Securities code 4582
March 3, 2023
(Date of commencement of electronic provision: March 1, 2023)

To Our Shareholders
2-2 Toranomon 3-chome, Minato-ku, Tokyo

SymBio Pharmaceuticals Limited
Representative Director,
President and CEO

Fuminori Yoshida

Notice of Convocation of
the 18th Ordinary General Meeting of Shareholders
Notice is hereby given that the 18th Ordinary General Meeting of Shareholders will be held as set forth below.
In convening the General Meeting of Shareholders, we have taken measures to provide information in electronic format on the
Company website. Please refer to the Information on Shareholders’ Meeting page under IR Information on the Company website at thefollowing link: https://symbiopharma.com/index_e.html
In addition to the Company website, we have also made available information regarding the General Meeting of Shareholders on thewebsite of the Tokyo Stock Exchange (“TSE”). If you are unable to view the information provided on the Company website, please
access the TSE website (Listed Company Search), search for the Company using our name (SymBio Pharmaceuticals) or securities
code (4582), and view information on the General Meeting of Shareholders under the Documents for public inspection/PR information
tab in basic information.
TSE website (Listed Company Search):https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do;jsessionid=00B3819797A8C27B35A1821C503A34B91
If you are not attending the meeting, you may exercise your voting rights in writing or via the Internet. Please review the Reference
Documents for the Ordinary General Meeting of Shareholders accompanying this letter or provided in electronic format, and exercise
your voting rights by no later than 5:30 p.m. on Wednesday, March 22, 2023 (JST), following the instructions below.
[Exercise of voting rights by mail]Please indicate your approval or disapproval of the proposals in the enclosed voting form and return this form to us so that it arrives
prior to the deadline indicated above.
[Exercise of voting rights via the Internet]
Please review the instructions under the “Procedures for the exercise of voting rights” to exercise your voting rights prior to thedeadline indicated above.
In the event that a voting right is exercised both by returning a voting form by mail and via the Internet, only voting via the Internet
will be valid and will supersede the form submitted by mail.
In the event that a voting right is exercised via the Internet more than once, only the most recent exercise will be valid.

1

1.
2.

Date/Time:
Place:

3.

Objectives:
Reports

Thursday, March 23, 2023 at 10:00 a.m. (Doors open at 9:30 a.m.)
Sapia Tower 6th Floor, 7-12 Marunouchi 1-chome, Chiyoda-ku, Tokyo
Station Conference Tokyo, Room 602(Please see the attached map)
1. Business report, consolidated financial statements, and report on the results of audit on consolidated
financial statements by accounting auditor and Audit & Supervisory Committee
for the 18th Term
(January 1, 2022 to December 31, 2022)
2. Financial report for the 18th Term (January 1, 2022 to December 31, 2022)

Items for resolution:
Proposal 1:
Partial amendments to the Articles of Incorporation
Proposal 2:
Election of four (4) Directors (excluding Directors serving as Audit & Supervisory Committee Members)
Proposal 3:
Election of one (1) Director serving as Substitute Audit & Supervisory Committee Member----------------------------------------------------------------------------------1. If attending the Ordinary General Meeting of Shareholders in person, in order to exercise your voting rights, please submit theenclosed voting form at the reception desk upon arrival at the venue on the day of the meeting.
2. Please also bring this Notice of Convocation to the meeting with you to save on resources.
3. If you are unable to attend the Ordinary General Meeting of Shareholders, you can exercise your voting rights by sending anothershareholder with voting rights to the meeting as your proxy. Please note, however, that it is necessary to submit a document
evidencing the authority of the proxy.
4. Please be advised that should any modification to the information provided in electronic format be necessary, the modified
information will be posted on each website the information is provided.
5. The mailing of this document serves as the provision of information provided in electronic format in paper form per the request
for such form.
6. Please note that when convening future general meetings of shareholders, we may cease to provide information in paper form,
except for information on events and others stipulated by laws and regulations.

2Measures to Prevent the Spread of COVID-19
SymBio Pharmaceuticals Limited has adopted measures as described below to prevent the spread of COVID-19 at our 18th Ordinary
General Meeting of Shareholders scheduled for Thursday, March 23, 2023. We sincerely appreciate your understanding and cooperationin this regard.
We request that our shareholders monitor their health and consider exercising their voting rights in advance either by mail or online.
For details on how to vote by mail or online, please review the instructions under the “Procedures for the exercise of voting rights”
section on Page 6 of this notification to exercise your voting rights by mail or online.
For individual who may be at higher risks, such as senior citizens, those with underlying conditions, or expectant mothers, westrongly recommend avoiding attendance in person.
If, upon careful consideration of the state of the spread of the virus on the day of the meeting as well as your health status, you decide
to attend in person, we request that you wear a mask and as well as take other measures to prevent infection. We also request that you
use hand sanitizer stations available at the venue, and permit us to measure your temperature upon entry. If you seem unwell or are
running a fever, we may request that you refrain from entering the venue.
Meeting staff and members of SymBio management will in principle be wearing masks at the meeting. We have taken extra
precautions to ensure that the meeting is conducted in a safe and smooth manner. Chairs will be set apart from each other to allow forsocial distancing, and we have prepared a simplified agenda so as to minimize the amount of time spent at the meeting venue.
In the event that any substantial alterations to meeting plans may be necessary due to circumstances, such notification will be
published on our website (https://www.symbiopharma.com/index_e.html).

3

Proposals and reference matters
Proposal 1: Partial amendments to the Articles of Incorporation

1.

Reason for the proposal

As of December 31, 2022, a total of 39,603,606 shares of the Company had been issued out of a total of 41,750,000 authorized shares.
To enable flexible fundraising in preparation for future business expansion, we propose to increase the total number of authorizedshares.

2.

Detail of the change

The detail of the change is as follows.
(The change is underlined.)
Current Articles of Incorporation
Article 6 (Total number of authorized shares)
Total number of authorized shares of the Company shall be
41,750,000.

Proposed Change
Article 6 (Total number of authorized shares)
Total number of authorized shares of the Company shall be
65,000,000.

4Proposal 2: Election of four (4) Directors (excluding Directors serving as Audit & Supervisory Committee Members)
All four (4) Directors (excluding Directors serving as Audit & Supervisory Committee Members; same applies hereafter in this
proposal) will resign upon expiration of their terms of office at the conclusion of the Ordinary General Meeting of Shareholders.
Accordingly, we propose the election of four (4) Directors as below. Please note that Hirotaka Ito has resigned from the position of
Director as of May 31, 2022.
Profiles of the candidates for Directors are as follows:#

Name(Date of birth)

Career summary, status/responsibility at the Company andsignificant concurrent positions
January 1980

Number ofCompany
shares owned

Representative Director and President,
Nippon Bio-Rad Laboratories Co., Ltd.
July 1991
Representative Director and President,
Fuminori Yoshida
Nippon Syntex K.K.
1,109,700
1(January 19, 1949)
May 1993
Representative Director and President, Amgen K.K.
sharesCorporate Vice-President, Amgen Inc. (U.S.)
March 2005
Established the Company; Representative Director, President andCEO of the Company (current)
April 1972
Joined Chugai Pharmaceutical Co., Ltd.
April 2002
General Manager of the Audit Office,
Chugai Pharmaceutical Co., Ltd.
March 2007
Full-time Audit & Supervisory Board Member, Chugai
Pharmaceutical Co., Ltd.
Shigetoshi Matsumoto
April 2011
Senior Advisor, Chugai Pharmaceutical Co., Ltd.
(August 12, 1949)
2
None
October 2011
Advisor, APO PLUS STATION Co., Ltd.
Outside Director term ofJune 2015
Senior Advisor, Protiviti LLC (current)
office: five years
October 2015
Audit Practice Counselor, Japan Audit &Supervisory Board Members Association (current)
March 2017
Outside member of the Audit & Supervisory of the Company
March 2018
Outside Director of the Company (current)
July 1971
Internship of Internal Medicine, University of Virginia Hospital
July 1973
Senior Assistant Resident of Internal Medicine, University ofVirginia Hospital
July 1974
Clinical and Research Fellow of Hematology, New England Medical
Center Hospital
July 1977
Assistant Professor of Medicine, Hematology/Oncology of
University of Utah School, University of Utah Hospital
October 1984
Senior Investigator and Head of Medicine Section, National Cancer
Bruce David Cheson
Institute, Cancer Therapy Evaluation Program(April 6, 1946)
June 2001
Scientific Advisor, Lymphoma Research Foundation (current)
3
None
Outside Director term of July 2002
Deputy Chief, Hematology-Oncology, Head of Hematology,
office: four years
Georgetown University Hospital, Lombardi Comprehensive Cancer
CenterMarch 2013
Hematology-Oncology Fellowship Program Director GUH
August 2016
Outside Director, Morphosys
December 2018
Frank M. Ewing Foundation Chair in Hematology-Oncology
March 2019
Outside Director of the Company (current)
May 2021
Doctor, The Center for Cancer and Blood Disorders (current)
April 1980
Joined the Industrial Bank of Japan, Ltd.
(currently Mizuho Bank, Ltd.)
April 2002
Deputy Head of HR Planning Team, Mizuho
Bank, Ltd.
April 2003
Head of President Office and Planning
Department, Olympic Group Corporation
December 2008
Registered as an Attorney-At-Law
Eiji Ebinuma
Attorney-At-Law, Toranomon Sougoh Law(July 3, 1957)
Firm
4
None
January 2013
Attorney-At-Law, Partner, Tanabe & Partners Law Firm (current)
Outside Director term of June 2014
Outside Director, MIRAIT Holdings Corporation
office: two years
June 2016
Outside Director, Rakuten Bank, Ltd.
(current)
March 2019
Outside member of the Audit & Supervisory Board of the Company(current)
June 2019
Audit & Supervisory Board Member, Toko Electrical Construction
Co., Ltd. (current)
March 2021
Outside Director of the Company (current)(Notes) 1. There are no special interests between any of the above candidates and the Company.
2. Shigetoshi Matsumoto, Bruce David Cheson, and Eiji Ebinuma are proposed as candidates for the position of Outside Director.
3. The Company has designated candidates Shigetoshi Matsumoto and Eiji Ebinuma as independent officers pursuant to the provisions of theTokyo Stock Exchange (TSE) and registered them as such with the TSE. If they are reelected, the Company will continue registering both5

candidates as independent officers.
4. The reasons for election of the candidates for Outside Director and a summary of their expected roles are as follows:(1) The Company proposes to elect Shigetoshi Matsumoto as Outside Director to seek his advice and opinion on the Company’s
management, having an objective perspective independent from the Company’s management engaged in business operations,leveraging his extensive knowledge and years of experience in business practice and audit at companies in the same industry.
(2) The Company proposes to elect Bruce David Cheson as Outside Director to seek his advice and opinion on the Company’s
management, having an objective perspective independent from the Company’s management engaged in business operations,leveraging his knowledge and experience as a physician. We note that, although Dr. Cheson has never been involved in the
management of corporation other than in the capacity of an outside director or auditor, we nevertheless conclude that, for the
aforementioned reasons, he is capable of properly conducting the duties of Outside Director of the Company.
(3) The Company proposes to elect Eiji Ebinuma as Outside Director to seek his advice and opinion on the Company’s management,
having an objective perspective independent from the Company’s management engaged in business operations, leveraging his
abundant knowledge and experience as an attorney. We note that, although Mr. Ebinuma has never been involved in the managementof corporation other than in the capacity of an outside director or auditor, we nevertheless conclude that, for the aforementioned
reasons, he is capable of properly conducting the duties of Outside Director of the Company.
5. The Articles of Incorporation of the Company stipulate that the Company may enter into an agreement with Directors (excluding those
who engage in business execution) to limit their liability for damages due to negligence of their duties. If the election of the abovementioned candidates for Outside Director is approved, the Company will continue the current liability limitation agreement or enter into a
new liability limitation agreement with each candidate.
A summary of the contents of the liability limitation agreement is as follows:- In the event that a Director is deemed to be liable for damages stipulated in Article 423, Paragraph 1 of the Companies Act, liability will
be limited to the higher of 1,000,000 yen or the maximum liability amount set forth in laws and regulations, provided that the Director
has performed his/her duties in good faith and without gross negligence.
6. The Company has concluded an indemnification contract with each of the current Directors. In addition to expenses related to shareholder
lawsuits that arise due to misconduct, the indemnification contract covers a wide range of expenses that individual officers and theCompany may incur, including the costs of dealing with criminal proceedings and public investigations outside Japan. If the reelection of
the current Directors is approved, the Company will maintain the indemnification contract with each of them.
7. The Company has obtained Directors and Officers Liability Insurance Policies covering all current Directors. If a candidate for Director iselected, the contract will renew automatically with the same contents with each candidate as the insured.
The said contract covers the loss incurred by the insured due to damages arising from improper acts based on the position of Director.
Costs of premiums paid on the aforementioned insurance are borne entirely by the Company.

