Seikagaku Corporation · TSE:4548
Seikagaku — Q3 FY2022 Earnings Presentation
63 slides from Seikagaku's earnings presentation, Feb 8, 2023
Slide 1: Financial Results for the 3rd Quarter of Fiscal Year 2022
Exploring the Innovative Promise of Glycoscience Financial Results for the 3rd Quarter of Fiscal Year 2022 (April 1, 2022 – December 31, 2022) （TSE：4548）
Slide 2: Contents
Exploring the Innovative Contents Promise of Glycoscience 3rd Results P3 Research and Development P11 Net Sales P3-8 SI-6603 P12 (Lumbar disc herniation) Income P9 SI-614 P13 Trend in R&D Expenses P10 (Dry Eye) SI-613 P14 (Osteoarthritis/Enthesopathy) SI-722 P15 (Interstitial cysti
Slide 3: Overview for 3Q of FY 2022
Exploring the Innovative Overview for 3Q of FY 2022 Promise of Glycoscience (Reference) 3Q FY2022 Year-on-Year FY2022 Full Year Forecasts Results FY 2022 Degree of （百万円） Change % of Change Forecasts Progress Net sales 26,162 -1,983 -7.0% 33,500 78.1% Operating Income 3,407 -2,827 -45.4% 1,700 200.4%
Slide 4: Net sales by Business Segment (3Q of FY2022)
Exploring the Innovative Net sales by Business Segment (3Q of FY2022) Promise of Glycoscience 3Q FY2022 Year-on- % of Domestic Pharmaceuticals (Millions of Yen) Results Year Change ▶ ARTZ（Joint-function improving agent） Net sales 26,162 -1,983 -7.0% • Market size at the prior-year level (-0.6%) • De
Slide 5: Safety Information on Joint Function Improving Agent JOYCLU
Exploring the Innovative Safety Information on Joint Function Improving Agent JOYCLU Promise of Glycoscience Blue Letter (rapid safety information) issued in June 2021 Seikagaku is further raising awareness among healthcare professionals and taking measures to identify the cause Dear Healthcare Prof
Slide 6: Net sales by Business Segment (3Q of FY2022)
Exploring the Innovative Net sales by Business Segment (3Q of FY2022) Promise of Glycoscience 3Q FY2022 Year-on- % of Domestic Pharmaceuticals (Millions of Yen) Results Year Change ▶ OPEGAN series（Ophthalmic viscoelastic devices） Net sales 26,162 -1,983 -7.0% • Market expanding, gradually returning
Slide 7: Net sales by Business Segment (3Q of FY2022)
Exploring the Innovative Net sales by Business Segment (3Q of FY2022) Promise of Glycoscience 3Q FY2022 Year-on- % of Overseas Pharmaceuticals (Millions of Yen) Results Year Change *Foreign exchange impact on Overseas Pharmaceuticals: approx. +900 million yen Net sales 26,162 -1,983 -7.0% ▶ Gel-One
Slide 8: Net sales by Business Segment (3Q of FY2022)
Exploring the Innovative Net sales by Business Segment (3Q of FY2022) Promise of Glycoscience 3Q FY2022 Year-on- % of Bulk Products / CDMO (Millions of Yen) Results Year Change Bulk products sales at the prior-year level, and CDMO sales at Dalton Pharmaceutical up due to the impact of Net sales 26,1
Slide 9: Income for 3Q of FY2022
Exploring the Innovative Income for 3Q of FY2022 Promise of Glycoscience 3Q FY2022 Year-on- % of Operating Income 3,407 (-2,827) (Millions of Yen) Results Year Change Cost of sales ratio（-0.5pt） • Ratio at the prior-year level because of change in Net sales 26,162 -1,983 -7.0% sales mix, despite NHI
Slide 10: Trend in R&D Expenses
Exploring the Innovative Trend in R&D Expenses Promise of Glycoscience Continuing to focus on drug discovery specializing in Glycoscience Undertaking improvement in R&D efficiency R&D Expenses Ratio to Net sales ● Ratio to Net sales(excluding royalty income) (Millions of Yen) 29.2% 27.6% 27.9% 27.9%
Slide 11: Pipeline List
Exploring the Innovative Pipeline List Promise of Glycoscience Development code/ Appli- Market Indication (Product name) PI PⅡ PⅢ cation approval SI-6603 SI-6603 Lumbar Disk Herniation （Condoliase） US SI-614 SI-614 Dry eye US （Modified Hyaluronate） SI-613 SI-613 Target Market US：Knee Osteoarthritis
