July 31, 2020

SEIKAGAKU CORPORATION
Consolidated Financial Results (Japan GAAP) (Summary)for the First Three Months of Fiscal 2020(Three-Month Period Ended June 30, 2020)
Listed exchanges: Tokyo Stock Exchange (First Section)
Stock code number: 4548
URL: https://www.seikagaku.co.jp/en/(All amounts have been rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Three Months of Fiscal 2020
(from April 1, 2020 to June 30, 2020)(1) Consolidated Financial Results(Percentages indicate changes from the same period in the previous fiscal year)
Net sales

Operating income

Millions ofYen

Millions ofYen%

Ordinary income
Millions ofYen%%First three months of fiscal 2020

6,972(8.8)

305(68.3)

610(51.2)

First three months of fiscal 2019

7,649

5.8

964

81.7

1,251

(19.5)Net income attributable toowners of parent
Millions of%
Yen

Net income per share

Diluted net income
per share

Yen

Yen

First three months of fiscal 2020

529(46.0)

9.39-

First three months of fiscal 2019980

(18.6)

17.38-(Note) Comprehensive income:First three months of fiscal 2020:
First three months of fiscal 2019:

957 million yen [21.8%]
786 million yen [50.4%](2) Consolidated Financial Position
Total assets

Total equity

Equity ratio

Millions of Yen

Millions of Yen%

As of June 30, 2020

67,23859,991

89.2

As of March 31, 2020

68,501

59,76787.2(Reference) Shareholders’ equity:
As of June 30, 2020: 59,991 million yen
As of March 31, 2020: 59,767 million yen

2. Dividends

Fiscal 2019
Fiscal 2020
Fiscal 2020
(Forecast)

1st QuarterYen-

2nd Quarter
Yen
13.00

Dividends per share
3rd Quarter
Yen---

Year-end

AnnualYen
13.00
-Yen
26.00
-(Note) Revision of the forecasts most recently announced: No

3. Forecast of Consolidated Financial Results for Fiscal 2020 (from April 1, 2020 to March 31, 2021)
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At this time it would be difficult to reasonably assess the impact of the COVID-19 infection on theCompany’s business and financial results on the basis of the situation at the end of the first quarter. Since theCOVID-19 infection is spreading in Japan and the U.S., key markets for the Company, Accordingly, theCompany has not yet determined a forecast of consolidated financial results for the fiscal year ending March 31,2021. The Company will carefully examine the impact of the COVID-19 infection on the financial results andpromptly make an announcement once it becomes possible to determine a forecast.

* Notes(1) Changes in the status of material subsidiaries during the period: No(2) Application of specific accounting methods for preparing the quarterly consolidated financialstatements: Yes(3) Changes in accounting policies, changes in accounting estimates, and retrospective restatements(a) Changes in accounting policies accompanying revisions in accounting standards: No(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 June 30,
2020

56,814,093 shares

As of March 31,
2020

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

As of June 30,
2020

397,767 shares

As of March 31,
2020

397,767 shares(c) Average number of shares issued during
the period (three months)

First three monthsof fiscal 2020

56,416,326 sharesFirst three monthsof fiscal 201956,403,902 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
At this time it would be difficult to reasonably assess a forecast of consolidated financial results for the fiscal year ending
March 31, 2021.

