Business Report(From January 1, 2018 to December 31, 2018)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 thatshould be pursued; however, we regard these to be the result of carrying out the mission, as well as ameans to accomplish the mission.
The management policy and action criteria are as cited below:
Policy1. General2.

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
Personnel

3.

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
Products

4.

1) Pursue high quality in products and data
2) Ensure post-marketing safety
3) Search for seeds externally
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
2.

Give priority to patient benefits if inconclusive
Challenge

3.

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.
Speed1) Never forget patients are waiting
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4.

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
Cost/Efficiency

5.

1) Never carry/purchase deadwood, never take/cause wasteful actions
2) No overtime work considered good3) Consider patient needs, scientific rationality and nature of laws/regulations when pursuing
higher quality in products/data
4) Pursue cost reduction with the principle of multiple sourcing, while regarding providers as
partners
Communication/Relationship
1)
2)
3)
4)
5)
6)

Never prioritize loyalty to company over morals
Rejecting inter-departmental advice and cooperation is a symptom of Big Company Disease.
Superiors to confidingly entrust tasks to subordinates, but to never leave them unmanaged
Hear anyone out and never interrupt themStart with a conclusion when explaining/responding
Mere greetings are significant

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1.2.

Progress and Results of Operations
mil yen2017

Year-onyear

2018% to total sales
2017

2018

Sales

7,236

10,568146.0%

100.0%

100.0%

Cost of goods sold

1,247

1,450

116.3%

17.2%

13.7%

Gross profit

5,989

9,118

152.2%

82.8%

86.3%

SG&A expense

6,013

7,240

120.4%

83.1%

68.5%

* Personnel cost

1,821

2,254

123.8%

25.2%

21.3%

* R&D expenses

1,676

1,917

114.4%

23.2%

18.1%

Operating income

△23

1,877

-%

△0.3%

17.8%

Non-operating income/expenses

185

82

Ordinary income

161

1,960

1,212.1%

2.2%

18.6%

Extraordinary income/loss

△60

△101

Net income before tax

101

1,859

1,837.4%

1.4%

17.6%

Income taxes

48

422

878.6%

0.7%

4.0%

Net income

53

1,437

2,704.3%

0.7%

13.6%

Net income per employee (‘000 yen)

205

5,841

Beginning balance

679

673

Prior period adjustment△27

Retained earnings brought forward-

Dividend

31

17

Net income

53

1,437

673

2,093

Ending balance* Major items included in SG&A expenses

Total sales in 2018 were 10,568 million yen, up 46% year-on-year. Nobelzin® and Lunabell® posted
sales of 4,633 million yen and 2,835 million yen, respectively, accounting for 47.1% and 28.8%,
respectively, of total products sales.
The cost of goods sold was 1,450 million yen, up 16.3% year-on-year, accounting for 13.7% of total
sales (2017: 17.2%). Sales, general and administrative expenses totaled 7,240 million yen, an increase in
20.4% year-on-year, accounting for 68.5% (2017: 83.1%), mainly including personnel expenses of
2,254 million yen, up 23.8% year-on-year, and 21.3% (25.2% in 2017) of total sales, R&D expenses of
1,917 million yen, up 14.4% year-on-year, and 18.1% (2017: 23.2%) of total sales, outsourcing expensesof 935 million yen and royalty expenses of 423 million yen. Outsourcing expenses mainly included 141
million yen for call center operation by EP-PharmaLine, 89 million yen for safety database construction
and operation by CMIC, and 52 million yen for business management service by Hisanaga & Company.
Royalty expenses were running royalties of 275 million yen and 116 million yen, respectively, to Jansen
Pharma and Pfizer.
As a result, operating profit was 1,877 million yen, a decrease in 23 million yen year-on-year andaccounted for 17.8%, down 0.3% year-on-year, of total sales.
Ordinary profit was 1,960 million yen, a jump of 1,212.1% year-on-year, accounting for 18.6% (2017:2.2%) of total sales, after recording non-operating income of 173 million yen including subsidy revenueof 169 million yen partly offset by non-operating expenses of 90 million yen including interest expenses
of 37 million yen and bond interest expenses of 14 million yen.
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An extraordinary loss of 101 million yen was recorded due to a loss resulting from typhoon damage of
Alabel® in Kansai International Airport. The loss for Alabel® will be recorded as extraordinary income
in 2019 as the Company will receive the insurance.
With the income taxes of 422 million yen, net income was 1,437 million yen, a jump of 2,704.3%
year-on-year, accounting for 13.6% of total sales (2017: 0.7%), and net income per employee was 5
million yen (2017: 0.2 million yen).
Retained earnings brought forward as of December 31, 2018 were 2,093 million yen, with the
beginning balance of retained earnings brought forward of 673 million yen and a dividend payment of
17 million yen.
In March 2018, Medipal Holdings Corporation acquired 20% of outstanding shares of the Company
through a private placement. We expect to build a stronger partnership and enhance a smooth personal
exchange with Medipal.
Under Medical’s collaborative effort for sales of Nobelzin®, the Company achieved sales of 10 billion
yen for the first time along with a growth of income.
To sum up our activities in 2018, we have taken the first step in the new stage, i.e. toward a
global/centennial company through: (1) newly launching three products, potential primary sources ofrevenue following Lunabell®, in Japan; (2) gained access to a strong sales and distribution network
through strengthening capital tie-up with Medipal Holdings Corporation; (3) secured solid cash flows
through Nobelzin®; (4) successfully developed more than one original product made in Japan; (5) theseproducts enabled us to gain a foothold in the US, China and Europe; and (6) these cash flows and an
improvement of trust by academia allowed us to strengthen a system to introduce new seeds.
The details are explained below.