6

Proposal 3: Election of one (1) Director serving as Substitute Audit & Supervisory Committee Member
The Company requests the election of one (1) Director serving as Substitute Audit & Supervisory Committee Member in case of apotential shortage of the number of Directors serving as Audit & Supervisory Committee Members stipulated by laws and regulations.
The appointment of the Director serving as Substitute Audit & Supervisory Committee Member may be revoked by a resolution of theBoard of Directors with the consent of the Audit & Supervisory Committee, but only prior to taking office. The Company has obtained
the consent of the Audit & Supervisory Committee to submit this proposal.
The profile of the candidate for Director serving as Substitute Audit & Supervisory Committee Member is as follows:
Name(Date of birth)
April 1970
May 1996
Takashi Watanabe(March 2, 1947)

March 2008

Career summary, status/responsibility at the Company andNumber of Company
significant concurrent positions
shares owned
Joined the Industrial Bank of Japan, Ltd.
(currently Mizuho Bank, Ltd.)Manager of the Paris branch office, the Industrial Bank of Japan, Ltd.
(currently Mizuho Bank, Ltd.)
Outside member of the Audit & Supervisory Board (full-time),
None
Kawaguchi Chemical Industry Co., Ltd.

June 2010
March 2011

Outside member of the Audit & Supervisory Board, SMS CO., LTD.
Outside member of the Audit & Supervisory Board (full-time), SMS
CO., LTD.
June 2014
Outside member of the Audit & Supervisory Board, SMS CO., LTD.
(Notes) 1. There is no special interest between the above candidate and the Company.
2. Takashi Watanabe is a candidate for Outside Director serving as Substitute Audit & Supervisory Committee Member.
3. The reasons for nomination and a summary of the expected roles of the candidate for Outside Director servicing as Substitute Audit &Supervisory Committee Member are as follows:
We request the election of Takashi Watanabe as an Outside Director serving as Substitute Audit & Supervisory Board Member to receive
advice and opinions concerning the audit of the Company’s Directors in the execution of their official duties from an objective and fair
perspective, leveraging his extensive experience and knowledge he gained as an Audit & Supervisory Board Member at listedcompanies. If he is appointed, the Company intends to register him as an independent officer in accordance with the provision of theTokyo Stock Exchange.
4. The Articles of Incorporation of the Company stipulate that the Company may enter into an agreement with Directors (excluding those
who engage in business execution) to limit their liability for damages due to negligence of their duties. If the above candidate is appointed
as Director serving as Substitute Audit & Supervisory Committee Member, the Company will enter into a liability limitation agreementwith him.
The outline of the contents of the liability limitation agreement is as follows.
In the event of liability for damages under Article 423, Paragraph 1 of the Companies Act, the Company shall be liable up to the higher ofan amount of 1,000,000 yen or the amount stipulated by law, provided that the Company has performed its duties giving rise to suchliability in good faith and without gross negligence.
5. The Company has concluded an indemnification contract with each of the current Directors. In addition to expenses related to shareholder
lawsuits that arise due to misconduct, the indemnification contract covers a wide range of expenses that individual officers and theCompany may incur, including the costs of dealing with criminal proceedings and public investigations outside Japan. If the above
candidate for Director serving as Substitute Audit & Supervisory Committee Member is appointed Director serving as Audit &Supervisory Committee Member, the Company will enter into an indemnification contract with the candidate.
6. The Company has obtained Directors and Officers Liability Insurance Policies covering all current Directors. If the candidate for Director
serving as Substitute Audit & Supervisory Committee Member is appointed Director serving as Audit & Supervisory Committee Member,
he will automatically be insured under the contract.
The said contract covers the loss incurred by the insured due to damages arising from improper acts based on the position of Director serving
as Audit & Supervisory Committee Member.
Costs of premiums paid on the aforementioned insurance are borne entirely by the Company.

71. Current Status of the Corporate Group(1) Business conditions and operating results
From the fiscal year ended December 31, 2022, the Group began preparing consolidated financial statements in connection withthe commencement of operations at its wholly-owned U.S.-based subsidiary, SymBio Pharma USA, Inc. (President: Carolyn
Yanavich), which serves as a strategic base for our global operations as a specialty pharmaceutical company. As reference, we haveprovided year-on-year comparisons with the non-consolidated financial statements in the same period last year, since there have beenno substantial changes in our business composition.
(i) Business results
In December 2020, the Group began selling TREAKISYM® (generic name: bendamustine hydrochloride or bendamustinehydrochloride hydrate) through its own sales organization. This was a critical step of the Group to attain profitability in FY 2021,
which was a top priority for the fiscal year.
The Group has assigned medical representatives nationwide to establish a highly productive salesforce that can identify local
needs and plan detailed proposals. We also deployed hematology experts in each region of operation to provide scientific information.
To achieve nationwide distribution, we have entered into distribution agreements with Suzuken Co., Ltd. and Toho PharmaceuticalCo., Ltd. with both companies as exclusive distributors. We are also working with S.D. Collabo Co., Ltd. and have established twologistics centers, one in Eastern Japan and the other in Western Japan.
In February 2022, the Group obtained approval for a partial change to the marketing authorization of the ready-to-dilute (RTD)
liquid formulation of TREAKISYM® to add rapid infusion (RI) administration. Compared to the freeze-dried (FD) formulation, theRTD formulation of TREAKISYM® reduces the time required for the complicated dissolution process. RI administration further
reduces the infusion time to 10 minutes, benefitting both patients and healthcare providers. The reduction in infusion volume also
lowers the volume of saline solution and, accordingly, the amount of salt (sodium chloride) used.
Conversion to the RI administration proceeded smoothly, with over 80% of medical institutions switching to RI administration
as of the end of December 2022.
As a result, net sales totaled 10,008,338 thousand yen (+21.2% year on year). Despite sales activities being constrained by delays
in treatment and continued restrictions on facility visits due to the spread of COVID-19, net sales rose due to the approval for theuse of TREAKISYM® in the bendamustine-rituximab (BR) therapy and in polatuzumab vedotin plus bendamustine-rituximab(Pola+BR) therapy to treat recurrent/refractory diffuse large B-cell lymphoma (r/r DLBCL).
Selling, general and administrative expenses totaled 5,636,278 thousand yen (+1.1% year on year). This amount includes researchand development expenses of 2,554,799 thousand yen (+47.2% year on year).
As a result, in FY 2022, operating profit was 1,963,625 thousand yen (versus 1,016,001 thousand yen in FY 2021) and ordinary
profit was 1,999,878 thousand yen (versus 1,001,133 thousand yen in FY 2021). Profit attributable to owners of parent amounted
to 1,179,238 thousand yen (versus 2,032,203 thousand yen in the same period of FY 2021, due in part to the recording of 1,275,759
thousand yen in deferred tax assets). As cumulative total sales of the RTD formulation of TREAKISYM® reached 11,000,000
thousand yen in FY 2022, the Group booked 550,000 thousand yen in sales milestone payments to Eagle Pharmaceuticals, Inc. (headoffice: New Jersey, U.S.; hereinafter “Eagle”) under cost of sales.
In February 2022, generic versions of TREAKISYM® were approved for manufacturing and marketing in Japan. Given thepotential infringement of Eagle’s patents related to TREAKISYM® in Japan which are exclusively licensed to the Company, theCompany in coordination with Eagle notified four generic makers of potential patent infringement and requested they takeappropriate measures to avoid such infringement. In December 2022, Eagle and the Company commenced the litigation seeking an
injunction against the manufacture and sale of Pfizer’s and Towa’s generic version of TREAKISYM® and compensation for damages
arising from the infringement.
Segment information has been omitted since the Group operates within a single segment, which includes the research anddevelopment, manufacturing, and marketing of pharmaceutical drugs and other related activities.
(ii) Research and development activities
During the fiscal year under review, we conducted the following research and development activities in each of our development
pipelines.
(a) Anticancer agents: SyB L-0501 (FD formulation), SyB L-1701 (RTD formulation), and SyB L-1702 (RI administration)(generic name: bendamustine hydrochloride or bendamustine hydrochloride hydrate, trade name: TREAKISYM®)
For the RI administration, the Group completed clinical studies on safety and a partial change application was approved in
February 2022, enabling the use of RI injection for all approved indications of the RTD formulation in-licensed from Eagle.
The Group will actively conduct further research on TREAKISYM®, such as ongoing clinical research with Saitama Medical
University and joint research with Kyoto University, to explore new possibilities of the drug.
(b) Anticancer agents: SyB L-1101 (intravenous formulation) and SyB C-1101 (oral formulation) (generic name: rigosertib
sodium)For rigosertib in-licensed from Onconova Therapeutics, Inc. and TREAKISYM®, the Group is searching for new indications aswell as new applications for the drugs used in combination with each other or with other existing drugs, through joint research andthe offering of academia-industry collaborative courses with the University of Tokyo.
(c) Antiviral drug: SyB V-1901 (generic name: brincidofovir [BCV])In the development of the intravenous and oral formulations of antiviral drug brincidofovir (SyB V-1901; hereinafter “BCV IV”
and “BCV Oral”) , in-licensed from Onconova with a view to global rollout, the Group has been carrying out joint research with8

top research institutions of each specialized field in Japan and overseas in light of the drugs’ broad effectiveness against dsDNA
viruses.
The Group has decided to prioritize the global development of BCV IV primarily in Japan, the U.S., and Europe, targeting
disseminated AdV infections occurring after hematopoietic stem cell transplantation, a niche area with a high unmet medical need.
In March 2021, the Group filed an Investigational New Drug (IND) application with the FDA to conduct a Phase II clinical trial
primarily in pediatric patients suffering from AdV infections (also including adults). This development program was granted Fast
Track designation by the FDA in April 2021, and the investigational drug was administered to the first patient in August 2021. Asof December 31, 2022, 20 patients were enrolled.
BK virus (BKV) infection after kidney transplantation is a disease with serious consequences for the recipient, the donor, themedical practitioner, and the society, due to the risk of impaired renal function and loss of the transplanted kidney (graft loss). The
Group submitted a clinical trial notification for a global Phase II study in patients infected with BKV after kidney transplantation to
the Pharmaceuticals and Medical Devices Agency (PMDA) of Japan in May 2022 and filed another notification with the Therapeutic
Goods Administration (TGA) of Australia in August 2022, and the investigational drug was administered to the first patient in
December 2022.
The Group is also looking to develop BCV to treat multiple sclerosis, an intractable disease that has recently been proven to be
associated with Epstein-Barr virus (EBV). In August 2022, the Group entered into a collaboration agreement with the National
Institute of Neurological Disorders and Stroke (NINDS), part of the National Institutes of Health (NIH) in the U.S., for the transfer
of materials for evaluation of BCV’s potential antiviral effect on EBV.
Among double-stranded DNA viruses (dsDNA), polyomaviruses are known to cause serious diseases through their infection. As
existing antiviral drugs show little efficacy, the development of an effective treatment is eagerly awaited. In November 2022, theGroup entered into Material Transfer Agreement with Penn State College of Medicine whereby the Group will provide BCV for use
in a non-clinical study to evaluate the efficacy of BCV in a mouse model of polyomavirus infection.
Some double-stranded DNA viruses, such as HSV1 and VZV, are directed against cranial nerve tissues and are known to cause
serious diseases, including Alzheimer's disease, in various cranial nerve areas due to infection caused by their reactivation. In
December 2022, the Group entered into a Sponsored Research Agreement with Tufts University to conduct joint research on BCV.
This joint research is a nonclinical study that will evaluate the efficacy of BCV in a herpes simplex virus (HSV) infection modelusing a 3D (three-dimensional) brain model established by Tufts University.
In addition to having its strong antiviral effect, BCV also is expected to have an antitumor effect, and the Group is exploring new
indications such as EBV-positive lymphoma, refractory brain tumors, and other cancers via research collaborations with the National
Cancer Centre Singapore (NCCS) and University of California San Francisco (UCSF) Brain Tumor Center. In December 2022, theresults of collaborative research with NCCS on the therapeutic efficacy of BCV in the treatment of NK/T-cell lymphoma for which
no effective treatment is currently available were presented by Dr. Jason Yongsheng Chan at the 64th American Society of
Hematology (ASH) Annual Meeting in New Orleans.
In September 2022, Chimerix Inc. announced that it has completed the closing of the sale of BCV to Emergent BioSolutions Inc.
(head office: Maryland, U.S.). The Group’s exclusive worldwide development, manufacturing, and marketing rights to BCV for all
indications except orthopox virus infections (including smallpox and monkeypox) will not be affected.
(iii) Business outside JapanThe Group appointed Dr. Carolyn Yanavich, President and Chief Operating Officer of SymBio Pharma USA, Inc., as Chief
Development Officer of the Group to further expand our global development structure and make SymBio Pharma USA, Inc. as thedriving force behind the international clinical trials, spearheading and accelerating the global development plan for BCV.
(iv) Licensing of new drug candidates
The Group is moving ahead with global development of brincidofovir, an antiviral drug in-licensed in 2019. At the same time,
the Group continues to evaluate new drug candidates for potential in-licensing. Through these efforts, the Group aims to create
medium- to long-term business value as a profitable biopharmaceutical company with growth potential.
(v) Capital investment
The total amount of capital expenditures during the fiscal year under review was 47,559 thousand yen, mainly consisting of office
investments and the purchase of appliances, network devices, and business software.

(2) Fundraising status
In the consolidated fiscal year under review, the Group raised 662,000 thousand yen through the issue of new shares with the CVI
Investments, Inc. as the allottee, and 13,760 thousand yen through the issue of the 58th share acquisition rights (total issue price:
13,760 thousand yen, total value of shares to be issued when the share acquisition rights are exercised in full: 1,570,000 thousand
yen).

