Business Report for the 17th Year

Nobelpharma Co., Ltd.
[From January 1, 2019 to December 31, 2019]

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Business Report(From January 1, 2019 to December 31, 2019)1.

Nobelpharma

1.1. Corporate Mission, Policy and Action Criteria
Corporate Mission
The Company’s mission is to “Contribute to society by providing necessary but neglectedpharmaceuticals and medical devices.” Sales and profits are important management indicators that shouldbe pursued; however, we regard these to be the result of carrying out the mission, as well as a means toaccomplish the mission.
The management policy and action criteria are as cited below:
Policy1. General
1) Share Mission, Policy and Action Criteria among all stakeholders (employees, shareholders,
officers)*Unable to share without routine review
2) Pursue evolution, yet upsizing is not our goal3) Comply with regulations and ethical codes
4) Ensure transparency and disclosure5) Launch out overseas
2. Personnel
1) Value employees and families, respecting self-development
2) Value “Selected Few” and create an environment for the “Selected Few” to enjoy working* “Selected Few” = experienced experts passionately devoted to working, irrespective ofgender, age, nationality, religion or preference
3) Value suggestions and opinions from employees
3. Products
1) Pursue high quality in products and data
2) Ensure post-marketing safety
3) Search for seeds externally
4. Capital
1)
2)
3)
4)

Profits as a result/means of achieving the Mission
Focus on higher return on sales/profits per employee
Investment decision by observing damage of failure, not unreliable counts of successProfits distribution to shareholders (dividends)/employees/internal reserve*Dividends: 1/3 of profits after tax*Employees: Up to dividends5) Asset management only with principal guarantee
Action Criteria
1. Principle
Give priority to patient benefits if inconclusive
Challenge
1) YMWS: “Yatte Minakucha Wakaranai, shikashi Songiri wo tamerauna”= You never know
unless you try, but do not hesitate to cut losses.
2) ZY: “Zenrei ga nainara Yattemiru”= If no precedence, try first.
3. Speed2.

1) Never forget patients are waiting
2/232) Set a deadline first (specific date) regardless of possible delay*Off Limits = “about - ,” “early/late - ,” etc.
3) If there is a failure/trouble, prevent expansion first, then recurrence4) Fast decisions for < X mil yen by the person responsible*X = 3 for Div Mngr; 1 for Dept Mngr/Branch Mngr/PM/PL
4. Cost/Efficiency
1)
2)
3)
4)

Never carry/purchase deadwood, never take/cause wasteful actions
Don’t be afraid to buy time for money
No overtime work considered good
Consider patient needs, scientific rationality and nature of laws/regulations when pursuing higher
quality in products/data
5) Pursue cost reduction with the principle of multiple sourcing, while regarding providers as
partners
5. Communication/Relationship
1) Never prioritize loyalty to company over morals
2) Rejecting inter-departmental advice and cooperation is a symptom of Big Company Disease.
3) Superiors to confidingly entrust tasks to subordinates, but to never leave them unmanaged4) Hear anyone out and never interrupt them5) Start with a conclusion when explaining/responding6) Mere greetings are significant
The Company will celebrate its 17th anniversary in June 2020. The number of employees exceeds 300,
and those who were present when the Company was founded have decreased. It is necessary to advancethe company and to make it require stricter compliance with the corporate mission, management policy
and action criteria.
The Company experienced a so-called harassment incident in the second half of 2019. The company
auditors pointed out some omission in the process of request for approval on disbursement in theheadquarters. Furthermore, there were some cases that appeared to fray over information disclosure andsecuring of transparency. By reflecting on ourselves, we seem to be losing our robustness.
Based on such reflection, Sales & Marketing hired external consultants to conduct training for corporate
mission, management policy and action criteria, which has demonstrated considerable effect. In 2020,
PMS Regulatory Compliance & Assurance will provide similar training. In addition, the Company
released the “Message to line managers” as attached at the end of the Business Report to thoroughly
prevent any harassment.

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1.2.

Progress and Results of Operations
mil yenYear-on-year

2018

2019

Sales

10,56813,403

Cost of goods sold

1,450

Gross profit
SG&A expense% to total sales
2018

2019

126.8%

100.0%

100.0%

1,466

101.1%

13.7%

10.9%

9,118

11,937130.9%

86.3%

89.1%

7,240

8,921

123.2%

68.5%

66.6%

* Personnel cost

2,254

2,401

106.5%

21.3%

17.9%

* R&D expenses

1,917

2,311

120.6%

18.1%

17.2%

Operating income

1,877

3,015

160.6%

17.8%

22.5%

82

△64

Ordinary income

1,960

2,951

150.5%

18.6%

22.0%

Extraordinary income/loss

△101

93

Net income before tax

1,859

3,045

163.8%

17.6%

22.7%

Income taxes

422

674

159.7%

4.0%

5.0%

Net income

1,437

2,370

164.9%

13.6%

17.7%

Net income per employee (‘000
yen)

5,841

7,476

673

2,093

Non-operating income/expenses

Retained earnings brought
forward
Beginning balance
Prior period adjustment-

Dividend

17359

Net income

1,437

2,370

Ending balance

2,093

4,104

* Major items included in SG&A expenses.
* Personnel expenses did not include those of R&D, and R&D expenses included personnel expenses of
R&D.

