Non-Consolidated Financial Results (Japanese GAAP) for the Nine Months Ended September 30, 2021

Non-Consolidated Financial Results (Japanese GAAP)

for the Nine Months Ended September 30, 2021

		November 12, 2021
Company Name:	Chiome Bioscience Inc.	Tokyo Stock Exchange
Stock Code:	4583	URL https://www.chiome.co.jp
Representative:	Shigeru Kobayashi, President & CEO
Inquiries:	Arihiko Bijohira, Executive Director & CFO	TEL: [phone]

Scheduled filing date of quarterly financial results: November 12, 2021

Scheduled dividend payment commencement date: －

Supplementary materials prepared for the quarterly financial results: Yes

Holding of the quarterly financial results explanatory meeting:

No

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

1. Financial Results for the Nine Months Ended September 30, 2021 (January 1, 2021 to September 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		%
Nine months ended	541	73.5	(850)		－	(843)	－	(842)		－
Sep. 30, 2021
Nine months ended	312	10.5	(1,080)		－	(1,087)	－	(1,087)		－
Sep. 30, 2020
	Net Income per Share	Diluted Net Income
			per Share
		Yen			Yen
Nine months ended		(20.94)			－
Sep. 30, 2021
Nine months ended		(31.33)			－
Sep. 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 Sep. 30, 2021	2,950	2,428	81.6
As of Dec. 31, 2020	3,494	3,109	88.2

(Reference) Equity As of Sep. 30, 2021: 2,408 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.

[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
3. 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	40,305,500	As of	39,505,200
	of the period (including treasury stock)	Sep. 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	Sep. 30, 2021	Shares	Dec. 31, 2020	Shares
3)	Average number of shares for the period	Nine months ended 40,249,394	Nine months ended	34,724,921
	(cumulative total for the period)	Sep. 30, 2021	shares	Sep. 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 Forward-looking statements 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 (3) Explanation of Forward-Looking
  Statements including Forecasts of Financial Results" on page 4 of this report.

Contents
1. Qualitative Information Regarding Quarterly Financial Results	2
(1)	Operating Results	2
(2)	Financial Position	4
(3)	Explanation of Forward-Looking Statements including Forecasts of Financial Results	4
2. Quarterly Financial Statements	5
(1)	Quarterly Balance Sheets	5
(2)	Quarterly Statements of Income	7
(3)	Notes Concerning Quarterly Financial Statements	8
	(Notes regarding going concern assumptions)	8
	(Notes regarding substantial changes in shareholders' equity)	8
	(Important subsequent events)	8

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1. Qualitative Information Regarding Quarterly Financial Results

(1) Operating Results

During the third quarter ended September 30, 2021 (hereinafter, "the period under review"), the global economic environment has been suffering from the pandemic of the Coronavirus Disease 2019 pandemic (hereinafter, "COVID-19"). It began to show some signs of regional recovery along with the widespread use of vaccination, however, uncertainty remains due to some concerns about a rebound of COVID-19. Under the current business environment, Net sales were ¥541,690 thousand, an increase of ¥229,405 thousand year-on-year, attributable to the upfront income from the out-licensing contract of LIV-2008/2008b in Drug Discovery and Development on top of the steady growth in Drug Discovery Support Business. Research and development expenses amounted to ¥860,295 thousand, a decrease of ¥90,732 thousand year-on-year, mainly due to the recording of CMC development costs such as GMP manufacturing of drug substance and preparation of investigational drugs for CBA-1535 project. Operating loss was ¥850,744 thousand (¥1,080,016 thousand previously), Ordinary loss was ¥843,016 thousand (¥1,087,149 thousand previously), and net loss was ¥842,789 thousand (¥1,087,916 thousand previously). Our business activities during the period under review are as follows.

