Our Approach to Sustainability

August, 2020

www.peptidream.com

1

President's Message (1/2):

Sustainability Efforts Crucial in Getting to the Next Stage of Growth

Kiichi Kubota, Director, Chairman

Patrick Reid, Representative Director, President & CEO

PeptiDream was established in July 2006 with the goal of developing innovative medicines using special peptides. For the first ten years, we were in the stage of building foundations, establishing technology, expanding alliances with domestic and international pharmaceutical companies, and increasing our trustworthiness as a company. With the completion of our new headquarters and laboratory in July 2017, the 11th year since our establishment, we kicked off a new organization in September 2017. Kiichi Kubota, who served as President for ten years since the foundation of the company, became Representative Director and Chairman, and I became Representative Director and President. I believe my mission for the coming decade is to deliver medicine to those around the world suffering from illnesses through strongly promoting business by utilizing our new R&D facilities and state-of-the-art technology.

To accomplish this mission, I believe that our organization must strive toward sustainability as we grow our business even further. We have identified material issues that are high in priority our perspective as a company and from the perspective of our shareholders. We are committed to promoting ESG (environmental, social and governance) initiatives that lead to enhanced non-financial capital. I also believe that proactively disclosing information related to these initiatives and placing importance on communication with our shareholders, investors, and society as a whole is crucial to achieving sustainable growth and enhancing our mid -tolong-term corporate value.

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President's Message (2/2):

Sustainability Efforts Crucial in Getting to the Next Stage of Growth

In terms of environmental friendliness (E), we strive toward the highest standards among drug development biotech companies. In June 2019, we expressed support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). In addition to creating a recycling-oriented society through rigorous separation of waste and improvement of recycling rates, we are promoting efforts that include SBT (the corporate version of the 2°C goal) measures to reduce CO2 emissions per employee by more than 50% compared to FY2018 by 2030 to achieve the 2°C goal set by the Paris Agreement. Moreover, our new headquarters and laboratory have acquired S-Certification, the highest possible rank of the CASBEE environmental performance assessment.

In terms of our efforts toward society and our employees (S), we are making a contribution to the sustainable development of the local community as well as educational and academic activities as a community member of the global innovation hub KING SKYFRONT and of Tonomachi in Kawasaki City, Kanagawa Prefecture. We are also committed in creating efficient innovation for the healthcare industry athrough providing our innovative pharmaceutical development technology, utilizing partnerships, and maintaining our intellectual property portfolio. The most important capital for us as a company built on innovation is our human resources. Along with respecting the individuality (strengths) of each and every employee, we strive to create a safe and comfortable working environment that allows each employee to demonstrate to their full capacities.

In terms of governance (G), not only are we bolstering the auditing and supervisory functions of the Board of Directors by involving three auditing committee members (independent external directors) with voting rights in the management decision making, but we are actively promoting efforts to improve the effectiveness of the Board. We also seek to improve managerial transparency by proactive and fair disclosure of corporate information so that our shareholders, investors, and society as a whole, both in Japan and abroad, can understand the actual status of our company. The ratio of shares held by institutional investors is approximately 58%, with the ratio of foreign shareholders above 40%. We also proactively promote disclosure of information to individual investors, and have hosted informational sessions aimed at individual investors with 980 attendees in FY2019.

I would like all executives and employees to continue to share the importance of working toward sustainability through our company-wide efforts so that many people as possible around the world will be grateful for us.

Patrick Reid, Representative Director, President & CEO

3

PeptiDream's Contribution Towards Achieving

the United Nations Sustainable Development Goals (SDGs)

Source: United Nations Information Centre

The Sustainable Development Goals (SDGs) adopted by the United Nations in September 2015 are 17 goals aimed at changing the

world by solving environmental and social problems and creating a sustainable society by 2030. The world must work together in order to

achieve these goals.

The ESG report we have created compiles our company's basic policies and key measures on ten main items related to E (environment),

S (society), and G (governance). Each item is classified as to which development goal in the SDGs it can contribute to and is listed under

the initiative title.

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10 Most Material Issues and Sustainability Focus at PeptiDream

Environment

Responsibility for Environmental Impacts

1

Reducing CO2 Emissions

Social

Initiatives for Society and Employees

  • Contributions to Society and Local Community

Governance

Initiatives for Good Governance

  • Dialogue with Shareholders, Investors and Society

2

3

Reducing Waste

Sustainable Water

Management

5

Promoting

Industry-Wide Innovation

  • Respecting Diversity, and Creating a Comfortable Working Environment

7

Occupational

Health and Safety

9

Corporate Governance

10

Compliance and

Risk Management

5

1 Reducing CO2 Emissions

Key Principle (What We Aim to Be)

All PeptiDream employees recognize the importance of preserving the global environment. We continue to strive to reduce CO2 emissions per employee more than 50% compared to FY2018 by 2030 through efforts to protect the environment and counter global warming.

Priority Initiatives

Supporting TCFD Recommendations

In June 2019, PeptiDream expressed support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

ESG Task Force & Employee Engagement

PeptiDream initiated the establishment of an ESG task force which is lead by a senior executive responsible for ESG. It is tasked to collect environmental data, to regularly discuss ideas to promote eco-friendly measures across the organization, and disseminate information to all employees and executives. In addition, the Company held multiple information sessions during FY2019 to update all employees on our environmental initiatives.

Environmental Preservation and Global Warming Countermeasures at New Headquarters/Laboratory

In July 2017, PeptiDream moved to our new headquarters and laboratory. The newly operated office building is designed to be environmentally friendly and energy efficient with building features shown as below.

- highly-insulating wall materials and windows - louver exterior to reduce solar heat burden - LED lighting throughout the building

- highly efficient air conditioning and elevators

- half-transparent louver to block sunlight and utilize natural lighting etc.

Promoting the Use of Renewable Energy

PeptiDream uses electricity as its main source of power. Since August 2018, as an effort

to reduce CO2 emissions, the Company has adopted an electricity supplier which proactively

Headquarters and Laboratory Building

promotes the shift towards renewable energy.

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1 Reducing CO2 Emissions

Key Data / Index

Reducing Power Consumption

We are working to reduce power consumption through efficient use of air conditioning in summer and winter season. Going forward, PeptiDream will strive to raise employee awareness of environmental preservation through visualization ofenergy consumption

Environmental Building Rating CASBEE

Our headquarters and laboratory building underwent CASBEE (Comprehensive Assessment System for Built Environment Efficiency) Kawasaki 2015 Edition Assessment on February 15, 2016 and received the highest possible rank of S- Certification.

(The upper right chart is an excerpt from the evaluation result of CASBEE Kawasaki)

Electricity Consumption / CO2 Emissions

Electricity consumption in FY2019 was 2,738 MWh (22.8 MWh per employee). The CO2 emissions converted from energy consumption were 1,817 tons (15.1 tons per employee).