Total sales in 2019 were 13,403 million yen, up 26.8% year-on-year. Nobelzin® and Lunabell® family(Lunabell® LD, Lunabell® ULD, Jemina® and Frewell®) posted sales of 8,053 million yen and 2,822
million yen, respectively, accounting for 62.3% and 21.8%, respectively, of total products sales.
The cost of goods sold was 1,466 million yen, up 1.1% year-on-year, accounting for 10.9% of total
sales (2018: 13.7%). Sales, general and administrative expenses totaled 8,921 million yen, an increase in
23.2% year-on-year, accounting for 66.6% (2018: 68.5%), mainly including personnel expenses of 2,401
million yen, up 6.5% year-on-year, and 17.9% (2018: 21.3%) of total sales, R&D expenses of 2,311
million yen, up 20.6% year-on-year, and 17.2% (2018: 18.1%) of total sales, sales promotion expenses of
1,780 million yen and outsourcing expenses of 1,199 million yen. Sales promotion expenses mainly
included 1,328 million yen of sales commission on Nobelzin® and Jemina® to MEDICEOCORPORATION, ASKA Pharmaceutical Co., Ltd. and SHIKOKU YAKUGYO Co., LTD. Outsourcing
expenses mainly included 110 million yen for safety information processing support operation by CMIC,
57 million yen for call center operation by EP-PharmaLine, and 52 million yen for business management
service by HisanagaCo., Ltd.
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As a result, operating profit was 3,015 million yen, up 60.6% year-on-year, and it accounted for 22.5%(2018: 17.8%) of total sales.
Ordinary profit was 2,951 million yen, up 50.5% year-on-year, accounting for 22.0% (2018: 18.6%) of
total sales, after recording non-operating income of 8 million yen including subsidy revenue of 6 million
yen, more than offset by non-operating expenses of 73 million yen including interest expenses of 34
million yen and bond interest expenses of 14 million yen.
For extraordinary profit, insurance proceeds of 93 million yen were recorded due to a loss resulting
from typhoon damage of Alabel® in Kansai International Airport in 2018.
With the income taxes of 674 million yen, net income was 2,370 million yen, up 64.9% year-on-year,
accounting for 17.7% (2018: 13.6%) of total sales, and net income per employee was 7 million yen (2018:
5 million yen).
Retained earnings brought forward as of December 31, 2019 were 4,104 million yen, with the beginningbalance of retained earnings brought forward of 2,093 million yen and a dividend payment of 359 millionyen.
To sum up our activities in 2019, we have taken a step towards a new stage, i.e. toward a
global/centennial company through: (1) Strong sales expansion of Nobelzin® and gaining steady cash
flows, as a potential primary source of revenue following Lunabell®; (2) showing successful results ofaccess to a strong sales and distribution network through strengthening capital tie-up with Medipal
Holdings Corporation; (3) steady advancement of preparation for a structure of overseas expansion
including China and Europe after establishment of a subsidiary in the U.S. under the strategy of selling
three products of Rapalimus®, TITANBRIDGE® and Retympa® in these three overseas subsidiaries; (4)secured cash flows and an improvement of trust by academia allowed us to strengthen a system tointroduce new seeds; and (5) an increase in R&D expenses by 20% year-on-year.
The details are explained below.

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1.3.

Domestic sales

The table below shows sales by product in 2019 on a wholesale price (NHI price) basis.
Sales (on a wholesale
price (NHI price) basis)
Brand Name

LaunchIndication(Yen in millions)2018 [1]Nobelzin®

Apr 2008
Mar 2017

Lunabell® LD

Jul 2008

Lunabell® ULD

Sep 2013

Nobelbar®

Dec 2008

Wilson’s isease,Year-onyear([2]/[1])2019 [2]

5,245

9,123

174.0%

9,640

4,375

45.4%

115

115

100.0%

1,133

1,036

91.4%

hypozincemia
Dysmenorrhea
Neonatal seizures,status epilepticus

Fostoin®

Jan 2012

Status epilepticus, preventionof postoperative seizures, etc.

Gliadel®

Jan 2013

malignant glioma

978

890

91.0%

Alabel®

Sep 2013

diagnosis of malignant glioma

294

284

96.6%

Indacin®

Jan 2013

patent ductus arteriosus of

60

50

83.3%

19

22

115.8%

69

69

100.0%

prematurity
Cosmegen®

Jan 2013

Wilms’ tumor,
choriocarcinoma, pediatricsolid malignant tumor, etc.

Unitalc®

Dec 2013

prevention of recurrent
malignant pleural effusion

Respia®

Dec 2014

apnea of prematurity

229

231

100.8%

Rapalimus®

Dec 2014

lymphangioleiomyomatosi s

249

276

110.8%

Zanosar®

Feb 2015

gastroenteropancreatic

368

416

113.0%

148

385

260.1%

1546

306.7%

125994

795.2%-

1-

18,68718,31298.0%

neuroendocrine tumor
Rapalimus® Gel

Jun 2018

Skin lesions associated withtuberous sclerosis

Titanium bridge

Jul 2018

Adductor spasmodic
dysphonia

Jemina®

Oct 2018

Dysmenorrhea

Retympa®

Dec 2019

tympanic membrane
perforation

Total

In 2019, the Company positioned Nobelzin®, Jemina® and Rapalimus® as the products to most focus
on as well as to spread and expand, and launched a new product, Retympa®, in December. We achieved
sales of 18.3 billion yen compared with the target of 17.7 billion yen on a wholesale price (NHI price)basis.
Most of our products including Nobelzin® are medicines that are no substitute, and we are working on
spreading and expanding them based on guidelines and evidence. With regard to our core products, we
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have collaborated with the Medipal Holdings Group mainly in Web seminars and expert’s movies topromote product value cognitive activities and confirmation of prescription.
In 2019, sales of Lunabell®, which had been our core product so far, were expected to decline
significantly due to the launch of its generic formulation. In order to cover the expected sales decline, we
actively have Web and area seminars for the promotion of our new product, Jemina®, mainly in the GP
market in cooperation with ASKA Pharmaceutical and the Medipal Holdings Group.
As of December 31, 2019, 89 MRs cover the entire country, of which 24 MRs are sent by the Medipal
Holdings Group. We aim at MR activities by a selected few and are also actively engaged in PR
activities in channels other than MRs by improving the customer center and the website. Sales ofNobelzin® grew through sales promotion activities using the AR (authorized medical sales representatives
who passed the MR certification exam) function of the Medipal Holdings Group, and we use this initiativefor Jemina® and Rapalimus® Gel.
For the logistics of the direct-sales products, the Medipal Holdings Group has exclusively taken overthe distribution.
1.4.

