Consolidated Financial Results (Japan GAAP) (Summary) for the Fiscal 2024 (Year Ended March 31, 2025)

May 13, 2025

Listed exchanges: Tokyo Stock Exchange (Prime Market) Stock code number: 4548

URL: https://www.seikagaku.co.jp/en/

Date of ordinary general meeting of shareholders (Planned): June 20, 2025 Date of dividend payment (Planned): June 23, 2025

(All amounts have been rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal 2024(from April 1, 2024 to March 31, 2025)
   1. Consolidated Financial Results

      (Percentages indicate changes from the prior fiscal year)

      	Net sales		Operating income		Ordinary income		Net income attributable to owners of parent
      	Millions of Yen	%	Millions of Yen	%	Millions of Yen	%	Millions of Yen	%
      Fiscal 2024 Fiscal 2023	39,374 36,213	8.7 8.2	1,333 433	207.8 (79.5)	1,933 1,691	14.3 (44.9)	1,214 2,186	(44.5) (2.2)

      (Note) Comprehensive income:

      Fiscal 2024: 2,417 million yen [(62.6 )% ]

      Fiscal 2023: 6,469 million yen [65.0 % ]

      	Net income per share	Diluted net income per share	Return on equity	Ordinary income as a percentage of total assets	Operating income as a percentage of net sales
      	Yen	Yen	%	%	%
      Fiscal 2024	22.25	-	1.7	2.3	3.4
      Fiscal 2023	40.08	-	3.1	2.1	1.2

   2. Consolidated Financial Position

      	Total assets	Total equity	Equity ratio	Total equity per share
      	Millions of Yen	Millions of Yen	%	Yen
      Fiscal 2024 Fiscal 2023	83,872 81,795	73,187 72,282	87.3 88.4	1,340.98 1,324.82

      (Reference) Shareholders' Equity:

      Fiscal 2024: 73,187 million yen

      Fiscal 2023: 72,282 million yen

   3. Consolidated Cash Flows

   	Net cash flows from operating activities	Net cash flows from investing activities	Net cash flows from financing activities	Cash and cash equivalents at the end of fiscal year
   	Millions of Yen	Millions of Yen	Millions of Yen	Millions of Yen
   Fiscal 2024	4,429	(3,540)	(1,571)	18,322
   Fiscal 2023	513	(7,209)	(1,461)	18,701

2. Dividends

   	Dividends per share
   	1stQuarter	2ndQuarter	3rdQuarter	Fiscal Year-end	Annual
   Fiscal 2023 Fiscal 2024	Yen - -	Yen 13.00 15.00	Yen - -	Yen 13.00 15.00	Yen 26.00 30.00
   Fiscal 2025 (Forecast)	-	15.00	-	15.00	30.00

   	Total dividend payments (Annual)	Dividend payout ratio (Consolidated)	Dividends as a percentage of total equity (Consolidated)
   	Millions of Yen	%	%
   Fiscal 2023 Fiscal 2024	1,418 1,637	64.9 134.8	2.0 2.3
   Fiscal 2025 (Forecast)		121.3

3. Forecast of Consolidated Financial Results for Fiscal 2025 (from April 1, 2025 to March 31, 2026)

(Percentages indicate changes from the prior fiscal year)

1. Changes in the status of material subsidiaries during the period: No
2. Changes in accounting principles, changes in accounting estimates, and retrospective restatements

   1. Changes in accounting principles accompanying revisions in accounting standards: Yes

   2. Changes other than those in (a) above: No

   3. Changes in accounting estimates: No

   4. Retrospective restatements: No

3. Number of shares issued (common stock):

   As of March 31, 2025	56,814,093 shares	As of March 31, 2024	56,814,093 shares
   As of March 31, 2025	2,236,456 shares	As of March 31, 2024	2,253,745 shares
   Fiscal 2024	54,572,641 shares	Fiscal 2023	54,554,782 shares

   1. Number of shares at the end of the period (including treasury stock)

   2. Number of treasury stock at the end of the

      period

   3. Average number of shares issued during the period

1. Non-Consolidated Financial Results

   (Percentages indicate changes from the prior fiscal year)

