Earnings of Q1 FY2021

August 13, 2021

Forward-looking statements, such as those relating to earnings forecasts and other projections contained in this material, are managementʼs current assumptions and beliefs based on currently available information. Such forward-looking statements are subject to a number of risks, uncertainties, and other factors. Accordingly, actual results may differ materially from those projected due to various factors.

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Highlights of Performance for Q1 FY2021

Consolidated Performance for Q1 FY2021(Billions of yen)

Actual

Change

Change

from FY20 Q1

from FY19 Q1

Revenue

582.7

+27.7%

+8.8

Operating Income

56.3

2.8 times

+51.7%

Net Income

Record

57.3

2.1 times

3.9 times

Attributable to

high

FUJIFILM Holdings

  • Revenue and profits increased in all business segments. Steady recovery from the previous fiscal year when performance was affected by COVID-19.
  • Highest ever Q1 net income attributable to FUJIFILM holdings. In addition to favorable performance, major contribution was from valuation gains on marketable and investment securities resulting from the IPO of an advanced medical company in which we had invested.

■ Full-year Forecast for FY2021

(Billions of yen)

Previous

Current

Change

forecast

forecast

Revenue

2,440.0

2,500.0

+60.0

Operating Income

180.0

200.0

+20.0

Net Income

Attributable to130.0 160.0 +30.0

FUJIFILM Holdings

Full-year forecast has been revised upward reflecting strong Q1 performance.

In the first quarter of the fiscal year ending March 2022, FUJIFILM Holdings recorded revenue of ¥582.7 billion and operating income of ¥56.3 billion.

Recovering steadily from the impact of the COVID-19 pandemic of the previous year, all business segments achieved year-over-year increases in revenue and profits. Revenue and profits were significantly higher even compared to the first quarter of FY2019 prior to the outbreak of the COVID-19 pandemic, which means that we succeeded in recovering business performance by taking preemptive measures for all businesses based on their respective situations.

Net income attributable to FUJIFILM Holdings reached a record high for a first quarter at ¥57.3 billion. In addition to the steady recovery from COVID-19 pandemic, valuation gains on marketable and investment securities resulting from the IPO of an advanced medical company in which we had invested, and about which I will explain later on, contributed to higher results.

Full-year forecast has been revised upward reflecting strong Q1 performance, with revenue revised upward by ¥60.0 billion to ¥2,500.0 billion, operating income revised upward by ¥20.0 billion to ¥200.0 billion, and net income attributable to FUJIFILM Holdings revised upward by ¥30.0 billion to ¥160.0 billion.

Annual dividend forecast remains unchanged at ¥100 per share, but will be reviewed again based on upcoming performance.

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Key Points of Performance for Q1 FY2021

Bio CDMO Business

Manufacturing capacity expansion plan*

•Decided to make large-scale capital

investment in the U.S. and Europe sites

Investment of approx. ¥90.0 billion;

operations planned to start in H2 2023

•Drug substance manufacturing capacity for

recombinant vaccines will be doubled in the

U.S. to meet the growing demand for

COVID-19 vaccines.

•In addition to expanded manufacturing

capacity, we will capitalize on industryʼs top-

class productivity to meet the growing

demand for biopharmaceuticals and

contribute to steady supply of high quality

*Manufacturing capacity at fiscal year-end

Denmark site20 x 6 units Operation to start in fall 2023

337

67

(Unit: )

180

39

270

141

U.S. site20 x 8 units Operation to start in spring

4972025

67

430

drugs.

FY21FY23FY25

Make aggressive capital investment to achieve FY2024 revenue target of ¥200.0 billion and CAGR of 20% in and after FY2025.

I will now explain about the key points of performance for the first quarter. First, about a new investment project in the bio CDMO business which was announced in June. We have decided to make large-scale investment at our sites in Europe and the U.S. With total investment amount of approximately ¥90.0 billion, we plan to significantly expand the production capability of biopharmaceutical drug substances, including those for COVID-19 vaccines and gene therapy drugs in the cutting-edge medical field, both of which are increasing in demand. Operation of the expanded facilities are scheduled to start in the latter half of 2023.

This graph illustrates our manufacturing capacity expansion plan, showing investments we have made to date. Including the investment we have just announced, we will expand manufacturing capacity to approximately 500,000 litres by the end of FY2025.

Now, let me remind you that to increase biopharmaceutical production capability, not only the bio reactor capacity, but also production efficiency, measured by the number of grams of target proteins, such as antibodies, produced per litre, is also important.

Our production technologies Apollo™ X and pAVEway™ boast industryʼs top-class production efficiency, with the former achieving production efficiency of 10g per litre or more in mammalian cell culture process and the latter achieving production efficiency of 14g per litre in microbial fermentation process.

By capitalizing on industryʼs top-class production efficiency and manufacturing capacity, which will reach about 500,000 litres by FY2025 through aggressive capital investment in response to growing demand for biopharmaceuticals, we will address the needs of our customers and increase order levels.

The investment we have just announced ensures that we will achieve revenue target of ¥200.0 billion in FY2024, and will continue to achieve an average revenue growth rate of 20% per year.