9

(3) Status of assets and profit and loss
(Unit: thousands of yen)
FY 2022
The 18th Term

Fiscal year

FY 2019
FY 2020
FY 2021
The 15th Term
The 16th Term
The 17th Term
(Consolidated fiscal year)
Classification
Net sales—
10,008,338——
Operating profit (loss)—
1,963,625——
Ordinary profit (loss)———
1,999,878
Profit (loss) attributable to owners of———
1,179,238
parentProfit (Loss) per share (yen)
—
—
—
30.20
Total assets
10,433,347———
Net assets
8,506,092———
Net assets per share (yen)———204.83(Note) Figures for the 17th and prior terms have been omitted as the Company began preparing consolidated financial statements from the 18th term(the consolidated fiscal year under review).

(4) Issues to be addressed by the GroupThe Group is committed to focusing on the following key management objectives.
(i) Further expansion of the pipeline
In order to enhance the enterprise value as a specialty pharmaceutical company, we need to expand the pipeline through ongoingin-licensing of new drug candidates for development.
The Group is conducting or planning development of the following anticancer agents: SyB L-0501, SyB L-1101, SyB C-1101,
SyB L-1701, SyB L-1702, and antiviral drug SyB V-1901. Currently we are in discussion with counterparties regarding the inlicensing of several new drug candidates, and will continue with active efforts to in-license new drug candidates for development
in order to further expand our pipeline.
(ii) Life cycle management of products in the existing pipeline
In order to enhance the enterprise value, not only in-licensing new drug candidates but also promoting product life cycle
management is important. Therefore, it is critical to maximize returns from each drug under development through indication
expansion after the in-licensed drugs’ initial approval.
TREAKISYM® is approved for manufacturing and marketing in Japan for the indications of recurrent/refractory low-grade nonHodgkin’s lymphoma and mantle cell lymphoma, chronic lymphocytic leukemia, and first-line treatment of low-grade nonHodgkin’s lymphoma and mantle cell lymphoma. TREAKISYM® was also granted approval for recurrent/refractory diffuse large
B-cell lymphoma (r/r DLBCL) in March 2021. In addition, the Company in-licensed the RTD formulation and RI injection of
TREAKISYM® from Eagle Pharmaceuticals in efforts to maximize the business value of TREAKISYM® by promoting the productlife cycle management of the product. For the RTD formulation, the Company obtained manufacturing and marketing approval in
September 2020, and launched the product in January 2021. For the RI injection, the Company filed a partial change applicationin May 2021, and obtained approval in February 2022.
With respect to rigosertib, U.S. licenser Onconova had been conducting a global Phase III study (INSPIRE study) of the drug inpatients with myelodysplastic syndromes (MDS), but in August 2020, it announced that the primary endpoint of the study—
improved overall survival compared to physician’s choice of treatment—had not been met. The Company is in charge of clinicaldevelopment in Japan and is reviewing ways to utilize findings from the additional analysis of the INSPIRE study in future
development of rigosertib.
With the aim of maximizing the business value of rigosertib and TREAKISYM®, the Company intends to conduct joint researchwith the University of Tokyo, to investigate the efficacy of the drugs used in combination as well as used in combination with otherexisting drugs and look for new indications.
The Company has proceeded with the global development of antiviral drug brincidofovir targeting adenovirus infections
occurring after hematopoietic stem cell transplantation and BK virus infections occurring after kidney transplantation, areas witha high unmet medical need, ahead of any other indications. It has also begun to explore the potential of the drug in treating virusinduced cancers. We aim to maximize earnings through managing the lifecycle of our products as we transform into a specialty
pharmaceutical company with the capacity to expand into global markets. Further, by accumulating data from joint research with
the National Institutes of Health and Tufts University, both in the US, we will investigate the effectiveness of brincidofovir intreating various dsDNA virus infections in humans and expand its indication to multiple viral infections. In doing so, we aim to
maximize the market and business value of brincidofovir.
(iii) Countermeasures to generic drugs
In February 2022, four pharmaceutical companies obtained approval to manufacture and market generic versions of the RTD
formulation of TREAKISYM®. Given the potential infringement of the licensor Eagle Pharmaceuticals, Inc.’s patent and theexclusive patent license granted to SymBio, the Company, after discussing with Eagle, notified the four companies of potential
patent infringement in writing and requested they take appropriate actions. In December 2022, the Company and Eagle jointly filed
a lawsuit against Pfizer Japan Inc. and Towa Pharmaceutical Co., Ltd., seeking an injunction against the manufacture and sale of
the generic versions of TREAKISYM® and claiming damages based on patent infringement.
(iv) Global expansion for further growth
In addition to Japan, the Group identifies China, South Korea, Taiwan, and Singapore as strategic regions and has moved forwardwith business development in Asia. However, with expanding medical expenditures due to the aging population in Japan, and theadvent of the “era of generic drugs comprising 80% of all drugs dispensed” as a governmental policy of Japan, the business10

environment for innovative drug developers is expected to remain extremely challenging. Such a policy may also be implemented
by other Asian countries.
Under these circumstances, the Group will promote global expansion aiming for further growth. Utilizing its experience fosteredthrough its business in Asia, the Company will search, evaluate, and negotiate concerning new drug candidates that can follow
antiviral drug brincidofovir in order to acquire their rights on a global scale.
(v) Securing personnel
The Group places the highest priority on personnel as the Company’s principal management resource. Without talent, we cannot
make superior achievements in terms of exploring, developing, and providing information concerning new drugs; nor can we rollout these new drugs on a global scale. We have been continually recruiting talented people; especially after being listed, we haverecruited the best and brightest people in order to strengthen the management organization. Going forward, we plan to continue tofurther strengthen our human resources by providing on-the-job training and employee development programs.
(vi) Financial issue
It is necessary for the Group to raise funds required for business activities such as R&D expenditures as pipeline development
and global business expansion progress and as drug candidates increase in number.
Therefore, we make every effort to further strengthen the financial base by continually diversifying the method of fund raisingand curtailing costs through tight budget control.

(5) Major business activities (as of December 31, 2022)
The Group regards underserved therapeutic areas that lack the development of new drugs, despite significant unmet medical needs, asbusiness opportunities. We develop new drugs with a primary focus on the treatment of rare diseases, mainly in the areas of oncology,
hematology, and multiple viral infections, and conduct integrated business activities that encompass search for new drug candidates,
development, manufacturing, and sales.

(6) Main office and employees(i) Main office (as of December 31, 2022)
Name

Location

Main office

Minato-ku, Tokyo(ii) Employees (as of December 31, 2022)
Classification

Number of employees

Increase or decrease fromprevious fiscal year-end―

Average age (years)
52.7

Average number of yearsof service
4.3

Male

92

Female

30

―

49.6

5.3

Total or average

122

―

52.0

4.5

(Notes) 1. Number of employees refers to full time employees.
2. The above number of employees does not include 30 temporary staff (including two at consolidated subsidiary).
3. No comparatives with the previous fiscal year-end have been provided as the Company began preparing consolidated financial statementsfrom the 18th term (the consolidated fiscal year under review).

(7) Status of significant subsidiaries
Company name

CapitalVoting rights ratio

Main business

SymBio Pharma USA, Inc.

USD1.00

100.0%

Pharmaceutical R&D(8) Main lenders and amount of borrowings (as of December 31, 2022)
Not applicable.

112. Matters Related to Stock (as of December 31, 2022)(1) Total number of authorized shares
Common stock: 41,750,000 shares(2) Total number of shares outstanding
Common stock: 39,518,338 shares (excluding 85,268 shares of treasury stock)(3) Number of shareholders
40,016(4) Major shareholders (10 largest)
Name of shareholder
Number of shares held
Shareholding ratio
Fuminori Yoshida
1,109,700
2.8%
ML PRO SEGREGATION ACCOUNT
1,001,000
2.5%
Sukenori Ito
430,000
1.1%
Daisuke Gomi
300,000
0.8%
Matsui Securities Co., Ltd.
250,200
0.6%
SMBC Nikko Securities Inc.
221,700
0.6%
Toshitaka Kashihara
220,025
0.6%
Nomura Securities Co., Ltd. self-deposit account
178,600
0.5%
Daiwa Securities Co., Ltd.
155,250
0.4%
JPMorgan Securities Japan Co., Ltd.
136,1930.3%(Note) Shareholding ratio (%) indicates the percentage of shares outstanding held. Shares outstanding is equal to the number of sharesissued minus treasury shares.

123. Matters Related to Share Acquisition Rights(1) Share acquisition rights held by the Company’s Officers that were issued as compensation for services (asof December 31, 2022)
The 30th warrant
by resolution of the Board of
Directors meetingon May 14, 2013
1,160 units

The 43rd warrant
by resolution of the Board of
Directors meetingon March 29, 2018
3,050 units

The 48th warrant
by resolution of the Board of
Directors meetingon March 28, 2019
3,150 units

29,000 shares

76,250 shares

78,750 sharesNone

19,800 yen per unit

19,400 yen per unit

3,196 yen per share

1 yen per share

1 yen per share

From: May 15, 2015
To: May 14, 2023

From: March 30, 2021
To: March 29, 2028

From: March 30, 2022
To: March 29, 2029

645 units (1 holder)
16,125 shares

—

—

—

250 units (1 holder)
6,250 shares

500 units (2 holders)
12,500 shares

The 52nd warrant
by resolution of the Board of
Directors meetingon March 26, 2020

The 54th warrant
by resolution of the Board of
Directors meetingon March 24, 2021

The 56th warrant
by resolution of the Board of
Directors meetingon March 29, 2022

Number of share acquisition rights

4,600 units

1,630 units

3,200 units

Number of shares to be issued upon
the exercise of share acquisitionrights (Note 4)

115,000 shares

40,750 shares

80,000 shares

Amount paid for share acquisitionrights (Note 2) (Note 4)

8,100 yen per unit

29,225 yen per unit

17,200 yen per unit

Value of property to be contributed
upon the exercise of each shareacquisition right (Note 1)

1 yen per share

1 yen per share

1 yen per share

Period in which exercise of shareacquisition rights is possible

From: March 27, 2023
To: March 26, 2030

From: March 25, 2024
To: March 24, 2031

From: March 30, 2025
To: March 29, 2032

2,800 units (1 holder)
70,000 shares

1,000 units (1 holder)
25,000 shares

2,000 units (1 holder)
50,000 shares

800 units (2 holders)
20,000 shares

450 units (3 holders)
11,250 shares

450 units (3 holders)
11,250 shares

Number of share acquisition rights
Number of shares to be issued upon
the exercise of share acquisitionrights (Note 4)
Amount paid for share acquisitionrightsValue of property to be contributed
upon the exercise of each shareacquisition right (Note 1)
Period in which exercise of shareacquisition rights is possible
Status of possession by Directors(excluding Audit & Supervisory
Committee members and Outside
Directors) (Note 4)
Status of possession by Outside
Directors (excluding Audit &Supervisory Committee Members)

Status of possession by Directors(excluding Audit & Supervisory
Committee Members and Outside
Directors) (Note 4)
Status of possession by Outside
Directors (excluding Audit&
Supervisory Committee Members)(Note 4)(Notes) 1. New shares were issued through the public offering on December 4, 2013, and third-party allotment on December 25, 2013, at the paid-in
amount less than the value of property to be contributed upon the exercise of each share acquisition right. Therefore, the stated value of
property to be contributed upon the exercise of each share acquisition right excluding those issued for the 32nd warrant and thereafter isadjusted in accordance with the adjustment provision.
2. The person who receives the allotment of share acquisition rights shall offset the amount to be paid for the relevant share acquisition rights
against cash compensation equivalent to the amount.
3. There are no share acquisition rights held by Directors serving as Audit & Supervisory Committee Members.
4. The Company conducted a 1-for-4 consolidation of common shares on July 1, 2019. Number of shares to be issued upon the exercise ofshare acquisition rights and exercise price have been adjusted accordingly.

13

(2) Share acquisition rights distributed to the Company’s employees as compensation for services during the
fiscal year under review (as of December 31, 2022)
The 57th warrant
by resolution of the Board of
Directors meeting on March
29, 2022
Number of share acquisitionrightsNumber of shares to be issued
upon the exercise of shareacquisition rights
Amount paid for shareacquisition rights (Note 2)
Value of property to becontributed upon the exercise ofeach share acquisition right
Period in which exercise of shareacquisition rights is possible

6,455 units
161,375 shares
17,200 yen per unit
1 yen per share
From: March 20, 2025
To: March 29, 2032

Status of allotment to theCompany’s employees (Note 1)

5,881 units (105 holders)
147,025 shares(Notes) 1. Of the share acquisition rights mentioned above, 574 units (14,350 shares) have been forfeited due to the retirement or resignation of
employees.
2. The person who receives the allotment of share acquisition rights shall offset the amount to be paid for the relevant share acquisitionrights against cash compensation equivalent to the amount.

(3) Other important matters concerning share acquisition rights (as of December 31, 2022)
The details of the issue of share acquisition rights via third-party allotment were determined as below by resolution of the Boardof Directors at a meeting held on May 16, 2022.
The 58th warrant by resolutionof the Board of Directors
meeting
on May 16, 2022
AlloteeNumber of share acquisitionrightsNumber of shares to be issued
upon the exercise of shareacquisition rights
Amount paid for shareacquisition rights
Value of property to becontributed upon the exercise ofeach share acquisition right
Period in which exercise of shareacquisition rights is possible

CVI INVESTMENT, Inc.
20,000 units
2,000,000 shares
688 yen per unit
785 yen per share
From: June 2, 2022
To: June 1, 2027

14

4. The Company’s Officers (as of December 31, 2022)(1) Names of Directors and Audit & Supervisory Board Members
Company position

Name

Representative Director

Fuminori Yoshida

Director

Shigetoshi Matsumoto

Director

Bruce David Cheson

Director

Eiji Ebinuma

Responsibility and significant concurrent position
Representative Director, President and CEO
Senior Advisor, Protiviti LLC
Audit Practice Counselor, Japan Audit & Supervisory
Board Members Association
Scientific Advisor, Lymphoma Research Foundation
Doctor, Cancer and Blood Disorders Center
Partner, Tanabe & Partners
Outside Director, Rakuten Bank, Ltd.
Audit & Supervisory Board Member, Toko Electrical
Construction Co.

