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.

May 15, 2023

Summary of Consolidated Financial Results
for the First Three 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: May 15, 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 three months of the fiscal year ending December 31, 2023 (January 1, 2023 toMarch 31, 2023)(1) Consolidated operating results (cumulative)(Percentage figures represent changes from the same period of the previous fiscal year.)Net sales

Operating profit

First three months ended
million yen%
million yen%
March 31, 2023
370
9.2
(108)
–
March 31, 2022
339
(48.3)(119)–
Note: Comprehensive income
Three months ended March 31, 2023:
Three months ended March 31, 2022:
Earnings per share (Basic)
First three months ended
March 31, 2023
March 31, 2022

Profit attributable toowners of parent

Ordinary profit
million yen%

million yen

%

(110)
(70)
(51) million yen(126) million yen

–
–

(148)
(120)

–
–

[–%]
[–%]

Earnings per share (Diluted)

yen

yen

(6.88)(5.77)––(2) Consolidated financial position
Total assets
Net assets
Equity ratio
As ofmillion yen
million yen%
March 31, 2023
6,957
6,251
89.5
December 31, 2022
6,257
5,496
87.7
Reference: Equity As of March 31, 2023: 6,223 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–
December 31, 2023
Fiscal year ending
0.00–
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%

million yen%

million yen%

yen

Fiscal year ending
2,799
(4.1)
260 (69.9)
242 (73.2)
183 (74.7)
8.74
December 31, 2023
Note: Revisions to the forecasts of results most recently announced: None
* As the Company conducts performance management on an annualized basis, forecasts of results over a six-month period are notpresented.
* Notes(1) Changes in significant subsidiaries during the first three months ended March 31, 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 March 31, 2023

21,602,681 shares

As of December 31, 2022

20,977,181 sharesb. Total number of treasury shares at the end of the period
As of March 31, 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 three months ended March 31, 2023