Overseas sales

International Clinical Development Div. of Research & Development examined business expansion in
the U.S. and Europe, and China Business Office of President’s Office was responsible for businessexpansion in China. As of April 1, 2019, the Company established Overseas Business Development toconsolidate and execute overseas business expansion. Rapalimus® Gel (NPC-12G) and TITANBRIDGE®
(NPC-17) were granted approvals under the "Sakigake" fast-track review system in Japan. We aim at
obtaining approvals and selling three products (these two products and Retympa® (NPC-18)) in the U.S.,
China and Europe.
In the U.S., on June 3, 2019, Nobelpharma America, LLC, a wholly-owned subsidiary of NobelpharmaCo., Ltd., was registered in Delaware, which opened an office in Bethesda, Montgomery County of
Maryland in October, as the first overseas office of the Company. A president sent from the Japan
headquarters is stationed and has recruited local employees and developed various office regulations, andalso commenced the preparation for local release of Rapalimus® Gel.
In China, we filed an application for the approval of Rapalimus® Gel, and the filing was officiallyaccepted in October 2019. While the filing is pending for review at this moment, we are preparing forincorporation in view of an approval in 2020. In China, we are examining the acquisition of approvals
and sales of three other existing products in addition to the above three products.
In Europe, we have conducted market research in preparation for business expansion of Rapalimus®
Gel and TITANBRIDGE®. EU regulations require an entity within the EU to file and gain an approval
for a new drug. Thus, we are preparing for incorporation in June 2020.
1.5. Research and Development (Japan and overseas)
Retympa®, a treatment for tympanic membrane perforation, was granted a marketing approval in
September 2019 following approvals of Rapalimus® Gel, a treatment for skin lesions associated withtuberous sclerosis, and Jemina®, a treatment for dysmenorrhea, in 2018, and Melatobel® (melatonin, atreatment for insomnia associated with childhood neurodevelopmental disorder) filed in April 2019 is
expected to be granted an approval in March 2020. In addition, the Company completed the First in
Human trial (PI) for cytomegalovirus (CMV) antibody (NPC-21), the Company's first antibody drug, an
IND was filed to the U.S. FDA in December 2019 and a US-Japan international joint clinical trial has
started in January 2020.
We have started a full-scale examination on overseas development in 2017 under the policy ofobtaining approvals of three products of Rapalimus® Gel, TITANBRIDGE® and Retympa® in three
regions of North America, China and Europe. In 2018, the Company has started meetings with the FDA
for development and NDA filing in the U.S. for Rapalimus® Gel that the FDA designated as an orphan
drug in 2017, and filed an NDA to the FDA in February 2020. In China, we filed an application for theapproval in September 2019 after the consultation with the authorities. In Europe, we have continued
discussions with local authorities. We also hold Q-sub meeting with the FDA and continue activities for
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the EU CE marking certification for TITANBRIDGE®. The third study was commenced for malaria
vaccine (NPC-19, prevention of falciparum malaria) in Africa in 2018, and it was transferred to cohort 2(age of 12 to 24 months) in 2019.
The table below summarizes the development stage, expected NDA and market size classification inthree categories of A. New Drugs and Medical Devices, B. Life Cycle Management (LCM) and C.
Overseas Development as of March 1, 2020. Many are drugs based on new concepts that originated inJapan. Market size classification is as follows:
I : Potential primary sources of revenue (sales of over 3 billion yen)
II : Short term approval and marginal profit are expected; however, they are not likely to be a
primary source of revenue.
III : Short term approval expected with a theme from academia such as a university. Lower
development cost with promising public subsidies. Difficult to estimate sales due toinnovative concepts.
IV : Similar to III but relatively long time required for approval.
A.

New Drugs and Medical Devices
CompoundIndication

Licensor

Development
stage

Estimated
approval

Classification1

NPC-15
Melatonin

Sleep disorders inchildren withneurodevelopmental
disorderIn-house

NDA
submitted

Mar 2020

I

2

GM-CSF
Sargramostim

Pulmonary proteinosis

Partner
Therapeutics Inc.

pre NDA

Sep 2021

II

3

NPC-09
Acetylneuraminicacid

Distal myopathy

In-house

PIII(Clinical
trial)

Dec 2022

III4

NPC-21
CMV antibody

CMV infection

Evec Inc.

PII

TBD

I

5

NPC-22
Skopolamin

Salivation

Kitasato
University

PI

TBD

IV

6

NPC-x4
P092

Prion disease

Gifu University

Non-clinical

TBD

IV

Jaw bone regeneration Niigata University

Non-clinical

TBD

III

Non-clinical

TBD

III

7

8

NPC-x5

NPC-x6-Hiroshima
University
Repertoire
Genesis Inc.

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B.

1

Life Cycle Management (LCM)
Development

Estimated

Classifi

stage

approvalcationNDA submitted

Dec 2020

III

PII

Jun 2022

III

Pfizer Inc.

PII

TBD

I

Gifu University

PIII

Jun 2021

III

Kyoto University

PII/III

Mar 2022

III

Keio University

PI/IIaDec 2021

III

Showa University

PII

TBD

IV

Nagasaki University

PII

TBD

IV

Osaka University

PII/III

Sep 2022

III

CompoundIndication

Licensor

NPC-02Child’s preparation

Nobelzin®

(new formulation)

NPC-05

Refractory pneumothorax

Organization

Unitalc®

(new indication)

Nagoya Medical

National Center forChild Health andDevelopment
National Hospital

2

Center
3

4

5

6

7

8

9

NPC-06

Nerve field

Fostoin®

(new indication)

NPC-12
Rapalimus®

NPC-12
Rapalimus®

Refractory lymphatic
disease(new indication)
Fbrodysplasia ossificans
progressiva(new indication)

NPC-12

Pendred syndrome

Rapalimus®

(new indication)

NPC-12
Rapalimus®
NPC-12
Rapalimus®

Epilepsy with focal
cortical dysplasia type II(new indication)
Idiopathic multicentric
Castleman's disease(new indication)

NPC-12G

Neurofibromatosis type I

Rapalimus® Gel(new indication)

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C.

Overseas Development
CompoundIndication

Licensor

Development

Estimated

Classifstage

approval

ication

USA：NDAsubmitted
1

NPC-12G(Rapalimus® Gel)

NPC-192(NPC-SE36)
Malaria vaccine

3

NPC-18(Retympa®)

Hemangiofibroma-

China：NDA
submitted

Prevention of

Osaka University

falciparum malaria

GHIT

Tympanic perforation

MEEI/Harvard
University

Dec 2020

Aug 2020

Ⅰ

EU：pre NDA

TBD

PIb

TBD

I

PII

TBD

III

TBD

III

NPC-17
4

Thyroid cartilage

Adductor spasmodic

fixation device

dysphonia-

Preparing
Clinical trial(TITANBRIDGE®)

As a matter requiring special attention, NPC-19 and NPC-21 were selected by Cyclic Innovation for
Clinical Empowerment (CiCLE), a program launched by Japan Agency for Medical Research andDevelopment (AMED).
1.6.

Finding of New Themes

Project Planning & Development is responsible for core roles for the Company's open innovation.
Specifically, its role is classified into (1) Finding and research for new themes (drugs and medical devices)that become future pillars of the Company’s business, (2) In/out-licensing negotiations with a new
development theme, (3) Support for commercialization and collaborative research of academia seeds thatare considered promising, (4) Financing and support of development expenses including acquisition of
public subsidy. It proceeds with its task in strong collaboration with other divisions including Research& Development and Business Development & IP Management. The following showed majorachievements in 2019.
Promotion of a joint program with academia for the purpose of finding seeds
Conclusion of evaluation and joint commercialization for tissue-engineered medical products, etc.
Conclusion of collaborative research agreement with academia for multiple seeds
Finding and search of seeds of many overseas companies and VCs, and negotiation of licensing
Upon promoting in-licensing and collaborative research, we place the primary focus on whether theseseeds met our mission, and conducted various and many evaluations including medical drugs (lowmolecular, peptide, antibody and oligonucleotide therapeutics), medical devices and tissue-engineered
medical products (regenerative medicine/cellular therapeutics and gene therapy). In addition, with a viewto finding and obtaining information on better seeds as well as realizing early commercialization, we havepromoted a joint business with academia to find seeds and plan to start in 2020.

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1.7.