Director (full-time Audit & Supervisory
Kiyoshi Watanabe
Committee Member)
Director (Audit & Supervisory
Committee Member)

Kesao Endo

Representative, Endo C.P.A. Firm
Outside Director, Careerlink Co., Ltd.
Representative Partner, ABS Audit Corp.

Director (Audit & Supervisory
Committee Member)

Yasuhiro Tamo

Partner, Nomura & Partners(Notes) 1. On March 29, 2022, the Company transitioned to a company with Audit & Supervisory Committee. As a result of the transition, theterms of office of full-time Audit & Supervisory Board Member Kiyoshi Watanabe and Audit & Supervisory Board Members Kesao
Endo and Yasuhiro Tamo had expired, and Kiyoshi Watanabe was appointed Director (full-time Audit & Supervisory Committee
Member) and Kesao Endo and Yasuhiro Tamo were appointed Directors (Audit & Supervisory Committee Members).
2. Shigetoshi Matsumoto, Bruce David Cheson, Eiji Ebinuma, Kiyoshi Watanabe, Kesao Endo, and Yasuhiro Tamo are Outside Directors.
3. The Company has designated Outside Directors Shigetoshi Matsumoto, Eiji Ebinuma, Kiyoshi Watanabe, and Kesao Endo as
independent officers pursuant to the provisions of the Tokyo Stock Exchange (TSE) and registered them as such with the TSE.
4. Director (Audit & Supervisory Committee Member) Kesao Endo possesses deep insight in finance and accounting, which he gained
through his profession as a certified public accountant.
5. Change in Directors during the fiscal year under review is as follows:
Director Hirotaka Ito resigned on May 31, 2022. At the time of his resignation, he was Director, Vice President, and COO.
6. The Company has appointed Outside Director Kiyoshi Watanabe as full-time Audit & Supervisory Committee Member to enable
gathering of information from Directors (excluding Audit & Supervisory Committee Members) and information sharing at important
meetings, as well as sufficient cooperation between the Internal Audit Division and Audit & Supervisory Committee, with the aim ofstrengthening the Committee’s audit and supervisory functions.
7. The Company has adopted the Corporate Officer System. The Corporate Officers who do not hold concurrent positions as Directors are
as follows:
Corporate Officer Takaaki Fukushima
Corporate Officer Koji Fukushima
Corporate Officer Kozo Yoshida
Corporate Officer Yoshiharu Torikai
Corporate Officer Kei Bamba(2) Summary of the contents of the liability limitation agreement
The Company has entered into a liability limitation agreement with all Directors excluding those engaged in business execution basedon the provisions of Article 427, Paragraph 1 of the Companies Act. Under the terms of the agreement, in the event that a Director hascaused loss to the Company due to negligence of his or her duties, and if the Director performed his or her duties in good faith andwithout gross negligence, the Director’s liability will be limited to the higher of 1,000,000 yen or the minimum liability amount set forthin Article 425, Paragraph 1 of the Companies Act.

(3) Summary of the contents of the indemnification contract
The Company has entered into an indemnification contract with Fuminori Yoshida, Shigetoshi Matsumoto, Bruce David Cheson,
Kiyoshi Watanabe, Kesao Endo, and Yasuhiro Tamo as stipulated in Article 430-2, Paragraph 1 of the Companies Act. In addition to
expenses related to shareholder lawsuits that may arise due to misconduct, the indemnification contract covers a wide range of expenses
that individual directors and the Company may incur, including the costs of dealing with criminal proceedings and public investigations
outside Japan. An indemnification contract was also concluded for Director Hirotaka Ito, who resigned on May 31, 2022.

(4) Directors and Officers Liability Insurance Policies
The Company has obtained Directors and Officers Liability Insurance Policies covering the Directors and Corporate Officers of theCompany and its subsidiaries.
The aforementioned insurance is payable as indemnification for losses suffered by the insureds as a result of a legal action brought foralleged wrongful acts in their capacity as Directors and Corporate Officers. However, the insurance policies exclude coverage for claims
arising out of fraudulent or dishonest acts conducted knowing that they were in violation of the laws and regulations. By establishingsuch exclusions, we have taken steps to ensure the appropriateness of the execution of duties by officers is not compromised.
Costs of premiums paid on the aforementioned insurance are borne entirely by the Company.

15(5) Compensation of members of the Board of Directors(i) Matters related to the policy for determining the details of individual compensation for Directors
The Company’s basic policy is to set the compensation for Directors after the transition to a Company with Audit & Supervisory
Committee at an appropriate level in consideration of their responsibilities. The amount of compensation for Directors does notinclude the share of salary as an employee for Directors who are concurrently serving as employees.
The Audit & Supervisory Committee has the authority to make decisions on the policy concerning the determination of the amountof compensation, or the calculation method thereof, for Directors serving as Audit & Supervisory Committee Members. The contentsof such authority and the scope of discretion shall be determined by the Audit & Supervisory Committee with the consent of all of
its members, within the limit of the total amount determined at the General Meeting of Shareholders.
1. Basic policy
The compensation system for Directors (excluding those serving as Audit & Supervisory Committee Members) shall be linked
to shareholders’ profit to function sufficiently as an incentive for the sustainable enhancement of corporate value. Furthermore,
the compensation of individual Directors (excluding those serving as Audit & Supervisory Committee Members) shall be
determined at an appropriate level based on the responsibilities of each position, and compensation shall consist of basic
compensation as fixed compensation and stock-based compensation.
2. Policy on determination of the amount of basic compensation (monetary compensation) of individual Directors (excluding thoseserving as Audit & Supervisory Board Members; including policies on determining the timing or conditions for granting
compensation)
The basic compensation for Directors (excluding those serving as Audit & Supervisory Committee Members) of the Company
shall be a monthly fixed compensation, and shall be determined based on a comprehensive consideration of the role,
responsibilities, years of service taking into account the level of compensation at other companies, the Company’s businessperformance, and the level of employee salaries. In making the decision, the Company confirms that the decision is in line withthe above policy, based on the report of the Nomination and Compensation Committee, which is composed of a majority of Outside
Directors, with an Outside Director serving as the chairperson. The decision is then delegated to the Representative Director by aresolution of the Board of Directors. In addition, the Company ensures reasonableness by delegating the decision to theRepresentative Director within the scope of the report that has been appropriately reviewed by the Nomination and Compensation
Committee.
3. Policy on determining the ratio of performance-linked compensation and other compensation of Directors (excluding thoseserving as Audit & Supervisory Committee Members)
Performance-linked compensation may be linked to the Medium-Term Management Plan to raise awareness of the need to
improve business performance, and compensation may be paid in a way that links business performance to compensation, or stock
options may be granted. The ratio of performance-linked compensation to other compensation shall be considered by the
Nomination and Compensation Committee. The Board of Directors shall delegate the President and Representative Director torespect the content of the report of the Nomination and Compensation Committee and to determine the content of compensationfor each individual Director (excluding those serving as Audit & Supervisory Committee Members). The ratio of compensation
for Directors who engage in business execution is considered based on the level of compensation benchmarked to companies of asimilar scale as the Company or companies in related industries and business categories.
4. Matters concerning the determination of the content of individual compensation of Directors (excluding those serving as Audit& Supervisory Committee Members)
The amount of compensation and stock options for each individual shall be reviewed by the Nomination and Compensation
Committee. The Board of Directors shall delegate the Representative Director, President and CEO to make decisions while
respecting the content of the report of the Nomination and Compensation Committee. Based on the delegation by the resolutionof the Board of Directors, Representative Director, President and CEO Fuminori Yoshida decides the amount, timing, and methodof payment of compensation to each Director for the current fiscal year. The above authority was delegated to Fuminori Yoshida,as the Company deems it appropriate for the Representative Director, President and CEO to make decisions on the contents ofcompensation in order to make decisions that take into account the evaluation of each Director’s business performance while
taking a comprehensive view of the Company’s performance.
(ii) Reasons for the Board of Directors’ determination that the contents of the compensation of Directors (excluding those serving as
Audit & Supervisory Committee Members) for the fiscal year under review is in line with the said policy
In determining the compensation for each individual Director (excluding those serving as Audit & Supervisory Committee
Members), the Board of Directors has determined that the contents of the decision are in line with the above policy, given that theRepresentative Director makes the decision in line with the said policy.
(iii) Matters concerning the resolution of the General Meeting of Shareholders regarding compensation
At the 17th Ordinary General Meeting of Shareholders held on March 29, 2022, it was resolved that the maximum annual amountof compensation for Directors (excluding those serving as Audit & Supervisory Committee Members) shall be 130 million yen (40million yen for Outside Directors; does not include employee salaries for Directors concurrently serving as employees). The number
of Directors (excluding those serving as Audit & Supervisory Committee Members) at the conclusion of the said General Meetingof Shareholders was five (5), including three (3) Outside Directors.
Separate from the monetary compensation, it was resolved at the said General Meeting of Shareholders that the maximum annual
amount of stock options granted to Directors (excluding those serving as Audit & Supervisory Committee Members) shall be 90

16

million yen (30 million yen for Outside Directors), and that the maximum number of stock acquisition rights granted within a year
from the date of the General Meeting of Shareholders of each fiscal year shall be 3,200 units (does not include employee salaries for
Directors concurrently serving as employees). The number of Directors (excluding those serving as Audit & Supervisory Committee
Members) at the conclusion of the said General Meeting of Shareholders was five (5), including three (3) Outside Directors. Notethat prior to the transition to a company with Audit & Supervisory Committee, it was resolved that the maximum annual amount ofstock options granted to Directors shall be 80 million yen at the 8th Ordinary General Meeting of Shareholders held on March 28,
2013 (30 million for Outside Directors, approved at the 11th Ordinary General Meeting of Shareholders held on March 30, 2016).
Further, it was resolved that no more than 3,200 units of share acquisition rights shall be granted per year to Directors at the 16th
Ordinary General Meeting of Shareholders held on March 24, 2021. The number of Directors at the conclusion of the said General
Meeting of Shareholders was seven (7), including five (5) Outside Directors.
At the 17th Ordinary General Meeting of Shareholders held on March 29, 2022, it was resolved that the maximum annual amountof monetary compensation for Directors serving as Audit & Supervisory Committee Members shall be 30 million yen, and that the
specific amount and timing of payments shall be determined by discussions among Directors serving as Audit & Supervisory
Committee Members. The number of Directors serving as Audit & Supervisory Committee Members at the conclusion of the said
General Meeting of Shareholders was three (3). Note that prior to the transition to a company with Audit & Supervisory Committee,
it was resolved that the maximum annual amount of compensation for Audit & Supervisory Board Members shall be 30 million yen
at the Extraordinary General Meeting of Shareholders held on June 30, 2011. The number of Audit & Supervisory Board Members
at the conclusion of the said General Meeting of Shareholders was four (4).
(iv) Total amount of compensation for Directors and Audit & Supervisory Board Members

Classification
Directors, excluding
Audit & Supervisory
Committee Members(Outside Directors)
Directors serving as
Audit & Supervisory
Committee Members(Outside Directors)
Audit & Supervisory
Board Members(outside members)

Total amount ofcompensation(thousand yen)

Total amount of compensation by type (thousandyen)
PerformanceBase
Non-monetary
linkedcompensationcompensationcompensation

Number of eligible officers

98,112(29,364)

60,646(20,019)―(―)

37,466(9,345)5(3)

18,909(18,909)18,909(18,909)

―
(―)

―
(―)

3
(3)

5,398
(5,398)5,398(5,398)

―
(―)

―
(―)

3
(3)

(Notes) 1. The amount of compensation for Directors does not include the share of salary as an employee for Directors who are concurrently serving
as employees.
2. On March 29, 2022, the Company transitioned to a company with Audit & Supervisory Committee with the approval of the proposal topartially amend the Articles of Incorporation at the 17th Ordinary General Meeting of Shareholders held on the same day.
3. Compensation for the Audit & Supervisory Board Members above is the amount paid prior to the transition to a company with Audit &Supervisory Committee.
4. The number of Directors or Audit & Supervisory Board Members compensated as stated above includes one (1) Director who resigned
on May 31, 2022.
5. The contents of non-monetary compensation are the amount of expenses recorded during the fiscal year under review related to stockacquisition rights granted as stock options.

17

(6) Matters Concerning Outside Directors and outside members of the Audit & Supervisory Board(i) Status of main activities during the fiscal year under review
Position

Director

Director

Director

Director (full-time
Audit &
Supervisory
Committee
Member)Director (Audit &Supervisory
Committee
Member)Name

Shigetoshi
Matsumoto

Bruce David
ChesonEiji Ebinuma

KiyoshiWatanabeKesao Endo

Status of attendance at
the Board of Directors
meetings

17 out of 17(100%)

17 out of 17(100%)

17 out of 17(100%)

17 out of 17(100%)

17 out of 17(100%)

Status of attendance atOpinions at the Board of Directors
Status of attendance at
the Audit &meetings, the Audit & Supervisory
the Audit & Supervisory
Supervisory Board
Board meetings, and the Audit &Committee meetings
meetings
Supervisory Committee meetings

—

—

—

4 out of 4
(100%)

4 out of 4
(100%)—Mr. Matsumoto expressed opinionsfrom an objective perspective
independent from the Company’s
management engaged in business
operations, leveraging his
extensive knowledge andexperience with the businesspractices of companies in the same
industry and with auditing work.