Headquarters and Laboratory

Building

CASBEE

Obtained the "S Certification", the highest rank

Evaluation by CASBEE Kawasaki 201 5 Edition (As of February 15, 2016)

Electricity Consumption

2,738 MWh Per employee: 22.8 MWh

1 year record (July 2018 to June 2019)

Eco-Efficient Construction

(BEE Rank & Chart)

la tn

  • lity mn a ro Qu iv

En

Environmental Load

CO2 Emissions

1,817 tons

Per employee: 15.1 tons

1 year record (July 2018 to June 2019)

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2 Reducing Waste

Key Principle (What We Aim to Be)

PeptiDream is contributing to solving social issues such as constructing a recycling-oriented society through rigorous waste sorting and improving recycling rates.

Priority Initiatives

Rigorous Waste Sorting

To reduce and recycle the amount of experimental and business-related waste, we strive to ensure rigorous waste sorting by implementing measures such as thorough sorting instructions as well as clear labeling.

Improving Recycling Rates

Our company entrusts the disposal of experimental and business-related waste to a contractor. All experimental waste is disposed properly and rendered harmless to support zero emissions and recycling of materials. Moreover, we properly verify and manage the manifest (Industrial Waste Management Slip) for disposal of waste.

Reducing OA Paper Consumption

We are promoting a variety of measures to reduce business-related OA paper consumption. Specifically, we have introduced Electronic Laboratory Notebook, set the printer defaults to print two pages per sheet and to print on both sides, and are promoting paperless meetings. Furthermore, we are promoting the use of paper that corresponds to the Act on Promoting Green Purchasing.

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  • Reducing Waste

Key Data/Index

Recycling Rate

Our business-related waste recycling rate is approximately 100%.

Waste Emissions

Regarding waste emissions in FY2019, there have been

67.11 tons of industrial waste, 10.91 tons of general waste, and 0.65 tons of waste emissions per employee.

OA Paper Consumption

OA paper consumption in FY2019 was 1.12 tons (0.008 tons per employee). Moreover, our toner cartridge recycling rate was 100%.

Participation in EyeCity's Eco Project

PeptiDream is engaged in the "Eco Project (Disposable Contact Lens Case Collection Initiative)" organized by EyeCity, the chain of contact lens specialty stores operated by HOYA Eye Care Company. The collected empty lens cases are recycled into recycled polypropylene materials and reused to create various recycled products.

The counter value of the recycled material is donated to the Japan Eye Bank Association to help those who wish to regain their eyesight.

Recycling Rate

General waste: 100%

Toner cartridges: 100%

1 year record (July 2017 to June 2018)

OA Paper Consumption

1.12 tons

Per employee: 0.008 tons

1 year record (July 2018 to June 2019)

Waste Emissions

Industrial waste: 67.11 tons

General waste: 10.91 tons

Per employee: 0.65 tons

1 year record (July 2018 to June 2019)

9

  • Efficient Use of Water and Prevention of Water Contamination

Key Principle (What We Aim to Be)

PeptiDream is working to use water resources efficiently and lessen the impact to the environment through our efforts to reduce water consumption and wastewater volume as well as to ensure the quality of wastewater.

Priority Initiatives

Reducing Water Consumption and Wastewater Volume

We are promoting efficient use of humidification in our indoor air conditioning to reduce water consumption and wastewater volume. Furthermore, we use water-conserving toilets and photocatalytic, self-cleaning exterior wall materials.

Ensuring Water Quality

We conduct proper wastewater treatment that strictly complies with environmental laws, regulations and agreements such as the Water Pollution Prevention Act and the Sewerage Service Act.

Monitoring Wastewater Quality

We regularly measure biochemical oxygen demand (BOD) and suspended solids (SS) to confirm that wastewater from our facilities meets the environmental standards. We also verify that wastewater used in our research and development activities does not contain hazardous substances.

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3 Efficient Use of Water and Prevention of Water Contamination

Key Data/Index

Water Consumption

The water consumption in FY2019 was 5,143 (42.8 per employee). Consumption tends to increase during the winter months when indoor humidifiers are used, so we are currently considering more efficient methods.

Total Water Discharge Volume and Decontaminated Water Volume

The total water discharge volume in FY2019 was 5,143, of which water volume processed in wastewater treatment facilities was 525.6.

Monitoring for Pollutant Load Volume and Substances Hazardous to the Environment

The biochemical oxygen demand (BOD) of decontaminated wastewater in terms of yearly average pollutant load was 20.06kg and suspended solids content (SS) was 8.67kg. The biochemical oxygen demand (BOD) of decontaminated wastewater in terms of yearly average contaminant level was 29.1mg/L and suspended solids content (SS) was 10.8mg/L, well below their respective standards (less than 600 mg/L each). In addition, we have verified that the organic solvents and heavy metals used in our research and development activities are below their respective standards.

Water Consumption

5,143

Per employee: 42.8

1 year record (July 2018 to June 2019)

Pollutant Load Volume

Biochemical Oxygen Demand (BOD): 20.1kg

Suspended Solids (SS): 8.7kg

Total Water Discharge

5,143

Of which, water volume processed in wastewater treatment facilities was 525.6

1 year record (July 2018 to June 2019)

Pollutants and Hazardous

Substances in Wastewater

Below standards

1 year record (July 2018 to June 2019)

1 year record (July 2018 to June 2019)

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  • Contribution to Society and Local Communities

Key Principle (What We Aim to Be)

PeptiDream strives to earn the trust of the broader society as a good corporate citizen through proactive and fair disclosure of our corporate information and improving the transparency in our management.

Priority Initiatives

Participation in Attractive Urban Development Planning for Tonomachi KING SKYFRONT

PeptiDream was appointed Board Member of the KING SKYFRONT Network Association. Established on February 6, 2018, KING SKYFRONT Network Association comprises local companies, research institutes, and local governments who participate in the Tonomachi International Strategic Zone KING SKYFRONT and strive to create sustainable development through cooperation across industry, academia, and government.

Participating in Local Community Events

PeptiDream cherishes its ties to the local community and actively participates in local events.

Examples:

On March 22, 2018, the MEXT (Ministry of Education, Culture, Sports, Science and Technology) Regional Innovation Ecosystems Building Program hosted an event called "Commercialization of Innovative Middle Molecule Drug Development Through the Fusion of IT Drug Technology and Chemosynthetic Technology" in which the Company delivered a lecture entitled "The Future of Peptide Drug Development".

On July 25, 2019, PeptiDream participated in the "KING SKYFRONT Company Tour" aimed at high school students in Kawasaki. The Company delivered a lecture entitled "Prospects of Japanese Pharmaceutical / Bio Industry and Future of PeptiDream" at the hall in our company.