Business Development & IP Management

Business Development & IP Management is a keystone of our business, which is responsible forbusiness development, intellectual property rights and agreements in the Company. Specifically, its roleis classified into (1) Planning and research for new themes (drugs and medical devices), (2) In/outlicensing negotiations with a new development theme, (3) Alliance management, (4) Research, planningof preventive measures and management of in-licensing of intellectual property, (5) Response tocompany-wide technical agreement, and (6) Procurement negotiations.
The following showed major achievements in 2019.
Conclusion of an agreement for patent, data, and know-how license of malaria vaccine
Conclusion of an agreement for patent and data license of TITANBRIDGE
Acquisition of license required for development and manufacturing of a treatment for CMV
infection from Lonza
Negotiation to expand a territory of b-FGF license agreement
Various arrangements and negotiations with the existing partners and development of a route forobtaining overseas new information (U.S. and China)
The number of patent families with which the Company is involved is 41 due to an increase incollaboration with academia. The Company filed patent applications that were closely related to eachtheme of LCM and actively filed trademarks on the names of company and products overseas inpreparation for overseas activities.
Business Development & IP Management added one contracted staff member in law-related tasks fortechnical service contracts, strived to understand all matters and consolidated contact points with lawyers.
The Company engaged in more than 50 purchase negotiations and contributed to achievement of
reasonable costs.
1.8.

Regulatory Affairs and Negotiations

Regulatory Affairs is responsible for administrative procedures related to the Act on Securing Quality,
Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (PMD Act), negotiationsof NHI price and material price, and proposals on NHI price system reform, and works to prevent theCompany from deviating from medical related laws and regulations. It is also responsible for patientgroup relations.
The Division added two staff members to further enhance development and regulatory affairs, andstrengthened development and regulatory affairs as well as administrative procedures (the Japanese
Ministry of Health, Labour and Welfare (MHLW) and Pharmaceutical and Medical Devices Agency(PMDA)). In addition, since 2018, we undertook systematization of operations (digitization of
application/approval information management and NDA filing), which had been insufficient so far, andrealized digitization of NDA filing in 2019.
Regulatory Affairs continued to confirm and discuss with relevant departments (Product Management
and Quality Assurance) about change control to prevent the "difference between certificates of approval
for manufacture and sale and the actual status of manufacturing,” and responded to the authority
adequately as needed so as to maintain a stable supply.
The In-house Product Material Committee reviewed 408 sales promotion materials of drugs, almost
double from the previous year. The Committee revised and advised as necessary to ensure that adequate
sales promotion materials are provided. In accordance with the guidelines on providing sales informationof ethical drugs released by the Japanese Ministry of Health, Labour and Welfare ("MHLW"), we
established a new supervising office for providing sales information and accordingly, the Product Material
Committee was transferred to “Review Office” within this supervising office.
For NHI price related work by Public Relations, Retympa® 250μg Set for Otology has been listed on
the NHI price list. An injection/IV charge related to this drug (application of tympanic perforation closuretechnique) was also set so as to realize its smooth insurance coverage. In addition, Regulatory Affairs
addressed more than ten projects for the calculation of the estimated NHI price and feasibility study of
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planning and developed products. Public Relations added a staff member to provide a higher accurate
evaluation that is capable of promptly responding to an increase in developments originated by academia
and changes in the circumstance of the NHI price.
As for activities in the industry, in April 2019, Samurai Biotech Association, for which the Company
works as a board member and coordinator office, was transformed into a general incorporated association.
In addition, Samurai Biotech Association successfully participated in the industry hearing conducted by
the special committee for NHI drug prices of the Central Social Insurance Medical Council.
In terms of patient group relations, the Company has communications with 24 patient groups and lent
its meeting rooms 18 times a year and in addition, 38 employees actively participated as volunteers so as
to maintain a good relationship with them. Further, we held four in-house seminars in which leading
members of patient groups were lecturers to promote better understanding of employees about intractablediseases.
1.9.

Manufacturing and Capital Expenditure

Most of our products are medicines that are no substitute. The Company has no manufacturing facilities
of its own, and outsources manufacturing of both APIs and products to domestic and overseas
manufacturers. Under such circumstances, we believe that the stabilization of the drug supply becomesstrong by (1) having many inventories of not only products but also important materials, and (2) byensuring multiple OEM suppliers. In 2019, we continued to work on increasing inventories of products
and materials. In 2019, the second OEM supplier for Nobelzin® tablet started production. In January 2020,
the Company filed an application for the approval of Nobelzin® granule, child's preparation of Nobelzin®.
We plan to launch this product in 2021 and continue to discuss with our OEM suppliers to build a structureof stable supply. As the current supplier’s lot size is too big to adequately adjust inventories of Indacin®,
we are preparing for transferring production to another supplier.
In addition, we established two logistics centers in both West and East Japan to prepare for disaster.
We have put into place a production system for new Melatobel® granule, and prepare for the first
shipment with estimated manufacturing and marketing approval to be granted in March 2020.
In 2019, capital investment related to production included HPLC devices (9.1 million yen, excludingtax) for shipping inspection of Zanosar®. The devices are currently operated by an analyzing company weoutsource shipping inspection to.
1.10. Pharmacovigilance & Quality Assurance
PMS Regulatory Compliance & Assurance works on business improvement in a cost-conscious way incompliance with related laws and regulations, by posting its mission as the three pillars of passing reexaminations, causing no drug-induced diseases and quality assurance and stable supply of products.
In terms of re-examinations, we completed PMDA’s series of compliance inspections of reexamination for Nobelzin®, a treatment for Wilson's disease, Nobelbar®, a treatment for neonatal seizures,and Fostoin® by February 2020. As the Company has established systems under GPSP and GVP andreviewed operation flows so far, the number of inquiries for the compliance inspection was drastically
improved to zero for Nobelbar®, a treatment for neonatal seizures, and and 10 for Nobelzin®, a treatment
for Wilson's disease, compared with 77 for Lunabell® LD.
In terms of safety-related matters, we completed post-marketing surveillance of Jemina® and are
currently conducting post-marketing surveillance of Retympa®. In 2019, the number of domestic andoverseas adverse event reports was 5,057 and 3,650, respectively, almost the same level in 2018 (5,438
and 3,612, respectively). Approximately 40% of domestic adverse event cases related to Nobelzin®, atreatment for hypozincemia, and a half of overseas cases related to Rapalimus®.
In terms of post-marketing surveillance-related matters, a general use survey of Jemina® was started inJune 2019 in collaboration/cooperation with ASKA Pharmaceutical, and we are preparing for a generaluse survey of Retympa® to begin in June 2020 in collaboration/cooperation with the Medipal HoldingsGroup. In December, 2019, the interim report of the survey was submitted to PMDA to dismantle a
condition for approval of Zanosar® (all-case surveillance).