—

Dr. Cheson expressed opinionsfrom an objective perspective
independent from the Company’s
management engaged in business
operations, leveraging his
extensive knowledge andexperience as a physician.

—Mr. Ebinuma expressed opinionsfrom an objective perspective
independent from the Company’s
management engaged in business
operations, using his knowledge
and experience at financial
institutions and as an attorney atlaw, mainly in the area of labor
law, and his extensive knowledge
as an Outside Director.

14 out of 14(100%)

Mr. Watanabe actively expressed
opinions from an objective and fair
perspective based on his extensive
experience and knowledge as anaudit & supervisory board member
at listed companies in order toachieve highly effective
managerial supervision.

14 out of 14(100%)

Mr. Endo actively expressed
opinions from a neutral
perspective based on thespecialized knowledge andextensive experience heaccumulated as a certified public
accountant in order to achieve
highly effective managerial
supervision.

Mr. Tamo expressed opinions froman objective perspective
Director (Audit &independent from the Company’s
Supervisory
17 out of 17
4 out of 4
14 out of 14
management engaged in businessYasuhiro Tamo
Committee(100%)(100%)(100%)
operations, based on his
Member)knowledge and experience as an
attorney at law, mainly in the areaof corporate law.
(Notes) 1. On March 29, 2022, the Company transitioned to a company with Audit & Supervisory Committee with the approval of the proposal topartially amend the Articles of Incorporation at the 17th Ordinary General Meeting of Shareholders held on the same day.
2. Changes in Directors and Audit & Supervisory Board Members during the fiscal year under review were as follows.
The terms of office of full-time Audit & Supervisory Board Member Kiyoshi Watanabe and Audit & Supervisory Board Members Kesao
Endo and Yasuhiro Tamo expired, and Kiyoshi Watanabe was appointed Director (full-time Audit & Supervisory Committee Member) andKesao Endo and Yasuhiro Tamo were appointed Directors (Audit & Supervisory Committee Members).

(ii) Summary of duties performed in roles expected to be fulfilled by Outside Directors
1. Shigetoshi Matsumoto and Eiji Ebinuma have been involved as members of the Nomination and Compensation Committee
from an objective and neutral standpoint in the selection of candidates for the Company’s Board of Directors and thedetermination of compensation for Directors.
2. Bruce David Cheson has contributed to the enhancement of the Company’s group-wide governance and supervisory functions
from a global perspective, and to the monitoring and supervision of the management of the Company from an independent
standpoint.
3. Kiyoshi Watanabe has contributed to the enhancement and reinforcement of the Company’s corporate governance and to themonitoring and supervision of the Company’s management from an independent standpoint, leveraging his track record at18

financial institutions and his broad experience and deep insight in management.
4. Kesao Endo has monitored and supervised the Company’s management and contributed to strengthening its supervisory
function over business execution from an independent standpoint, drawing on his expertise and abundant experience as acertified public accountant.
5. Yasuhiro Tamo has monitored and supervised the Company’s management and contributed to strengthening the supervisory
function of business execution from an independent standpoint, based on his knowledge and extensive experience as an
attorney at law, mainly in the area of corporate law.

5. Status of Accounting Auditor(1) Name of accounting auditor
Ernst & Young ShinNihon LLC(2) Summary of the contents of the liability limitation agreement
Not applicable.

(3) Summary of the contents of the compensation agreement
Not applicable.

(4) Amount of compensation
Amount paid
Amount of compensation paid to the accounting auditor concerning the fiscal year underreview
Total amount of monetary and other property benefits to be paid by the Company and its
subsidiary

33,500 thousand yen
33,500 thousand yen(Notes) 1. Reasons for the Audit & Supervisory Committee’s approval of the amount of compensation to be paid to the accounting auditor
The Audit & Supervisory Committee verified the contents of the audit planning by the accounting auditor, performance of its duties inprevious years, and status of planning and actual performance, and as a result of a careful review on the adequacy of the amount ofcompensation for the fiscal year under review, has approved the amount of compensation to be paid to the accounting auditor, pursuant to
the provisions of Article 399, Paragraph 1 of the Companies Act.
2. The amounts of compensation for audits paid in accordance with the Companies Act, and the audits conducted in accordance with the
Financial Instruments and Exchange Act, are not distinguished in the contract agreement between the Company and the accounting auditor.
It is not possible to distinguish between compensation paid for these two types of audits; therefore the total amount thereof is stated.

(5) Policies for dismissal or non-reappointment of the accounting auditor
When it is deemed necessary to dismiss (or not reappoint) the accounting auditor for reasons relating to the accounting auditor’s
execution of duties, the Audit & Supervisory Committee shall determine the contents of a proposal to be presented to a General Meetingof Shareholders in respect of the dismissal (or non-reappointment). In addition, when the accounting auditor falls under any of the itemsof Article 340, Paragraph 1 of the Companies Act, the Audit & Supervisory Committee shall dismiss the accounting auditor with theconsent of all members of the Audit & Supervisory Committee. If this is the case, an Audit & Supervisory Committee Member selectedby the Audit & Supervisory Committee shall report the dismissal of the accounting auditor and the reasons for such dismissal at the first
General Meeting of Shareholders convened after the dismissal.

19

6. System to Ensure the Appropriateness of Operations(1) The corporate system to ensure that Directors and employees comply with laws and ordinances, aswell as the Articles of Incorporation, in the process of performing their duties(i) Dissemination and thorough implementation of management philosophy
In order to implement its management philosophy, the Company has established for the Group a Corporate Action Charter andstandards of conduct to which all Company members are expected to adhere. The Company informs all executives and staff
regarding these policies and asks for each member’s understanding regarding the spirit of these regulations and for thoroughcompliance with the same. All business activities of the Company are based on the premise of compliance with laws and ordinances
and the maintenance of corporate ethical standards (below, “compliance”).
(ii) Establishment of internal control committee
The Company develops internal control systems and employs other measures to support thorough compliance, risk management,
and financial reporting. In addition, an internal control committee has been established at the Company to ensure the Group’s
complete observance of laws and ordinances, the Articles of Incorporation, and other internal regulations through exhaustive
supervision.
(iii) Establishment of internal audit office, etc.
The Company has established an internal audit office as an independent unit under the direct supervision of the President andappoints internal auditors to its subsidiary as necessary. Through regular audits and related activities, objective assessments are
made as to the effectiveness and efficiency of business, the reliability of various financial reports, safeguarding of assets,compliance status of operations, and the appropriateness and effectiveness of corporate risk management policies. When necessary,
the Company ensures the efficacy of internal controls by accepting advice and proposals concerning recommended improvements
to the maintenance and operation of systems.
(iv) Establishment of compliance reporting and consultation hot-lines
The Company has established compliance reporting and consultation hot-lines both internal to and outside the Company, andhas designated compliance liaisons to respond to reports and requests for consultation from employees of the Group, and to identify
and resolve any compliance issues at the earliest stage possible.
(v) Systems for securing reliable financial reporting
The Company establishes internal control systems and oversees their appropriate operation in order to ensure reliable financial
reporting for the Group.

(2) Corporate system for maintenance and control of information regarding the performance of duties byDirectors
The Group appoints an individual to be responsible for the general management of corporate documents and to appropriately
maintain and otherwise control all important documents containing information as to the performance by Directors of their duties in
addition to legally required records of proceedings of Shareholders meetings and Board of Directors meetings, as provided in laws
and ordinances as well as in the Company’s own “Rules for the Management of Documents.”(3) Corporate system for control of risk of loss, including in-house rules for such control
The Group practices risk control under its basic risk control policy and related rules. The Internal Control Committee is responsible
for the supervision and promotion of risk management. Additionally, the Company will swiftly respond to emergency situation by
establishing an emergency response headquarters managed by the Representative Director and President.

(4) Corporate system to ensure the efficient performance of duties by Directors(i) Directors and employees perform their duties in appropriate and efficient accordance with the “Rules for the Board of Directors”
and “Rules for the Internal Approvals,” as well as other related regulations.
(ii) The Company regularly holds Executive Management Committee meetings pursuant to the “Rules for the Executive
Management Committee” and reviews key proposals for the purpose of supporting careful and timely decision-making from theRepresentative Director and President.
(iii) The Company develops mid- to long-term business plans and operates and expands its business in accordance with these plans.
In addition, the Company establishes numerical targets within its business plans for each fiscal year and, through monthly
closings, manages progress toward these targets while making relevant reports to Directors.

(5) Basic policy against anti-social forces and their associates
The Group resolutely opposes anti-social forces and their associates that pose a threat to the order or safety of society and forbids
their participation in any and all business activities.

(6) Assistant to Audit & Supervisory Committee Members
Audit & Supervisory Committee Members may request that the Representative Director and President appoint an employee to act
as an assistant to Audit & Supervisory Committee Members. Upon receiving such a request, the Representative Director and President
shall make an appropriate appointment.

(7) Ensuring the independence of assistants to Audit & Supervisory Committee Members from Directors(excluding those serving as Audit &Supervisory Committee Members) and the effectiveness of the Audit& Supervisory Committee Members’ instructions to employees(i) Assistants to Audit & Supervisory Committee Members shall not receive instructions concerning their supporting duties fromanyone other than Audit & Supervisory Committee Members.

20

(ii) Matters such as personnel evaluation and transfer and disciplinary actions concerning employees that assist Audit & Supervisory
Committee Members shall be subject to the prior consent of the Audit & Supervisory Committee.

(8) Corporate system for Directors and employees to report to the Audit & Supervisory Committee;
corporate system for other reports to the Audit & Supervisory Committee; and corporate system toensure the efficient performance of audits by the Audit & Supervisory Committee(i) Any Director or employee shall promptly inform the Audit & Supervisory Committee if and when he/she becomes aware of any
circumstance that threatens to cause any significant damage to, or could adversely affect, the Company.
(ii) Audit & Supervisory Committee Members may participate in all matters that they consider important in terms of gaining a better
understanding of decision-making processes, conditions, and statuses of the Company’s businesses. Accordingly, they may
attend Board of Directors meetings, Executive Management Committee meetings, and other important meetings. In addition, they
are permitted to view key decision-making documents related to these meetings.
(iii) Audit & Supervisory Committee Members may individually interview Directors and employees in key positions ofresponsibility to obtain information regarding the management conditions of the Company’s businesses.
(iv) Audit & Supervisory Committee Members will regularly exchange opinions with the Representative Director and President andthe accounting auditor.
(v) The Company will not apply any sort of unfavorable treatment or unjust punishment to individuals who make reports to the
Audit & Supervisory Committee.

(9) Matters related to the treatment of expenses or obligations associated with the execution of duties of Audit& Supervisory Committee Members (limited to the execution of duties of Audit & Supervisory Committee),including the procedures for prepayment or reimbursement of such expenses(i) The Company will respond without delay to claims for the prepayment of expenses made by Audit & Supervisory Committee
Members under Article 399-2 of the Companies Act, accepting responsibility for associated expenses and processing related
obligations, except in cases in which these have been determined unnecessary for the execution of the duties of Audit &Supervisory Committee Members.
(ii) The Company authorizes and shoulders expenses incurred when Audit & Supervisory Committee Members seek opinions oradvice from external experts, including attorneys and certified public accountants, if it is found necessary for the execution of
their duties.

(10) System to ensure appropriate operations of the corporate organization consisting of the Company and its
subsidiary
The Company will take the following measures to properly manage and operate the Group.
(i) We will apply SymBio Charter of Corporate Conduct to our subsidiary, and strive to ensure thorough awareness of the Charter,along with the Codes of Conduct of subsidiary created based on the Charter.
(ii) The Company will build and operate an appropriate internal control system related to the following, to enable appropriate
management and business execution of the Group.
1) System for reporting matters related to the execution of duties of subsidiary Directors to the Company
2) Regulations and other systems for risk management and loss control of the subsidiary3) System to ensure that Directors of subsidiary are executing their duties efficiently
4) System to ensure that Directors and employees of subsidiary are executing their duties in compliance with laws and regulations
and the Articles of Incorporation

7. Summary of the Status of System to Ensure the Appropriateness of Operations(1) The Company is striving to foster a culture of compliance across the organization and ensure appropriate operation of internal
control systems through its communications with Directors and employees, and through publication of information such as the basic
policies regarding internal control systems, corporate compliance conduct principles, basic risk control policies, and thewhistleblowing system manual on the Company’s intranet bulletin board.
(2) At the Board of Directors meetings of the Company, Outside Directors (including Directors serving as Audit &Supervisory Committee Members) participate in resolutions from an independent standpoint and monitor and supervise
the management. Each Audit & Supervisory Committee Member carries out management audits as well.
(3) Full-time Audit & Supervisory Committee Members attend important meetings such as the Board of Directors meetings
as well as Executive Management Committee meetings, and exchange views with representative directors monthly.