21,574,786 shares

For the first three months ended March 31, 2022

20,956,714 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.
(Method of accessing supplementary documents for quarterly results and details of quarterly results briefing)
The Company plans to hold a briefing via live webcast for the first three months on May 17, 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 three 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 three months(1) Qualitative information regarding consolidated operating results
1) Financial results
During the first three months of the fiscal year ending December 31, 2023, the Japanese economy was gradually recovering,
although some weakness was observed. With regard to corporate business sentiment, while business conditions deteriorated in
the manufacturing industry, business confidence in non-manufacturing industries improved due to an improving trend in retailand other consumption on the back of a recovery in consumer spending and inbound demand. Although corporate earnings varyacross industries, corporate appetite for capital investment is seen as strong.
In the pharmaceutical industry, the Ministry of Health, Labour and Welfare announced the NHI drug price revision for FY2023.
In this second mid-year revision, NHI drug prices were reduced for 48% (9,300 products) of all listed products, while 1,100
products had their prices raised as a result of the “re-pricing for unprofitable products,” which was implemented as an exceptional
measure to deal with soaring prices and maintain a stable supply. Furthermore, in consideration of innovation, the Price
Maintenance Premium was increased as a temporary and exceptional measure to maintain previous NHI drug price levels. In
parallel with this, industry associations are making recommendations for reform of the NHI drug price system in 2024, citing anurgent need to strengthen the biopharmaceutical innovation ecosystem, including the NHI drug price system.
Such industry trends as these had no small impact on the business development activities of drug discovery startups, like theGroup, that operate a drug discovery business.
Under such conditions, the Group achieved the following financial results during the first three months.
Regarding human drug products launched to the market, sales of K-CAB® (generic name: tegoprazan)—a drug for gastroesophageal reflux disease marketed by HK inno.N Corporation (headquarters: Osong, South Korea, “HK inno.N”)—in South
Korea continued to perform well from the previous year, with external prescription data showing sales of 35.7 billion won, an
increase of 15.2% compared with the same period of the previous fiscal year and equivalent to 3.5 billion yen at 0.10 yen to thewon. Also, HK inno.N launched K-CAB® 25mg, which is a new drug product that contains half the amount of tegoprazan
compared to the current drug, in South Korea as a maintenance treatment for patients with cured erosive esophagitis. This means
K-CAB® is the only Potassium Competitive Acid Blocker (P-CAB)-based gastric acid secretion inhibitor marketed in South
Korea that can be used in all stages of erosive esophagitis, from onset to after it is cured.
Global expansion of tegoprazan is also progressing well. The Company has executed exclusive license agreements with HK
inno.N for the development, marketing, and manufacturing of tegoprazan with sublicensing rights, and the companies that haveentered into the license agreements with HK inno.N (the “sublicensees”) are engaged in development, manufacturing, andmarketing in their respective countries and regions. As of the end of the first three months ended March 31, 2023, expansion has
been completed to 36 countries, including South Korea, and tegoprazan products are being marketed in four countries: South
Korea, China, the Philippines, and Mongolia.
In China, it has been decided that from March, tegoprazan will be eligible for reimbursement under China’s public healthinsurance system. Previously, the drug was not eligible for reimbursement by public health insurance, with its price paid entirelyout of pocket by patients. However, reimbursement eligibility is expected to improve access to tegoprazan and increase its sales.
Furthermore, in Singapore and Mexico, the sublicensees have obtained marketing approval from the local regulatory authorities
and are preparing to launch there. As a result, the Company received a lump-sum payment from HK inno.N based on theagreement with HK inno.N.
With regard to pet drugs, sales were strong from last year for GALLIPRANT® (generic name: grapiprant), which is a drug forosteoarthritis in dogs, 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 failure,
all of which were licensed to Elanco Animal Health Inc. (headquarters: Indiana, U.S.).
Other licensed programs are also in the pre-clinical development stage or later at licensee and sublicensee companies. In the first
three months ended March 31, 2023, regarding the cannabinoid CB2 receptor agonist (RQ-00202730/AAT-730/OCT461201)
licensed by the Company to AskAt Inc. (headquarters: Nagoya, Aichi, “AskAt”) and further licensed by AskAt to Oxford
Cannabinoid Technologies Ltd. (headquarters: London, U.K., “OCT”), OCT has submitted an investigational new drug
application to the UK regulatory authority and ethics committees for Phase I clinical trials.
As for pre-licensing programs, pre-clinical studies progressed from the previous fiscal year during the fiscal year under review
for a ghrelin receptor agonist, which is being developed in-house. In addition, the Company holds the rights to develop,
manufacture, and market tegoprazan in Japan, but in order to achieve a speedy launch of the drug in Japan, the Company has
decided to forgo conducting clinical trials in-house and concentrate on licensing activities, and are in discussions with candidate
partner companies. For other pre-licensing programs, the Company conducted business development activities aimed at finding
business partners through a flexible combination of face-to-face meetings and online conferences.
In the programs in the discovery research stage, as in the previous year, the Company continued to promote collaborative researchand internal independent research efforts aimed at generating development compounds and strengthening its drug discovery-2-research foundations. Furthermore, in order to further enhance its drug discovery value chain and portfolio, the Company
established a new research site at Shonan Health Innovation Park (Fujisawa, Kanagawa). The research site is working to obtain
opportunities to collaborate with companies that possess cutting-edge knowledge and technologies in areas such as new modalities,
target molecule discovery, and the application of AI to drug discovery.
Clinical trials for the treatment of myelodysplastic syndrome (MDS) and acute myeloid leukemia (AML) are underway in the
U.S. for a retinoic acid receptor alpha agonist (tamibarotene, TM-411/SY-1425), licensed by the Company’s consolidated
subsidiary TMRC Co., Ltd. to Syros Pharmaceuticals Inc. (headquarters: Massachusetts, U.S., “Syros”). During the first threemonths ended March 31, 2023, Syros received Fast Track designation from the U.S. Food and Drug Administration (FDA) for
the indication of higher-risk myelodysplastic syndrome (HR-MDS). Drug candidates with Fast Track Approvals enable more
frequent communication with the FDA regarding development plans and, if supported by clinical data, priority review and
expedited approval.
In addition, for the issuance of new shares through third-party allotment and the 16th series of share acquisition rights to CVI
Investments, Inc. as resolved by the Board of Directors on December 20, 2022, the payment procedure was completed on January
5, 2023.
Accordingly, financial results for the first three months, the reporting period, were as follows. Business revenue for the period
was 370 million yen (up 9.2% year on year), operating loss totaled 108 million yen (compared with operating loss of 119 million
yen a year earlier), ordinary loss totaled 110 million yen (compared with ordinary loss of 70 million yen a year earlier), and loss
attributable to owners of parent was 148 million yen (compared with loss attributable to owners of parent of 120 million yen a
year earlier).
Total business expenses were 479 million yen (up 4.4% year on year). This mainly consists of cost of business revenue (59 million
yen, an 11.7% increase from the same period of the previous fiscal year), research and development expenses (268 million yen,an 1.7% increase from the same period of the previous fiscal year) and other selling, general and administrative expenses (151
million yen, a 6.6% increase from the same period of the previous fiscal year).
2)