Slide 12: SI-6603 (Treatment for Lumbar Disc Herniation)
Exploring the Innovative SI-6603 (Treatment for Lumbar Disc Herniation) Promise of Glycoscience Aim to provide new options in lumbar disc hernia treatment and maximize product value through early market penetration Development status Administration image ▶ U.S. Phase III ：Starting February 2018 ・Sub
Slide 13: SI-614 (Dry Eye)
Exploring the Innovative SI-614 (Dry Eye) Promise of Glycoscience Phase III clinical study in the U.S. initiated in May 2022 Subject enrollment completed in February 2023 Development status Administration image ▶ U.S. : P III：Starting May 2022 Subject enrollment completed in Feb. 2023 • Sales partne
Slide 14: SI-613 (Treatment of Osteoarthritis/Enthesopathy)
Exploring the Innovative SI-613 (Treatment of Osteoarthritis/Enthesopathy) Promise of Glycoscience Development of SI-613-ETP discontinued Prioritize identification of cause of JOYCLU side effects Development status Administration image ▶ SI-613 (osteoarthritis of the knee) U.S. /China/South Korea •
Slide 15: SI-722 (Interstitial cystitis and bladder pain syndrome)
Exploring the Innovative SI-722 (Interstitial cystitis and bladder pain syndrome) Promise of Glycoscience Subject enrollment for PI/PII studies in the U.S. completed Analysis of study results to proceed Administration image Development status ▶ U.S. Phase I/II：Starting November 2019 ・Subject enrollm
Slide 16: SI-449 (Adhesion Barrier / Medical Device)
Exploring the Innovative SI-449 (Adhesion Barrier / Medical Device) Promise of Glycoscience Subject enrollment for pivotal study completed in September 2022 Carrying out observation period for both studies and results analysis Administration image Development status ▶ Japan pivotal study(field of ga
Slide 17: Dividends from Surplus and Treasury Stock Acquisition
Exploring the Innovative Dividends from Surplus and Treasury Stock Acquisition Promise of Glycoscience Board resolution to pay dividends in accordance with the dividend policy in the mid-term management plan Acquisition of treasury shares completed FY2022 Annual dividend：¥26 per share （including an
Slide 18: Appendix
Exploring the Innovative Promise of Glycoscience Appendix 18
Slide 19: Trend in NHI Reimbursement Price of ARTZ to Domestic
Exploring the Innovative Trend in NHI Reimbursement Price of ARTZ to Domestic Promise of Glycoscience (円) ¥1,526 ¥1,453(-7.4%) ¥1,348(-7.2%) ¥1,155 1,500 (-14.3%) ¥968 ¥813 (-13.1%) 1,000 (-12.6%) ¥1,114 (-3.6%) ¥930 500 (-3.9%) 0 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022
Slide 20: Trend in Deliveries of ARTZ / OPEGAN to Domestic Medical Institutions
Trend in Deliveries of ARTZ / Exploring the Innovative Promise of Glycoscience OPEGAN to Domestic Medical Institutions Joint-function improving agent Ophthalmic viscoelastic devices ARTZ OPEGAN The first HA joint function improving agent The first domestically HA formulation in the world Used
Slide 21: Overview of Forecasts in FY2022
Exploring the Innovative Overview of Forecasts in FY2022 Promise of Glycoscience FY2022 FY2021 Results Degree of (Millions of Yen) Forecasts Results Change % of Change Progress Net sales 33,500 34,851 -1,351 -3.9% 51.5% Operating Income 1,700 4,495 -2,795 -62.2% 153.6% Ordinary Income 2,900 5,395 -2
Slide 22: Forecasts (Net sales) in FY2022
Exploring the Innovative Forecasts (Net sales) in FY2022 Promise of Glycoscience FY2022 Year-on-Year Net sales Forecasts % of Change Forecasting a sales decrease to result from steep (Millions of Yen) Change decline in royalty income and impact of NHI drug price reductions, despite higher pharmaceut