On August 1, 2019, PeptiDream participated in the "Summer Science EventLecture: "The Future of Peptide Drug Development"

2019" aimed at elementary school students in Kawasaki. The Company

delivered a lecture about intractable diseases and provided trial sessions of a

wheelchair riding.

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  • Contribution to Society and Local Communities

Priority Initiatives

Educational and Academic Supports

PeptiDream actively supports education and academics aimed at promoting and developing science and technology.

Examples:

On January 24, 2018, PeptiDream delivered a lecture entitled "Fusing PDPS and the International Space Station to Find Answers Out of Infinite Possibility" at the "International Space Station and KIBO Utilization Symposium: Expanding the 400 Km Stage in the Sky" hosted by the Japan Aerospace Exploration Agency (JAXA).

On February 2, 2018, PeptiDream hosted a company tour and information session for students from the Massachusetts Institute of Technology (MIT).

On October 26, 2018, PeptiDream delivered a lecture entitled "Introduction to Drug Discovery" for students in Center for iPS Cell Research and Application (CiRA), Kyoto University.

On February 28, 2019, PeptiDream co-sponsored the "Rare Disease Day" event. The event began in Sweden to raise awareness for rare and intractable diseases and improve the quality of lives of patients and their families by better diagnoses and treatment.

Lecture: "Fusing PDPS and the International Space Station to Find Answers Out of Infinite Possibility"

Company tour and information session for MIT students

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  • Developing Efficient Approaches to Foster Innovation Across Industry

Key Principle (What We Aim to Be)

PeptiDream continues to seek ways to develop efficient approaches to foster innovation across industry and help patients suffering from diseases through providing eco-friendly and innovative technology for drug development and maximizing partnerships.

Priority Initiatives

Continious Upgrade of the Environmentally-Friendly

PDPS

Developed as a drug development platform system to discover special cyclic peptides that serve as both small molecule drugs and antibody therapies, PDPS (Peptide Discovery Platform System) has undergone continual research to upgrade its process ever since its development. To find candidate compounds for hit molecules using PDPS, we carry out screening using a solution of just 0.1 ml in a miniature tube. By using our million times more diverse compound library (one trillion types), this makes it possible to search candidate compounds for hit molecules when compared to conventional methods. We believe that our PDPS makes it easier to innovate drug discovery, a once costly and time-consuming process.

Library Diversity

Total Library Capacity

Required Space for Library Storage (area)

Time Required for Screening

Efficient and Environmentally Friendly PDPS

PDPS

Regular Screening

When performing HTS with

Method (HTS)

the same diversity as PDPS...

1 trillion kinds

1 million kinds

1 trillion kinds

(1 x 1012)

(1 x 106)

(1 × 1012)

0.1mL

10 L

100,000kL (about 280 twenty

(1 tube)

(assuming that 1

five-meter pools)

compound = 1mL)

(assuming that 1 compound

= 1mL)

0.5 m2

5.2 m2

5.2 x 106 m2

(1 freezer)

(11 freezers)

(about 11 million freezers)

About 10 days

About 11 days

About 30000 years

(assuming

(assuming

1 compound = 1 sec)

1 compound = 1 sec)

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  • Developing Efficient Approaches to Foster Innovation Across Industry

Priority Initiatives

PDPS's Robust Intellectual Property Strategy to Drive Our Mission

Our PDPS (Peptide Discovery Platform System) is a proprietary drug discovery platform system combining three proprietary technologies and systems: Flexizyme Technology, FIT (Flexible In-Vitro Translation) System, and RAPID (Random Peptide Integrated Discovery) Display System.

Regarding the patent of PDPS, PDPS is designed to function as a "system" by building a strong patent portfolio of multiple related patents surrounding the Flexizyme patent, which serves as the core.

This closes loopholes that inevitably arise with individual patents and creates robust intellectual property, meaning our partner companies can use PDPS to discover new pharmaceuticals with assurance. As the number of clients licensed to use PDPS technology increases, with a focus on major pharmaceutical companies, we believe that our robust intellectual property contributes to our mission of fulfilling unmet medical needs and delivering medicine to people worldwide.

Additionally, our PDPS platform received the "Intellectual Property Achievement Award" from the Ministry of Economy, Trade and Industry.

PDPS Patent Portfolio Overview

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  • Developing Efficient Approaches to Foster Innovation Across Industry

Priority Initiatives

Expanding Cross-Industry/Global Partnerships to Foster Innovation

Joint Pharmaceutical Research and Development (R&D) Contract

Based on the drug target proteins provided from our partners, we facilitate special cyclic peptides and small molecular drug development through joint pharmaceutical R&D activities utilizing PDPS (Peptide Discovery Platform System), our proprietary drug discovery platform system. This makes it possible to obtain candidate compounds for hit molecules even for targets that were difficult to identify using conventional drug development methods.

*As of June 30, 2020, we have entered joint pharmaceutical R&D agreements with 19 companies.

PDPS Technology Licensing Contract

Among our joint pharmaceutical R&D alliance partners, seven companies have signed a non-exclusive technology licensing contract with PeptiDream. Licensees using this technology have no limits on drug targets and are able to promote in-house pharmaceutical research and development by utilizing PDPS.

Expanding Our Pipeline Through Strategic Alliances

By forming strategic alliances with pharmaceutical companies around the world that have special technologies, bio-ventures, and academia, we are working to expand our in-house drug candidate compounds (pipeline).

*As of June 30, 2020, we have entered strategic alliances with eight companies (JCR Pharmaceuticals, Modulus Discovery, Heptares Therapeutics in the UK, Kleo Pharmaceuticals in the US, Nihon Medi-Physics, POLA Chemical Industries, JSR Corporation and Mitsubishi Corporation), and are conducting joint research on developing peptide drugs for rare refractory disease with Kawasaki Medical School, as well as conducting joint R&D with the Bill & Melinda Gates Foundation on therapies to eradicate tuberculosis and malaria, a serious problem for the world's poorest countries.

PDPS Partnerships

Alliance companies: 19 companies

Technology licensees:

7 companies

Strategic alliances:

8 companies,

2 organizations

As of June 30 , 2020

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  • Developing Efficient Approaches to Foster Innovation Across Industry

Key Data / Index

Companies that have signed the Joint Pharmaceutical Research and Development Contract. (19 companies)

Signed the Joint

Pharmaceutical Research

and Development Contract in

October 2010.

Signed the Joint

Pharmaceutical Research

and Development Contract in

November 2010.

Signed the Joint

Pharmaceutical Research

and Development Contract in

December 2010.

Signed the Joint

Pharmaceutical Research

and Development Contract in

July 2012.

Signed the Joint

Pharmaceutical Research and

Development Contract in

September 2012.

Signed the Joint

Pharmaceutical Research and

Development Contract in

September 2012.

Signed the Joint

Pharmaceutical Research and

Development Contract in

November 2012.

Signed the Joint

Pharmaceutical Research and

Development Contract in

March 2013.