Research and development

Research and development expenses of the entire Group during the first three months were 268 million yen. For the first threemonths, 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 March 31, 2023 were 6,957 million yen, an increase of 699 million yen (up 11.2%) from the end of theprevious fiscal year. This is mainly attributable to an increase in cash and deposits of 596 million yen, a decrease in accounts
receivable - trade, and contract assets of 209 million yen, and an increase in investment securities of 139 million yen.
Liabilities
Total liabilities as of March 31, 2023 were 706 million yen, a decrease of 54 million yen (down 7.1%) from the end of theprevious fiscal year. This is mainly attributable to a decrease in accounts payable - trade of 66 million yen, a decrease inincome taxes payable of 23 million yen, and an increase in long-term borrowings of 39 million yen.
Net assets
Total net assets as of March 31, 2023 were 6,251 million yen, an increase of 754 million yen (up 13.7%) from the end of theprevious fiscal year. This is mainly attributable to an increase in share capital and legal capital surplus of 786 million yen
due to capital increase through third-party allotment, the recording of loss attributable to owners of parent of 148 million
yen, and an increase in valuation difference on available-for-sale securities of 96 million yen.
Consequently, the equity ratio was 89.5% (up 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 March 31, 2023 amounted to 4,282 million yen (compared with 2,404
million yen a year earlier), an increase of 603 million yen (up 16.4%) from the end of the previous fiscal year.
The respective cash flows in the first three months and the factors thereof are as follows.
-3-Cash flows from operating activities
Net cash used in operating activities was 210 million yen (compared with net cash of 372 million yen provided a year earlier).
This is mainly attributable to the recording of loss before income taxes of 110 million yen, a cash inflow from a decrease intrade receivables of 209 million yen, cash outflows from a decrease in trade payables of 66 million yen and a decrease inaccounts payable - other of 101 million yen, and income taxes paid of 49 million yen.
Cash flows from investing activities
Net cash used in investing activities was 33 million yen (down 86.3% year on year). This is mainly attributable to thepurchase of property, plant and equipment of 26 million yen and the purchase of intangible assets of 6 million yen.
Cash flows from financing activities
Net cash provided by financing activities was 840 million yen (compared with net cash of 4 million yen used a year earlier).
This is mainly attributable to proceeds from issuance of shares of 782 million yen, proceeds from issuance of shareacquisition rights of 19 million yen, proceeds from long-term borrowings of 50 million yen, and repayments of leaseliabilities of 10 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

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-

As of March 31, 2023

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

4,271,688
393,138
259,262–
8,569
105,250
142,150
113,772
5,293,833

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

62,156204,258
199,820466,235

4,268
19,98472
24,325

4,077
33,07872
37,228987,962
24,0738,172
1,020,208
1,435,559
6,257,653

1,127,359
22,237
10,5891,160,186
1,663,649
6,957,483

(Thousands of yen)
As of December 31, 2022
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-