21

Consolidated Balance Sheet(As of December 31, 2022)
Item(Assets)
Current assets
Cash and deposits
Accounts receivable–trade
Merchandise and finished goods
Semi-finished goods
Supplies
Advance payments
Prepaid expenses

Amount9,312,706
6,282,554
2,084,915
293,757
175,170452
252,745
209,886

Other
Non-current assets
Property, plant and equipment
Buildings
Tools, furniture and fixtures
Accumulated depreciation
Intangible assets
SoftwareInvestments and other assets
Deferred tax assets
Leasehold and guarantee deposits
Total assets

Item

13,224(Unit: thousands of yen)Amount(Liabilities)
Current liabilities
Accounts payable–trade
Accounts payable–other
Income taxes payable
Provision for product changeover
Other
Non-current liabilities
Provision for retirement benefits

1,923,870
46,633
1,163,721
401,066
16,331
296,118
3,385
3,385

Total liabilities

1,927,255

1,120,641
69,00964,931
73,159(69,080)
222,204
222,204
829,427
744,728
84,698(Net assets)
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Accumulated other comprehensive income
Foreign currency translation adjustment
Share acquisition rights
Total net assets

8,506,092

10,433,347

Total liabilities and net assets

10,433,347(Note) Amounts of less than one thousand yen are rounded down.

22

8,094,176
17,548,459
17,523,357(26,889,486)(88,154)243
243
411,672

Consolidated Statement of Income
January 1, 2022
( toFrom
December 31, 2022 )(Unit: thousands of yen)AmountItem
I. Net sales
II. Cost of goods sold

10,008,338
2,408,434

Gross profit
III. Selling, general and administrative expenses

7,599,904
5,636,278

Operating profit

1,963,625

IV. Non-operating income
Interest income

98

Foreign exchange gains
Other

136,179
2,925

V. Non-operating expenses
Commission fee

56,543

Share issuance cost
Other

45,867
540

Ordinary profit
VI. Extraordinary income

139,204

102,951
1,999,878

Gain on reversal of share acquisition rights

106,401

Profit before income taxes
Income taxes–current

396,010

Income taxes–deferred

531,030

106,401
2,106,279
927,041

Profit

1,179,238

Profit attributable to non-controlling interests
Profit attributable to owners of parent－
1,179,238(Note) Amounts of less than one thousand yen are rounded down.

23

Consolidated Statement of Changes in Equity
January 1, 2022
( Fromto December 31, 2022 )(Unit: thousands of yen)

Shareholders’ equity

Balance as of January 1, 2022

Cumulative effect of changes
in accounting policies
Restated balance
Changes during period
Issuance of new shares

Share capital

Capital surplus

17,157,628

17,132,501(86,045)(92,822)

17,132,501

331,000

331,000

662,000

59,831

59,831

119,662

390,856

Balance as of December 31, 2022

17,548,459

17,523,357(28,068,725)

Total
Shareholders’equity6,228,181

17,157,628

390,831(86,045)

1,179,238

44

44

1,179,238(2,165)81

1,179,238(2,108)

1,958,817(26,889,486)(88,154)

8,094,176

Shareacquisitionrights519,099

Total net assets

6,747,325(92,822)44

44519,099

6,654,502
662,000
119,662
1,179,238(2,165)81

Net changes of items otherthan shareholders’ equity

198

198

(107,426)(107,228)

Total changes during period

198

198

(107,426)

1,851,589

Balance as of December 31, 2022

243

243

411,672

8,506,092(Note) Amounts of less than one thousand yen are rounded down.

24

6,135,358(2,165)
56

24

Accumulated other comprehensive
incomeTotal
Foreignaccumulated
currency
othertranslation
comprehensive
adjustment
incomeCumulative effect of changes
in accounting policies
Restated balance
Changes during period
Issuance of new shares
Issuance of new shares(exercise of share acquisitionrights)Profit attributable to ownersof parent
Purchase of treasury shares
Disposal of treasury shares(27,975,902)

Treasury shares(92,822)

Issuance of new shares(exercise of share acquisitionrights)Profit attributable to ownersof parent
Purchase of treasury shares
Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes during period

Balance as of January 1, 2022

Retainedearnings

Notes to Consolidated Financial Statements(Basis of consolidated financial statements)(Scope of consolidation)
Number of consolidated subsidiaries and the name of key consolidated subsidiary
Number of consolidated subsidiaries
One
Name of consolidated subsidiary
SymBio Pharma USA, Inc.
Effective from the fiscal year under review, the Company included SymBio Pharma USA, Inc., previously a nonconsolidated subsidiary, in the scope of consolidation due to the subsidiary’s increased significance.

(Application of equity method accounting)None to be reported.

(Significant accounting policies)(1) Valuation basis and method of marketable and investment securities
Marketable and investment securities
Shares of subsidiaries are stated at cost determined by the moving-averagemethod.

Shares of subsidiaries and affiliates
Other marketable and investment securities
Available-for-sale securities withdeterminable market value

Available-for-sale securities with a determinable market value are stated at fairvalue based on marketable value on the closing date and other premises. Anyvaluation differences are included directly in shareholders’ equity. Cost of
securities sold is calculated by the moving-average method.

Available-for-sale securities without
determinable market value

Available-for-sale securities without determinable market value are stated atcost determined by the moving-average method.

Derivative transactions

Derivative financial instruments are stated at fair value.

Inventories

Merchandise and finished goods are stated at cost determined by the first-in,
first-out method, and semi-finished goods are stated at cost determined by theweighted average cost method. The amount on the balance sheet is calculated
by reducing book value when the contribution of inventories to profitability
declines. Inventory items are classified into separate categories for the
purpose of detailed monitoring of inventory movements and appropriate
valuation.

(2) Depreciation and amortization of non-current assets
Property, plant and equipment
Depreciation of property, plant and equipment is computed by the straight(excluding lease assets)line method.
The useful lives of major property, plant and equipment are summarized asfollows:
Buildings
3 to 18 years
Tools, furniture and fixtures
4 to 20 years
Intangible assets(excluding lease assets)

Amortization of intangible assets is computed by the straight-line method.
Capitalized software costs are being amortized over the period of the internal
use of five years.

Lease assets

Depreciation of lease assets is computed by the straight-line method over thelease term with no residual value.

(3) Basis for reserves and provisions
Provision for product changeover(4)

An estimated amount of expenses is recorded to prepare for expenses to be incurred
accompanying the changeover from the FD formulation to RTD formulation of
TREAKISYM®.

Recognition of significant revenues and expenses
The Group recognizes revenue from the sale of merchandise and finished goods at the time of delivery to the customer, as
this is when the control of the merchandise and finished goods is transferred to the customer and performance obligations are
satisfied. Revenue from the sale of merchandise and finished goods is estimated within the range in which it is highly probablethat there will not be a significant reversal of the consideration promised in the contract with the customer less sales rebates inaccordance with the terms of the sales contract. The amount of consideration expected to be refunded to the customer is recorded
as a refund liability. The refund liability is estimated based on the terms of the contract and past records.

25

(5)

Other significant matters for preparation of consolidated financial statements(i) Fiscal year of the consolidated subsidiary
The closing date of the consolidated subsidiary is the same as the consolidated closing date.
(ii) Accounting method for deferred assets
Share issuance costs and bond issuance costs are recorded in full as expenses when incurred.
(iii) Accounting method for retirement benefits
A simplified method is applied in calculating the retirement benefit liabilities and retirement benefit expenses, using
the amount of benefits that would be payable if all employees voluntarily retired at the end of the fiscal year as retirement
benefit liabilities.
(iv) Standard for translation of foreign-currency denominated assets or liabilities into Japanese yen
Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the spot exchange
rate prevailing on the closing date, and the difference arising from such translation is recorded as profit or loss.

(Notes on changes in accounting policy)(Application of Accounting Standard for Revenue Recognition)
The Group has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29; March 31, 2020; hereinafter“Revenue Recognition Standard”) from the beginning of the fiscal year under review. As a result of the application of this standard,
revenue will be recognized in the amount expected to be received in exchange for the promised goods or services at the time controlof the promised goods or services is transferred to the customer.
Under the previous accounting standard, for transactions where the total amount of consideration the Group is entitled to inexchange for the transfer of promised goods or services, i.e., the transaction price, is likely to be reduced after a contract is signedwith the customer, the Group revised the transaction price once the amount to be reduced was fixed. However, under the new
accounting standard, the Group makes a reasonable estimate of the variable amount and subtracts it from the transaction price at thetime the goods or services are transferred to the customer. Further, under the previous accounting standard, the Group accounted for
expected sales returns by recording provisions for sales returns in the amount equivalent to gross profit; however, in accordance withthe provisions regarding variable consideration, the Group no longer recognizes revenue at the time of sale and records refund
liabilities as “other” under the current liabilities section of the balance sheet.
The Group has followed the transitional treatment prescribed in the provision of Paragraph 84 of the Revenue Recognition
Standard and has applied the new accounting standard from the opening balance of retained earnings of the fiscal year under review,
whereby the cumulative effect of retrospective application of the new accounting standard prior to the beginning of the fiscal year
under review is added to or deducted from the beginning balance of retained earnings.
As a result, in the consolidated statements of income for the fiscal year under review, net sales increased by 62,962-thousand-yen,operating profit and ordinary profit increased by 62,962 thousand yen, respectively, and profit before income taxes increased by
62,962 thousand yen. In addition, the balance of retained earnings at the beginning of the period decreased by 92,822 thousand yen.
Net assets per share, net income per share and diluted net income per share decreased by 2.38 yen, increased by 1.61 yen andincreased by 1.59 yen, respectively, during the current fiscal year.
(Application of Accounting Standard for Fair Value Measurement)
The Group has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30; July 4, 2019; hereinafter“Fair Value Measurement Standard”) from the beginning of the fiscal year under review.
In applying the Fair Value Measurement Standard, the Group has followed the transitional treatment prescribed in the provisionof Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10; July 4, 2019) and will apply accounting the Fair Value Measurement Standard prospectively.
The adoption of this accounting standard has no effect on the consolidated financial statements.

(Note to Significant Accounting Estimates)(1) Amount recorded in the consolidated financial statements for the fiscal year under review
Deferred tax assets recorded in the fiscal year under review: 744,728 thousand yen(2) Information regarding significant accounting estimates on the identified item(i) Calculation method
Based on the company classification stipulated in the “Implementation Guidance on Recoverability of Deferred Tax Assets”(ASBJ Guidance No. 26, February 16, 2018), the Company recorded deferred tax assets for the deductible temporary
differences and losses carryforward at the end of the fiscal year under review, to the extent that they can be used to reduce
future tax burden. When recording deferred tax assets, taxable income before adjustment for temporary differences, etc. isestimated based on the business plan.
(ii) Major assumptions
Taxable income based on future profitability is estimated according to the Group’s business plan. The estimate is also
based on certain assumptions that take into consideration significant uncertainties caused by such factors as the impact ofsales volume of existing drugs on net sales and the impact of pipeline development progress on tax adjustment items.
(iii) Impact on the consolidated financial statements for subsequent fiscal years
Any revisions to the assumptions underlying the estimates due to changes in the economic conditions, etc., may have asignificant impact on the amount of deferred tax assets to be recorded on the consolidated financial statements for subsequentfiscal years.

26

(Additional information)(Overdraft and commitment line contracts)
The Group has overdraft and commitment line contracts with three banks in a business relationship to efficiently procure working
capital. The status of the bank overdraft and loan commitments based on these contracts at the end of the fiscal year under review is
as follows:(Unit: thousands of yen)
Total amounts of bank overdraft limit and loan commitment line
3,150,000
Balance of borrowing outstanding—
Unused balance
3,150,000(Impact of COVID-19)
The outlook for the business environment remains uncertain, as COVID-19 infections remain a threat to healthcare facilities andpatients, altering patient care behavior and making patients more cautious about treatment. Such impacts are considered in our
accounting estimates such as the recoverability of deferred tax assets, etc.

(Consolidated statement of income)R&D costs included in general and administrative expenses:

2,554,799 thousand yen(Statement of changes in equity)(1) Type and number of shares issued and treasury shares
At beginning ofcurrent period
Common stock

Shares issued

Increase

38,457,206

1,146,400

Decrease(Unit: number of shares)
At end of current
period－39,603,606(Notes) Increase of 1,000,000 shares in the total number of outstanding common shares is due to a capital increase and increase of 146,400 sharesissued in common stock is due to the exercise of share acquisition rights.

(2) Number of shares to be issued upon exercise of share acquisition rights issued at the end of the fiscal year under review
Common stock
2,175,425 shares(Note) Excludes share acquisition rights for which the commencement date of the exercise period has not yet arrived.