   	Net sales		Operating income		Ordinary income		Net income
   	Millions of Yen	%	Millions of Yen	%	Millions of Yen	%	Millions of Yen	%
   Fiscal 2024 Fiscal 2023	26,620 25,141	5.9 13.8	440 (332)	- -	1,302 1,804	(27.8) (2.2)	922 2,537	(63.6) 41.1

   	Net income per share	Diluted net income per share
   	Yen	Yen
   Fiscal 2024	16.90	-
   Fiscal 2023	46.50	-

2. Non-Consolidated Financial Position

(Reference) Shareholders' Equity:

Fiscal 2024: 59,269 million yen

Fiscal 2023: 60,314 million yen

*This financial reports are not subject to audit of the certified public accountant and audit firm.

*The above forecast has been prepared on the basis of economic circumstances, market trends, and other assumptions made at the time of release of this document. Actual results may differ from the forecast due to a variety of factors.

In the fiscal year ended March 31, 2025 (fiscal 2024), net sales were ¥39,374 million, up 8.7% year on year. The increase is attributable to higher royalty income and higher sales in the LAL business, despite lower sales of domestic and overseas pharmaceuticals. Operating income rose 207.8% year on year to ¥1,333 million because of the revenue increase. Ordinary income rose 14.3% year on year to ¥1,933 million, which lagged behind operating income growth because of the recognition of foreign exchange loss, and net income attributable to owners of parent fell 44.5% to ¥1,214 million due to higher tax expenses.

1. Net sales by segment Pharmaceutical Business

   Seikagaku has adopted a business model of focusing management resources on R&D and manufacturing by forming alliances with domestic and overseas companies that have expertise in each product field and entrusting sales to these business partners rather than having an in-house pharmaceuticals sales division.

   In view of this business structure, in addition to reporting product sales from Seikagaku to business partners, the Company also reports on the status of sales from business partners to medical institutions using "deliveries to medical institutions" or "local sales volume" as performance indicators.

   - Domestic Pharmaceuticals (¥11,919 million, down 1.5% year on year)

   Revenue from domestic pharmaceuticals fell 1.5% year on year, mainly because of lower sales of ARTZ, a joint function improvement agent for knee osteoarthritis, and the OPEGAN series of ophthalmic viscoelastic devices.

   Deliveries to medical institutions of ARTZ rose sharply year on year thanks to continued switching from competing products. Also, facilities maintenance for the purpose of production system expansion at the Company's plant was completed, and shipment volume increased year on year. However, the Company's sales declined year on year due to a decrease in unit prices reductions.

   Deliveries to medical institutions of the OPEGAN series increased year on year, reflecting factors including a continued gradual market growth trend accompanying population aging. Nevertheless, the Company's sales fell year on year, due to a decline in unit prices.

   The Company's sales of HERNICORE, a treatment for lumbar disc herniation, declined year on year due to shipment timing, while sales of MucoUp, a submucosal injection agent for endoscopic surgery, decreased due to the impact of an insurance reimbursement price decrease.

   The Company's sales of the joint function improvement agent JOYCLU rose year on year due to shipment timing. The

   Company issued a Dear Healthcare Professionals Letter of Rapid Safety Communication (Blue Letter) concerning JOYCLU on June 1, 2021 and is continuing cooperative efforts with sales partner Ono Pharmaceutical Co., Ltd. to gather side effects reports and other information and provide safety-related information.

   - Overseas Pharmaceuticals (¥9,804 million, down 2.5% year on year)

   Revenue from overseas pharmaceuticals fell 2.5% year on year due to lower sales of Gel-One, an intra-articular single-injection viscosupplement for the treatment of knee osteoarthritis for the U.S. market and ARTZ for China, despite higher sales of SUPARTZ FX, an intra-articular 5-injection viscosupplement for the treatment of knee osteoarthritis for the U.S. market.

   Local sales volume of Gel-One declined year on year. The Company's sales decreased due to postponement of the shipment timing of certain products to fiscal 2025.