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In terms of quality-related matters, we filed GMP compliance inspection on approvals in FY2019 (21applications for 13 products), obtained notifications of result for all products and completed GMP
compliance inspection. For release decision of products and APIs, we decided on more than 100 lots thatwere mainly APIs and formulation of Nobelzin® to ensure a stable supply of products.
1.11. Funding and Major Lenders
In 2019, the Company borrowed 1,200 million yen and repaid and redeemed 1,411 million yen tofinancial institutions.
The resulting balance of loans payable and bonds as of December 31, 2019 was 5,203 million yen. As
the Company has cash and deposits of 4,990 million yen, the actual amount of borrowing is 212 million
yen (2018: 627 million yen).
As of December 31, 2019, the status of borrowing is as follows:
Loans payable
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
MUFG Bank, Ltd.
The Shoko Chukin Bank, Ltd.
The Tokyo Shinkin BankJapan Finance Corporation
Total

1,700 million yen
400 million yen
625 million yen
204 million yen
150 million yen
43 million yen
3,122 million yen

Japan Agency for Medical Research and Development
Corporate bond2nd straight bond
4th straight bond
5th straight bond
6th straight bond
7th straight bond
Total

Osaka Soda Co., Ltd.
Mizuho Bank, Ltd.
The Shoko Chukin Bank, Ltd.
Resona Bank, Ltd.
Resona Bank, Ltd.

380 million yen

500 million yen (Maturity: Dec 2024)
500 million yen (Maturity: Dec 2021)
100 million yen (Maturity: Mar 2020)
300 million yen (Maturity: Mar 2022)
300 million yen (Maturity: May 2026)
1,700 million yen

1.12. Financial Results, Assets and 2016 Forecast
The Company's financial results, assets and 2018 forecasts are as follows:
In the next year, the Company expects an increase in sales but a decrease in profits as R&D and overseas
investment will grow significantly, though profits are supposed to grow as sales will increase.
2016
Mil yen except for*

2017

2018

2019

(Actual results) (Actual results) (Actual results) (Actual results)

14th year

15th year

16th year

17th year

2020(Forecasts)

18th year

Sales

6,791

7,236

10,56813,403

17,228

Ordinary income

△56

161

1,960

2,951

2,298

93

53

1,437

2,370

1,503

8,000yen

4,000yen

111,000yen

Total assets

7,671

8,975

12,204

14,138

16,716

Net assets

691

685

3,319

5,330

6,246

*Equity ratio

9.0%

7.6%

27.2%

37.7%

37.4%

59,000yen

58,000yen

245,000yen

Net income*Net income per share(Note)*Net asset per share(Note)

13/23

175,000yen 111,000yen

394,000yen 461,000yen

(Note) As the Company split its shares in 2017, the number of shares in 2016 is converted into thenumber after the stock split.

1.13. Employees
As of March 1, 2020, the number of employees is 317 (including a total of 111 including 40 seconded
employees, 26 temp staff members, 44 contract employees and one counsellor but excluding directors andemployees seconded to external organizations) with an average age of 51.5. The number of employees
increased by 48 compared with 269 as of March 1, 2019. The average number of years of continuous
services (seconded employees and temp staff members are not included in the counting) is 4.5 years.
Total personnel expenses of the overall company in 2019, including expenses for seconded employees
and temp staff members, were 3,019 million yen, an increased in 8.6% compared with 2,779 million yen
in 2018. This was mainly due to an increase in the number of employees to strengthen sales of new
products such as Nobelzin® and to prepare for overseas business. A new MR team dedicated to thegynecological field was established for the launch of Jemina®.
Although the Company does not recruit new graduates simultaneously, we recruit postdoctorals andthose with equivalent status regularly. Since 2012, we have recruited over ten, who work mainly in
Research & Development and Project Planning & Development. Currently, we have no prospective
employee this April but have accepted one foreign student for an internship. We have also activelytransferred temp staff members to direct employment and in 2019, 13 staff members became our full-time
employees. As we promoted mid-career recruitment of young and middle-aged people, the average age
was six years younger than the peak time (57.7 years old as of March 2012) with improvement of thebalance of age composition.
Due to such initiatives as review of work process, IT promotion including telework, health management
and support for balancing child care and work as well as a continuous approach to transform the working
style, monthly average overtime in the entire company was 9.2 hours, falling below ten hours for four
consecutive years. The rate of annual paid leave taken by employees was 75.3%, maintaining the highlevel. However, as overtime increased slightly and the rate of annual paid leave taken decreased slightly,
we will encourage employees to apply the home teleworking and flex-time system and make it a goal for
all employees to obtain extended leave provided by the Company’s regulations.
1.14. Issues
Issues that each division should address are as follows:(1) To get a new MR evaluation system across to all MRs (Sales & Marketing), and to further enhancebasic education (mission & action criteria) (PMS Regulatory Compliance & Assurance)(2) To plan to make a profit from overseas business in the year 2023, to obtain manufacturing andmarketing approval by itself and to sell the products through its own distribution channel. Overseas
Sales should withdraw from an area where it cannot expect to make a profit in a single year as ofNovember 2022. (Overseas Business Development)(3) To reinforce education for managers and non-management employees, and to provide educationon the Company’s mission, management policy and action criteria thoroughly (Administrative
Affairs & Corporate Planning).
(4) To actively introduce new development themes from academia and business companies (Project
Planning & Development, and Business Development & IP Management)(5) To change the current system to a global one to ensure that each division addresses requests fromoverseas subsidiaries in line with the expansion of overseas business (Overseas Business
Development, Research & Development, PMS Regulatory Compliance & Assurance, Regulatory
Affairs, Supply Chain & Manufacturing, and Administrative Affairs & Corporate Planning)