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1.3.

Domestic sales

The table below shows sales by product in 2018 on a wholesale price (NHI price) basis.
Sales (on a wholesale
price (NHI price) basis)
Brand Name
LaunchIndication(Yen in millions)2017 [1]2018 [2]Year-onyear([2]/[1])Nobelzin®

Apr 2008
Mar 2017

Wilson’s disease, hypozincemia

2,089

5,245

251.1%

Lunabell® LD
Lunabell® ULD

Jul 2008
Sep 2013

Dysmenorrhea

9,912

9,640

97.3%

Nobelbar®

Dec 2008

Neonatal seizures, status epilepticus

112

115

102.2%

Fostoin®

Jan 2012

Status epilepticus, prevention of
postoperative seizures, etc.

1,232

1,133

92.0%

Gliadel®

Jan 2013

malignant glioma

982

978

99.5%

Alabel®

Sep 2013

diagnosis of malignant glioma

294

294

100.1%®

IndacinJan 2013

patent ductus arteriosus ofprematurity

71

60

84.9%

Cosmegen®

Jan 2013

Wilms’ tumor, choriocarcinoma,
pediatric solid malignant tumor, etc.

1719112.5%

Unitalc®

Dec 2013

prevention of recurrent malignant
pleural effusion

69

69

99.5%

Respia®

Dec 2014

apnea of prematurity

211

229

108.3%

Rapalimus®

Dec 2014

lymphangioleiomyomatosi s

211

249

118.1%

Zanosar®

Feb 2015

gastroenteropancreatic
neuroendocrine tumor

343

368

107.2%

Rapalimus® Gel

Jun 2018

Skin lesions associated with tuberous
sclerosis

-

148

-

Titanium bridge

Jul 2018

Adductor spasmodic dysphonia

-

15

-

Jemina®

Oct 2018

Dysmenorrhea

-

125

-

15,554

18,687120.1%Total

In 2018, the Company positioned Nobelzin® as the product to most focus on as well as to spread andexpand, and it also launched three new products, of which, two products were designated under the“Sakigake” fast-track review system (Rapalimus® Gel in June and TITANBRIDGE® in July) and atreatment for dysmenorrhea (Jemina® in October). We achieved sales of 18.7 billion yen compared withthe target of 18.1 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.
Sales of Lunabell®, which have been our core product so far, are expected to decline significantly inthe future as a generic drug of Lunabell® ULD was launched in December 2018. We launched a new
product, Jemina®, which is replacing Lunabell®, and in addition, launched an authorized generic (AG) of
Lunabell® ULD under cooperation with ASKA Pharmaceutical. Co., Ltd. in order to offset a decrease inrevenue.
As of March 1, 2019, 86 MRs cover the entire country, of which 23 MRs are sent by the Medipal
Holdings Group. We aim at MR activities by Selected Few and are also actively engaged in PR
activities in other channels than MRs by enhancing the customer center and Web site. Sales ofNobelzin® grew followed by sales promotion activities using the AR (authorized medical sales
representatives who passed MR certification exam) function of the Medipal Holdings Group, and we use
this initiative for Jemina® and Rapalimus® Gel.
For the logistics of the direct-sales products, the Medipal Holdings Group has exclusively taken overthe distribution.
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1.4.