Slide 23: Forecasts (Income) in FY2022
Exploring the Innovative Forecasts (Income) in FY2022 Promise of Glycoscience FY2022 Year-on-Year Operating Income Forecasts % of Change SGA expenses (Millions of Yen) Change • Decrease in R&D expenses accompanying Net sales 33,500 -1,351 -3.9% completion of subject enrollment in an additional clini
Slide 24: Domestic Pharmaceuticals (Year-on-Year)
Exploring the Innovative Promise of Glycoscience Domestic Pharmaceuticals (Year-on-Year) Sales down, reflecting concentration of Domestic Pharmaceuticals 2Q FY2022 Results JOYCLU shipments in 1H FY2021 due to Sales trend -14.7% （Sales） launch coupled with impact of NHI drug price reductions ＜Breakdo
Slide 25: Domestic Pharmaceuticals (FY2022 Forecast Year-on-Year)
Exploring the Innovative Domestic Pharmaceuticals (FY2022 Forecast Year-on-Year ) Promise of Glycoscience Substantial sales decrease, with NHI drug Domestic Pharmaceuticals FY2022 Forecast price reductions offsetting an expected Sales trend volume increase from domestic -5.2% pharmaceuticals （Sales）
Slide 26: Overseas Pharmaceuticals (Year-on-Year)
Exploring the Innovative Overseas Pharmaceuticals (Year-on-Year ) Promise of Glycoscience Sales at the prior-year level, with the Overseas Pharmaceuticals 2Q FY2022 Results impact of yen depreciation Sales trend - 1.5% compensating for ARTZ inventory （Sales） adjustment in China ＜Breakdown＞ Full year
Slide 27: Overseas Pharmaceuticals (FY2022 Forecast Year-on-Year)
Exploring the Innovative Overseas Pharmaceuticals (FY2022 Forecast Year-on-Year ) Promise of Glycoscience Sales increase, with impact of yen Overseas Pharmaceuticals FY2022 Forecast depreciation compensating for impact of Sales trend +13.0% system changes in the U.S. and ARTZ shipment adjustments in
Slide 28: Sales of LAL Business (year-on-year / value basis)
Exploring the Innovative Sales of LAL Business (year-on-year / value basis) Promise of Glycoscience LAL Business 2Q FY2022 Results：+26.7% (Year-on-Year) Sales trend ＊Foreign exchange impact: approx. + 630million Overseas Full year (Millions of Yen) ＜Breakdown＞ Overseas Domestic Sales increase on gro
Slide 29: Overview of JOYCLU
Exploring the Innovative Overview of JOYCLU Promise of Glycoscience Manufacturing and marketing approval in Japan obtained in March 2021 For the indication of osteoarthritis (knee joint and hip joint) May 19 NHI drug price listing and launch Product name JOYCLU®30mg Intra-articular Injection Generic
Slide 30: Overview of JOYCLU
Exploring the Innovative Overview of JOYCLU Promise of Glycoscience Improvement of symptoms expected by administration once every 4 weeks First joint function improvement agent in Japan indicated for the treatment of osteoarthritis of the hip joint Features ▶ Hyaluronic acid and diclofenac chemicall
Slide 31: Four types of lumbar disc herniation
Exploring the Innovative Four types of lumbar disc herniation Promise of Glycoscience 1. Protrusion 2. Subligamentous extrusion The hernia does not extend beyond the Although the hernia extends beyond the outermost layer of the annulus fibrosus outermost layer of the annulus fibrosus, it is covered
Slide 32: Physician and Facilities Requirements for HERNICORE Use
Exploring the Innovative Physician and Facilities Requirements for HERNICORE Use Promise of Glycoscience Setting of physician and facility requirements for HERNICORE use to promote appropriate use and ensure safety 【Physician requirements 】 【Japanese Society for Spine Surgery and Related Research】 :
Slide 33: Market Situation of Hyaluronic Acid Products in the U.S.
