gain on valuation of compound financial instruments
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
Other
Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Gain on sale of investment securities
Gain on redemption of investment securities
Total extraordinary income
Extraordinary losses
Loss on redemption of investment securities
Retirement benefits for directors (and other officers)
Total extraordinary losses
Profit (loss) before income taxes
Income taxes
Profit (loss)
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent

First nine months ended
September 30, 2023

1,904,302

1,495,493

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

189,420
934,434
479,715
1,603,570(108,077)

491
11,664
182,461––388
195,005

711
4,777
111,674
3,260
2,600
9,770
132,793

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

4,629
5,859
3,930
–
46,761061,180(36,464)

10,2684,203
14,472––––
17,80017,800673,159
205,986
467,172–
467,172649–
649(37,113)80,524(117,637)–(117,637)

Consolidated statement of comprehensive income (cumulative)(Thousands of yen)First nine months ended
September 30, 2022
Profit (loss)
Other 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-7-

First nine months ended
September 30, 2023

467,172(117,637)(23,819)(23,819)443,353

38,586
38,586(79,051)

443,353(79,051)––

(3) Consolidated statement of cash flows(Thousands of yen)First nine months ended
September 30, 2022
Cash flows from operating activities
Profit (loss) 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)
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
Decrease (increase) in long-term 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 consumption taxes refund
receivable
Increase (decrease) in accrued consumption taxes
Increase (decrease) in deposits received
Increase (decrease) in provision for share awards
Increase (decrease) in provision for share awards for
directors (and other officers)
Other, net
SubtotalInterest and dividends received
Interest paid
Subsidies received
Commitment fees paid
Income taxes paid
Income taxes refund
Payments of retirement benefits for directors (and otherofficers)
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 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-8-

First nine months ended
September 30, 2023

673,159
108,291(491)(11,664)(111,358)–(37,113)
120,509(711)(4,777)(98,034)(2,600)4,220(3,260)

4,253
4,083
287
6,896
(10,268)(4,203)17,800718,4211,370
23,928(75,207)(63,032)
97(37,092)(13,755)

4,629
5,859
3,930
46,761–
649–
133,599744(56,588)5,882(172,678)(41,505)(137,816)(5,843)(26,251)(16,539)(47,231)(41,045)(37,475)(23,744)
38,553–(12,057)
1,840

8,156

4,532

1,417
1,149,158
15,893(4,278)–(7,000)(183,182)–

14,135(287,496)
11,259(4,715)2,600(19,212)(119,368)
11,826(17,800)–

952,791(405,107)(200,000)
110,130(25,968)(745)(351,856)
315,249
210,512–57,321(100,000)–(189,449)(16,730)(160,000)–
200,000(2,592)(268,771)

(Thousands of yen)First nine months ended
September 30, 2022
Cash flows from financing activities
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of shares
Proceeds from issuance of shares resulting fromexercise of share acquisition rights
Proceeds from issuance of share acquisition rights
Repayments of lease liabilities
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-9-First nine months ended
September 30, 2023

13,100(655)–

50,000(6,965)
782,614

4,040

188

–
(27,600)(11,114)

19,362(32,750)
812,449

116,195

98,0301,115,193
2,240,661
3,355,854

236,601
3,679,304
3,915,905

(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
On January 5, 2023, the Company received payment for capital increase through third-party allotment from CVI Investments,
Inc. As a result, share capital and capital surplus each increased 393,125 thousand yen. Moreover, including increases due tothe issuance of share acquisition rights (stock options) and the issuance of new shares as restricted stock-based compensation
for directors, share capital and capital surplus each increased 399,065 thousand yen during the first nine months ended
September 30, 2023, resulting in share capital of 2,664,763 thousand yen and capital surplus of 2,854,546 thousand yen as of
September 30, 2023.
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 implementation guidance on accounting standard for fair value measurement)
The Company has applied the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31, June 17, 2021) 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 Implementation Guidance on Accounting Standard for Fair Value Measurement
prospectively in accordance with the transitional measures provided for in paragraph 27-2 of the Implementation Guidance on
Accounting Standard for Fair Value Measurement.
Note that there was no effect of the application of the Implementation Guidance on Accounting Standard for Fair Value
Measurement on the quarterly consolidated financial statements.
Additional information(Application of practical solution on the accounting and disclosure under the group tax sharing system)
The Company and its consolidated subsidiaries have transitioned from the consolidated taxation system to the group tax sharing
system from the first quarter of the fiscal year under review. Accordingly, the treatment of accounting and disclosure forcorporation tax, regional corporation tax, and tax effect accounting is in accordance with the “Practical Solution on the
Accounting and Disclosure under the Group Tax Sharing System” (PITF No. 42, issued on August 12, 2021; hereinafter “PITF
No. 42”). In addition, the change in accounting policy with the application of PITF No. 42 in accordance with paragraph 32(1)of PITF No. 42 is considered to have no impact.
(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 estimates for the
fiscal year under review.
Segment information, etc.
[Segment information]
I. 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.
II.

For the first nine months ended September 30, 2023 (January 1, 2023 to September 30, 2023)
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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