14/23

The mission of domestic sales is to further reinforce domestic sales in 2020. To this end, AMs (areamanagers) will be appointed in branches in order to develop them as a branch manager's right‐hand man
who can generate an area strategy by themselves for support so as to strengthen sales capabilities. In
addition, we plan to provide position-based training, management training and MR evaluation training to
improve the quality of MR activities.
For Nobelzin®, the mission is to get creative with the way that we go about our business to continue
the momentum so far. Recognition of Jemina® launched in 2018 has increased after the dismantling ofprescription limitations. In 2020, it is necessary to grow in the GP market promptly for a further increasein the market share. To this end, we consider that we have to work with our co-promotion partners of
ASKA Pharmaceutical and the Medipal Holdings Group, particularly for Jemina®. Retympa® launched
in December 2019 is a novel product as a treatment for tympanic membrane perforation and is highly
valued by specialty doctors. We will make a great effort to penetrate the product promptly into the market
through activities without MRs (IT, Web site and remote MRs). We filed an NDA for NPC-15(Melatobel®) in April 2019 and expect to obtain an approval in March 2020. We will work toward
delivering the product to patients as soon as possible.
The mission of overseas sales is that three overseas bases in the U.S., China and Europe will realize theexpectation of making a profit in a single year as of November 2022. Basically, overseas bases strive toobtain manufacturing and marketing approval by themselves and to sell the products through their own
distribution channel. Meanwhile, under the Company’s action criteria of “Don’t hold back from buying
time with money,” we will make an effort to take measures to deliver the world’s first drugs to patients
waiting for such drugs as soon as possible with the idea of alliance with other companies. In addition, inorder to launch three overseas bases simultaneously, we have to change functions of each division in theJapan headquarters to the global one. We have to proceed with the preparation in the shortest amount oftime while the schedule of development and approval is uncertain, and we plan to run local subsidiaries
by a compact organization as much as possible in close collaboration with in-house departments as well
as external companies and consultants that support us.
In the U.S., we are recruiting local employees and plan to prepare for the launch of Rapalimus® Gel by
the end of December 2020. As NDA filing was conducted by the Japan headquarters, a local subsidiary
will act as a sales company. In addition, we are examining the moving up of the timing of NDA filing for
Retympa®.
In China, we will establish a local subsidiary in June 2020 and start operations to obtain manufacturingand marketing approval for Rapalimus® Gel. The application for the approval of the product was filed by
the Japan headquarters. We may require a large amount of costs to obtain business permits in China, andit should be necessary to elaborate somewhat though we will not change our policy of selling the products
through our own distribution channel. We will accelerate obtaining approvals of three overseas productsof Rapalimus® Gel, TITANBRIDGE® and Retympa® in China, and examine obtaining approvals for threeother products that are released in Japan.
In Europe, we will establish a local subsidiary in June 2020 and start operations to obtain manufacturingand marketing approval for Rapalimus® Gel. The application for the approval will be filed by a local
subsidiary and basic functions as a pharmaceutical company, including quality assurance, safety control
and medical affairs, will be completed within the local subsidiary under the support of the Japan
headquarters. We are also preparing for the EU CE marking certification for TITANBRIDGE® as an
approach to the EU. The application for the approval of Retympa® is examined to be moved up.
Research & Development will push ahead of the development schedule, with the aim of obtaining anapproval of NPC-02 granule, a treatment for Wilson's disease and hypozincemia, in December 2020. The

15/23

development schedule is set out below. Also, we will promote a clinical trial of NPC-06, a treatment forneurological disorder, and early launch of LCM for Retympa® and Melatobel®.
In view of overseas expansion, based on the aforementioned big strategy of launching three productsof Rapalimus® Gel, TITANBRIDGE® and Retympa® in three regions of the U.S., Europe and China, theCompany will start pre-IND/ pre-NDA/ Q-sub meetings with the US FDA, meetings with China’s
CFDA/CDE and Scientific Advice meeting with the EU EMA. We will also push ahead the establishmentof a production system for NPC-SE36 (NPC-19, malaria vaccine) associated with a change in a
manufacturing site.
A.

Status of Domestic Development
Compound

2020

2019

2021

2022

(3)
Approved

NPC-15(1)
Filed

NPC-02 granule(12)
Approved(9)
Approved

(12)
Filed

GM-CSF(9)
Filed

P-III (LM, investigator-initiated)

NPC-12 LM/CVA(6)Approved

(10)
Filed

P-III (CVA, investigator-initiated)
NPC-12 FOP

(7)
Filed

P-II/III (investigator-initiated)

NPC-12 Pendred
NPC-05(12)
Approved

(5)
Filed

P-I/IIa (investigator-initiated)

(6)
Filed

P-II (investigator-initiated)

(12)
Filed

P-II/III (investigator-initiated)

NPC-12GLong-term administration trial (clinical trial by company)
NPC-09P-III (clinical trial by company)
P-II (Nerve field 1)

NPC-06

P-III (Nerve field1)

P-II (Nerve field 2)
NPC-21

P-II US-Japan International Clinical Trial

NPC-22

B.

P-I

P-II/III

Status of Overseas Development
Compound

Year

U.S.
NPC-12G

2020(12)
Approved

(2)
NDA
(8)
Approved

Europe(9)
FiledClinical study

Response to Q-submission

China

P-III

EuropeU.S.
NPC-18

Review for CE marking
P-II (investigator-initiated)

P-III

China

P-III

EuropeNPC-SE36(NPC-19)

2022

2021

China

U.S.
NPC-17

2019

Month

Overseas

P-III
P-Ib (Burkina Faso)

CHMI test

16/23

The task to find seeds for new research is to strengthen and accelerate the preparation for a new
development theme continuously. Upon finding seeds, we will focus on the point that these seeds meet
the Company's mission (providing necessary but neglected pharmaceuticals and medical devices) andactively introduce and commercialize them from academia and bio ventures from scientific and objective
viewpoints. We will further promote support for commercialization of academia seeds to ensure a smooth
shift to a development phase from a basic study through our involvement with the initial stage.
We continue to make an effort to acquire public subsidy and financing of development expenses forcommercialization.
Business Development & IP Management will actively promote license activities for introducing newthemes that can be commercialized by 2024 through a tie-up with Project Planning & Development. As
we added staff members engaging in agreements, we will proceed with reflecting negotiation result of anagreement in the proposed agreement promptly so as to enter into the agreement in the short term, whichis the target in 2020. In overseas expansion, we have to devote more staff members to FTO searches andsupport of agreements. In terms of LCM, we will actively work to secure rights promptly with the viewto responding to near-future LCM which has been discussed with Research & Development. There weresome cases in which Sales & Marketing disclosed information related to a patent before an application
for the patent so that the patent we applied for was rejected for patent registration due to the violation of
innovation. We will educate our people about intellectual property again for recurrence prevention. In
purchase negotiations, we strive to realize ongoing cost reduction by paying due attention even to details.
As tasks of regulatory affairs and negotiations, Regulatory Affairs actively supports operations of bothResearch & Development and PMS Regulatory Compliance & Assurance, continues to help efficient andspeedy responses to the authority, and fulfills regulatory affair operations with the aim of promoting amore strategic response of regulatory affairs. We also plan to add two staff members in preparation for
an increase in workload associated with control of domestic changes and support of overseas regulatory
affairs.
Public Relations utilized the know-how for negotiations of NHI/material price to be involved in adevelopment strategy and support active responses to the authority from the development phase, and itaims to obtain adequate prices for new drugs and medical devices in the future. It also follows the NHI
price reform and health insurance reform to feed back to in-house strategies from a technical perspective.
In addition, through activities of Samurai Biotech Association, for which the Company acts as a board
member and coordinator office, lobbying and advising the authorities will be continued. An increase instaff members is planned to fulfill these operations, increase the calculation of estimated NHI price andfeasibility study, and foster a negotiator.
As for production, Supply Chain & Manufacturing continues to work on a stable supply of the existingproducts. As product inventories of Zanosar® are maintained at those for around six months, which are
lower than other products, we take care to obtain information on the manufacturing status of the next lots
from a French supplier at all times in order to prevent disrupting its supply.
We are working on launching Melatobel® granule as scheduled, which is expected to be launched in
2020, and other tasks for stable supply. In addition, we will prepare for releasing Melatobel® tablet to themarket as soon as possible. The preparation of manufacturing and sales of Nobelzin® granule, a new
formulation to be launched in 2021, is underway.
As the launch of Rapalimus® Gel in the U.S. and China comes within reaching distance in line with theadvancement of its overseas development, we added staff members to prepare for establishing a supply
system of the products for overseas sales.
17/23

