November 8, 2022

SEIKAGAKU CORPORATION
Consolidated Financial Results (Japan GAAP) (Summary)for the First Six Months of Fiscal 2022
(Six-Month Period Ended September 30, 2022)
Listed exchanges: Tokyo Stock Exchange (Prime Market)
Stock code number: 4548
URL: https://www.seikagaku.co.jp/en/
Scheduled date to commence dividend payment: December 2, 2022
(All amounts have been rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Six Months of Fiscal 2022
(from April 1, 2022 to September 30, 2022)(1) Consolidated Financial Results(Percentages indicate changes from the same period in the previous fiscal year)
Net sales
Millions ofYen

Operating income
Millions ofYen%

Ordinary income
Millions ofYen%%

First six months of fiscal 2022

17,258(15.9)

2,610(56.8)

3,600(43.7)

First six months of fiscal 2021

20,530

54.6

6,038

665.0

6,393

492.9

Net income attributable toowners of parent
Millions of%
Yen

Net income per share

Diluted net income
per share

Yen

Yen

First six months of fiscal 2022

3,141(37.4)

56.32-First six months of fiscal 2021

5,019422.2

89.07-(Note) Comprehensive income:First six months of fiscal 2022:
First six months of fiscal 2021:

5,173
6,208

million yen [(16.7)%]
million yen [315.5%](2) Consolidated Financial Position
Total assets

Total equity

Equity ratio

Millions of Yen

Millions of Yen%

As of September 30, 2022

77,82369,75389.6

As of March 31, 2022

75,244

66,34088.2(Reference) Shareholders’ equity:
As of September 30, 2022:
As of March 31, 2022:

69,753 million yen
66,340 million yen

2. Dividends

Fiscal 2021
Fiscal 2022Fiscal 2022(Forecast)

1st Quarter
Yen-

Dividends per share
3rd QuarterYen-

2nd Quarter
Yen
15.00
13.00

-(Note) Revision of the forecasts most recently announced: Yes

1Year-end

Annual

Yen
15.00

Yen
30.00

13.00

26.00

3. Forecast of Consolidated Financial Results for Fiscal 2022 (from April 1, 2022 to March 31, 2023)
Net sales

Fiscal 2022

Operating income

Millionsof Yen%

33,500(3.9)

Millionsof Yen

1,700(Percentages indicate changes from the previous fiscal year)
Net income
Net income
Ordinary income
attributable toper shareowners of parentMillionsof Yen%

(62.2)

2,900%

Millionsof Yen(46.2)

2,650%(29.0)

Yen

48.12(Note) Revision of the forecasts most recently announced: Yes* Notes(1) Changes in the status of material subsidiaries during the period: No(2) Application of specific accounting methods for preparing the quarterly consolidated financial
statements: Yes(3) Changes in accounting policies, changes in accounting estimates, and retrospective restatements(a) Changes in accounting policies accompanying revisions in accounting standards: Yes(b) Changes other than those in (a) above: No(c) Changes in accounting estimates: No(d) Retrospective restatements: No(4) Number of shares issued (common stock):(a)Number of shares at the end of the period(including treasury stock)

As of September
30, 2022

56,814,093 shares

As of March 31,
2022

56,814,093 shares(b) Number of treasury stock at the end ofthe period

As of September
30, 2022

1,655,104 shares

As of March 31,
2022

567,822 shares(c) Average number of shares issued during
the period (six months)

First six monthsof fiscal 2022

55,783,570 sharesFirst six monthsof fiscal 2021

56,353,031 shares*This financial reports are not subject to the quarterly review procedures of the certified public accountant and audit
firm.
* Disclaimer regarding forward-looking information including appropriate use of forecasted financial results
The forecast shown in these materials are based on information currently available and certain assumptions that theCompany regards as reasonable. Actual performance and other results may differ materially from these forecasted figures due
to various factors.

