February 5, 2021

SEIKAGAKU CORPORATION
Consolidated Financial Results (Japan GAAP) (Summary)for the First Nine Months of Fiscal 2020
(Nine-Month Period Ended December 31, 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 Nine Months of Fiscal 2020
(from April 1, 2020 to December 31, 2020)(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 nine months of fiscal 2020

20,813(10.4)

1,459(55.3)

2,113(45.4)

First nine months of fiscal 201923,240

7.7

3,265

141.6

3,868

31.0

Net income attributable toowners of parent
Millions of%
Yen

Net income per share

Diluted net income pershare

Yen

Yen

First nine months of fiscal 2020

1,879-

33.31-

First nine months of fiscal 2019(9,781)-(173.40)-(Note) Comprehensive income:First nine months of fiscal 2020:
First nine months of fiscal 2019:

1,857 million yen [ - % ](9,083) million yen [ - % ](2) Consolidated Financial Position
Total assets

Total equity

Equity ratio

Millions of Yen

Millions of Yen%As of December 31, 2020

66,66460,267

90.4

As of March 31, 2020

68,501

59,76787.2(Reference) Shareholders’ equity:
As of December 31, 2020:
As of March 31, 2020:

60,267million yen
59,767million yen

2. Dividends

Fiscal 2019
Fiscal 2020
Fiscal 2020
(Forecast)

1st QuarterYen-2nd Quarter
Yen
13.00
10.00

Dividends per share
3rd Quarter
Yen-(Note) Revision of the forecasts most recently announced: No1Year-end

AnnualYen
13.00

Yen
26.00

10.00

20.00

3. Forecast of Consolidated Financial Results for Fiscal 2020 (from April 1, 2020 to March 31, 2021)(Percentages indicate changes from the previous fiscal year)
Net income
Net income
Operating income
Ordinary income
attributable toper shareowners of parent

Net sales

Fiscal 2020

Millionsof Yen%27,500(4.0)

Millionsof Yen850

Millionsof Yen%(56.6)%

2,050(48.5)

Millionsof Yen1,700%

Yen－30.13(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 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)(b) Number of treasury stock at the end ofthe period(c) Average number of shares issued during
the period (nine months)