Signed the Joint

Pharmaceutical Research and

Development Contract in

December 2013.

Signed the Joint Pharmaceutical Research and

Development Contract in April 2015.

Signed the Joint

Pharmaceutical Research and

Development Contract in

September 2015.

Signed the Joint

Pharmaceutical Research and

Development Contract in

September 2015.

Signed the Joint

Pharmaceutical Research and

Development Contract in

November 2015.

Signed the Joint

Pharmaceutical Research and

Development Contract in

December 2015.

Signed the Joint

Pharmaceutical Research and

Development Contract in

February 2016.

Signed the Joint Pharmaceutical

Research and Development

Contract in March 2016.

Signed the Joint Pharmaceutical

Research and Development

Contract in April 2017 (including

PDC).

Signed the Joint Pharmaceutical Research and Development Contract in November 2017 (including PDC, diagnostic pharmaceuticals, bio- imaging drugs, and agrochemicals).

Signed the Joint

Pharmaceutical Research and

Development Contract in

September 2018.

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  • Developing Efficient Approaches to Foster Innovation Across Industry

Key Data/Index

PDPS Technology Licensing Contract. (7 companies)

Expanding Development Pipeline through Strategic Alliances. (8 companies, 2 organizations)

Agreed to a non-exclusive technology license for the drug discovery platform

system PDPS in September 2013.

Agreed to a non-exclusive technology license for the drug discovery platform system PDPS in April 2015.

Agreed to a non-exclusive technology license for the drug discovery platform

system PDPS in March 2016.

Agreed to a non-exclusive technology license for the drug discovery platform system PDPS in July 2016.

Agreed to a non-exclusive technology license for the drug discovery platform

system PDPS in June 2017.

Agreed to a non-exclusive technology license for the drug discovery platform

system PDPS in June 2018.

Agreed to a part of the patent for technology license of the drug discovery platform system PDPS in December 2018.

Conducting strategic joint research aimed at obtaining special cyclic peptides that can cross the blood-brain barrier.

Conducting strategic joint

research on small

lmolecular compound candidate drugs using computational chemistry.

Conducting strategic joint research targeting G- protein reactive receptors (GPCR) involved in inflammatory disease.

Conducting strategic joint

research on small

moleculecancer immunotherapy drugs.

Conducting strategic joint research on peptide therapies for Duchenne muscular dystrophy (DMD), an intractable disease.

Receiving subsidies for the research and development of novel

therapies

for tuberculosis and malaria.

Conducting strategic joint research on radio isotope (RI) labelled drugs and diagnostic agents.

Conducting strategic joint research on cosmetics,

quasi-drugs and drugs

with peptides.

JSR Corporation is a

partner for the joint

research and development of peptides

applicable to affinity chromatography.

Mitsubishi Corporation is a joint venture partner for the establishment of PeptiGrowth Inc. which develops, produces and sells peptide alternatives to growth factors, key ingredients of cell culture, used in the manufacturing of cell therapy, regenerative medicines and other biopharmaceuticals.

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  • Creating a Comfortable Working Environment with Respect for Diversity

Key Principle (What We Aim to Be)

PeptiDream respects the individuality of our employees. We also strive to create an environment that matches one's aptitudes, where each and every employee feels a sense of solidarity as a member of the company and can demonstrate their abilities.

Priority Initiatives

Company Policy for Human Rights

We have established "PeptiDream's Policy on the Respect for Human Rights."

PeptiDream's Policy on the Respect for Human Rights

PeptiDream Inc. sets out its policy on the respect for human rights as follows. Following this policy, PeptiDream pursues business activities in which it respects the human rights of all stakeholders.

1. Basic policy

PeptiDream promotes business activities in respect to the human rights of all stakeholders, including all board members, employees, business partners, the entire supply chain, and local communities, at all facilities. This policy on respecting human rights is based on the International Bill of Human Rights, and the International Labor Organization (ILO) Declaration on Fundamental Principles and Rights in Labor, and the Guiding Principles on Business and Human Rights, and other international norms.

We specifically adhere to the following,

PeptiDream hires and assigns people based on their capabilities and responsibilities regardless of their gender, sexual orientation and gender identity (SOGI), nationality, race, age, disabilities, religion or anything else.

PeptiDream is against all forms of forced and compulsory labour. PeptiDream protects the welfare of children and does not accept the employment of children excluded if legally permitted.

PeptiDream regards "freedom of association" and "right to collective bargaining" as human rights that should be respected as a company, and respect these rights of employees in accordance with the provisions of the law.

2. Scope of application

This policy is applied to all board members and all employees of PeptiDream. PeptiDream asks all stakeholders throughout the entire supply chain for their understanding of the policy and cooperation to respect human rights.

3. Education for respect for human rights

PeptiDream strives to educate all board members and employees on respecting human rights through providing training for preventing discrimination and harassment in the workplace.

4. Dialogue with stakeholders

PeptiDream considers that its initiatives to respect human rights should be developed continuously. The Company emphasizes the importance of ongoing

dialogue with relevant stakeholders as well as understanding human rights implications relevant to its business activities from the perspectives of the people

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affected. Through continuing these efforts and disclosing relevant information, we will continue to improve our human rights activities.

  • Creating a Comfortable Working Environment with Respect for Diversity

Priority Initiatives

Human Rights & Diversity Initiatives

We are a company that respects diversity. Patrick Reid (Representative Director and President) actively promotes human rights initiatives and strives to foster awareness of respect for employee individuality and human rights. We are also promoting the employment of a wide range of human resources, regardless of gender, age, disability, nationality, academic and work history, and more.

High Ratio of Female Employees

At 39%, our ratio of female employees exceeds by far the pharmaceutical industry average, and we are working to create a comfortable working environment for women that can help maximize their capabilities.

Employing Wheelchair Rugby Player

We employed wheelchair rugby players Koichi Tanabe and Masayuki Haga. The company entirely supports them as they are committed to achieve their dream with respect to team play which resonates with our business style.

They actively take part in disabled athletes' school visits and visited 26 schools in FY2019.

Koichi Tanabe and Masayuki Haga

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  • Creating a Comfortable Working Environment with Respect for Diversity

Priority Initiatives

Improving Work-life Balance

We have introduced a flex-time system to promote a more flexible working style. We are striving to improve work-life balance of our employees as well as sustainability through overtime work management.

Supports for Life Events and Promotion of Diverse Working Styles

We are promoting the creation of a working environment that makes it easier for an employee to return after taking childcare leave. 100% of our female employees have taken childcare leave in the past six years, and the rate of return and six-year retention rate after taking childcare leave is also 100%. In addition to this, we have introduced a short-time work hour system and a nursing care leave system.

Cultivating Human Resources, Developing Careers

We have introduced an online learning subsidy system and in-house training programs to continuously develop our employees' skills and careers.