Research and Development (Japan and overseas)

Rapalimus® Gel, a treatment for skin lesions associated with tuberous sclerosis, and Jemina®, atreatment for dysmenorrhea, were approved in 2018 and by following them, we filed NDA for NPC-18,
a treatment for tympanic perforation. In addition, the Company achieved expected purpose for the Firstin Human trial (PI) for cytomegalovirus (CMV) antibody (NPC-21), the Company’s first antibody drug,
and PIII trial for NPC-15, melatonin.
The Company has been proceeding with the full-scale examination on overseas development since2017 based on a plan of obtaining approvals for three products of TITANBRIDGE®, Rapalimus® Gel,
and NPC-18 in three regions including North America, Europe and China. In 2018, the Company has
started meetings with FDA for development and NDA filing in the U.S. for Rapalimus® Gel that FDA
designated as an orphan drug in 2017, and hold Q-sub meeting with FDA for TITANBRIDGE®. The
third study was commenced for malaria vaccine (NPC-19, prevention of falciparum malaria) in Africa in
2018.
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, 2019. 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-18bFGF, etc.

Tympanic perforation

TRI (Note)
Kaken
PharmaceuticalFiled

Sep 2019

III2

NPC-15
Melatonin

Sleep disorders inchildren withneurodevelopmental
disorderIn-house

Clinical trial
in preparation

Mar 2020

I

3

GM-CSF
Molgramostim

Pulmonary proteinosis

Savara Inc.

PIII(Globalclinical trial)

Jun 2021

II

4

NPC-09
Acetylneuraminicacid

Distal myopathy

In-house

PII/III

TBD

III

5

NPC-21
CMV antibody

CMV infection

Evec Inc.

PI

TBD

I

6

NPC-22
Skopolamin

Salivation

Kitasato
University

Non-clinical

TBD

IV

7

NPC-x4
P092

Prion disease

Gifu University

Non-clinical

TBD

IV

Note: TRI (Translational Research Center for Medical Innovation)

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B. Life Cycle Management (LCM)
CompoundIndication

Licensor

Development
stage

Estimated
approval

Classification

1

NPC-02
Nobelzin®

Child’s preparation(new formulation)

National Centerfor Child Healthand Development

PIII

Dec 2020

III2

NPC-05
Unitalc®

Refractorypneumothorax(new indication)

National Hospital
Organization
Nagoya Medical
CenterPII

Sep 2021

III

3

NPC-06
Fostoin®

Nerve field(new indication)

Pfizer Inc.

PII

TBD

I

4

NPC-12
Rapalimus®

Refractory lymphatic
disease(new indication)

Gifu University

PIII

Dec 2020

III

5

NPC-12
Rapalimus®

Fbrodysplasia
ossificans progressiva(new indication)

Kyoto University

PII/IIIDec 2020

III

6

NPC-12
Rapalimus®

Pendred syndrome(new indication)

Keio University

PI/IIaTBD

IV

7

NPC-12
Rapalimus®

Epilepsy with focal
cortical dysplasia typeII(new indication)

Showa University

PII

TBD

IV

8

NPC-12G
Rapalimus® Gel

Neurofibromatosis
type I(new indication)

Osaka University

PII/IIIDec 2021

IV

C. Overseas Development
CompoundIndication

Licensor

Development
stage

Estimated
approval

Classification1

NPC-19(NPC-SE36)
Malaria vaccine

Prevention of
falciparum malaria

Osaka University
GHIT

PIb

TBD

I

2

NPC-18bFGF, etc.

Tympanic perforation

MEEI/Harvard
University

PII

TBD

III

3

NPC-17Thyroid cartilage
fixation device(TITANBRIDGE®)

Adductor spasmodic
dysphonia-

Clinical trial in
preparation

TBD

III

4

NPC-12G
Rapalimus® Gel

Hemangiofibroma-

Clinical trial in
preparation

TBD

I

Rapalimus® Gel (NPC-12G) and TITANBRIDGE® (NPC-17) launched in 2018 deserve special
mention, as they are drugs designated under the “Sakigake” fast-track review system, one of theimportant measures of the Japanese Ministry of Health, Labour and Welfare (“MHLW”), and they werealso designated as an orphan drug and medical device, respectively.
1.5.