Exploring the Innovative Market Situation of Hyaluronic Acid Products in the U.S. Promise of Glycoscience Market size of US$950 mil. in 2021 (+8.3% year-on-year) ■U.S. market share by number of injections (Value basis, including competitors) Single injection Multiple injection Five-inj.: Single-inje
Slide 34: Trend in Overseas Sales of Hyaluronic Acid Products
Exploring the Innovative Trend in Overseas Sales of Hyaluronic Acid Products Promise of Glycoscience Including (Millions of Yen) impact of yen depreciation 8,000 7,466 7,652 7,000 Start of full scale sales 7,300 7,113 for Gel-One Aug.2012 6,771 6,511 6,776 6,000 Including 6,339 impact of yen appreci
Slide 35: Recombinant LAL reagent PyroSmart NextGen
Exploring the Innovative Recombinant LAL reagent「PyroSmart NextGen」 Promise of Glycoscience April 2021 launch at ACC Product to be marketed globally, with a launch in Japan planned for May or later in 2021 Product Features ▶ Product manufactured using recombinant technology without using blood harve
Slide 36: The LAL Business
Exploring the Innovative The LAL Business Promise of Glycoscience Endotoxin detection reagents Glucan detection in vitro (Seikagaku Corporation, ACC) diagnostic agents (ACC) Manufacture and sale of reagents for detecting Manufacture and sales of in vitro diagnostic endotoxins* in the manufacturi
Slide 37: Outline of Associates of Cape Cod, Inc.
Exploring the Innovative Outline of Associates of Cape Cod, Inc. Promise of Glycoscience Developed the world’s first endotoxin detection reagent and obtained FDA approval in 1977 / Sales network spanning 80 countries Associates of Cape Cod, Inc. （ACC社） Headquarters：Massachusetts, U.S.A. Establis
Slide 38: Outline of Acquisition: Dalton, a Canadian CDMO
Exploring the Innovative Outline of Acquisition Promise of Glycoscience Dalton, a Canadian CDMO, becomes a subsidiary Acquiring a pharmaceuticals manufacturing base compliant with US/Canadian GMP Outline of acquisition Name：Dalton Chemical Laboratories, Inc. Acquisition cost：Up to CAD 41 million
Slide 39: Outline of SEIKAGAKU NORTH AMERICA CORPORATION
Exploring the Innovative Outline of SEIKAGAKU NORTH AMERICA CORPORATION Promise of Glycoscience Established new company in Canada, promoting development of Seikagaku pharmaceuticals and medical devices in North America SEIKAGAKU NORTH AMERICA CORPORATION Location ：Toronto, Ontario Province, Canada
Slide 40: Trend in Financial Index
Exploring the Innovative Trend in Financial Index Promise of Glycoscience new revenue recognition standard 50% 46.2% 46.4% 47.2% 44.8% 43.7% 44.8% ● 43.1% ● 41.1% 41.6% ● Sales Cost Ratio (excluding royalty 40% income) 29.2% 30% 27.6% 27.9% 26.5% 27.9% 26.7% ◆ 25.2% 23.9% 24.0% ◆ ◆ R&D Expenses Rati
Slide 41: Trends in Depreciation & Capital Investments
Exploring the Innovative Trends in Depreciation & Capital Investments Promise of Glycoscience Impairment loss taken in FY2019 Depreciation will trend toward ¥1.0 billion ■ Trend in Depreciation 3,500 (Millions of Yen) 3,191 2,920 2,925 2,902 2,610 2,500 1,778 1,500 1,300 1,051 808 500 ~~ FY2014 FY20
Slide 42: Overview of Current Mid-term Management Plan
Mid-term Management Plan Exploring the Innovative Overview of Current Mid-term Management Plan Promise of Glycoscience FY2025 numerical targets Net sales ¥40.0 billion Operating income ¥7.0 billion Next mid-term management plan Next Stage Current mid-term management plan Fiscal 2022 to Fiscal 2025 P
Slide 43: Overview of Key Measures