Concerning the safety assurance of pharmaceutical products, PMS Regulatory Compliance &Assurance aims at improving quality and making operations more productive in compliance with related
laws and regulations.
For filing of re-examination, we have prepared for the introduction of a project management system in
April 2020 to adequately manage and promote projects. In addition, control power functions to address
filing of re-examination and compliance were established in the Safety Measure Promotion Dept., whichadequately manages and supervises preparation status.
For safety management, looking ahead into the overseas business expansion, we introduced the ARISg system in June 2019, a global version of the adverse drug event report database (ARIS-j) that we
introduced in 2015. In August 2019, we also introduced “Operation Designer,” an electronic medium
evaluation flow system, and realized visualization and streamlining of operations including paperless
initiatives.
In terms of the drug use-results survey, we have introduced the Electronic Data Capture (EDC) system
to the survey of Jemina® started in June 2019 in addition to Nobelzin®, a treatment for hypozincemia, andalso plan to use EDC in the survey of Retympa® that is currently being planned and Melatobel® in the
future.
As an effective use of outside resources, we will deepen collaboration and cooperation with the Medipal
Holdings Group to secure safety of pharmaceutical products and promote and manage post-marketingsurveillance on Nobelzin®, Rapalimus® Gel, Jemina®, Retympa® and Melatobel®.
PMS Regulatory Compliance & Assurance also plans to exchange personnel with Sales & Marketing
and attends in branch manager meetings and branch meetings with an aim to secure the safety of drugs
within the company on a smooth and adequate basis.
The tasks of corporate planning and accounting are to establish overseas subsidiaries as scheduled andto build a back office related to accounting, tax, funding, H&R and management by making full use ofoutsourcing and cloud systems for support of overseas expansion with the view to establishing andoperating a highly apparent management system of overseas subsidiaries. It is increasingly difficult tounderstand business figures due to business expansion and overseas development; therefore, we will
enhance a budget control system to ensure quick and accurate understanding of these figures. In
conjunction with it, we will examine an effective method to promote paperless and IT initiatives.
Cash management is planned mainly in cash flows arising from operating activities. However, we willborrow long-term funds from financial institutions to maintain sufficient cash in hand to ensure a flexible
response to unscheduled fund needs since we are repaying borrowings steadily and financing conditions
are currently positive.
As for the issue of human resources and general affairs, we will proceed with securing human resourcesto establish overseas bases in the U.S., China and Europe and to promote overseas expansion, and also
recruiting human resources to reinforce domestic sales capabilities, including recruitment of foreigners inJapan.
In terms of working style reform, we actively encourage employees to apply telework, off-peak
commuting and the like to ensure their safety and realize effective working as a part of initiatives for
COVID-19 and natural disasters such as typhoon, flood and earthquake. We have rolled out companywide training on harassment and work to foster employees by using e-learning to disseminate theCompany’s philosophy and president’s message (“Request for line managers”).
We are also working on introducing a new target management/evaluation system. This year, we will
utilize this system to streamline processes of employee’s target setting and its evaluation as well as toimprove communication between supervisors and subordinates.
In February 2020, the office of Sales & Marketing, which was located separately from the headquarters
building, moved to the headquarters building to address earthquake resistance and ensure smoothcommunication between departments.

18/23

As a measure for the spread of the infectious novel coronavirus, all employees have started to work athome in March 2020. We will take this opportunity to push ahead with home teleworking and the flexible
working hours system with the aim of cutting costs by reducing office buildings by March 2021.
We set the targets for the mid-long term future vision of sales and profit as an immovable high goal
named North Star. In 2019, the numerical targets in 2023 as North Star in the 2019-23 mid-term businessplan were sales of 50 billion yen and ordinary profit of 10 billion yen. In the 2020-24 mid-term businessplan developed in 2020, this North Star target in 2023 is highly likely to be achieved as we plan that theoverseas business will make a profit in a single year in 2023.
North Star(2023)

TargetSales

50 billion yen

Ordinary income

10 billion yen

1.15. Other Important Matters
1.15.1. Relocation of the headquarters
Nobelpharma Co., Ltd. relocated the headquarters to the following address effective April 1, 2019.
Subsequently, Sales & Marketing moved to the fifth floor of the same building from Yaesu in February
2020.
New address: 1-17-24 Shinkawa, Chuo-ku, Tokyo 104-0033
New Tel: +81-3-6670-3800, Fax: +81-3-6670-3801
1.15.2. Establishment of the U.S. subsidiary
In the U.S., on June 3, 2019, Nobelpharma America, LLC, a wholly-owned subsidiary of NobelpharmaCo., Ltd. and a sales company, was registered in Delaware, which opened an office in Bethesda,
Montgomery County of Maryland in October, as the first overseas office of the Company. Its capital is 3
million dollars and a president sent from the Japan headquarters is stationed.
1.15.3. Stable supply
Despite the COVID-19 pandemic, Nobelpharma is responsible for stable supply to patients as apharmaceutical company.
We have investigated whether there is any problem with stable supply for each supplier of additive andmaterials, APIs and OEM suppliers and for each affiliate in Japan and overseas. There is no problem forstable supply at this time, and we maintain inventories of the products over six months as our policy.
We will continue to secure stable supply of medical drugs.

19/23

2.

Current Status of the Company

2.1. Shares (as of December 31, 2019)(1) Number of shares authorized(2) Number of shares issued(3)

Ordinary share
Number of shareholders

2.2.

Status of Major Shareholders
Hisanaga & Co., Ltd. (ordinary share)
Medipal Holdings Corporation (ordinary share)
Inabata & Co., Ltd. (ordinary share)

50,000 shares
13,525 shares
3
10,000 shares (73.9%)
2,705 shares (20.0%)820 shares (6.1%)

Share Warrant

2.2.1.

Share warrant that is issued to and held by the Company's executive officers as
consideration for execution of their duties
Not applicable

2.2.2.

Share warrant that is issued to and held by the Company's employees as consideration for
execution of their duties
Not applicable

2.2.3. Share warrant in issue
Not applicable
2.3. Corporate Executives
2.3.1. Management Reshuffle(1) Directors and Company Auditors
As of March 26, 2020, the status of full-time and part-time directors is as follows:
CEO and President:
Jin Shiomura
Director (part-time):

Isamu Sojyo(former Executive Managing Director ofJapan Intellectual Property Association)

Director (part-time):
Director (part-time):

Nobukuni Taneya
Takahisa Iizuka(Part-time company auditor of Arara Inc.)
Development Division, Medipal Holdings
Corporation)

Director (part-time):

Koichi Noda

(Financial Management Office and General
Manager, Accounting Dept., Inabata & Co.,Ltd.)

