Chiome Bioscience : Non-Consolidated Financial Results (Japanese GAAP) for the Six Months Ended June 30, 2021

Non-Consolidated Financial Results (Japanese GAAP)

for the Six Months Ended June 30, 2021

		August 13, 2021
Company Name:	Chiome Bioscience Inc.	Tokyo Stock Exchange
Stock Code:	4583	URL http://www.chiome.co.jp/english/
Representative:	Shigeru Kobayashi, President & CEO
Inquiries:	Arihiko Bijohira, Executive Director & CFO	TEL: [phone]

Scheduled filing date of quarterly financial results: August 13, 2021

Scheduled dividend payment commencement date: －

Supplementary materials prepared for the quarterly financial results: Yes

Holding of the quarterly financial results explanatory meeting:

Yes (For institutional investors and securities analysts)

(Amounts of less than one million yen are rounded down)

1. Financial Results for the Six Months Ended June 30, 2021 (January 1, 2021 to June 30, 2021)

(1) Operating Results (Cumulative)

(% figures are the increase / (decrease) compared with the corresponding period of the previous fiscal year)

	Net Sales	Operating Income		Ordinary Income	Net Income
	Million yen	%	Million yen		%		Million yen	%	Million yen		%
Six months ended	384	122.1	(415)		－	(409)	－	(408)		－
Jun. 30, 2021
Six months ended	173	23.1	(735)		－	(735)	－	(736)		－
Jun. 30, 2020
	Net Income per Share	Diluted Net Income
			per Share
		Yen			Yen
Six months ended		(10.16)			－
Jun. 30, 2021
Six months ended		(22.01)			－
Jun. 30, 2020

Notes: Despite the existence of shares with a dilutive effect, "Diluted Net Income per Share" is not stated because Chiome incurred a loss for each respective period.

(2) Financial Position

	Total Assets	Net Assets	Equity Ratio
	Million yen	Million yen	%
As of Jun. 30, 2021	3,328	2,858	85.3
As of Dec. 31, 2020	3,494	3,109	88.2

(Reference) Equity As of Jun. 30, 2021: 2,839 million yen As of Dec. 31, 2020: 3,081 million yen

2. Dividends

		Annual Dividends
	1Q-End	2Q-End		3Q-End	FY-End	Total
	Yen	Yen		Yen	Yen	Yen
Fiscal Year Ending	－	0.00		－	0.00	0.00
Dec. 31, 2020
Fiscal Year Ending	－	0.00
Dec. 31, 2021
Fiscal Year Ending				－	0.00	0.00
Dec. 31, 2021 (Forecast)
Note: Revision to the most	recently announced	dividend forecast:	No

3. Forecasts of Financial Results for the Fiscal Year Ending December 31, 2021 (January 1, 2021 to December 31, 2021)

As it is difficult to provide reasonable estimates for Drug Discovery and Development Business at present, Chiome discloses only business forecasts for Drug Discovery Support Business; net sales ¥530 million. There is no revision to the most recently announced forecasts of financial results.

[Notes]

1. Application of Special Accounting Practices in the Preparation of Quarterly Financial Statements: No
2. Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatements

1. Changes in accounting policies in line with revisions to accounting and other standards: No

2)	Changes in accounting policies other than 1) above:	No
3)	Changes in accounting estimates:		No
4)	Retrospective restatements:		No
(3) Number of Shares Issued (Common Stock)
1)	Number of shares issued as of the end	As of		40,291,500	As of	39,505,200
	of the period (including treasury stock)	Jun. 30, 2021		shares	Dec. 31, 2020	Shares
2)	Number of treasury stock as of the end	As of		146	As of	146
	of the period	Jun. 30, 2021		shares	Dec. 31, 2020	Shares
3)	Average number of shares for the period	Six months ended	40,223,691	Six months ended	33,436,774
	(cumulative total for the period)	Jun. 30, 2021		shares	Jun. 30, 2020	shares

*This summary report on Chiome's quarterly financial statements is not subject to quarterly review procedures.