Mid-term Management Plan Exploring the Innovative Overview of Key Measures Promise of Glycoscience Five Key Measures (Strategic Pillars) Ⅰ Ⅱ Ⅲ Ⅳ Ⅴ Maximize the Maintain and Accelerate Construct a Expand the product value enhance the R&D utilizing global LAL business of SI-6603 business value unique
Slide 44: Accelerate R&D Utilizing Unique Drug-Discovery Technologies
Mid-term Management Plan Exploring the Innovative Accelerate R&D Utilizing Unique Drug-Discovery Technologies Promise of Glycoscience Aim to leverage Seikagaku’s GAG-related technologies to create products needed by patients Unmet medical needs Existing fields Creation of new (orthopedics,ophthalm
Slide 45: Pipeline List (Research and Development themes)
Ⅰ. Accelerate R&D Utilizing Unique Drug-Discovery Technologies Exploring the Innovative Pipeline List (Research and Development themes) Promise of Glycoscience Development code/ Appli- Market Indication (Product name) PI PⅡ PⅢ cation approval SI-6603 SI-6603 SI-6603 Lumbar Disk Herniation （Condolias
Slide 46: Plan until Market Introduction of SI-6603
Mid-term Management Plan Exploring the Innovative Plan until Market Introduction of SI-6603 Promise of Glycoscience Obtain clinical study findings during FY2025 Aim for an NDA and approval during the period of the current mid-term management plan Steps leading up to market introduction Follow-up obs
Slide 47: Maintain and Enhance the Business Value of Joint Function Improving Agents
Mid-term Management Plan Maintain and Enhance the Business Value of Joint Exploring the Innovative Promise of Glycoscience Function Improving Agents Pursue corporate value enhancement through maximization of Seikagaku products in the market for joint function improving agents and cost structure impr
Slide 48: Construct a Global Production System
Mid-term Management Plan Exploring the Innovative Construct a Global Production System Promise of Glycoscience Further reinforce a stable supply of products on the basis of a GMP-compliant, appropriate governance system Seikagaku Corporation Takahagi Plant DALTON CHEMICAL LABORATORIES, INC. (Ibaragi
Slide 49: Strategic Direction for the LAL Business
Mid-term Management Plan Exploring the Innovative Strategic Direction for the LAL Business Promise of Glycoscience Aim to be a leading company in the market for recombinant endotoxin detection reagents and glucan detection in vitro diagnostics Pursuit of Unique Value Refine the joint development sys
Slide 50: Initiatives for Expansion of the LAL Business
Mid-term Management Plan Exploring the Innovative Initiatives for Expansion of the LAL Business Promise of Glycoscience Accomplish a transformation necessary from a long-term perspective in addition to continuation of current businesses and product improvement 1. Endotoxin detection reagent business
Slide 51: Materiality
Mid-term Management Plan Exploring the Innovative Materiality Promise of Glycoscience Seikagaku has identified important issues that should be addressed on a priority basis in the interest of achieving sustainable development of society and enhancement of corporate value ① Creation of truly useful p
Slide 52: Sustainability-Related Initiatives
Mid-term Management Plan：Sustainability Exploring the Innovative Sustainability-Related Initiatives Promise of Glycoscience Acceleration of multinational expansion and new drug development. Strengthening and utilization of original GAG-related basic technologies Healthcare Product improvement
Slide 53: Numerical Targets