Finding of New Themes

Business Development & Strategy is responsible for core roles for the Company’s open innovation.
Specifically, its role is classified into (1) Planning and research for new themes (drugs and medical
devices), (2) In/out-licensing negotiations with a new development theme, (3) Acquisition of public
subsidy and financing of development expenses, (4) Support for commercialization of academia seeds,(5) Alliance management, (6) Intellectual property management and technology-related contracts, and(7) Procurement negotiations.
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The following showed major achievements in 2018.
 Conclusion of a partnership agreement with public institution
 Conclusion of an in-licensing agreement with Evec Inc. for a treatment for CMV infection
 Conclusion of an agreement with LTT Bio-Pharma Co., Ltd. for new indication of the existingproducts
 Conclusion of memorandum with ASKA Pharmaceutical. Co., Ltd. for OEM agreement andsupply of Lunabell® AG
 Support for acquiring subsidy for collaborative research with academia
 Conclusion of collaborative research agreement and provision of research data agreement withmultiple academia Selection of TITANBRIDGE® by Development of Medical Devices through Collaboration
between Medicine and Industry (Standardization and Development/Overseas Development) ofJapan Agency for Medical Research and Development (AMED)In 2018, the Company increased the number of staff engaged in intellectual property rights. The
number of patent families with which the Company is involved is 36 (2017: 33) due to an increase incollaboration with academia. We reviewed more than 130 cases resulting from an increase in law-related
tasks for technical service contracts. We also worked on employee education and enlightenment
activities and hold 11 intellectual property right workshops including four basic classes and sevenclasses handling popular topics.
The Company engaged in more than 50 purchase negotiations and contributed to achievement of
reasonable costs.
1.6.

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 secured the second OEM supplier for Nobelzin®.
Accordingly, we can cover the majority of expected demand for Nobelzin® in 2019 while wemanufactured Nobelzin® tablet of 36 million in 2018. In contrast, we cannot avoid loss on disposal due
to a wrong demand forecast as we have many inventories. In 2018, we recognized loss on disposal of
inventories of 16 million yen for Rapalimus® Gel but it was within our expectations. We established twologistics centers in both West and East Japan to prepare for disaster and ensure BCP.
The Company has put into place a production system for three new products (Rapalimus® Gel,
TITANBRIDGE® and Jemina®) and shipped for the first time. All three products are supplied steadily.
Meanwhile, the reduction of cost of goods manufactured is also an important issue in manufacturing.
In 2019, cost of sales increased 16.3% year-on-year while product sales grew 46.0% year-on-year due toreduction of import price of Alabel® and outsourcing expenses of Nobelzin®.
For this period, there was no capital investment related to production.
1.7.

Pharmacovigilance & Quality Assurance

Pharmacovigilance & Quality Assurance works on business improvement in a cost-conscious way incompliance with related laws and regulations, by posting its mission of (1) quality assurance and stablesupply of products, (2) causing no drug-induced diseases, and (3) passing re-examinations.
We completed compliance inspection of re-examination for Lunabell® ULD in February 2018, and reexamination was completed in March 2019. We filed re-examination of Nobelzin®, a treatment for
Wilson’s disease, in April 2018 and are working on responding to inquiries. We filed re-examination ofNobelbar®, a treatment for neonatal seizures, in January 2019 and are preparing for complianceinspection.

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In terms of safety-related matters, we completed post-marketing surveillance of Rapalimus® Gel andare currently conducting post-marketing surveillance of Jemina®. In 2018, the number of domestic andoverseas adverse event reports was 5,438 and 3,612, respectively, 1.5 times and 3.0 times, respectively,
compared with 3,583 and 1,198, respectively, in 2017.
In terms of post-marketing surveillance-related matters, a specific use survey of Nobelzin®, atreatment for hypozincemia, reached the target number of registered cases in September 2018 as we
strengthened the collaboration/cooperation system with the Medipal Holdings Group. For use
investigation of TITANBRIDGE®, we started a new scheme investigation in collaboration withTranslational Research Center for Medical Innovation in July 2018.
In terms of quality-related matters, we conducted a GMP audit for 12 manufacturing bases in our
OEM suppliers.
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),negotiations of NHI price and material price, and research and proposals on NHI price system reform,
and works to prevent the Company from deviating from medical related laws and regulations. It is also
responsible for patient relations.
The Company added a staff in Regulatory Affairs to provide development and regulatory affairs withmore strategic feature and to strengthen development and regulatory affairs and administrative
procedures (to the Japanese Ministry of Health, Labour and Welfare (MHLW) and Pharmaceutical andMedical Devices Agency (PMDA)). In addition, we undertook systematization of operations(digitization of application/approval information management and NDA filing), which have been
insufficient so far, and aim at starting operation by the end of March 2019.
Regulatory Affairs continued to confirm and discuss with relevant departments (Product Management
and Quality Assurance) about the “difference between certificates of approval for manufacture and saleand the actual status of manufacturing,” the pending issue in the entire pharmaceutical industry in 2016,
and responded to the authority adequately as needed. Accordingly, there was no material problem.
In-house Product Material Committee reviewed 220 sales promotion materials of drugs. The
Committee revised and advised as necessary to ensure that adequate sales promotion materials areprovided.
Further, Regulatory Affairs undertook a new business of a feasibility study of planning and developed
products so that it added a staff in 2019 in order to prepare a system to provide highly precise
evaluations promptly corresponding to an increase in new products developed by academia and changes
in NHI price conditions.
In terms of industry group activities, Samurai Biotech Association aims at becoming a generalincorporated association to raise its status and the Company, as its coordinator company, proceeds withthe preparations.
In terms of patient relations, the Company has communications with 22 patient groups and lent its
meeting rooms 26 times a year and in addition, 39 employees actively participated as volunteers.
Accordingly, the Company received a high evaluation from patient groups with keeping a good
relationship. Further, we hold three in-house seminars in which leading members of patient groups arelecturers to bring the fresh voices of patients to our employees.
1.9.