* Explanation Concerning the Proper Use of Financial Results Forecasts and Other Relevant Specific Items

1. Forward-lookingstatements including forecasts of financial results contained in this report are based on management's assumptions and beliefs that are determined to be reasonable in light of currently available information. Chiome cautions readers that due to a variety of factors actual results may differ materially from forecasts. For the assumptions that underpin financial results forecasts as well as other related items, please refer to the "1. Qualitative Information Regarding Quarterly Financial Results (4) Explanation of Forward- Looking Statements including Forecasts of Financial Results" on page 5 of this report.
2. Chiome plans to hold a financial results explanatory meeting by online for institutional investors and securities analysts on August 16, 2021. Supplementary materials will be available on the Chiome's website after the meeting.

Contents
1. Qualitative Information Regarding Quarterly Financial Results	2
(1)	Explanation of Operating Results	2
(2)	Explanation of Financial Position	4
(3)	Explanation of Cash Flows	5
(4)	Explanation of Forward-Looking Statements including Forecasts of Financial Results	5
2. Quarterly Financial Statements	6
(1)	Quarterly Balance Sheets	6
(2)	Quarterly Statements of Income	8
(3)	Quarterly Statements of Cash Flows	9
(4)	Notes Concerning Quarterly Financial Statements	10
	(Notes regarding going concern assumptions)	10
	(Notes regarding substantial changes in shareholders' equity)	10
	(Significant subsequent events)	10

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1. Qualitative Information Regarding Quarterly Financial Results

1. Explanation of Operating Results

During the second quarter ended June 30, 2021 (hereinafter, "the period under review"), the outlook for the global economic environment remains unclear due to the pandemic of the Coronavirus Disease 2019 (hereinafter, "COVID- 19"), although some signs of regional recovery are reported along with extension of vaccination. Under the current business environment, Net sales was ¥384,932 thousand, an increase of ¥211,653 thousand year-on-year, attributable to the Up-front income from the out-licensing contract of LIV-2008/2008b in the Drug Discovery and Development on top of the steady growth in the Drug Discovery Support Business. Research and development expenses amounted ¥459,373 thousand with a decrease of ¥149,332 thousand year-on-year since much less cost incurred in Preclinical work and Preclinical work and manufacturing of clinical study drug in CBA-1205 program. Operating loss was ¥415,345 thousand (an operating loss of ¥735,779 thousand previously), Ordinary loss was ¥409,402 thousand (an ordinary loss of ¥735,874 thousand previously), and net loss was ¥408,737 thousand (compared to a net loss of ¥736,036 thousand previously). Chiome's business activities during the period under review are as followings.

In the Drug Discovery and Development, clinical study of CBA-1205 which is an in-house program of the first in- class antibody, has been making progress. Dosing to cancer patients began in July 2020. The Phase I study consists of 2 parts, put simply, and currently, the study is in the first part to evaluate the safety and determine the maximum tolerated dose by increasing the dose of the antibody step-by-step in patients with solid tumors. So far, no serious adverse reaction occurred. For CBA-1535, a multi-specific antibody project, preparation work for a clinical study progresses as scheduled. Due to the spread of COVID-19, there was a temporary supply shortage of research materials required for the manufacture of the drug substance. However, the procurement of research materials was completed during Q2, and there is no impact on the schedule of regulatory application for CBA-1535 Phase 1. For the projects in discovery stage, Chiome puts efforts in bringing early discovery projects to the lead antibodies, and to build a portfolio of intellectual property assets. We will strive for fulfilling pipelines in terms of number and quality which address the unmet medical needs. This could be initiation of new projects leveraged by our own Tribody technology in addition to collaborative works with pharma, biotech company, and academia aiming to create new projects for novel drug discovery.