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Key Points of Performance for Q1 FY2021

Life Sciences Business (Regenerative Medicine)

  • Century Therapeutics, Inc., which U.S. subsidiary FCDI invested in and established with the aim of developing next-generation cancer immunotherapeutic drugs using allogeneic iPS cells, made IPO on the U.S. NASDAQ market. As a result, valuation gains on marketable and investment securities of ¥17.6 billion were recorded.
  • A strategic R&D alliance agreement* was reached with BlueRock Therapeutics LP, a subsidiary of Germany- based Bayer AG, regarding iPS cell therapies for ocular diseases. An upfront payment of US$30 million has been received and up to US$40 million funding for R&D and part of investigational agent manufacturing is planned to be received for the development of the three retinal disease therapy programs.

Strengthen alliance with partner

companies

Joint R&D

Supply therapeutic iPS cells

Pharmaceutic

iPS cell-related patent licensing

iPS cell related

al companies

Contract process development /

technology,

manufacturing of regenerative

Bio ventures

manufacturing

medicine products (CDMO)

facilities, human

Development / sales milestone and

resources etc.

royalty payments

Strengthen alliance with partner companies and promote industrialization of cell therapy in the regenerative medicine field by leveraging our iPS cell technology and manufacturing facilities

*Tri-party agreement between FUJIFILM Cellular Dynamics, Inc. (FCDI), Opsis Therapeutics, LLC, (both Fujifilm group companies) and BlueRock Therapeutics LP, which is a subsidiary of major pharmaceutical company Bayer AG

Next, we move on to the life sciences business. The life sciences business is subdivided into the regenerative medicine, cell culture media, and reagent businesses with a focus on drug discovery support services.

As key points of Q1 performance, we achieved two major accomplishments in the regenerative medicine field.

The first accomplishment is valuation gains on marketable and investment securities resulting from the IPO of Century Therapeutics Inc., in which our U.S. subsidiary FUJIFILM Cellular Dynamics, Inc. (FCDI) invested and established.

Century Therapeutics was jointly established by FCDI, which is a leading company in iPS cell development and manufacturing, and Versant Ventures, which is a major U.S. venture capital firm in the medical field, with the aim of developing next-generation cancer immunotherapeutic drugs using allogeneic iPS cells. Bayer AG, a major pharmaceutical company, also provides development funding for this project.

On June 18, Century Therapeutics made IPO on the U.S. NASDAQ market, which led us to record valuations gains of ¥17.6 billion on our stock holdings. Supply of iPS cells from FCDI to Century Therapeutics and other transactions between the two companies will continue after the IPO. With regard to the next-generation cancer immunotherapeutic drug, which is being developed by Century Therapeutics, we plan to carry out contract development of production process and manufacturing of investigational agents.

The second accomplishment is a strategic alliance with BlueRock Therapeutics LP, which is a subsidiary of Bayer AG. Through this alliance, BlueRock Therapeutics will have the option to obtain exclusive license for three nonclinical-stage, retinal disease therapy programs, which are being developed by FCDI and its subsidiary Opsis Therapeutics. In return, FCDI and Opsis Therapeutics received an upfront payment of US$30 million and will receive up to US$40 million funding for R&D and part of investigational agent manufacturing. For future production, FCDI will carry out contract manufacturing of investigational agents, and when the programs enter into a commercial production phase, BlueRock Therapeutics and FCDI will carry out the production.

In the regenerative medicine field, we have been promoting business portfolio tuning by selling Japan Tissue Engineering CO., Ltd. (J-TEC) in the previous fiscal year and other measures to focus on the fields where we can leverage our strength. Our strengths are in iPS cell technology, cGMP compliant production facilities, and human resources with expertise and know-how. The two accomplishments mentioned earlier were achieved by leveraging these strengths. We will continue to strengthen alliance with our partner companies to promote industrialization of cell therapy and commit to the development of cell therapeutic products to meet unmet medical needs.

Thank you. Thatʼs all from me.

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Consolidated Performance for Q1 FY2021

(April 2021- June 2021)

(Billions of yen)

Q1

FY2020

FY2021

Change

Impact of

Constant-

exchange rate

currency basis

Revenue

456.3

582.7

126.4

19.7

106.7

100.0%

100.0%

+27.7%

+23.4%

Operating Income

20.4

56.3

35.9

4.0

31.9

4.5%

9.7%

2.8 times

2.6 times

Income before

42.2

77.8

35.6

5.1

30.5

highRecord

Income Taxes

9.2%

13.3%

+84.3%

+72.3%

Net Income Attributable to

27.5

high

57.3

29.8

3.5

26.3

Record

FUJIFILM Holdings

6.0%

2.1 times

+95.6%

9.8%

Net Income Attributable to

¥68.80

¥143.34

¥74.54

Other change factors (YoY):

FUJIFILM Holdings per Share

Impact of raw materials prices on

¥1

operating income: -¥5.3 billion

Exchange US$/

¥108

¥109

Rates

€/¥

¥119

¥132

¥13

In the first quarter of the fiscal year ending March 2022, revenues increased by 27.7% year-over-year to ¥582.7 billion, and consolidated operating income increased 2.8 times year-over-year to ¥56.3 billion.

Income before income taxes surged 84.3% year-over-year to a record high for a first quarter of ¥77.8 billion, due mainly to valuation gains on marketable and investment securities resulting from the IPO of Century Therapeutics.

Net income attributable to FUJIFILM Holdings for the first quarter also reached a record high, increasing 2.1 times year-over-year to ¥57.3 billion.

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Fujifilm Holdings Corporation published this content on 13 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 August 2021 06:40:09 UTC.