As of March 31, 2023

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

61,615
12,62040,359188,577
50,389
7,619
5,620
8,602
375,404

9,170
167,661
12,22260,59048,515
159,235
12,24650,201

14,49813,5932,750
266,893760,671

47,131
330,923
706,3282,265,697
2,455,480
773,021(21)5,494,178

2,658,975
2,848,758
624,647(21)
6,132,360(5,569)(5,569)8,372
5,496,981
6,257,653

91,177
91,177
27,6176,251,155
6,957,483

(2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income (cumulative)(Thousands of yen)First three months ended
March 31, 2022

First three months ended
March 31, 2023

339,273

370,493

53,218
263,751
142,153
459,122(119,849)

59,427
268,358
151,527
479,313(108,820)

209
5,117
62,148–
6
67,482

170
1,398
6,391
5,270
1,030
14,261

704
583
3,000
76
13,438–17,803(70,170)

1,506
1,749
–
3,635
8,571
0
15,464(110,022)

2,739
2,739

–
–

17,80017,800(85,231)35,671(120,902)–(120,902)––(110,022)
38,350(148,373)–(148,373)

Business revenue
Business expenses
Cost of business revenue
Research and development expenses
Other selling, general and administrative expenses
Total business expenses
Operating loss
Non-operating income
Interest income
Interest on securities
Foreign exchange gains
Gain on valuation of compound financial instruments
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commitment fees
Loss on valuation of compound financial instruments
Share issuance costs
Loss on valuation of derivatives
Other
Total non-operating expenses
Ordinary loss
Extraordinary income
Gain on redemption of investment securities
Total extraordinary income
Extraordinary losses
Retirement benefits for directors (and other officers)
Total extraordinary losses
Loss before income taxes
Income taxes
Loss
Profit attributable to non-controlling interests
Loss attributable to owners of parent
Consolidated statement of comprehensive income (cumulative)(Thousands of yen)First three months ended
March 31, 2022
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 three months ended
March 31, 2023

(120,902)(148,373)(5,934)(5,934)(126,836)

96,746
96,746(51,627)(126,836)(51,627)––

(3) Consolidated statement of cash flows(Thousands of yen)First three months ended
March 31, 2022
Cash flows from operating activities
Loss before income taxes
Depreciation
Interest income
Interest income on securities
Interest expenses
Commitment fees
Foreign exchange losses (gains)
Loss (gain) on valuation of compound financial
instruments
Loss (gain) on valuation of derivatives
Share issuance costs
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 accounts receivable - other
Decrease (increase) in consumption taxes refund
receivable
Increase (decrease) in accrued consumption taxes
Increase (decrease) in accounts payable - other
Increase (decrease) in accrued expenses
Increase (decrease) in income taxes payable - factor
based tax
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
Commitment fees paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from redemption of investment securities
Net cash provided by (used in) investing activities-8-

First three months ended
March 31, 2023

(85,231)
31,835(209)(5,117)704
583(47,193)(110,022)
30,979(170)(1,398)
1,506
1,749(6,770)3,000(5,270)13,43876(2,739)17,800857,662969
12,370(3,972)(184,891)
20

8,571
3,635
–
–
209,173(68)(66,451)(15,429)(28,266)(488)(15,802)(33,234)(37,475)(49,563)(14,315)–(101,567)(10,090)(19,628)(11,828)(22,623)
14,334(13,301)(10,389)

2,718

(904)

99
466,850
3,988(704)(7,000)(90,444)372,689

6,111(153,923)
1,748(1,605)(7,000)(49,893)(210,674)––(301,856)
56,940(244,916)(26,932)(6,655)––(33,588)(Thousands of yen)First three months ended
March 31, 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 share acquisition rights
Proceeds from issuance of shares resulting fromexercise 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 three months ended
March 31, 2023––––

50,000(655)
782,614
19,362

2,275

188(6,385)(4,110)(10,954)
840,555

39,802

6,769

163,465
2,240,661
2,404,126

603,0623,679,304
4,282,366

(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 during the first three months ended
March 31, 2023, resulting in share capital of 2,658,975 thousand yen and capital surplus of 2,848,758 thousand yen as ofMarch 31, 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 three months ended March 31, 2022 (January 1, 2022 to March 31, 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 three months ended March 31, 2023 (January 1, 2023 to March 31, 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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