In Drug Discovery and Development, Phase 1 clinical study of CBA-1205 which is an in-house program of the first in-class antibody, has been making progress, dosing to solid cancer patients since July 2020. Currently evaluating the safety by increasing the dose step-by-step in patients. This is the first of two parts. There have been no serious adverse reactions reported and it is making good progress. For CBA-1535, a multi-specific antibody project, the manufacturing of the investigational drugs has been making a good progress and we are preparing for the submission of IND application aiming for the first half of 2022. In discovery stage projects, we carry on working on lead antibodies and continue to build a portfolio of intellectual property assets. We will strive to expand the number and quality of our development pipelines by collaborating with drug discovery companies and academia to launch new drug discovery projects, as well as promoting new themes using our own Tribody technology.

• Drug Discovery Pipeline (out-licensed products)

Regarding ADCT-701, an ADC format of LIV-1205 that was licensed out to Switzerland-based ADC Therapeutics SA, they are currently preparing for an IND application and clinical trials in the US for 2022.

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

In addition, there is a pharmaceutical company who remains interested in evaluation of LIV-2008/2008b. We will primarily focus on alliance management under the agreement with Henlius so that they will exercise the option, and in parallel, continue to pursue 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 started 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 exploratory efficacy will also be evaluated in

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patients with advanced and/or recurrent hepatocellular carcinoma. In the first part, since no dose limiting toxicity has been observed within the original plan, additional higher dose cohorts were set aiming to evaluate further safety for higher doses. 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, CMC development by a CMO whom we outsourced the manufacturing of the investigational drugs to is progressing as planned. Under the current uncertain circumstances of the new Coronavirus outbreak/resolution, we are considering an alternative plan to conduct the Phase I study, development and application of the drug in Japan where the impact of COVID-19 is less than in UK which was originally planned. After consultation with PMDA, regulatory authority in Japan, we are convinced that we can submit an application with the existing data package in the first half of 2022.

For the humanized anti-Semaphorin 3A antibody, the Collaborative Development License and Exclusive Option Agreement with SemaThera Inc. were terminated as announced on May 14, 2021. At present, we have started collaborative research with an overseas research institution targeting diseases associated with Semaphorin 3A, and we will collect the data from this research for the business development activities.

PCDC is a first-in-class cancer therapeutic antibody that targets CDCP1 involved in the growth and metastasis of cancer cells. We are currently conducting additional animal studies and other activities that are important to the progress of our research and development activities, while seeking opportunities for out-licensing or collaboration with external companies, mainly in the field of ADC. 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. In the period under review, we examined the progress of research projects and research data extensively to determine the out-licensing and development plans of our key projects, and also considered the revision and termination of current projects in order to launch new projects which will enhance the pipeline. We are also working to file a patent application for a new drug discovery project.

We are participating 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). We received research grants from AMED and recorded part of them as non-operating income for the period under review.

As a result, net sales of Drug Discovery and Development were ¥103,013 thousand, an increase of ¥101,583 thousand year-on-year; Research and Development expenses of ¥860,295 thousand a decrease of ¥90,732 thousand year-on-year, and a segment loss of ¥757,382 thousand (¥949,048 thousand previously) were recorded.

Drug Discovery Support Business contributes to the company's stable earnings. We offer technical support services to pharmaceutical companies and research institutions by leveraging knowledge in protein preparation and multiple antibody generation technologies including the ADLib® system, our proprietary platform for antibody generation and affinity maturation. We are working to stabilize the business base by entering into basic transaction contracts, while promoting the development of new customers to strengthen our earnings base.

In addition, as announced on May 14, 2021, Chiome and Mologic Ltd.in the UK (hereinafter "Mologic") have entered into a Collaborative Research Agreement for antibody discovery and development for diagnostic use. Under the agreement which lasts up to 1 year, Chiome will generate antibodies against several targets utilizing ADLib® system which is Chiome's proprietary platform technology. Mologic will evaluate the antibodies by its technology and know-how for diagnostic drug application. Chiome will receive consideration for research activities from Mologic for its research and development activities and if Mologic earns a profit from the diagnostic products consisting of antibodies generated under this agreement, Chiome will receive part of the profit as royalties. Consideration corresponding to the period under review is recorded in net sales.

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