Dialogues and Employee Engagement

We host monthly social gatherings and meetings for all researchers aimed at enhancing communication, presentation training, and understanding the work of other departments.

Fair Compensation and Mid-term Incentive System

In addition to fair compensation and treatment, we have introduced the "Employee Stock Ownership Plan" (J-ESOP), an incentive plan that provides employees with company shares to enhance their morale and motivation toward maximizing company corporate values and productivity.

Town hall meeting

Regular social gathering

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  • Creating a Comfortable Working Environment with Respect for Diversity

Key Data / Index

Female Employees'

Childcare Leave Rate

100%

The rate of female employees taking childcare leave in the past six years is 100%.

Childcare Leave Rate: Number of employees who took childcare leave between April 2013 and March 2019/Number of employees who gave birth x 100

Return Rate/Retention

Rate After Childcare Leave

100%

The rate of return and retention rate for female employees after taking childcare leave has been 100% for the past six

years.

Return Rate: Number of employees returning after childcare leave/Number of employees who took childcare leave x 100

Retention Rate: Number of employees still working six years after taking childcare leave/number of employees returning from childcare leave x 100

Both are from April 2013 to March 2019

Female Employee Ratio

39%

The female employee ratio is 39.0% as of December 31, 2019.

This is well above the 24.0%* average of the top seven Japanese pharmaceutical companies.

*Top seven companies in terms of sales, based on each company's public data Female Employee Ratio: female employees/total employees; "employees" include dispatched, contracted and full time employees

Rate of Paid Leave Days

Actually Taken

67%

The average rate of paid leave days actually taken was 67% for FY2017-2019. This is well above the average paid leave

rate of 51.1% in the 2017 Comprehensive Working Condition Survey (targeting 6,400 companies) performed by the Ministry of Health, Labor, and Welfare of Japan.

Rate of Paid Leave Days Actually Taken: Number of paid leave days taken by full-time or contract employees from FY2017 to 2019 /number of paid leave days given x 100

Rate of Summer

Vacation Days Actually Taken

95%

The average rate of summer vacation days actually taken for 2016-2018 was 95%. Employees can get four days off as summer vacation between July 1 and October 31.

Rate of Summer Vacation Days Actually Taken: Number of days taken/Number of days given x 100, average value for 2016-2018.

Turnover Rate

2.9%

The average turnover rate for FY2017-2019 was 2.9%. This

is well below the average annual turnover rate of 14.9% for

2017 according to the Ministry of Health, Labor, and Welfare

of Japan.

Average Turnover Rate: Number of full-time employees and contract

22

workers who quit/Total number of employees at the end of June,

average value for FY2017-2019.

7 Compliance with Occupational Health and Safety

Key Principle (What We Aim to Be)

PeptiDream prioritizes safety and health in all our operations. We strive for zero accident through continued occupational health and safety efforts.

Priority Initiatives

Establishing and Running Holding The Safety and Health Committee

Consisting of ten committee members and one occupational health practitioner, the Safety and Health Committee meets every month to work on ensuring safety and health in the workplace and occupational accident prevention measures.

Biosafety

All genetic recombination experiments are conducted in accordance to relevant laws and regulations such as the Cartagena Act and the "Kawasaki City Guidelines for Proper Use of Biotechnology". Safety education is provided for employees engaged in related work by the biosafety chief in charge.

Installing AED (Automated External Defibrillator)

AED devices are installed within the company, and we host training sessions on cardiopulmonary resuscitation using AED and training dummies.

Disaster Preparedness & Implementing Disaster Drills

An emergency power generator has been installed on the rooftop in preparation of floods or tsunamis. We have set aside evacuation space within the company for those who would be stranded in the event of a disaster and have stockpiled three days' worth of food and water in preparation. In addition, we implement regular disaster drills under the supervision of firefighters.

Employee Health Management

We are working with occupational health practitioners and health insurance associations to maintain and promote the health of our employees.

23

7 Compliance with Occupational Health and Safety

Key Data / Index

# of Occupational Accidents

Lost Time Injuries

Severity Rate

2

Frequency Rate(LTIFR)

Zero

Zero

The total number of occupational accidents in FY2019 was two (as of June 30, 2019). Both were non-severe

accidents and timely reported to authority.

The Lost Time Injuries Frequency Rate (LTIFR) in FY2019 was zero (as of June 30, 2019).

LTIFR: Number of casualties by occupational accident/total working hours during FY2019 x 1,000,000

The Severity Rate in FY2019 was zero (as of June 30, 2019).

Severity Rate : lost workdays /total working hours during FY2019 x 1,000

24

8 Dialogue with Shareholders, Investors and Society

Key Principle (What We Aim to Be)

PeptiDream proactively and fairly discloses corporate information and strive toward improving transparency, so that our shareholders, investors, and the whole society can understand the actual reality of our company.

Priority Initiatives

Co-Creation Through Communication with Stakeholders

We select accessible locations for our general meetings of shareholders meetings to encourage active participation. We also hosted a management information session after the general meeting in 2020 and made time for discussion with our shareholders.

We proactively communicate with domestic and international investors directly by face-to-face discussion or through telephone conferences. In addition to paying IR visits, especially to our international institutional investors, we actively participate in conferences sponsored by securities companies hosted in Japan.

We engage in direct dialogue with several individual investors, and in FY2019 we hosted company information sessions in 16 cities nationwide. We also carry out unique initiatives such as hosting company information sessions jointly with other companies.

We started an IR information blog in June 2017, where we provide detailed information on our activities in a precise, easy-to-understand manner, even for technical content.

25

8 Dialogue with Shareholders, Investors and Society

Priority Initiatives

Disclosure Policy Establishment and Compliance

Basic Policy on Disclosure of Information

Our basic policy is to proactively and fairly disclose corporate information and strive toward improving transparency, so our shareholders, investors, and society at large can understand the actual circumstances at our company.

Information Disclosure Standards

We promptly disclose information based on the principles of transparency, fairness, and continuity according to the laws and regulations in the Financial Instruments and Exchange Act and the "Timely Disclosure of Corporate Information" regulations for companies listed on the Tokyo Stock Exchange (hereinafter referred to as "Timely Disclosure Regulations").

We also strive to actively disclose information that we believe may be effective in understanding our company, even if this information does not fall under the Timely Disclosure Regulations. That said, we do not disclose personal information, customer information, or information that violates the rights of anyone involved.

How We Disclose Information

Disclosure of information as stipulated by the Timely Disclosure Regulations is done using the Timely Disclosure Network (TDnet) provided by the Tokyo Stock Exchange, and after disclosing it through the system, the information is then also promptly posted to our website. We strive to actively disclose information that we believe may be effective in understanding our company, even if this information does not fall under the Timely Disclosure Regulations.

