GNI : FY2022 Q2 Analyst Call Q&A Summary

(Held on August 17, 2022)

This article contains statements concerning the current plans, expectations and strategies of GNI Group Ltd. (GNI Group). Any statements contained herein that pertain to future operating performance and that are not historic facts are forward-looking statements. Forward-looking statements may include, but are not limited to, words such as "believe," "plan," "strategy," "expect," "forecast," "possibility" and similar words that describe future operating activities, business performance, events or conditions. Forward-looking statements, whether spoken or written, are based on judgments made by the management of GNI Group, based on information that is currently available to it. As such, these forward-looking statements are subject to various risks and uncertainties, and actual business results may vary substantially from the forecasts expressed or implied in forward-looking statements. Consequently, investors are cautioned not to place undue reliance on forward-looking statements.

The information contained in this presentation does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. Any decision to invest in or acquire securities of GNI Group must be based wholly on the information contained in the preliminary offering circular issued or to be issued by GNI Group in connection with any such offer and not on the contents hereof.

This English summary translation is for convenience only. To the extent there is any discrepancy between this English translation and the original Japanese version, please refer to the Japanese version.

Note: In places, pro forma figures in the pages which follow may be rounded to underscore direction of the business.

Q1: We can see revenue went up in JPY terms, but how does it look in local currency terms? Does the first half result reflect your true capability, and is the revenue expected to grow in the second half?

A1: We believe the current growth will continue in local currency terms as well. There should not be a significant change in the growth trend. In local currency terms, the revenue grew by 16% in RMB and 8% in USD terms YoY on an annualized basis.

Q2: How is F351's Phase 3 clinical trial? Is it on schedule? How many subjects are currently enrolled?

A2: We're on schedule. Although COVID-19 lockdown has caused some delay, we're catching up. We're afraid that we cannot disclose the exact number of enrollments at the moment, but it is on target.

Q3: 2022Q2 sales seems to have been strong in China. Is there any reason? Once the COVID-19 lockdown is over, is the sales growth expected to accelerate?

A3: Without COVID-19, things would be much better. In China, patient flows in hospitals significantly decreased in big cities. BC covers many Tier 3 and 4 cities (that are not as impacted), which is one of BC's strengths. However, even now the impact of COVID-19 still exists. Currently, among pharmaceutical companies in China, any growth is positive.

Q4: If Beijing Continent (BC below) goes public, will GNI continue to consolidate it?

A4: We will continue to consolidate BC. Our intention is to remain a controlling shareholder of BC in any foreseeable future even after dilution from its potential IPO.

Q5: Can you elaborate the opportunities you are exploring in Japan.?

A5: Unfortunately, we cannot disclose details right now, but we are looking for various opportunities. Slowdown in pharmaceutical / biotech industry presents us opportunities. We are looking for profit-neutral or profit-positive opportunities. That is, we do not intend to have negative impacts on our P/L.

Q6: Among the 8 programs in Cullgen's new drug pipeline, which one is likely to be the next to go on to a clinical trial after TRK?

A6: We are afraid we cannot disclose much on the next in the pipeline at this moment, but it will most likely the one that targets leukemia and solid tumor, and they are moving full-speed towards IND. Cullgen's targeted protein degradation pipeline is highly productive, and we expect more to come.

Q7: Based on your full-year forecast and the actual first half results, you seem to expect around JPY 800 million of operating profit and JPY 200 million of profit before tax. Does that mean that you expect about JPY 600million of financial expenses in the second half? Do you expect any event that causes it?

A7: We have maintained all the underlying assumptions of the forecast and does not expect any special event that causes large change to financial expenses. The above effect is purely due to the fact that we have maintained the full-year forecast in JPY terms during this period of highly volatile macro environment.