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1. Results of Operations for the First Quarter of Fiscal 2020 (Three-Month Period Ended June 30, 2020)(1) Qualitative explanation on quarterly financial results
In the first three months (April 1 to June 30, 2020) of the fiscal year ending March 31, 2021 (fiscal 2020), netsales were ¥6,972 million, down 8.8% year on year. The result is attributable to a decrease in revenue from thepharmaceuticals business due to the impact of National Health Insurance (NHI) drug price reductions in Japan
coupled with a decrease in outpatient services accompanying the spread of the COVID-19 infection andpostponement of non-urgent and non-emergency medical procedures in the U.S.
Operating income fell 68.3% year on year to ¥305 million as a result of the sales decrease and an increase in
R&D expenses attributable to costs related to measures to promote subject enrollment for an additional clinicalstudy underway in the U.S. for SI-6603, a treatment for lumbar disc herniation. Ordinary income fell 51.2% year
on year to ¥610 million, reflecting positive factors including the recording of royalty income and a decrease inforeign exchange loss, and net income attributable to owners of parent fell 46.0% year on year to ¥529 million.
1) Net sales by segment
Pharmaceutical Business- Domestic Pharmaceuticals (¥3,694 million, up 0.1% year on year)
Amid overall market contraction for ARTZ, a joint function improving agent for knee osteoarthritis, deliveries to
medical institutions decreased year on year due to the impact of a decrease in outpatient services accompanying
the spread of the COVID-19 infection. Market share increased, reflecting the effectiveness of measures toacquire new user facilities implemented in the previous fiscal year. Although shipments increased year on year,
the Company’s sales fell due to the impact of NHI drug price reductions.
Although the overall market contraction for the OPEGAN series of ophthalmic viscoelastic devices began
to contract due to a decrease in the number of cataract surgeries accompanying the spread of the COVID-19
infection, deliveries to medical institutions increased due to altered shipments of competing products. The
Company’s sales also increased as the higher volume compensated for the impact of NHI drug price revisions.
The Company’s sales of MucoUp, a submucosal injection agent for endoscopic surgery, fell year on year,
reflecting the impact of a sales offensive for a competing product and a decrease in the number of endoscopic
surgeries accompanying the spread of the COVID-19 infection.
To provide the opportunity for treatment with HERNICORE, a treatment for lumbar disc herniation, togreater numbers of patients, the Company continues to provide information and the collect post-marketing safety
data to ensure appropriate use and safety. In the first quarter, deliveries of HERNICORE to medical institutions
and the Company’s sales increased due to steady growth in the number of new user facilities, despite the impactof a decrease in outpatient services accompanying the spread of the COVID-19 infection.
- Overseas Pharmaceuticals (¥1,138 million, down 41.8% year on year)
Local sales volume in the U.S. and the Company’s sales of Gel-One, an intra-articular single-injection
viscosupplement for the treatment of knee osteoarthritis, fell year on year due to the impact of factors including
the lockdown of urban areas and postponement of non-urgent and non-emergency medical procedures
accompanying the spread of the COVID-19 infection.
Local sales volume in the U.S. and the Company’s sales of SUPARTZ FX, an intra-articular 5-injection
viscosupplement for the treatment of knee osteoarthritis, declined year on year due to a continuing trend in theU.S. market toward preference for products that require a low number of injections, coupled with the impact of
the COVID-19 infection.
Local sales of Seikagaku products in the U.S. market have followed a recovery trend since mid-May, whenlockdowns were gradually lifted and economic activity began to resume.
Although economic activity resumed in China (P.R.C.) at a comparatively early date, local sales volume andthe Company’s sales of ARTZ decreased, reflecting the impact of continued curtailment of outpatient services insome areas even after April.
3- Bulk Products (¥295 million, up 1.7% year on year)
The Company’s sales were at the prior-year level, despite intensification of competition for hyaluronic acid.
As a result of these developments, sales from the pharmaceuticals business segment fell 13.6% year on year to¥5,128 million.
LAL Business
Sales of Bacterial Endotoxin Testing (BET) and Clinical Diagnostic (Fungitell) reagents increased thanks toreinforcement of sales activities at overseas subsidiary Associates of Cape Cod, Inc., and sales of the LAL
business rose 7.7% year on year to ¥1,844 million. *The endotoxin-detecting reagents and contract research services offered in the LAL business are used inquality management of injectable pharmaceuticals and certain medical devices, and at this time the Company
expects the impact from the COVID-19 infection to be limited. However, it is unclear when the COVID-19
infection will subside, and the business may be affected if the situation becomes prolonged.
*Since Associates of Cape Cod, Inc.’s fiscal year ends in December, the impact on sales of the spread of theCOVID-19 infection was immaterial during the period from January to March 2020, the Company’s first quarter.
(2) Explanation of forward-looking information, including the forecast of consolidated financial results
At this time it would be difficult to reasonably assess the impact of the COVID-19 infection on the Company’sbusiness and financial results on the basis of the situation at the end of the first quarter. Since the COVID-19
infection is spreading in Japan and the U.S., key markets for the Company, Accordingly, the Company has not
yet determined a forecast of consolidated financial results for the fiscal year ending March 31, 2021. TheCompany will carefully examine the impact of the COVID-19 infection on the financial results and promptly
make an announcement once it becomes possible to determine a forecast.
(3)Research and Development Activities
To contribute to healthy and fulfilling lives for people around the world, the Company focuses its research anddevelopment on glycoscience as its area of specialization and aims to create original pharmaceuticals andmedical devices.
To achieve early and continuous launching of new drugs, which hold the key to future business growth, theCompany 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 three months of fiscal 2020 were ¥1,615 million, or 23.2% of net sales.
The status of progress of principal R&D activities is described below.
SI-6603 (treatment for lumbar disc herniation: developed in the U.S.)
An additional Phase III clinical study of SI-6603 in the U.S. was initiated in February 2018, and the Company
proceeded with the study under a plan to complete follow-up observations in November 2022. However, as ofJune 30, 2020 the Company anticipates a delay of approximately six months, partly because of discontinuationof the study at some medical institutions and an increase in the number of subjects postponing hospital visits,
both due to the spread of the COVID-19 infection in the U.S. If a lockdown is ordered because of an upward
trend in the COVID-19 infection cases in a state where many trial sites are located, an additional delay in subject
enrollment would be anticipated. The Company is currently steadily implementing measures, such as effective
recruitment activities in subject enrollment and the rapid start-up of new trial sites in cooperation with a local
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contract research organization (CRO), while placing the highest priority on the situation at medical institutions
and prevention of infection of patients and medical personnel.
SI-613 (treatment for osteoarthritis: developed in Japan and the U.S.)In January 2020, the Company submitted a new drug application for manufacturing and marketing approval in
Japan relating to the efficacy and effectiveness of SI-613 in the treatment of osteoarthritis (knee joint, hip joint,ankle joint) based on the results of three Phase III clinical studies conducted in Japan. The Company isappropriately responding to inquiries from the regulatory authorities and believes that the examination isproceeding according to schedule at this time.
SI-722 (treatment for interstitial cystitis: developed in the U.S.)
A Phase I clinical study of SI-722 was completed in the U.S., and Phase I/II clinical studies were initiated inNovember 2019. However, as of June 30, 2020 the Company expects a delay of approximately four months in
the clinical trial plan due to the spread of the COVID-19 infection in the U.S. If infection in the U.S. spreads
further and a lockdown is ordered in a state where trial sites are located, an adverse impact on subject enrollment
is anticipated. The Company is currently endeavoring to conduct the trial in cooperation with a local CRO while
placing the highest priority on the situation at medical institutions and prevention of infection of patients andmedical personnel.
SI-449 (adhesion barrier: developed in Japan)
Since a clinically useful effect was confirmed in a pilot study of SI-449 initiated in May 2018, a pivotal study toconfirm adhesion prevention effect, safety, and operability was initiated in May 2020. The Company isproceeding carefully with preparations for the start of subject enrollment, placing the highest priority on
preventing infection of patients, medical personnel, and others with the COVID-19 infection.

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