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1. Results of Operations for the First Six Months of Fiscal 2022
(Six-Month Period Ended September 30, 2022)(1) Qualitative explanation on quarterly financial results
In the first six months (April 1 to September 30, 2022) of the fiscal year ending March 31, 2023 (fiscal 2022),
net sales were ¥17,258 million, down 15.9% year on year. Growth in the LAL business was offset by declining
sales in the pharmaceutical business due to a substantial decline in royalty income and the impact of National
Health Insurance (NHI) drug price reductions in Japan.
Operating income fell 56.8% year on year to ¥2,610 million as a result of the sales decrease,notwithstanding a decrease in R&D expenses accompanying completion of subject enrollment in an additional
clinical study underway in the U.S. for SI-6603, a treatment for lumbar disc herniation. Ordinary income and net
income attributable to owners of parent fell 43.7% to ¥3,600 million and 37.4% to ¥3,141 million, respectively,
declining less steeply than operating income because of factors including the recording of foreign exchange
gains due to yen depreciation.
1) Net sales by segment
Pharmaceuticals Business- Domestic Pharmaceuticals (¥5,808 million, down 14.7% year on year)
Deliveries to medical institutions of ARTZ, a joint function improvement agent for knee osteoarthritis, increased
year on year amid signs that the market is recovering from the impact of COVID-19, thanks to successful
measures to promote switching from competing products. The Company’s sales fell due to the impact of NHI
drug price reductions, despite an increase in shipment volume resulting from the shipment schedule.
The Company’s sales of the joint function improvement agent JOYCLU, launched on May 19, 2021,
declined substantially year on year, reflecting concentration of shipments in the first six months of fiscal 2021.
Although the Company called attention to the risk of shock or anaphylaxis in the Important Side Effects sectionof the JOYCLU package insert, in response to multiple reports of shock or anaphylaxis occurring in patients
following administration of JOYCLU, the Company issued a Dear Healthcare Professionals Letter of Rapid
Safety Communication (Blue Letter) on June 1, 2021 to increase awareness of these side effects among
healthcare professionals. The Company is continuing cooperative efforts with sales partner Ono PharmaceuticalCo., Ltd. to proactively gather side effects reports and other information and provide safety-related information.
Also, since April 2022 the Company has been conducting a clinical study to identify the cause of the side effects
with the cooperation of specialists and medical institutions.
Deliveries to medical institutions of the OPEGAN series of ophthalmic viscoelastic devices increased year
on year, with the impact of COVID-19 running its course and the market gradually returning to the pre-COVID
growth trend. The Company’s sales fell as a result of NHI drug price reductions coupled with an inventory
adjustment by the sales partner.
The Company’s sales of MucoUp, a submucosal injection agent for endoscopic surgery, decreased,reflecting a decline in shipments from a high level in the first half of the previous fiscal year and the impact of an
NHI reimbursement price revision.
Although deliveries to medical institutions of HERNICORE, a treatment for lumbar disc herniation,
remained at the prior-year level, the Company’s sales rose as a result of the shipment schedule.
- Overseas Pharmaceuticals (¥4,384 million, down 1.5% year on year)
Local sales volume in the U.S. of Gel-One, an intra-articular single-injection viscosupplement for the treatmentof knee osteoarthritis, decreased year on year, reflecting the impact of a health insurance system change relating
to price disclosure implemented in July 2022. The Company’s sales increased substantially, fueled by the impactof yen depreciation.
Local sales volume in the U.S. of SUPARTZ FX, an intra-articular 5-injection viscosupplement for thetreatment of knee osteoarthritis, was at the prior-year level, reflecting continuation of unfavorable market3