Silent Period

To prevent information leakage offinancial results (including quarterly financial results), and to ensure fairness in disclosing information, our silent period is from the day after the final day of settling accounts period (quarterly settlements in December, March, June, September) until the day results are announced. During this period, we will refrain from answering questions or commenting on financial results and performance forecasts. However, ifsignificant performance fluctuations are expected during this period, we will disclose information as deemed appropriate acording to the Timely Disclosure Regulations.

Disclaimers

Among information disclosed (including the contents of this website), anything other than past facts are future forecasts made by our company based on information currently available and is not guaranteed. As such, please be aware that actual results may vary.

Also, disclosure of information (including content on this website) is only to provide information for understanding our corporation and is not intended to solicit investment.

We ask that any decisions made regarding investment should be done at your sole discretion.

26

  • Dialogue with Shareholders, Investors and Society

Key Data / Index

# of Attendees of the

Shareholders Meeting

97people

97 shareholders attended the 2020 General Shareholders Meeting due to COVID-19 concerns. With regular shareholder meetings focused on discussion with shareholders, there was a substantial increase in the number of attendees, from 98 people in 2015 to 236 in 2016, 365 in 2017, 439 in 2018 and 403 in 2019.

Rate of Institutional Investor

Ownership

59%

The rate of institutional investors as of the end of June 2020 is 59.1%. Breaking this number down, 38.5% are foreign institutional investors and 20.6% domestic.

Rate of Foreign Stock Ownership

42%

The rate of foreign share ownership as of the end of June 2020 is 42.2%. This is the same level as at the end of June 2019.

Discussions with

Company Information Sessions

# of Postings in IR Information Blog

Institutional Investors

Aimed at

Total Number of Companies

Individual Investors

125 times

345 companies

16 times/980 people

We carried out discussions (including telephone conferences) with a total of 345 institutional investors in FY2019. We

hosted financial results sessions twice, and overseas IR visits three times.

We are planning to implement company information sessions aimed at individual investors in all 47 prefectures. In FY2019

we implemented company information sessions aimed at individual investors in 16 cities, with a total of 980 guests.

The IR information blog was updated 125 times in FY2019. The IR blog was started in June 2017 as a way of explaining

our company's current status and future possibilities in an

easy-to-understand, accurate manner, and is updated once27 every three days.

9 Corporate Governance

Key Principle (What We Aim to Be)

The fundamental thinking behind our corporate governance is, to fulfill our social responsibilities as a company listed on the stock exchange with our philosophy of "utilizing our proprietary PDPS (Peptide Discovery Platform System) to create pharmaceuticals from special peptides and help people around the world suffering from disease", and to improve the soundness and efficiency of management to create a lasting increase in our corporate value.

Priority Initiatives

Reinforcing Auditory Function by Establishing an Auditing Committee and Appointing Independent External Directors

Our company is a "Company with an Auditing Committee", having a Board of Directors, Auditing Committee, and Accounting Auditors in place. We believe that having three Auditing Committee members (independent External Directors), who participate in the management decision-making with voting rights on the Board of Directors, reinforces the auditing and supervisory function of the Board of Directors

Establishing a Basic Policy of Corporate Governing, Conducting Continuous Review and Improvement (PDCA Cycle)

In addition to sharing understanding of the content of the Corporate Governance Report at the Board of Directors meeting, we are promoting initiatives and follow-up on all principles stipulated in the Corporate Governance Code. We have submitted our Report (both English and Japanese versions) on Corporate Governance to the Tokyo Stock Exchange.

Improving the Effectiveness of the Board of Directors

Our company meets the qualifications for independent officers set by the Tokyo Stock Exchange with three elected independent External Directors (independent External Director ratio of 50%), enabling discussions based on independent, neutral opinions within the Board of Directors. To improve the effectiveness of the Board of Directors, we comply with advance delivery deadlines for Board of Directors materials (at least three business days in advance) and have increased opportunities to provide information to our independent External Directors.

Establishing Nomination and Compensation Committee

Nomination and Compensation Committee with an outside director as chairman

was established as an advisory body to the Board of Directors. Through

deliberation of subjects, the Committee ensures the independence and

objectivity of the procedures concerning the nomination and compensation of

28

directors and aims to further enhance our corporate governance function.

PeptiDream's Organization Structure

  • Corporate Governance

Key Data / Index

Ratio of Independent

External Directors

43%

With three independent External Directors and a ratio of external directors at 43%, we met

corporate governance code standards (As of December 31, 2019).

Cross Shareholdings

Zero

We do not own shares of other listed companies as cross-shareholdings.

Number and Ratio of Independent External Directors

July 2017

July 2018

July 2019

Board of Directors Total

8

6

7

Board of Directors (Excluding

5

3

4

Auditing Committee Members)

Internal Directors

4

3

4

External Directors

1

0

0

Board of Directors (Auditing

3

3

3

Committee Members)

Independent External

3

3

3

Directors

Ratio of Independent

38%

50%

43%

External Directors

Diversityin directors

Regarding internationalization, our president is American and two executive directors have years of experience working overseas for foreign-based

companies. Therefore, they help to achieve a high ratio of diversity and balance in ideas and ways of thinking. Meanwhile, the Company will continue

29

to consider recruiting female directors from the perspective of effectiveness and appropriate size.A female director was appointed as substitute

member of the Audit and Supervisory Committee at the 14th Ordinary General Meeting of Shareholders held on 27th March 2020.

  • Corporate Governance

Directors (as of December 31, 2019

Kiichi Kubota

Director, Chairman

Date of Birth: April 10, 1953

Term : 13 years

Number of shares held 14,106,400

April 1976

Joined NISSAN MOTOR CO.,LTD

July 1978

Jointed Special Reference Laboratories, Inc. (current

SRL ,Inc.)

November 2000

Founding Senior Managing Director of JGS, Inc.

April 2001

Chief Executive Officer of JGS, Inc.

July 2006

Founding President of the Company

September 2017

Founding President of PeptiStar Inc.(to present)

September 2017

Representative Director, Chairman of the Company

September 2019

Director, Chairman of the Company (to present)

Reason Appointed to the Board of Directors

Mr. Kiichi Kubota is the founder of the Company and has been leading its management with his strong leadership and executive ability based on his management skills and extensive experience and performance. In light of this, the Company believes that Mr. Kubota is capable of successfully fulfilling his duties as Director, with respect to the decision-making process of the Board of Directors.

Board Meeting attendance: 100%8/8

Patrick C. Reid, Ph.D.