Funding and Major Lenders

In 2018, the Company borrowed 1,380 million yen and repaid 1,678 million yen to financial
institutions.
The resulting balance of loans payable and bonds as of December 31, 2018 was 5,414 million yen. As
the Company has cash and deposits of 4,787 million yen, the actual amount of borrowing is 627 million
yen (2017: 1,430 million yen).

9/17

As of December 31, 2018, the status of borrowing is as follows:
Long-term loans payable
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
MUFG Bank, Ltd.
The Shoko Chukin Bank, Ltd.
The Tokyo Shinkin BankJapan Finance Corporation
Resona Bank
Total

1,210 million yen
930 million yen
337 million yen
271 million yen
166 million yen
98 million yen
20 million yen
3,034 million yen

Japan Agency for Medical Research and Development380 million yen
Balance of bonds
2nd straight bond -> Osaka Soda Co., Ltd.
3rd straight bond -> Medipal Holdings Corporation
4th straight bond -> Mizuho Bank, Ltd.
5th straight bond -> The Shoko Chukin Bank, Ltd.
6th straight bond -> Resona Bank, Ltd.
Total

500 million yen (Redemption: Dec 2024)
600 million yen (Redemption: May 2019)
500 million yen (Redemption: Dec 2021)
100 million yen (Redemption: Mar 2020)
300 million yen (Redemption: Mar 2022)
2,000 million yen

1.10. Financial Results, Assets and 2016 Forecast
The Company’s financial results, assets and 2018 forecasts are as follows:
2015
mil yen except for *

2016

2017

2018

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

13th year

14th year

15th year

16th year

2019(Forecasts)

17th year

Sales

7,435

6,791

7,236

10,56812,642

Ordinary income

△270

△56

161

1,960

1,369

Net income*Net income per share (Note)
Total assets

157

93

53

1,437

953

5,000 yen

8,000 yen

4,000 yen

111,000 yen

70,000 yen

9,671

7,671

8,975

12,204

12,330Net assets

984

691

685

3,319

4,437

* Equity ratio

10.2%

9.0%

7.6%

27.2%

35.9%

84,000 yen

59,000 yen

58,000 yen

245,000 yen

911,000 yen*Net asset per share (Note)(Note) As the Company split its shares in 2017, the number of shares in 2015 and 2016 is converted into the number
after the stock split.

