Consolidated Financial Results for the Nine Months Ended October 31, 2021

Consolidated Financial Results

for the Nine Months Ended October 31, 2021

[Japanese GAAP]

December 15, 2021

Company name: SanBio Company Limited

Stock exchange listing: Tokyo Stock Exchange

Code number: 4592

URL: https://www.sanbio.com/

Representative: Keita Mori, Representative Director and President

Contact: Yoshihiro Kakutani, Corporate Officer of Management Administration

Phone: +81-3-6264-3481

Scheduled date of filing quarterly securities report: December 15, 2021

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing material on financial results: No

Schedule of financial results briefing session: No

(Note) Comprehensive income: Nine months ended October 31, 2021: ¥(4,534) million [-%] Nine months ended October 31, 2020: ¥(2,517) million [-%]

(Note) Diluted net income per share is not stated as net loss per share was recorded although there are potential shares with dilutive effect.

(2) Consolidated Financial Position

(Reference) Equity: As of October 31, 2021: ¥3,604 million As of January 31, 2021: ¥8,133 million

2. Dividends

(Note) Revision to the forecast for dividends announced most recently: No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending January 31, 2022 (February 1, 2021 to January 31, 2022)

(% indicates changes from the previous corresponding period.)

Notes:

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): No
2. Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: No
3. Changes in accounting policies, changes in accounting estimates and retrospective restatement
4. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
5. Total number of issued shares (common shares)

1. Total number of issued shares at the end of the period (including treasury shares): October 31, 2021: 51,793,402 shares
   January 31, 2021: 51,785,505 shares
2. Total number of treasury shares at the end of the period:

October 31, 2021: 196 shares

January 31, 2021: 196 shares

3) Average number of shares during the period

Nine months ended October 31, 2021: 51,787,764 shares

Nine months ended October 31, 2020: 51,785,033 shares

*These quarterly financial results are outside the scope of quarterly review by a certified public accountant or an

audit corporation.

* Explanation of the proper use of the financial results forecast and other notes

The earnings forecasts and other forward-looking statements herein are based on information available to the Company at the time of preparation and certain assumptions deemed to be reasonable, and the Company does not assure the achievement of any of these. Furthermore, actual results may vary significantly due to various factors. For the assumptions and notes for earnings forecasts, please refer to "1. Qualitative Information on Quarterly Financial Results for the Period under Review, (3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" on page 3 of the attachment.

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1. Qualitative Information on Quarterly Financial Results for the Period under Review

(1) Explanation of Operating Results

During the nine months ended October 31, 2021 (from February 1, 2021 to October 31, 2021), the global economy was exposed to waves of the spread and reduction of the new coronavirus infection. Although many countries tried to recover their economies through promotion of vaccination for the new coronavirus infection and other economic measures, an outlook of the economic recovery was uncertain due to the further spread of the infection even in countries with relatively high vaccination rates. In Japan as well, the preliminary figures for gross domestic product (GDP) for the July-September quarter of 2021 indicated a negative growth for the first time in two quarters, and thus the situation has been unpredictable.

In the Japanese regenerative medicine industry, amid ongoing promotion of the industry by implementation of the Act on the Safety of Regenerative Medicine and the Revised Pharmaceutical Affairs Act of November 2014, the approval for conditional and time-limited sales was granted for the first time in September 2015 under the new program to accelerate the process of drug approval for regenerative medical products developed in Japan. The accelerated delivery of regenerative medical products to the market is rapidly becoming a reality. In addition, the 21st Century Cures Act was passed in the US in December 2016. Under the new legal system, regenerative medical products will be identified as a new category of advanced medical treatment (Regenerative Medicine Advanced Therapy: RMAT) while the establishment of an approval system and approval of new drugs, pertaining to regenerative medicine-related products, are expected to be accelerated.

In this environment, while aiming at commercialization of its unique regenerative cell medicine, SB623, as a new drug candidate for central nervous system diseases, the Company established SanBio Asia Pte. Ltd., its first subsidiary in Asia outside Japan, in Singapore on February 1, 2021, with a view to expanding sales channels in the Asian region. Regarding the development status of the Group (hereinafter referring to three companies; the Company, SanBio, Inc. of Mountain View, California, US, and SanBio Asia Pte. Ltd. of Singapore), in the Phase 2 clinical trial involving the SB623 development program for treatment of chronic traumatic brain injury and conducted in the US and Japan with 61 patients, the Group obtained positive results in November 2018 that the "patients treated with SB623 cells demonstrated a statistically significant improvement in their motor function compared to the control group, and primary endpoint was met." In April 2019, the domestic development program for treatment of chronic traumatic brain injury was chosen as a designated regenerative medical product by the Ministry of Health, Labour and Welfare under the SAKIGAKE Designation System. This system aims to shorten the examination after submitting the application for approval for manufacture and sales (hereinafter referred to as the "application for approval") and to reduce the period from the application for approval to the approval to six months. Therefore, as for the products subject to the SAKIGAKE designation, face-to-face advice and prior interviews should be completed before the application for approval, and then the SAKIGAKE comprehensive evaluation consultation should be conducted. After obtaining permission of the application for approval in the process, the application for approval must be submitted. The SB623 development program for treatment of chronic traumatic brain injury is currently in the phase of the SAKIGAKE comprehensive evaluation consultation. This consultation consists of five parts: clinical, non-clinical, quality, reliability, and GCTP, and each part requires permission for the application. In addition, as for the SB623 development program for treatment of chronic motor deficit from ischemic stroke ("development program for treatment of chronic stroke"), the Group conducted a Phase 2b clinical trial (STR- 02 trial) in the US with 163 patients demonstrating motor deficits associated with chronic ischemic stroke, and announced in January 2019 that "no statistically significant difference was found in the proportion of patients whose Fugl-Meyer Motor Scale (FMMS) score improved by 10 or more points over the baseline at six months after treatment (the primary endpoint) between the SB623 treatment group and the control group, and thus the trial did not meet the primary endpoint." However, in September 2020, as an additional analysis of STR-02 trial, the Group evaluated the efficacy of SB623 in 77 patients whose infarct area was smaller than a certain size (47% of the patients examined in STR-02 trial) at six months after the SB623 treatment by using the composite FMMS endpoint, and obtained a statistically significant result (P-value=0.02), indicating that 49% of the SB623 treatment group consisting of 51 patients showed improvement compared to 19% of the sham surgery group consisting of 26 patients. To maximize the value of SB623 by selection and concentration of our management resources, the Group has decided to give priority to the preparation for the development of the SB623 programs for treatment of ischemic stroke and hemorrhagic stroke in Japan, in parallel with preparing to apply for approval for manufacture and sales of SB623 for treatment of chronic traumatic brain injury in Japan as early as possible. Specific designs of the clinical trials and the contents of the development of both the programs will be announced promptly once they are finalized.

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