Director (part-time):

Toshio Miyata(Director of Mih Clinic Yoyogi)

Audit & Supervisory
Board Member (parttime):
Audit & Supervisory
Board Member (parttime):

Yoshitaka Kishi(Former full-time company auditor, Dia Rix
Co., Ltd.)Tomoyasu Toyoda(Company auditor, Medipal Holdings
Corporation)(2) Executive Officers and Directors
As of March 26, 2020, the status of executive officers and directors is as follows:
Vice President & Chief
Shigeki Shimasaki(Head of Research & Development / PMS
Operating Officer
Regulatory Compliance & Assurance)

20/23

Chief Operating Officer

Arata Tabata(Head of Business Development & IP
Management)

Senior Executive Officer Tetsuo Hayase
Senior Executive Officer Hitoshi Yokoyama(new)(Head of Supply Chain & Manufacturing)(Head of Sales & Marketing)Executive Officer

Kenji Shimizu(Deputy Head of Research & Development)

Executive Officer

Masato Iwamoto

Executive Officer

Yoshiki Yagi

(General Manager of Supply Chain
Management, Supply Chain &Manufacturing)(Head of Project Planning & Development)

Executive Officer
Executive Officer

Toshiaki Okamura
Kozo Hayase

Executive Officer
Executive Officer (new)Yoshihide
Yamamoto
Hitoshi Hasegawa

Executive Director
Executive Director

Masanori Osakabe
Atsunori Iwao

Executive Director

Takako Aburada

Executive Director

Shigeru Doseki(Region Manager of Tokyo Region)

Executive Director

Katsuhiro Kimura

Executive Director

Yoshiki Kida

(Region Manager of Saitama-Kanshinetsu
Region)(President & CEO, Nobelpharma America,
LLC)(Head of Regulatory Affairs)(Head of Administrative Affairs & Corporate
Planning)(Head of President Office and Overseas
Business Development)(Head of PMS Regulatory Compliance &Assurance / General Marketing Compliance
Officer)(Deputy Head of Research & Development)(General Manager of Quality Assurance,
Quality Assurance Officer)(General Manager of CMC Development,
Supply Chain & Manufacturing)

Executive Director (new) Masahiko Tanaka
Executive Director (new) Masatomi Nemoto(General Manager of Clinical Research 3)(General Manager of Pharmacovigilance /Safety Management Officer)
Executive Director (new) Yasuo Suga
(Deputy Head of Sales & Marketing)Executive Director (new) Tsutomu Iwasa(Region Manager of Kansai Region)
Executive Director (new) Makoto Matsuda(Region Manager of Hokkaido/Tohoku
Region)Executive Director (new) Yasuo Satake(General Manager of HR & General Affairs)
Executive Director (new) Takahiro Yamasaki (Managing Director-Elect of Nobelpharma
subsidiary to be established in Europe)
Acting Executive
Weidong Chen
(Director of Overseas BusinessDirector (new)Development)(Note) The Company plans to establish local subsidiaries in Germany as a base in Europe and in
China, respectively, by the second quarter of 2020.
(3) Executive officers resigned (as of March 26, 2020)
Akira Ikeda(Senior Fellow, HR & General Affair Div., Administrative Affairs & Corporate
Planning)
Seiu Iida(Head of GCP Audit Office)21/23

2.3.2. Remuneration paid to directors and company auditors

2.4.

Classification

Head-countAmount paid

Directors

6

9,600,000 yen

Company auditor

2

4,800,000 yen

Total

8

14,400,000 yen

Matters related to accounting auditor

2.4.1 Name of accounting auditor
Deloitte Touche Tohmatsu LLC
2.4.2 Amount of remuneration, etc. for accounting auditor
Amount of remuneration, etc. for accounting auditor in the current business year 13 million yen(Note) This is remuneration, etc. for business stipulated by Article 2, Paragraph 1 of the Certified
Public Accountants Act (Law No. 103 of 1948) and compensation to audit certification under
the Companies Act.
2.4.3 Reasons that company auditor approves remuneration, etc. for the accounting auditor
The company auditor obtained necessary documents and received reports from the relevant departmentof the Company and the accounting auditor, and confirmed and verified the details of the accounting
auditor’s audit plan, the status of the execution of duties by the accounting auditor and calculation basisof estimated remuneration. As a result, the company auditor determined that the amount of remuneration,etc. for the accounting auditor was appropriate and approved it in accordance with Article 399, Paragraph
1 of the Companies Act.
2.4.4 Policy on decision to dismiss or not to reappoint accounting auditorWhen the accounting
auditor meets any of the items of Article 340, Paragraph 1 of the Companies Act, and when
it is deemed to be difficult to carry our adequate audit due to events that damage theaccounting auditor’s quality and independence, the company auditor may determine thedetails of a proposal on dismissal or refusal of reappointment of an accounting auditor to besubmitted to a general meeting of shareholders.
2.5.

Other matters

No matters requiring special attention

22/23

Attached documents
16-Jul-19
From the President
Message to line managers
1.Go over the company mission, management policy, and code of conduct on a regular basis anddevelop a deeper understanding.
2. Be aware that your behavior is always being observed.
Mixing public and private must be avoided by all means.
3. It is hard work (such as apologizing to customers) that a boss should take the lead.
Subordinates respect courageous bosses.
4. Be mindful of perception of favoritism.
For example, going out for lunch or to drink with a specific subordinate (or a group).
5. Do not invite a subordinate of the opposite sex for a one-on-one lunch/drink.
Because subordinates tend to hesitate to decline, it may be perceived as harassment.
6. Do not procrastinate to mend your wrong (Analects of Confucius).
7. Do not speak ill of people nor boast your achievements (Tori Nakane).
8. Speak out words of greetings when you get to the office or leave.
Furthermore, if the boss is quick with jokes, the workplace becomes brighter.
Puns are just fine.
9. Meet with your subordinates on a regular basis, repeatedly, one-on-one, and sober.
The purpose of the meeting is to listen to your subordinates.
10. When scolding, one-on-one, and when praising, in front of everyone.
11. There is nothing good to be received by a heavy-handed order.
Be gentle and go to all length to explain when making straight talks.
12. Don't deny a subordinate's suggestion on the spot.
Listen to it and, if necessary, leave a day or so before telling otherwise.
13. Instructions that are not in line with a subordinate's intention may also be necessary.
Explain the background and purpose carefully at that time and make an effort to win theunderstanding.
However, after offering careful explanations three times, you may prevail with your instructions.
14. It is highly probable that a subordinate who has been carefully instructed five times and has notmade improvements are not suited to the work.
It's also a way of showing love to encourage switching jobs after making him understand.
15. Simply stay away from trading shares of related parties, whether listed or not.

23/23