Mid-term Management Plan Exploring the Innovative Numerical Targets Promise of Glycoscience FY2021 results FY2025 target Net sales ¥34.8 billion ¥40.0 billion Operating income ¥4.4 billion ¥7.0 billion ≪Assumptions≫ U.S. market introduction of SI-6603 (treatment for lumbar disc herniation) Profi
Slide 54: Basic Policy on Profit Distribution
Mid-term Management Plan Exploring the Innovative Basic Policy on Profit Distribution Promise of Glycoscience Make investments for sustained profit growth and corporate value enhancement and pay stable dividends Shareholder returns • Consider dividend increases with ¥26 per share as a guideline, tak
Slide 55: Mid-term Management Plan Summary
Mid-term Management Plan Exploring the Innovative Mid-term Management Plan Summary Promise of Glycoscience A period for achieving growth Ⅰ Ⅱ Ⅲ Ⅳ Ⅴ Maximize the Maintain and Accelerate Construct a Expand the product value enhance the R&D utilizing global LAL business of SI-6603 business value unique
Slide 56: Basic Policy on Research and Development
Exploring the Innovative Basic Policy on Research and Development Promise of Glycoscience Continue Our R&D policy to make the most of our technology and knowledge Target Substances Orthopedic Glycoscience New disorders Products Area Osteoarthritis(OA) Lumbar disc GAG herniation, etc. GAG- Modified r
Slide 57: Clinical Study Information
Exploring the Innovative Clinical Study Information Promise of Glycoscience Develop- Target Development code/ Clinical Study Title Estimated Primary End Point ment Enroll- Indication (Study ID) Period (Primary Follow-up period) Location ment SI-6603 U.S. Phase III additional study May. 2018 – Leg pa
Slide 58: Contract Status by R&D Theme
Exploring the Innovative Contract Status by R&D Theme Promise of Glycoscience Planned receipt of milestone royalties in accordance with future progress in development and marketing Develop- Total Amount of Development Code ment Sales Partner Milestone Royalties Indication Location ( of which, in upf
Slide 59: Seikagaku's vision
Exploring the Innovative Seikagaku's vision Promise of Glycoscience A company that is valued by the world through its Our vision innovative drug discovery Core values (motto) Creativity, Fairness, Dreams and Passion We create safe and useful products for human well-being Creed with basic research ba
Slide 60: Special Profile
Exploring the Innovative Special Profile Promise of Glycoscience Specialization in Glycoscience Niche field, market not big enough for the major pharmaceutical companies to penetrate Focusing on this field more than 70 years State-of-the-art technology related to GAG Drug discovery expertise u
Slide 61: Our Business Segment
Exploring the Innovative Our Business Segment Promise of Glycoscience Pharmaceutical Business 73.7％ Ophthalmic Surgical Aids Domestic Pharmaceuticals 32.8％ Bulk Products/ CDMO 7.5％ Bulk Products Joint Function Improving Agents Net Sales Royalty income 11.4％ 34,851million Treatment for lumbar disc he
Slide 62: Main Hyaluronic Acid (HA) Products
Exploring the Innovative Main Hyaluronic Acid (HA) Products Promise of Glycoscience ARTZ® Joint function improving agent by multiple injections The first HA joint function improving agent in the world Main distributors: Kaken Pharmaceutical (Japan): ARTZ Bioventus (U.S.): SUPARTZ FX Kunming Bake
Slide 63: Cautionary Notes
■Cautionary Notes This material contains forward-looking statements regarding future management strategies or performance forecasts. These descriptions are based on judgments derived from information that is currently available to Seikagaku and are subject to risk and uncertainty. Actual results and