1.11. Employees
As of March 1, 2019, the number of employees is 269 (including a total of 103 including 35 seconded
employees, 22 temp staff, and 46 contract employees but excluding directors and employees seconded toexternal organizations) with an average age of 51.9. The number of employees increased by 10compared with 259 as of March 1, 2018.
Total personnel costs including expenses for seconded employees were 2,254 million yen, up 23.8%
year-on-year. The major reason of increase was an increase in the number of staff due to reinforcementof manpower in sales departments associated with an increase in demand for Nobelzin® and launchingof new products as well as preparations for overseas business. Although the Company does not recruit
new graduates simultaneously, we recruit postdoctorals and those with equivalent status regularly. We
recruited two in 2016 and one 2017, and additionally one will join us this April. We have recruited morethan ten in total since 2012 and plan to continue to recruit a few every year. We promote temp staff andcontracted employees to full-time positions in principle.
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We continue to take such initiatives as review of work process, IT promotion and transformation ofworking style to reduce overtime. In 2018, monthly average overtime in the entire company was 8.7hours, falling below ten hours for three consecutive years. The rate of annual paid leave taken by
employees in 2018 was 81.3%, up 5% year-on-year, maintaining the high level.
In terms of the personnel system, we prioritize health management (Note) initiative and “Support forbalance of work and childcare” based on the Act on Advancement of Measures to Support Raising NextGeneration Children and are working on various new themes.
We have paid cash incentives to employees based on the company regulations and in 2019, a total of
approximately 166 million will be paid as incentives. It is equivalent to about a half of the dividend
payment scheduled in 2019 and the average incentive per employee including seconded employees isapproximately 680,000 yen.
(Note) “Health management” is a management method taking into account employees’ health fromthe viewpoint of a company’s sustainable growth.
1.12. Issues
In 2019, company-wide issues are six as follows:(1) Preparation for new development theme and relevant nurturing and recruitment of development
staff (Business Development & Strategy, Research & Development)(2) Acquire approvals and build sales systems in the U.S., China And Europe (Research &Development, President Office)(3) Secure cash flows to accelerate the above initiatives, completion of reinforcement of domestic
sales and nurturing/recruitment of frontline sales personnel and marketing (Marketing & Sales)(4) Further expansion of Nobelzin®, early growth of Jemina® and Rapalimus® Gel that lag behind,and smooth launch of NPC-18, a new drug to be approved that is a treatment for tympanic
perforation (Marketing & Sales)(5) Filing NDA for NPC-15 (melatonin) in April 2019 and preparation for domestic development of
GM-CSF(6) Acquire profitable NHI price for approved drugs
The mission of domestic sales (Sales & Marketing) is to complete the reinforcement of domestic sales
in 2019 and achieve the sales plan of 18.6 billion yen on a wholesale price (NHI price) basis. For
Nobelzin®, the mission is to try various measures to continue the momentum so far. We are far fromsatisfied with initial sales of Jemina® and Rapalimus® Gel launched in 2018 and it is necessary to growthem earlier. To this end, we consider that we have to work with our co-promotion partners of ASKA
Pharmaceutical. Co., Ltd. and the Medipal Holdings Group particularly for Jemina®. Although we do
not expect large sales for TITANBRIDGE®, as NPC-18, a treatment for tympanic perforation, which isscheduled to be launched in 2019, is a medicine in the same otological field, we will take measures forthe otological field and look into the future.
Other missions include re-building of our sales approach taking into account the impact of theworking style reform of doctors and guidelines on providing sales information as a recent trend.
The task to find new themes (Business Development & Strategy) is to strengthen and accelerate thepreparation for a new development theme. We will actively introduce and commercialize seeds thatmeet the Company’s mission (providing necessary but neglected pharmaceuticals and medical devices)from academia and bio ventures. 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.

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Research & Development will push ahead the development schedule, with the aim of obtaining anapproval of NPC-18, a treatment for tympanic perforation, in September 2019 and submitting the NDA
for NPC-15, melatonin in April 2019. The development schedule is set out below.
In view of overseas expansion, based on the aforementioned big strategy of launching three products
of TITANBRIDGE®, Rapalimus® Gel, and NPC-18 in three regions including North America, Europe
and China, the Company will start pre-IND/ pre-NDA/ Q-sub meetings with the US FDA, Scientific
Advice meeting with the EU EMA and meeting with China’s CFDA/CDE. We also push ahead the
preparation for a consortium with related associations for NPC-SE36 (NPC-19, malaria vaccine) and theestablishment of a production system associated with a change in manufacturing place.
A. Status of Domestic Development
Compound

2018

2019

Filed

Approved

P-II/III

NPC-02 granule

2020

2021

NHI price

Filed

Approved

NHI price

P-III (investigator-initiated)
Approved

Filed
Bioequivalence study
P-III (LM, investigator-initiated)

Continuous administration (investigator-initiated)

Filed

P-III (CVA, investigator-initiated)
P-II/III (investigator-initiated)

Approved
Continuous administration (investigator-initiated)

Continuous administration (investigator-initiated)

Filed

Approved

P-I/IIa (investigator-initiated)

Filed

P-III International Clinical Trial (Savara)

PK study for Japanese

Filed
P-III

P-II (Nerve field 1)

P-III

P-II (Nerve field 2)
P-II/III (investigator-initiated)

P-III long‐term administration study
P-I
Non-clinical study

P-II International Clinical Trial
P-I

P-II/III

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B. Status of Overseas Development
Compound

Year

2018

2019

2020

Mont
h

Clinical trial in the U.S.

U.S.

Preparation of NDA document
EuropeU.S.

EuropeU.S.

Request for priorconsultation with
European authorities
2nd Q-submission

Preparation/submission of IDE

Clinical test in the U.S.