• Drug Discovery Pipeline (out-licensed products)

With regard to ADCT-701, an ADC format of LIV-1205 that was licensed out to Switzerland-based ADC Therapeutics SA, the preparation work for the clinical development is moving forward.

With regard to LIV-2008/2008b, as announced on January 2021, Chiome and Shanghai Henlius Biotech, Inc. ("Henlius") have signed an Exclusive License Agreement for development and commercialization of the anti-TPOR- 2 antibodies, LIV-2008/2008b, developed by Chiome. Under the agreement, Chiome granted an exclusive license, with sublicensing right, to Henlius for development, manufacturing and marketing the antibody in the region of China, Hong Kong, Macau, and Taiwan. In addition, Chiome granted to Henlius an option right for development, manufacturing, and marketing of LIV-2008/2008b in the rest of the world other than the abovementioned territory. Under the agreement, Chiome received an upfront payment of US$1 mil and was booked as sales of Drug Discovery and Development Business for the period under review.

In addition, there are some pharmaceutical companies who remain interested in evaluation of LIV-2008/2008b.

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Chiome will primarily focus on alliance management under the agreement with Henlius so that they will exercise the option, and also in parallel, continue to explore the out-licensing opportunity to a third party to maximize the business value of this pipeline.

• Drug Discovery Pipeline (In-house programs, out-licensing candidates)

In CBA-1205 development, the phase I study began in July 2020 and has been progressing on track. In the first part of the study, the safety, tolerability, and pharmacokinetics in patients with solid tumor will be evaluated and the maximum tolerated dose is determined. In the second part, the safety, tolerability, and exploratory efficacy will be evaluated in patients with advanced and/or recurrent hepatocellular carcinoma. Currently, in the first part, we are increasing dose of the study drug to be administered to patients from the lowest dose to higher dose in a stepwise manner, while confirming the maximum dose of drug that can be administered to patients without causing unacceptable adverse reaction. Furthermore, it has extended the dose escalation part to higher doses than originally planned in aiming for enabling to set broader safety margin. The second part of the study is expected to start at the end of 2021 or the first half of 2022. There will be no change in the timing of completion of the phase I study from the original plan.

For CBA-1535, works on CMC development are progressing towards the study drug manufacture. In the period under review, the research materials have been secured, and the manufacture of the study drug is proceeding smoothly. It is expected that the CMC development and the manufacture of the study drug will complete within the original schedule for the clinical trial application. In addition, under the current uncertain situation of COVID-19 pandemic, it is not going to be practical to perform a Phase 1 study in the UK as originally planned. An alternative plan to conduct the study in Japan which is less impacted is being studied. We are currently conducting consultations with the authorities looking at submission of clinical trial application sometime between the end of 2021 and the first half of 2022.

For the humanized anti-Semaphorin3A antibody, the Collaborative Development License and Exclusive Option Agreement with SemaTheRa has terminated as announced on May 14, 2021. At present, we have started our own research and development and business development activities targeting diseases associated with semaphorin 3A. With regard to PCDC, Chiome conducts additional drug efficacy tests that are important in promoting its R&D activities while seeking for opportunities of out-licensing or collaboration, mainly in ADC field. On July 1, 2021, the World Intellectual Property Organization (WIPO) published patent information on the application (WO/2021/132427).

In addition, we have five drug discovery projects in the exploratory stage and multiple research themes. We are working on activities to further enhance our pipeline by evaluation on progress status of the research and reviewing whether to revise or abolish drug discovery projects as appropriate. Also, Chiome participates in a research program in the field of infectious diseases and technology development led by an academia in Japan, which is backed by a grant from the Japan Agency for Medical Research and Development (AMED).

As a result, net sales of the Drug Discovery and Development was ¥103,013 thousand, an increase of ¥101,382 thousand year-on-year; research and development expenses of ¥459,373 thousand (a decrease of ¥149,332 thousand year-on-year), and a segment loss of ¥356,461 thousand (a segment loss of ¥607,377 thousand previously) were recorded.

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