Representative Director, President & CEO

Date of Birth: January 14, 1975

Term : 11 years

Number of shares held 4,300,000

August 2003

NRSA Post-doctoral Fellow of Dartmouth Medical School

April 2004

Project Associate Professor of Research Center for Advanced

Science and Technology, the University of Tokyo

January 2005

Visiting Associate Professor of Center for Collaborative

Research, the University of Tokyo

April 2006

Project Associate Professor of Research Center for Advanced

Science and Technology, the University of Tokyo

January 2007

Joined the Company

August 2008

Director of the Company

May 2012

Director and General Manager of Scientific Department of the

Company

September 2012

Senior Vice President and General Manager of Scientific

Department of the Company

July 2014

Senior Vice President, Head of Research & Development of the

Company

September 2017

Representative Director, President of the Company(to

present)

Reason Appointed to the Board of Directors

Dr. Patrick C. Reid joined the Company shortly after its foundation and has been leading

research and development operations. He is assuming the responsibility of management

as a Director of the Company and has deep insight and ability. In light of this, the

Company believes

that Dr. Reid is capable of successfully fulfilling his duties as

Director, with respect to the decision-making process of the Board of Directors.

30

Board Meeting attendance: 100%8/8

9 Corporate Governance

Directors (as of December 31, 2019

Keiichi Masuya, Ph.D.

Kiyofumi Kaneshiro, Ph.D.

Executive Vice President

Executive Vice President

Date of Birth: April 2, 1969

Date of Birth: August 16, 1977

Term : 4 years

Term1 year

Number of shares held 0

April 1998

Joined Mitsubishi Chemical Corporation

September 2001

Joined Novartis Pharma K.K.

April 2006

Joined Novartis International AG

November 2008

Head of PPI Drug Discovery and Novartis Leading Scientist

of Novartis International AG

July 2014

Joined the Company, General Manager of Scientific

Department

September 2015

Director and Vice President, Head of Chemical of the

Company

March 2018

Director and Executive Vice President of the Company (to

present)

Reason Appointed to the Board of Directors

Dr. Keiichi Masuya has a wealth of operational experience in the Scientific Department of the Company and deep insight in the field. In light of this, the Company believes that Dr. Masuya is capable of successfully fulfilling his duties as Director, with respect to the decision-making process of the Board of Directors.

Board Meeting attendance: 100%8/8

Number of shares held 0

April 2003

Research Fellow of the Japan Society for the Promotion of

Science (DC)

April 2005

Researcher at Center for Collaborative Research, the

University of Tokyo

April 2006

Joined The Boston Consulting Group (BCG

January 2016

Partner and Managing Director of BCG

January 2018

Joined the Company, Executive Vice President

September 2018

Director and Executive Vice President of the Company (to

present)

Reason Appointed to the Board of Directors

Dr. Kiyofumi Kaneshiro has extensive experience in all aspects of management and a high level of insight. The Company proposes his election as Director, believing that the Company can expect him to successfully fulfill his duties by utilizing his experience and insight, with respect to the decision-making process of the Board of Directors.

Board Meeting attendance: 100%8/8

31

  • Corporate Governance

Independent External Directors (as of December 31, 2019

Michio Sasaoka

Independent External Director

(Full-Time Auditing Committee Member)

Date of Birth: July 16, 1949

Term: 7 years

Number of shares held 200,000

September 1978

Postdoctoral Research Associate of Massachusetts Institute

of Technology

October 1980

Joined Otsuka Chemical Co., Ltd.

January 1988

General Manager of Synthesis Research of Otsuka Chemical

Co., Ltd.

November 2003

Director of Explorative Laboratory of Otsuka Chemical Co.,

Ltd.

March 2007

Managing Director of Otsuka Chemical Co., Ltd.

August 2009

Adviser of Otsuka Chemical Co., Ltd.

May 2012

Corporate Auditor of the Company

September 2015

Director (Audit and Supervisory Committee Member) of the

Company (to present)

Toshio Nagae

Independent External Director

(Auditing Committee Member)

Date of Birth: December 2, 1943

Term: 4 years

Number of shares held 7,600

April 1967

Joined Shionogi & Co., Ltd.

October 1970

Joined ICI-Pharma (current, AstraZeneca K.K.)

June 1981

Joined Schering-Plough K.K. (current MSD K.K.)

May 1997

Joined Rhône-Poulenc-Rorer K.K. (current Sanofi K.K.)

January 2000

Executive Officer of Aventis Pharma K.K. (current Sanofi K.K.)

May 2003

President and Representative Director of CMIC-MPSS Co. Ltd.

(current CMIC Ashfield Co., Ltd.)

June 2003

Concurrently served as President and Representative Director

of PCN Co., Ltd. (current Healthclick Co., Ltd.)

October 2005

President and Representative Director of York Pharma K.K.

January 2010

Established Pharma Business Consultant, Representative (to

present)

Reason Appointed to the Board of Directors

Michio Sasaoka was appointed as an External Director for his experience and extensive knowledge of corporate management as well as his broad global insight. He is deemed to have no conflict of interest with our General Shareholders and is qualified as an independent officer.

Board Meeting attendance: 100% (8/8)

April 2014

Visiting Professor of Gifu Pharmaceutical University (to present)

September 2015

Director (Audit and Supervisory Committee Member) of the

Company (to present)

June 2017

Director (Audit and Supervisory Committee Member) of Human

Metabolome Technologies, Inc. (to present)

Reason Appointed to the Board of Directors

Toshio Nagae was appointed as an External Director for his experience and extensive knowledge of corporate management as well as his broad global insight. He is deemed to have no conflict of interest with our General Shareholders and is qualified as an independent officer.

Board Meeting attendance: 100% (8/8)

32

9 Corporate Governance

Independent External Directors (as of December 31, 2019)

Yukinori Hanafusa

Independent External Director

(Auditing Committee Member)

Date of Birth: May 10, 1975

Term: 2 years

Number of shares held 0

April 1998

Joined Aoyama Audit Corporation

July 2001

Registered as a Certified Public Accountant

August 2009

Founding Representative Director of Accounting Works Co., Ltd.

(to present)

June 2014

Corporate Auditor of Tottori Gas Co., Ltd. (to present)

September 2014

Auditor of Yatani Gakuen (to present)

December 2014

Corporate Auditor of Zen Inc. (to present)

March 2015

Corporate Auditor of ARCLAND SERVICE CO., LTD.

March 2016

Director (Audit and Supervisory Committee Member) of

ARCLAND SERVICE CO., LTD. (to present)

September 2017

Director (Audit and Supervisory Committee Member) of the

Company (to present)

Reason Appointed to the Board of Directors

Yukinori Hanafusa was appointed as an External Director because, as a certified public accountant, he is well-versed in finance and accounting. He is deemed to have no conflict of interest with our General Shareholders and is qualified as an independent officer.

Board Meeting attendance: 100% (8/8)

33

Corporate Governance

Key Skills & Expertise of PeptiDream's Board Members

Corporate

Global

Technology,

Finance &

HR

Legal & Risk

Internal

Board Members

Research &

Management &

Environment

Society

Control &

Management

Business

Accounting

Management

Development

Development

Governance

Kiichi Kubota

Director, Chairman

Patrick C. Reid,

Representative

Director, President &

Ph.D.