conditions for multiple-injection products due to the trend toward preference for products that require fewer
injections. The Company’s sales fell as a result of shipment timing.
Local sales volume in China of ARTZ fell sharply amid continuing lockdowns in major cities
accompanying the renewed spread of COVID-19. The Company’s sales declined substantially because there
were no shipments in the first quarter due to a packaging material change. Shipments restarted in August 2022 inaccordance with the annual shipment plan.
- Bulk Products and Contract Development and Manufacturing Organization (¥1,497 million,
up 12.6% year on year)
Although sales of bulk products were at the prior-year level, sales of contract development and manufacturing
and other services of overseas subsidiary Dalton Chemical Laboratories, Inc. rose due to the impact of yen
depreciation.
As a result of these developments and a steep decline in royalty income (¥1 million, down 100.0% year on year),sales from the Pharmaceuticals business segment fell 27.5% year on year to ¥11,692 million.
LAL Business
Sales from the LAL business segment increased 26.7% year on year to ¥5,566 million, reflecting steady sales inJapan and the contribution from higher sales of Bacterial Endotoxin Testing (BET) reagents and Clinical
Diagnostic (Fungitell) reagents and higher orders for contract testing services attributable to reinforcement ofsales activities at overseas subsidiary Associates of Cape Cod, Inc.
(2) Explanation of forward-looking statements, including the forecast of consolidated financial results
The Company previously refrained from announcing the forecasts of consolidated financial results for the fiscal
year ending March 31, 2023 (fiscal 2022) because it was difficult to prepare reasonable earnings forecasts due tothe need to assess the progress of efforts currently underway to identify the cause of the occurrence of shock oranaphylaxis associated with the joint function improvement agent JOYCLU. The Company hereby announces
the forecasts of consolidated financial results for fiscal 2022, prepared on the basis of the state of progress at thecurrent point in time, forecasts, and other information.
For fiscal 2022, the Company forecasts net sales of ¥33,500 million, a decrease of 3.9% from the previous
fiscal year to result from a sharp decline in royalty income and substantial impact from NHI price reductions inJapan. These factors are projected to offset the positive effects of higher sales volumes of pharmaceuticals inJapan and the impact of yen depreciation on overseas pharmaceutical sales.
The Company forecasts operating income of ¥1,700 million, a decrease of 62.2% year on year to result fromthe expected sales decrease and higher expenses at overseas subsidiaries, including foreign currency translation,
despite a projected decrease in R&D expenses accompanying completion of subject enrollment in an additional
clinical study underway in the U.S. for SI-6603, a treatment for lumbar disc herniation. Ordinary income and net
income attributable to owners of parent are expected to decline less steeply than operating income because ofexpected foreign exchange gains related to valuation of foreign currency-denominated assets. The Company
forecasts a 46.2% decrease in ordinary income to ¥2,900 million and a 29.0% decrease in net income attributableto owners of the parent to ¥2,650 million.
Although the Company achieved the full-year income forecasts in the second quarter, the above forecasts
reflect an expected decrease in sales of contract testing services at an overseas subsidiary, anticipated higher
expenses to result from concentration of R&D expenses in the third quarter and beyond, soaring fuel costs, andconcentration in the third quarter and beyond of periodic plant maintenance, originally scheduled to beperformed by the second quarter, because of a semiconductor shortage and other factors.
The Company forecasts R&D expenses of ¥8,000 million, a decrease of 11.2% year on year, and a ratio ofR&D expenses to net sales (excluding royalty income) of 23.9%.
Note: The exchange rate assumption used in the forecast of consolidated financial results for fiscal 2022 is ¥1404

to the U.S. dollar for the third quarter and beyond.
(Millions of yen)
Net sales

Operating income

Ordinary income

Net income
attributable to ownersof parent

Previous forecast (A)----Revised forecast (B)33,500Change (B - A)-----

Change (%)-----

Reference: Results forfiscal 2021

34,851

1,700

4,495

2,900

5,395

Net incomeper share-2,650

3,733

48.12

66.32

Note: The above forecast has been prepared on the basis of economic circumstances, market trends, and otherassumptions made at the time of release of this document. Actual results may differ from the forecast due to avariety of factors.
The Company will promptly announce a mid-term management plan once it becomes possible to reasonably
formulate a plan.

3) Research and Development Activities
To contribute to healthy and fulfilling lives for people around the world, the Seikagaku Group focuses its
research and development on glycoscience as its area of specialization and aims to create original
pharmaceuticals and medical devices.
To achieve early and continuous launching of new products, which hold the key to future business growth,
the Group will engage in efficient R&D activities focused on target compounds and high-priority target diseases
and make efforts to increase the number of projects through reinforcement of unique drug-discovery
technologies and utilization of open innovation.
Total R&D expenses in the first six months of fiscal 2022 were ¥3,407 million, or 19.7% of net sales(excluding royalties).
The status of progress of principal R&D activities is described below.

SI-449 (adhesion barrier: developed in Japan)
Although a delay occurred in the clinical trial schedule of a pivotal study of SI-449 in the field ofgastroenterological surgery due to the spread of COVID-19 infection, subject enrollment was completed in
September. The study is being conducted for the purpose of confirming efficacy (prevention of adhesion
formation), safety, and usability in gastroenterological surgery.
Subject enrollment in a pilot study being conducted being conducted in the field of gynecology for thepurpose of expanding the scope of application of SI-449 was completed in May 2022. Following the observation
periods of both studies, the Company will focus for a new product application based on the data obtained.
SI-449 is a powdered medical device whose main ingredient is cross-linked chondroitin sulfate developed
using Seikagaku’s own proprietary glycosaminoglycan cross-linking technology. It has the property of absorbing
moisture and swelling, and is expected to prevent post-operative adhesion formation in surgery by forming abarrier between the surgical wound site and surrounding tissues after application. The Company will proceedwith development of SI-449 with a view to introducing it globally, not only in Japan.
There is no substantial change in the other R&D activities.
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