As of December
31, 2020

56,814,093 shares

As of March 31,
2020

56,814,093 shares

As of December
31, 2020

384,421 shares

As of March 31,
2020

397,767 sharesFirst nine monthsof fiscal 2020

56,424,531 sharesFirst nine monthsof fiscal 201956,411,600 shares* This financial reports are not subject to the quarterly review procedures.
* 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 Nine Months of Fiscal 2020
(Nine-Month Period Ended December 31, 2020)(1) Qualitative explanation on quarterly financial results
In the first nine months (April 1 to December 31, 2020) of the fiscal year ending March 31, 2021 (fiscal 2020),
net sales were ¥20,813 million, down 10.4% year on year. The result is attributable to sales decrease in 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 COVID-19 infection. These events
contrasted with the positive impact on the sales of the consolidation of Dalton Chemical Laboratories, Inc. as awholly owned subsidiary in March 2020.
Operating income fell 55.3% year on year to ¥1,459 million as a result of the sales decrease and an increasein R&D expenses attributable to costs related to an additional clinical study underway in the U.S. for SI-6603, atreatment for lumbar disc herniation. This occurred despite lower operating expenses, reflecting factors including
a decrease in depreciation due to non-recurrence of an impairment loss recognized in the same period of theprevious fiscal year and a review of sales promotion expenses.Ordinary income fell 45.4% year on year to¥2,113 million, reflecting the decline in operating income, despite positive factors that included the recording ofroyalty income related to overseas products. Net income attributable to owners of parent was ¥1,879 million,turning positive following a net loss of ¥9,781 million in the same period of the previous fiscal year incurred due
to recognition of an impairment loss on property, plant and equipment related to the pharmaceuticals business.
Net sales by segment
Pharmaceuticals Business- Domestic Pharmaceuticals (¥9,617 million, down 16.2% year on year)
A decrease in outpatient services accompanying the spread of COVID-19 infection led to contraction of theoverall market for ARTZ, a joint function improving agent for knee osteoarthritis, and lower deliveries to
medical institutions compared to the same period of the previous fiscal year. Nevertheless, switching fromcompeting products to ARTZ continued, and market share increased, reflecting factors that included thecontinuing effectiveness of measures to acquire new user facilities. After following a recovery trend since June,
the market had once again softened as of December due to the renewed spread of COVID-19 infection from
November onward. The Company’s sales fell, due in part to the impact of NHI drug price reductions.
Although the overall market for the OPEGAN series of ophthalmic viscoelastic devices contracted aimd adecrease in the number of cataract surgeries accompanying the spread of COVID-19 infection, deliveries to
medical institutions and market share increased due to the impact of shipment adjustments for competingproducts. The Company’s sales also increased as the higher volume compensated for the impact of NHI drug
price reductions.
The Company’s sales of MucoUp, a submucosal injection agent for endoscopic surgery, fell year on year,
reflecting the impact of a low-price sales offensive for competing products coupled with a decrease in thenumber of endoscopic surgeries accompanying the spread of COVID-19 infection.
Deliveries to medical institutions of HERNICORE, a treatment for lumbar disc herniation, increased due to
steady growth in the number of new user facilities, despite the impact of a decrease in outpatient services
accompanying the spread of COVID-19 infection. The Company’s sales fell, reflecting a high level of shipmentsin the first nine months of the previous fiscal year. To provide the opportunity for treatment to greater numbersof patients, the Company is continuing efforts to provide information and collect post-marketing safety data toensure appropriate use and safety.
- Overseas Pharmaceuticals (¥4,700 million, down 22.3% year on year)
Although local sales volume in the U.S. of Gel-One, an intra-articular single-injection viscosupplement for thetreatment of knee osteoarthritis, was substantially affected in the first quarter by the spread of COVID-19
infection, volume increased from the second quarter onward accompanying easing of measures implemented toprevent the spread of infection, such as postponement of non-urgent and non-emergency medical procedures.
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The Company’s sales fell year on year, reflecting the substantial impact of lower shipments in the first quarter.
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 continuation of the trend in
the U.S. market toward preference for products that require a low number of injections coupled with a decreasein outpatient services.
Local sales of Seikagaku products in the U.S. market have been picking up since mid-May, when economic
activity resumed, and the recovery trend was ongoing as of the end of the third quarter.
Although curtailment of outpatient services in some areas of China continues, the impact on the market has
been minimal, and local sales volume of ARTZ increased. The Company’s sales decreased, reflecting factors
including adjustment of shipments to the sales partner in the second quarter.
- Bulk Products and Contract Development and Manufacturing Organization* (¥1,535 million, up 84.6%year on year)
Sales increased due to the addition of sales from contract development and manufacturing at Dalton ChemicalLaboratories, Inc., despite lower sales of bulk products.
*Starting from the second quarter, the sales of Dalton Chemical Laboratories, Inc., which became a subsidiary inMarch 2020, are included in the pharmaceuticals business segment.
As a result of these developments, sales from the pharmaceuticals business segment fell 13.6% year on year to¥15,853 million.
LAL Business
Sales from the LAL business segment increased 1.4% year on year to ¥4,960 million as both sales of overseas
subsidiary Associates of Cape Cod, Inc., and sales in Japan increased slightly.
Since the endotoxin-detecting reagents and contract research services offered in the LAL business are usedin quality management of injectable pharmaceuticals and certain medical devices, at this time the impact fromCOVID-19 infection is limited.
(2) Explanation of forward-looking information, including the forecast of consolidated financial results
The Company has revised its consolidated financial forecast for fiscal 2020 ending March 31 2021, which wasannounced on September 24, 2020, to incorporate results of operations through the first nine months of the fiscal
year as well as various factors that can be foreseen at this time.
Net sales are expected to exceed the previous forecast, reflecting softer-than-expected-impact of COVID-19
on sales of overseas pharmaceuticals and overseas sales in the LAL business.
As for the earnings outlook, operating income is expected to exceed the previous forecast, with a projected
increase in net sales compared to the previous forecast compensating for higher R&D expenses.
Ordinary income and net income attributable to owners of parent are also expected to exceed the previous
forecasts, reflecting a projected increase in royalty income related to overseas products.
Seikagaku forecasts R&D expenses of ¥7,700 million (¥300 million above the previous forecast of ¥7,400million).
Note:
1. The exchange rate assumption to be used in the forecast of consolidated financial results for the fourth quarter onward is¥103 to the U.S. dollar.
2. Although the Company achieved the full-year consolidated forecasts for operating income, ordinary income, and net
income attributable owners of parent in the third quarter, the revised forecast reflects expected concentration of R&D andother expenses in the fourth quarter.
4(Millions of yen)
OperatingincomeNet sales

Ordinary income

Net income
attributable toowners of parent

Net income pershare (Yen)Previous forecast (A)26,650

550

1,400

1,150

20.38

Revised forecast (B)27,500

850

2,050

1,700

30.13

Change (B-A)

850

300

650

550

－

Change (%)

3.2

54.5

46.4

47.8

－

Reference:
28,642
1,960
3,981(10,839)(192.15)
Result for fiscal 2019
Note: The above forecast has been prepared on the basis of economic circumstances, market trends, and other assumptions
made at the time of release of this document. Actual results may differ from the forecast due to a variety of factors.

(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 nine months of fiscal 2020 were ¥5,380 million, or 25.9% 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 Companyproceeded with the study under a plan to complete follow-up observations in November 2022. However, a delay
has occurred in the clinical trial schedule, partly because of discontinuation of the study at some medical
institutions and an increase in the number of subjects postponing hospital visits, both due to the spread of
COVID-19 infection in the U.S. As of December 31, 2020, against a backdrop of a recovery trend in the status oftrial site operation, the Company is implementing measures such as effective recruitment activities in subject
enrollment and the rapid start-up of new trial sites in cooperation with a local contract research organization(CRO) and endeavoring to promote steady enrollment and minimize delays. The Company will continue toconduct the study while taking measures to reduce the risk of COVID-19 infection.
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 application wasdeliberated at a meeting of the Second Committee on New Drugs of the Pharmaceutical Affairs and FoodSanitation Council (PAFSC) held in January 2021, and the Committee recommended approval of SI-613 for use
in the treatment of osteoarthritis in the knee joint and hip joint. The Company will continue to respond
appropriately in cooperation with the sales partner in order to obtain the manufacture and sales approval.
SI-722 (treatment of Interstitial cystitis and bladder pain syndrome: developed in the U.S.)
Phase I/II clinical studies of SI-722 were initiated in November 2019, and although a delay occurred in theclinical trial schedule due to the spread of COVID-19 infection in the U.S., subject enrollment was completed inJanuary 2021.
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