CEO

Keiichi Masuya,

Executive Vice

Ph.D.

President

Kiyofumi

Executive Vice

Kaneshiro, Ph.D.

President

Michio Sasaoka,

Independent External

Director

Ph.D.

(Full-Time Auditing

Committee Member)

Independent External

Toshio Nagae

Director

(Auditing Committee

Member)

Yukinori

Independent External

Director

Hanafusa

(Auditing Committee

Member)

34

10Compliance and Risk Management

Key Principle (What We Aim to Be)

In accordance with our Charter of Corporate Behavior, PeptiDream strives to increase employee awareness of compliance and foster a corporate culture for employees to speak out.

Priority Initiatives

Enactment and Compliance with the Corporate Code of Conduct

We are working to spread awareness of the Corporate Code of Conduct among executives and employees.

We also minimize risk and ensure high transparency in our tax practice by observing related laws (Tax Policy) and correctly filling tax returns.

As a company, PeptiDream maintains a healthy and normal relationship with politics (Political Involvement Policy) and we do not make any political donations.

Establishment of Internal Whistleblowing Helpline

We have set up a whistleblowing helpline to report workplace fraud and harassment in the workplace that allows anonymous consultation.

Information Management System

Our internal network uses a 24-hour monitoring service to detect anomalies and take measures quickly.

Research and development data are managed by Electronic Laboratory Notebook, which records operation history and has a stringent backup system in place.

PeptiDream Corporate Code of Conduct

Recognizing that fulfilling our corporate social responsibility leads to

increasing corporate value, we will act responsibly with common sense

and faithfully comply with the code of conduct when conducting our

corporate activities.

By applying our proprietary Peptide Discovery Platform System

(PDPS), which is a world-leading technology, we contribute to creating

the market for peptide drug discovery, the third market following those of

low molecular drugs and antibody drugs, thereby contributing to

advances in medicine around the world.

We comply with laws and regulations and execute fair corporate

activities in accordance with the legislative intent.

We communicate with the broader public, not to mention our

shareholders, to disclose our corporate information proactively and fairly.

We respect the distinctive personalities of our employees, ensure that

their workplaces are safe and comfortable, and create an environment

that enables all employees to demonstrate their capabilities and vitality

with a sense of unity as members of the company.

We act based on fair, transparent, free competition and trade. We do

not tolerate any form of bribery and corruption.

We adopt a firm attitude with respect to anti-social forces and similar

groups that threaten social order and safety and have no involvement

with them at all.

We maintain sound, normal relationships with politicians, the

government, medical professionals, and others.

By respecting diversity, we proactively push forward with efforts

relating to human rights. We will not condone any discrimination based

on gender, sexual orientation and gender identity (SOGI), nationality,

race, age, disability, religion or anything else.

35

10Compliance and Risk Management

Whistleblowing Procedure Flowchart

Report once

concluded

Representative Director & CEO

Investigation & Response

Executive Director responsible for Business Administration/Full-time External Director

  • Assess whether it constitutes a violation of laws and regulations
  • Conduct factual investigation by appropriately-organized investigation team
  • Take corrective measures
  • Take disciplinary action against relevant individual(s) involved

Escalate once the concern received

Consider an

appropriate

response

Contact Point

Contact Point

Feedback on

progress/outcome

Full-Time External Director

Whistleblowing Hotline,

Business Admin Department

of the response

A concern raised by phone/email/fax, in writing, or face-to-face

PeptiDream board members and current and former employees including contract/part-

time/entrusted workers

36

10Compliance and Risk Management

Information Security Accident Response - Flowchart

Report once

concluded

Representative Director & CEO

Investigation & Response

Investigation & Response Team (including external specialists where needed)

  • Conduct factual investigation
  • Take initial and secondary responses
  • Report and disclose progress/outcome of the response and develop preventive measures

Escalate once an accident occurs

Consider an

Feedback on progress/outcome

appropriate response

of the response

Chief Information Security Officer (Executive Director)

Information Management,

Business Admin Department

Information Manager in each department

External partners specialized

in information management

37

10Compliance and Risk Management

Priority Initiatives

Enactment and Compliance with the Supplier Code of Conduct

We ask for the understanding and cooperation of all suppliers and their subcontractors in compliance with this Supplier Code of Conduct.

Establishment of Animal Testing Policy

We outsource animal testing to contracted research organizations (CRO) in which we evaluate their activities according to our policy.

Risk Management Structure

Through weekly management meetings to discuss risk issues (members include the President and Representative Director and both Vice Presidents), we take measures to respond to risks in a timely manner.

PeptiDream's Animal Testing Policy

In order to prove safety and effectiveness for research ad development of new drugs, animal testing within the minimum necessary range is essential. We respect the dignity of animal life and recognize the "3R Principle: Replacement (use of non-animal alternative methods), Reduction (reducing the number of animals involved), Refinement (avoiding the infliction of distress on animals) as our basic principle of animal testing. Animal experiments are conducted only within the minimum necessary range. As there is no animal testing facility in the company, we outsource work to contracted research organizations (CRO) which can comply with our basic principle and has the capabilities to perform animal testing consistent to our policy.

PeptiDream's Supplier Code of Conduct

PeptiDream is committed to understanding legal compliance, human rights, environmental conservation, and health and safety, associated with our supply chain. To ensure that PeptiDream meets these social standards and norms, and to

promote procurement activities considering them, we articulated this Supplier Code of Conduct. We request our suppliers to comply with this Supplier Code of Conduct

in order to strengthen mutual trust and build sustainable business partnership.

  1. Employment through free choice: Forced labor or work in captivity shall be prohibited.
  2. Child labor and young workers: Child workers shall not be employed illegally. Young workers shall be employed to the extent permitted under applicable laws. Their duties shall be limited to those that will not expose them to any danger.
  3. Elimination of discrimination: Discrimination associated with gender, nationality, race, age, disabilities, religions, etc. shall be prohibited.
  4. Wages, benefits, and work hours: Minimum wages, wages for overtime work, statutory benefits, including social security, etc. shall be paid under applicable laws. Work hours shall be within those prescribed under applicable laws.

5.Freedom of association: Suppliers' rights on freedom of association, participation

or non-participation in labor unions, and appointment of representatives shall be respected under local laws.

  1. Prevention of corruption: Corruption shall be prohibited. Bribes shall not be offered or received directly or indirectly through a third person to make an inappropriate profit.
  2. Unfair competition: Business activities shall be conducted in compliance with the antimonopoly law for fair competition.
  3. Environmental consideration: Applicable laws and regulations related to the environment shall be complied with.

38

Our Aim, Mission and Dream:Contribution to people around the world. Hearing a "thank you" from even one patient, is what we strive for. This is our Dream at PeptiDream.

39

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PeptiDream Inc. published this content on 08 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 August 2020 15:33:09 UTC