EU CE marking review (certification authority for preparation forcommencement and technical session)

Submission of materials

P-II (investigator-initiated)
Pre-IND request

Overseas

Prior consultation with
European authorities

Preparation for IND

P-Ib (Burkina Faso)

As for production, Supply Chain & Manufacturing continues to work on a stable supply of theexisting products. We are working on launching NPC-18, a treatment for tympanic perforation, as
scheduled, which is expected to be launched in 2019, and other tasks for stable supply.
As a part of LCM of the existing products, we established new Formulation Technology Department
to strengthen and work on the development of a new drug form.
As a new development theme in the future, we anticipate that bio-pharmaceuticals are increasing, so
we will push ahead the establishment of a system capable of development of bio-pharmaceuticals.
Concerning the safety assurance of pharmaceutical products, Pharmacovigilance & Quality Assurance
aims at improving quality and making operations more productive in compliance with related laws andregulations.
For filing of re-examination, we push ahead the introduction of a project management system toadequately manage and promote projects.
In terms of the drug use-results survey, we consider the introduction of Electronic Data Capture(EDC) system also to all-case surveillance with the view of improving quality of survey data andstreamlining collection of survey slips and follow up.
For safety management, looking ahead into the future overseas business expansion, we are working
on introducing the ARIS-g system, a global version of the adverse drug event report database (ARIS-j)that we introduced in 2015. As a part of paperless initiatives, we are proceeding with projects to evaluate
workflows and store materials on an electronic medium.
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 postmarketing surveillance.
As tasks of regulatory affairs and negotiations, Regulatory Affairs actively supports both Research &Development and Pharmacovigilance & Quality Assurance, continues to help efficient and speedy
responses to the authority, and shifts to development regulatory affair operations with the aim ofpromoting a more strategic response of regulatory affairs. Regulatory Affairs plans to review evaluation
procedures to ensure an accurate feasibility study, a new business under charge, and introduce a new
database and increase by one staff. It also utilizes the know-how for negotiations of NHI/material priceto involve a development strategy and support active responses to the authority from the development
phase, and it aims to obtain adequate prices for new drugs and medical devices in the future. It also
follows NHI price reform and health insurance reform to feed back to in-house strategies from atechnical perspective. In addition, through activities of Samurai Biotech Association of which theCompany is a board member, lobbying and advising the authorities will be continued.
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The tasks of corporate planning and accounting (Administrative Affairs & Corporate Planning) are toincrease the accuracy of budgetary variance analysis and the forecasts to implement the annual budget
for certain and to put into place a system to ensure flexible management.
For financial affairs, the Company intends to mainly use cash flows arising from future operating
activities. In 2019, however, we may borrow from financial institutions to maintain sufficient cash inhand to ensure a flexible response to unscheduled development fund needs as we are repaying
borrowings steadily and financing conditions are positive. Also, we eye the possibility of realization of
intangible assets that are not directly involved with new drug sales, our core business. We will carry out
these activities in anticipation of introducing new development seeds actively from 2019 to 2021.
The Company’s two proposals for prevention of falciparum malaria (NPC-19) and CMV infection(NPC-21) were selected by Cyclic Innovation for Clinical Empowerment (CiCLE), a new program
launched by Japan Agency for Medical Research and Development (AMED) in FY2017. This is a loantype system. It has an advantage of risk hedge for a company that will not be required to repay 90% of
its borrowing if it should fail, but it also has a disadvantage of limiting free use of the fund as thecompany is required to pledge the gross amount of loan to be extended. Currently, the Company has
pledged cash deposits of 2,050 million yen to AMED.
We are working on putting into place a management system for the establishment of the first overseas
base to be scheduled in 2019.
As for the issue of human resources and general affairs (Administrative Affairs & Corporate
Planning), we will proceed with correction of age composition and balance of employees that we havebeen working on so far. In addition, we think about recruitment of foreigners positively.
In terms of working style reform and support for the development of the next generation for which theJapanese government has taken an active initiative, we plan to introduce and expand flexible
teleworking and leave for a refreshment/sabbatical leave system that have a more productive leavesystem than that in other companies in the same industry and to enhance a system supporting the balanceof work and childcare. We will also actively undertake health management, aiming at non-smoking
recommendations and encouraging all employees to get medical checkups.
In April 2019, the head office will be relocated for the main purpose of earthquake resistance and in
addition, we will create an employee-friendly working place.
We will establish various systems including an expatriate employee system in preparation for the fullscale overseas expansion.
We set the targets for the mid-long term future vision of sales and profit as an immovable high goal
named North Star. The 2019-23 mid-term business plan is formulated with (1) new development and (2)overseas expansion as the two main pillars. The numerical targets in 2023 as North Star are sales of 50
billion yen and ordinary income of 10 billion yen.
New North Star (2023)

TargetSales

50 billion yen

Ordinary income

10 billion yen

1.13. Other Important Matters
No matters requiring special attention

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2.

Current Status of the Company

2.1.