(3) Matters related to dividends from surplus paid during the current fiscal year.
None to be reported(Financial instruments)(1)

Financial instruments(i) Policies for financial instruments
The Group procures the funds necessary in light of the pipeline development plan (primarily by third-party allotment andoffering by new share issuance). A temporary surplus fund is invested in financial instruments which are highly safe and liquid.
As a principle, the Group does not enter into derivative transactions for speculative trading purposes but uses them within thescope prescribed in the Group’s internal rules.
(ii) Types of financial instruments and related risks
Operating receivables such as accounts receivable–trade are exposed to the credit risk of customers and joint development
partners. Operating receivables denominated in foreign currencies are exposed to foreign exchange fluctuation risk.
Operating payables such as accounts payable–trade and accounts payable–other are mostly due within 60 days. Operating
payables denominated in foreign currencies are exposed to foreign exchange fluctuation risk.
The Group uses derivative transactions to avoid foreign exchange fluctuation risks and enters into forward exchange contracts
within the scope prescribed in the internal rules based on balances of receivables and payables denominated in foreign currencies
as well as the actual volume of export and import transactions denominated in foreign currencies.
Leasehold and guarantee deposits are mostly security deposits related to leased office premises and their refunds are subject tothe credit risk of the lessor.
(iii) Risk management for financial instruments
1. Monitoring of credit risks (the risk that customers or counterparties may default on obligations)
In accordance with the Group’s internal credit policies for managing credit risk arising from operating receivables, thedepartment in charge periodically monitors the creditworthiness of major customers and monitors due dates and outstandingbalances by individual customers. In addition, the Company is making efforts to promptly identify and mitigate risks of bad
debts from customers who are having financial difficulties.
The Group enters into derivative transactions only with financial institutions which have a sound credit profile in order tomitigate the counterparty risk.
2. Monitoring of market risk (the risk arising from fluctuations in foreign exchange rates, interest rates, and others)

27

The Group deposits cash primarily with financial institutions with high credit ratings.
The Group enters into forward exchange contracts in order to avoid foreign exchange fluctuation risks in connection withreceivables and payables denominated in foreign currencies.
Followed by appropriate authorization procedures prescribed in the Group’s internal rules, the Finance & Accounting
department executes and monitors derivative transactions. Transaction performances are reported to the Executive Management
Committee on a regular basis.
3. Monitoring of liquidity risks (the risk that the Company may not be able to meet its obligations on the scheduled due date)
Based on the report from each department, the responsible department of the Group prepares and updates its cash flow plans
on a timely basis and ensures to maintain the liquidity on hand to manage liquidity risk.
(iv) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market
price available, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fairvalue, different assumptions and factors could result in different fair value.
(v) Concentration of credit risk
As of the end of fiscal year under review, 100% operating receivables are from one particular major customer.
(2) Fair value of financial instruments
The carrying value on the consolidated balance sheet, fair values, and their differences as of December 31, 2022 are as follows.
(Unit: thousands of yen)
Carrying value on the balance

Fair value

sheet
Lease and guarantee deposits

Difference

84,69881,183△3,514

Assets, total

84,69881,183△3,514(*1)(11,128)(11,128)—

Derivative transactions(Note) 1. Receivables and liabilities arising from derivative transactions are presented on a net basis and net liabilities are shown in parentheses.
(Note) 2. Cash and deposits, Accounts receivable–trade, Accounts payable–trade, Accounts payable–other, Income taxes payable and Consumption
taxes payable are omitted because they are cash or are settled within a short time and the fair value is almost equal to the book value.
(Note) 3. The redemption schedule for monetary assets and securities with maturities after the closing date

(Unit: thousands of yen)
Due after five years
Due after ten
through ten years
years
—
—

Cash and deposits

6,282,554

Due after one year throughfive years—

Accounts receivable–trade

2,084,915———

8,367,470———

Due in one year or less

Total
(Notes)Lease and guarantee deposits are not included because it is not possible to clearly determine the return date necessary to estimate theamortized amount of lease and guarantee deposits.

(3) Fair Value of Financial Instruments by levels
The fair value of financial instruments is classified into the following three levels based on the observability and materiality of the
inputs used to calculate fair value.
Level 1: Fair value derived from quoted prices in active markets for identical assets or liabilities.
Level 2: Fair value derived from observable inputs that are not included in Level 1 inputs.
Level 3: Fair value derived from unobservable inputs.
When multiple inputs that have a significant impact on the fair value calculation are used, the fair value is classified at lower level
category.
(ⅰ)Financial instruments measured at fair value(Unit: thousands of yen)Classification
Derivative transactions
Currency-related transactions
Liabilities, total(Notes)Fair value
Level 1

Level 2

Level 3

Total—

(11,128)—(11,128)—(11,128)—(11,128)

Net receivables and payables, which were derived from derivative transactions, are presented in net amounts, and any item
for which the total becomes a net liability is indicated in parentheses.

(ⅱ)Financial instruments other than those measured at fair value

28

(Unit: thousands of yen)Classification

Fair value
Level 1

Lease and guarantee deposits
Assets, total—

Level 2
81,183—

81,183

Level 3—

Total
81,183—

81,183(Notes) Derivative transactions
Fair value calculations are based on quoted prices provided by counterparty financial institutions and are classified as Level 2 fair value.
Lease and guarantee deposits
Based on a reasonably estimated expected return period, the fair value is calculated based on the present value of the future cash flows discounted
by the Japanese government bond yields corresponding to the period until redemption, and is classified as Level 2 fair value.

(Revenue recognition)(1) Information about breakdown of revenue from contracts with customers(Unit: thousands of yen)
Current Consolidated Fiscal Year
(From January 1, 2022 to
December 31, 2022）
Sales of Merchandise and finished goods

10,008,338

Revenue from contracts with customers

10,008,338

Sales to external customers

10,008,338(2) Underlying information in understanding revenue
Underlying information in understanding revenue is as stated in (Basis of consolidated financial statements), (Significant
accounting policies), (4) Recognition of significant revenues and expenses.
(3) Information for understanding the revenue amount for the fiscal year under review and subsequent fiscal years(i) Balance of contract assets and contract liabilities
The Group has no balance of contract assets and contract liabilities. In addition, no revenue was recognized in the fiscal year
under review from performance obligations satisfied in previous fiscal years.
(ⅱ) Transaction price allocated to remaining performance obligations
The Group does not have any material transactions with an initial expected term of contract exceeding one year. Further, there
is no material amount of consideration arising from contracts with customers that is not included in the transaction price.

(Per-share information)(1) Net assets per share(2) Net profit per share
Average number of shares outstanding during the year

204.83 yen
30.20 yen
39,046,821 shares(Significant subsequent events)
None to be reported.

29

Balance Sheet(As of December 31, 2022)
Item

AmountItem(Assets)
Current assets
Cash and deposits
Accounts receivable–trade
Merchandise and finished goods
Semi-finished goods
Supplies
Advance payments
Prepaid expenses
Other
Non-current assets

9,289,713
6,259,561
2,084,915
293,757
175,170452
252,745
209,886
13,224
1,120,641

Property, plant and equipment
Buildings
Tools, furniture and fixtures
Accumulated depreciation
Intangible assets
SoftwareInvestments and other assets
Shares of subsidiaries and associates
Deferred tax assets
Leasehold and guarantee deposits

Total assets(Unit: thousands of yen)Amount(Liabilities)
Current liabilities
Accounts payable–trade
Deferred income
Accounts payable–other
Income taxes payable
Provision for product changeover
Consumption taxes payable
Other
Non-current liabilities
Provision for retirement benefits

1,895,944
46,63318,803
1,135,794
401,066
16,331
245,324
31,9903,385
3,385

69,009Total liabilities

1,899,329

64,931
73,159(69,080)
222,204
222,204
829,427
0744,728
84,698(Net assets)
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Other retained earnings
Retained earnings brought forward
Treasury shares
Share acquisition rights

10,410,354(Note) Amounts of less than one thousand yen are rounded down.

30

8,099,352
17,548,459
17,523,357
17,518,459
4,898(26,884,309)(26,884,309)(26,884,309)(88,154)411,672

Total net assets

8,511,025

Total liabilities and net assets

10,410,354

Statement of Income
January 1, 2022
( toFrom
December 31, 2022 )(Unit: thousands of yen)AmountItem
I. Net sales
II. Cost of goods sold

10,008,338
2,408,434

Gross profit
III. Selling, general and administrative expenses

7,599,904
5,627,706

Operating profit

1,972,197

IV. Non-operating income
Interest income

98

Foreign exchange gains
Other

128,933
2,925

V. Non-operating expenses
Commission fee

56,543

Share issuance cost
Other

45,867
540

Ordinary profit
VI. Extraordinary income

131,957

102,951
2,001,204

Gain on reversal of share acquisition rights

106,401

Profit before income taxes
Income taxes–current

390,552

Income taxes–deferred

531,030

106,401
2,107,605

Profit921,582
1,186,022(Note) Amounts of less than one thousand yen are rounded down.

31

Statement of Changes in Equity
January 1, 2022
( Fromto December 31, 2022 )(Unit: thousands of yen)
Shareholders’ equity
Capital surplus
Capital stock

Balance as of January 1, 2022

Legal capital surplus

Other capitalsurplus17,127,628

4,873

17,157,628

Total capitalsurplus17,132,501

Cumulative effect of changes inaccounting policies
Restated balance

Retained earnings
Other retained
earnings
Retained earnings
brought forward(27,977,510)(92,822)

17,157,628

17,127,628

4,873

17,132,501

331,000

331,000

331,000

59,831

59,831

59,831(28,070,332)

Changes during period
Issuance of new shares
Issuance of new shares (exercise ofshare acquisition rights)
Profit1,186,022

Purchase of treasury shares
Disposal of treasury shares

24

24

Net changes of items other thanshareholders’ equity
Total changes during period
Balance as of December 31, 2022

390,831

390,83124

390,856

1,186,022

17,548,459

17,518,459

4,898

17,523,357(26,884,309)

Shareholders’ equity
Total shareholders’
Treasury shares

Share Acquisition rights

Total net assets

equityBalance as of January 1, 2022

(86,045)

6,226,573

Cumulative effect of changes inaccounting policies
Restated balance

519,099(92,822)(86,045)

6,133,750

6,745,672(92,822)

519,099

6,652,850

Changes during period
Issuance of new shares
Issuance of new shares (exercise ofshare acquisition rights)
Profit662,000

662,000

119,662

119,662

1,186,022

1,186,022

Purchase of treasury shares(2,165)(2,165)(2,165)

Disposal of treasury shares

56

81

81

Net changes of items other thanshareholders’ equity(107,426)(107,426)

Total changes during period(2,108)

1,965,601(107,426)

1,858,175

Balance as of December 31, 2022

(88,154)

8,099,352

411,672

8,511,025(Note) Amounts of less than one thousand yen are rounded down.

32

Notes to Non-Consolidated Financial Statements(Significant accounting policies)(1)Valuation basis and method of marketable and investment securities
Marketable and investment securities
Shares of subsidiaries are stated at cost determined by the moving-averagemethod.

Shares of subsidiaries and affiliates
Other marketable and investment securities
Available-for-sale securities withdeterminable market value

Available-for-sale securities with a determinable market value are stated at fairvalue based on marketable value on the closing date and other premises. Anyvaluation differences are included directly in shareholders’ equity. Cost of
securities sold is calculated by the moving-average method.

Available-for-sale securities without
determinable market value

Available-for-sale securities without determinable market value are stated atcost determined by the moving-average method.

Derivative transactions

Derivative financial instruments are stated at fair value.

Inventories

Merchandise and finished goods are stated at cost determined by the first-in,
first-out method, and semi-finished goods are stated at cost determined by theweighted average cost method. The amount on the balance sheet is calculated
by reducing book value when the contribution of inventories to profitability
declines. Inventory items are classified into separate categories for the
purpose of detailed monitoring of inventory movements and appropriate
valuation.

(2)Depreciation and amortization of non-current assets
Property, plant and equipment
Depreciation of property, plant and equipment is computed by the straight(excluding lease assets)line method.
The useful lives of major property, plant and equipment are summarized asfollows:
Buildings
3 to 18 years
Tools, furniture and fixtures
4 to 20 years
Intangible assets(excluding lease assets)

Amortization of intangible assets is computed by the straight-line method.
Capitalized software costs are being amortized over the period of the internal
use of five years.

Lease assets

Depreciation of lease assets is computed by the straight-line method over thelease term with no residual value.

(3)Deferred assets
Share issuance costs and bondissuance costs

Share issuance costs and bond issuance costs are recorded as expenses in full at thetime of expenditure.

(4) Basis for translating assets and liabilities denominated in foreign currencies into Japanese yen
Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the spot exchange rates
prevailing on the closing date, and resulting gains or losses are credited or charged to income.
(5) Basis for reserves and provisions
Provision for retirement benefits

Provision for product changeover

The provision for retirement benefits is provided based on an estimated amount for
retirement benefit obligations at the end of fiscal year under review.
The Company applies the simplified method to calculate amounts of provision for
retirement benefits and retirement benefit expenses. That is, the amount of retirement
benefit obligations are the payments required for voluntary retirement as of each fiscal
year end.
An estimated amount of expenses is recorded to prepare for expenses to be incurred
accompanying the changeover from the FD formulation to RTD formulation of
TREAKISYM®.

(6) Recognition of revenues and expenses
The Company recognizes revenue from the sale of merchandise and finished goods at the time of delivery to the customer, as
this is when the control of the merchandise and finished goods is transferred to the customer and performance obligations are
satisfied. Revenue from the sale of merchandise and finished goods is estimated within the range in which it is highly probable that33

there will not be a significant reversal of the consideration promised in the contract with the customer less sales rebates inaccordance with the terms of the sales contract. The amount of consideration expected to be refunded to the customer is recorded
as a refund liability. The refund liability is estimated based on the terms of the contract and past performance.