   Although local sales volume of SUPARTZ FX, a product for the U.S. market, was at the prior-year level, the Company's sales rose year on year, reflecting distributor inventory adjustments.

   Local sales volume of ARTZ for China declined year on year. The Company's sales for China also declined year on year due to a decrease in shipment volume accompanying a change of materials in the fourth quarter.

   - Bulk Products and Contract Development and Manufacturing Organization (¥3,192 million, up 3.5% year on year)

   Net sales from these businesses increased 3.5% year on year. Although sales of bulk products declined, sales of contract development and manufacturing and other services of overseas subsidiary Dalton Chemical Laboratories, Inc. increased.

   As a result of these developments, coupled with an increase in royalty income (¥2,598 million, up 271.6% year on year), sales from the Pharmaceutical business segment rose 6.1% year on year to ¥27,513 million.

   LAL Business

   Sales from the LAL business segment increased 15.5% year on year to ¥11,860 million. The beneficial impact of yen depreciation and higher sales of Fungitell (a beta-glucan-detecting in vitro diagnostic) and PyroSmart NextGen recombinant reagent for endotoxin detection at overseas subsidiary Associates of Cape Cod, Inc., as well as strong sales in Japan, contributed to the sales increase.

2. Research and Development Activities

To contribute to healthy and fulfilling lives for people around the world, the Seikagaku Group focuses its research and development on glycoscience as its area of specialization and aims to create original pharmaceuticals and medical devices.

The Group will aim to achieve early and continuous launching of new products, which hold the key to future business growth, by focusing on application of Seikagaku's original glycoscience-related basic technologies to create new development themes in existing fields as well as innovative research themes, including in new disease areas, and by pursuing various alliances.

Total R&D expenses in fiscal 2024 were ¥7,643 million, or 20.8% of net sales (excluding royalties), and the number of R&D personnel was 201, or 18.7% of the total number of employees, at March 31, 2025.

The status of progress of principal R&D activities is described below.

SI-6603 (treatment for lumbar disc herniation: developed in the U.S.)

In March 2025, the Company received from the U.S. Food and Drug Administration (FDA) a complete response letter (CRL), and approval for SI-6603 was not obtained. The FDA expressed no concerns relating to the clinical study results, including the efficacy and safety of SI-6603, and no additional clinical studies are required. However, they did make additional observations, mainly concerning the manufacturing facility and control of the drug substance and drug product. The Company will now respond to the observations in preparation for obtaining approval at an early date and aim to resubmit an application within one year of receipt of the CRL.

SI-6603, which contains condoliase as its active pharmaceutical ingredient, is a therapeutic agent directly injected into the lumbar disc. It does not require general anesthesia and is less invasive to the patient than surgical treatment. Since a single-injection treatment is expected to improve the symptoms of lumbar disc herniation, the Company aims to provide SI-6603 as a new treatment option.

Gel-One (treatment for Osteoarthritis of the knee and hip: developed in Japan)

Gel-One is an intra-articular injection whose active ingredient is a cross-linked hyaluronate, utilizing Seikagaku's unique cross-linking technology. Since Gel-One remains in the joint for a long period of time, a single injection of Gel-One is expected to provide long-term pain relief. The product has been available in overseas markets since 2012 as Gel-OneⓇ (U.S.) and HyLinkⓇ (Taiwan and Italy) indicated for osteoarthritis of the knee.

Gel-One Initiated Phase III clinical studies of the knee joint and hip joint in February 2025.

SI-722 (treatment for interstitial cystitis: developed in the U.S.)

Seikagaku is considering the policy on future development based on data obtained in Phase I/II clinical studies. SI-722 is a novel chemical compound in which a steroid is conjugated with chondroitin sulfate using Seikagaku's proprietary glycosaminoglycan modification technology and drug delivery systems. SI-722 injected into the bladder is thought to demonstrate long-lasting improvement in the conditions of frequent urination and bladder pain by releasing a steroid with an anti-inflammatory effect.