Shares (as of December 31, 2018)(1) Number of shares authorized(2) Number of shares issued

Ordinary share
Number of shareholders(3) Status of Major Shareholders
Hisanaga & Company (ordinary share)
Medipal Holdings Corporation (ordinary share)
Inabata & Co., Ltd. (ordinary share)

50,000 shares
13,525 shares
3

10,000 shares
2,705 shares
820 shares(73.9%)(20.0%)(6.1%)One share of the special-class share issued in June 2017 was repurchased as treasury stock andcancelled in January 2018.
2.2.

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 28, 2019, the status of full-time and part-time directors is as follows: CEO andPresident:
CEO and President:

Jin Shiomura

Directors (part-time):

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

Directors (part-time):

Nobukuni Taneya(Part-time company auditor of Arara Inc.)

Directors (part-time):

Takahisa Iizuka

Development Division, Medipal Holdings
Corporation)

Directors (part-time):

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

Directors (part-time):

Toshio Miyata(Director of Mih Clinic Yoyogi)

Company Auditor (parttime):

Yoshitaka Kishi(Former full-time company auditor, Dia Rix
Co., Ltd.)

Company Auditor (parttime):

Tomoyasu Toyoda(Company auditor, Medipal Holdings
Corporation)

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(2) Executive Officers and Directors
As of March 28, 2019, the status of executive officers and directors is as follows:
Vice President & Chief
Operating Officer:

Shigeki Shimasaki(Head of Research & Development)

Chief Operating Officer:

Arata Tabata(Head of Business Development & IP
Management)

Senior Executive Officer:

Tetsuo Hayase(Head of Supply Chain & Manufacturing)

Executive Officer:

Kenji Shimizu(Deputy Head of Research &Development)

Executive Officer:

Akira Ikeda(Deputy Head of Administrative Affairs &Corporate Planning)

Executive Officer:

Masato Iwamoto(General Manager of Supply Chain
Management, Supply Chain &Manufacturing)

Executive Officer:

Hitoshi Hasegawa(Head of PMS Regulatory Compliance &Assurance, Safety Management Officer)

Executive Officer:

Yoshiki Yagi

(Head of Project Planning &Development)

Executive Officer:

Toshiaki Okamura(Head of Regulatory Affairs)

Executive Officer:

Kozo Hayase(Head of Administrative Affairs &Corporate Planning)

Executive Officer:

Yoshihide Yamamoto(Head of President’s Office)Executive Officer:

Seiu Iida(General Marketing Compliance Offices)

Acting Executive Officer:

Hitoshi Yokoyama(Head of Sales & Marketing, seconded
from Medipal Holdings Corporation)

Executive Director:

Masanori Osakabe(Deputy Head of Research &Development)

Executive Director:

Atsunori Iwao

(General Manager of Quality Assurance,
Quality Assurance Officer)

Executive Director:

Takako Aburada(General Manager of CMC Development,
Supply Chain & Manufacturing)

Executive Director:

Shigeru Doseki(Branch Manager of Tokyo Branch,Marketing & Sales)

Executive Director:

Katsuhiro Kimura(Deputy Head of Marketing & Sales)

Acting Executive Director: Shotaro Goda

(Head of Overseas Business Development,
seconded from Mitsubishi Chemical
Corporation)(Note) Effective March 1, 2019, the Company abolished and separated Business Development &Strategy into new Business Development & IP Management and Project Planning &Development in order to clarify responsible operations and promote streamlining. Effective
March 28, 2019, Overseas Business Development was established as a department
responsible for overseas operations.
(3) Executive officers resigned (as of March 28, 2019)
Tsutomu Sugaya (scheduled to assume the office of Counsellor)

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2.3.2.

Remuneration paid to directors and company auditors
Classification

2.4.

Head-countAmount paid

Directors

6

9,973,000 yen

Company auditor

2

4,400,000 yen

Total

8

14,373,000 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
department of the Company and the accounting auditor, and confirmed and verified the details of theaccounting auditor’s audit plan, the status of the execution of duties by the accounting auditor andcalculation basis of estimated remuneration. As a result, the company auditor determined that theamount of remuneration, etc. for the accounting auditor was appropriate and approved it inaccordance with Article 399, Paragraph 1 of the Companies Act.
2.4.4
Policy on decision to dismiss or not to reappoint accounting auditor
When 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 the details of a
proposal on dismissal or refusal of reappointment of an accounting auditor to be submitted to a
general meeting of shareholders.
2.5.

Other matters

Nobelpharma Co., Ltd. has relocated the headquarters to the following address effective April 1, 2019.
New address: 1-17-24 Shinkawa, Chuo-ku, Tokyo 104-0033
New Tel: +81-3-6670-3800, Fax: +81-3-6670-3801

End of document

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