(Notes on changes in accounting policy)(Application of Accounting Standard for Revenue Recognition)
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29; March 31, 2020;
hereinafter “Revenue Recognition Standard”) from the beginning of the fiscal year under review. As a result of the application ofthis standard, revenue will be recognized in the amount expected to be received in exchange for the promised goods or services at
the time control of the promised goods or services is transferred to the customer.
Under the previous accounting standard, for transactions where the total amount of consideration the Company is entitled to inexchange for the transfer of promised goods or services, i.e., the transaction price, is likely to be reduced after a contract is signedwith the customer, the Company revised the transaction price once the amount to be reduced was fixed. However, under the new
accounting standard, the Company makes a reasonable estimate of the variable amount and subtracts it from the transaction price atthe time the goods or services are transferred to the customer. Further, under the previous accounting standard, the Company
accounted for expected sales returns by recording provisions for sales returns in the amount equivalent to gross profit; however, in
accordance with the provisions regarding variable consideration, the Company no longer recognizes revenue at the time of sale andrecords refund liabilities as “other” under the current liabilities section of the balance sheet.
The Company has followed the transitional treatment prescribed in the provision of Paragraph 84 of the Revenue Recognition
Standard and has applied the new accounting standard from the opening balance of retained earnings of the fiscal year under review,
whereby the cumulative effect of retrospective application of the new accounting standard prior to the beginning of the fiscal year
under review is added to or deducted from the beginning balance of retained earnings.
As a result, in the statements of income for the fiscal year under review, net sales increased by 62,962-thousand-yen, operating
profit and ordinary profit increased by 62,962 thousand yen, respectively, and profit before income taxes increased by 62,962
thousand yen. In addition, the balance of retained earnings at the beginning of the period decreased by 92,822 thousand yen.
Net assets per share, net income per share and diluted net income per share decreased by 2.38 yen, increased by 1.61 yen andincreased by 1.59 yen, respectively, during the current fiscal year.

(Application of Accounting Standard for Fair Value Measurement)
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30; July 4, 2019;
hereinafter “Fair Value Measurement Standard”) from the beginning of the fiscal year under review.
In applying the Fair Value Measurement Standard, the Company has followed the transitional treatment prescribed in the provisionof Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10; July 4, 2019) and will apply the new accounting standard prescribed by the Fair Value Measurement
Standard, prospectively.
The adoption of this accounting standard has no effect on the financial statements.

(Note to Significant Accounting Estimates)(1) Amount recorded in the consolidated financial statements for the fiscal year under review
Deferred tax assets recorded in the consolidated fiscal year under review: 744,728 thousand yen(2) Information regarding significant accounting estimates on the identified item(i)

Calculation method
Based on the company classification stipulated in the “Implementation Guidance on Recoverability of Deferred Tax Assets”(ASBJ Guidance No. 26, February 16, 2018), the Company recorded deferred tax assets for the deductible temporary
differences and losses carryforward at the end of the fiscal year under review, to the extent that they can be used to reduce
future tax burden. When recording deferred tax assets, taxable income before adjustment for temporary differences, etc. isestimated based on the business plan.

(ii) Major assumptions
Taxable income based on future profitability is estimated according to the Group’s business plan. The estimate is also basedon certain assumptions that take into consideration significant uncertainties caused by such factors as the impact of sales
volume of existing drugs on net sales and the impact of pipeline development progress on tax adjustment items.
(iii) Impact on the consolidated financial statements for subsequent fiscal years
Any revisions to the assumptions underlying the estimates due to changes in the economic conditions, etc., may have asignificant impact on the amount of deferred tax assets to be recorded on the consolidated financial statements for subsequentfiscal years.

34(Additional information)(Overdraft and commitment line contracts)
The Company has overdraft and commitment line contracts with three banks in a business relationship to efficiently procure
working capital. The status of the bank overdraft and loan commitments based on these contracts at the end of the fiscal year underreview is as follows:(Unit: thousands of yen)
Total amounts of bank overdraft limit and loan commitment line
3,150,000
Balance of borrowing outstanding—
Unused balance
3,150,000(Impact of COVID-19)
The outlook for the business environment remains uncertain, as COVID-19 infections remain a threat to healthcare facilities andpatients, altering patient care behavior and making patients more cautious about treatment. Such impacts are considered in our
accounting estimates such as the recoverability of deferred tax assets, etc.

(Balance sheet)
Monetary assets receivable from subsidiaries are as follows.
Short-term monetary assets receivable:

6,905 thousand yen(Statement of income)(1) R&D costs included in general and administrative expenses:
2,546,227 thousand yen(2) Transaction volume with subsidiaries and affiliates is as follows.
Transaction volume of operating transactions:

144,764 thousand yen(Statement of changes in equity)
Type and number of shares issued and treasury shares
At beginning ofcurrent period
Common stock

Treasury shares

Increase

82,618Decrease
2,750(Unit: number of shares)
At end of current
period100(Notes) 1. Increase of 2,750 treasury shares in common stock is due to the purchase of shares less than one unit.
2. Decrease of 100 treasury shares in common stock is due to the sale of shares less than one unit to shareholders.

(Tax effect accounting)Significant components of deferred tax assets and liabilities
Deferred tax assets:(Unit: thousands of yen)
99,374Losses on valuation of inventories disallowed
2,359
Excess depreciation for lump-sum depreciable assets
1,112,916
Excess amortization for deferred assets
2,273,704
Research and development expenses disallowed
50,852
Accounts payable–other disallowed
1,036
Provision for retirement benefits disallowed
41,189Enterprise taxes payable disallowed
5,000
Provision for product changeover disallowed
2,534
Asset retirement obligations disallowed
114,101
Share-based compensation expenses disallowed
4,036,381
Loss carried forward
7,739,451
Subtotal of deferred tax assets(3,805,995)
Valuation allowances for loss carried forward(3,188,726)
Valuation allowances for deductible temporary differences(6,994,722)
Subtotal of valuation allowances
Total deferred tax assets

744,72835

85,268

(Transactions with affiliated parties)
Category

Name of
Location
Capital orBusiness details or profession
company orinvestment
person(thousands of yen)

Ratio of voting rights
and other forms ofownership (%)

Executive

Fuminori
Yoshida(Ownership) Direct:
2.84

—

—

Representative Director,
President and Chief Executive
Officer of the Company

Relationships withaffiliated parties

Transaction
details

Exercise of shareacquisition rights

Transaction
Account Year-end balance
amounttitle(thousands of(thousands of yen)
yen)

27,195(35,000 shares)——(Note) This information describes the exercise during the fiscal year under review of share acquisition rights granted based on resolutions of the Boardof Directors meetings held on March 28, 2019.

(Notes on revenue recognition)
Underlying information for understanding revenue arising from contracts with customers
Underlying information for understanding revenue arising from contracts with customers is as stated in (Significant accounting
policies), (6) Recognition of revenues and expenses.

(Per-share information)(1) Net assets per share(2) Net profit per share
Average number of shares outstanding during the year

204.95 yen
30.37 yen
39,046,821 shares(Significant subsequent events)
None to be reported.

36

Audit report on consolidated financial statements by accounting auditor

Independent Auditor’s ReportFebruary 28, 2023
The Board of Directors
SymBio Pharmaceuticals Limited
Ernst & Young ShinNihon LLC
Tokyo, Japan
Tetsuya Tomita
Designated Engagement Partner
Certified Public Accountant
Kinuyo Matsuo
Designated Engagement Partner
Certified Public Accountant

OpinionPursuant to Article 444, paragraph 4 of the Companies Act, we have audited the accompanying consolidated financial statements,
which comprise the consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in equity,and notes to the consolidated financial statements of SymBio Pharmaceuticals Limited and its consolidated subsidiaries (the Group)
applicable to the fiscal year from January 1, 2022 to December 31,2022.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial
position and results of operations of the Group applicable to the fiscal year ended December 31, 2022, in accordance with accounting
principles generally accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We
are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information
The other information comprises the information included in the Group’s business report and its supplementary schedules.
Management is responsible for preparation and disclosure of the other information. The Audit and Supervisory Committee is responsible
for overseeing the Group’s reporting process of the other information.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doingso, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.

Responsibilities of Management, the Audit and Supervisory Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going
concern and disclosing, as required by accounting principles generally accepted in Japan, matters related to going concern.
The Audit and Supervisory Committee is responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit.
We also:37

・ Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances for ourrisk assessments, while the purpose of the audit of the consolidated financial statements is not expressing an opinion on theeffectiveness of the Group’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fairpresentation in accordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theGroup to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision andperformance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with the ethical requirements regarding
independence that are relevant to our audit of the consolidated financial statements in Japan, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to
the provisions of the Certified Public Accountants Act of Japan.

38

Audit report by accounting auditor

Independent Auditor’s ReportFebruary 28, 2023
The Board of Directors
SymBio Pharmaceuticals Limited
Ernst & Young ShinNihon LLC
Tokyo, Japan
Tetsuya Tomita
Designated Engagement Partner
Certified Public Accountant
Kinuyo Matsuo
Designated Engagement Partner
Certified Public Accountant

OpinionPursuant to Article 436, Section 2, paragraph 1 of the Companies Act, we have audited theaccompanying financial statements, which comprise the balance sheet, the statement of income, the statement of changes in equity ,the notes to non-consolidated financial statements and the related supplementary schedules of SymBio Pharmaceuticals Limited (the“Company”) applicable to the 18th fiscal year from January 1, 2022 to December 31, 2022.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position and results ofoperations of the Company applicable to the fiscal year ended December 31, 2022, in accordance with accounting principles generally
accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independentof the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Japan, and wehave fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Other Information
The other information comprises the information included in the Group’s business report and its supplementary schedules.
Management is responsible for preparation and disclosure of the other information. The Audit and Supervisory Committee is responsible
for overseeing the Group’s reporting process of the other information.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.

Responsibilities of Management, the Audit and Supervisory Committee for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern
and disclosing, as required by accounting principles generally accepted in Japan, matters related to going concern.
The Audit and Supervisory Committee is responsible for overseeing the Company’s financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit.
We also:・ Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our39

opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances for ourrisk assessments, while the purpose of the audit of the financial statements is not expressing an opinion on the effectiveness of theCompany’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether thefinancial statements represent the underlying transactions and events in a manner that achieves fair presentation in accordance withaccounting principles generally accepted in Japan.
We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with the ethical requirements regarding
independence that are relevant to our audit of the financial statements in Japan, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company which is required to be disclosed pursuant
to the provisions of the Certified Public Accountants Act of Japan.

40

Audit report by Audit & Supervisory Committee

Report of the Audit & Supervisory Committee
We, Audit & Supervisory Committee Members, prepare this report of audit with regard to the execution of Directors’ duties during
the 18th Term of the Company from January 1, 2022 to December 31, 2022. The methods and results of the audit are as follows.

1. Methods and Contents of the Audit
The Audit & Supervisory Committee regularly received reports from Directors and employees regarding the contents of resolution by
the Board of Directors related to matters stipulated in Article 399-13, Paragraph 13, Item 1, B and C of the Companies Act and the statusof establishment and operation of the internal control system set up based on the said resolution, and requested additional explanation asnecessary. The Committee has expressed its opinion and conducted an audit using the methods outlined below.

(i) We conducted the audit in compliance with the standards for audits by Audit & Supervisory Board Committee set forth
by the said Committee, and abided by the audit policy and division of duties. In cooperation with the Company’s
Internal Control Division, we attended important meetings and received reports from Directors and employees
regarding their execution of duties, requesting additional explanation if necessary. We also reviewed documents forimportant settlements, and investigated the status of operations and assets of the headquarters and key business offices.
Regarding the Company’s subsidiary, we communicated and exchanged information with Directors, etc. of thesubsidiary, and received reports on the subsidiary’s business operations as necessary.
(ii) In addition, we monitored and inspected the independent position of the accounting auditor and the execution of
appropriate audits by the accounting auditor, and also received the reporting from the accounting auditor with regard
to the state of execution of its duties, requesting additional explanation as deemed necessary. Furthermore, we received
the notification from the accounting auditor that “the system to ensure that its duties are executed as appropriate (theitems listed by the respective paragraphs of Article 131 of the Ordinance on the Accounting of Companies)” ismaintained in accordance with “the standards for quality control of audits (Business Accounting Council, October 28,2005),” requesting additional explanation as deemed necessary.
Based on the methods described above, we reviewed the business reports and related supplementary schedules, financial reports(including balance sheet, statement of income, statement of changes in equity, and notes to non-consolidated financial statements) andrelated supplementary schedules, and consolidated financial statements (consolidated balance sheet, consolidated statement of income,consolidated statement of changes in equity, and notes to consolidated financial statements) for the Term reported.

2. Results of Audit(1) Results of the audit of the business reporta. The business report and supplementary schedules fairly present the Company’s situation in accordance with laws and ordinances
and the Company’s Articles of Incorporation.
b. No misconduct in the execution of Directors’ duties or any material facts in violation of laws or ordinances or the Company’s
Articles of Incorporation was observed.
c. The contents of resolution by the Board of Directors with regard to the Internal Control System are appropriate. Also, there is nomatter to be noted as for the descriptions in the business report regarding such Internal Control System and the execution of
Directors’ duties.
(2) Results of the audit of the financial statements and related supplementary schedules
Both the methods used for and the results of the audit conducted by the accounting auditor, Ernst & Young ShinNihon LLC, areappropriate.
(3) Results of the audit of the consolidated financial statements
Both the methods used for and the results of the audit conducted by the accounting auditor, Ernst & Young ShinNihon LLC, areappropriate.
February 20, 2023
Audit & Supervisory Committee,
SymBio Pharmaceuticals Limited____________________
Kiyoshi Watanabe
Full-time Audit & Supervisory Committee Member____________________
Kesao Endo
Audit & Supervisory Committee Member____________________
Yasuhiro Tamo
Audit & Supervisory Committee Member(Note) Audit & Supervisory Committee Members Kiyoshi Watanabe, Kesao Endo, and Yasuhiro Tamo are Outside Directors of theCompany as stipulated in Article 2, Item 15 and Article 331, Paragraph 6 of the Companies Act.

41