Kaken Pharmaceutical : Announcement on Recording of Extraordinary Losses and Revisions to the Full-year Earnings Forecast

The Company announces that it will record extraordinary losses in the fourth quarter of the consolidated fiscal year ending March 2022 as follows and revise the full-year earnings forecast, published on May 7, 2021 for the fiscal year ending March 2022 (April 1, 2021 to March 31, 2022).

1. Recording of extraordinary losses

In January 2019 the Company obtained marketing rights of Lenabasum (hereinafter "the drug") for systemic sclerosis and dermatomyositis treatment in Japan from the US-based company Corbus Pharmaceuticals Holdings, Inc., (hereinafter "Corbus"). As a result of the phase III clinical trials conducted by Corbus, the primary endpoints were　 not achieved in either of the systemic sclerosis and dermatomyositis trials, while Cobus has no plans for additional clinical trials at present. Upon reassessment of the asset value, considering the changed situation since the original capitalization, Kaken decided to recognize the total amount of intangible asset related to the drug of approximately 3 billion yen as an impairment loss. The Company will make its final decision on future development of the drug, after discussions with Corbus and taking into account various factors including business feasibility.

Additionally, because of the recording of contractual losses (about ¥800 million), which arise from accelerated amortization of manufacturing facility expenses by the Company's 　contract manufacturers, the Company will record extraordinary losses in the total amount of ¥3,800 million, not reflected in the full-year earnings forecast, published on May 7, 2021.

1. Revisions to the earnings forecast

(1) Revisions to the consolidated earnings forecast for the fiscal year ending March 2022 (April 1, 2021 to March 31, 2022)

(Unit: millions of yen)

	Net sales	Operating profit	Ordinary profit	Profit attributable to owners of parent	Basic earnings per share
Forecast announced previously (A)	79,200	18,800	19,200	14,000	370.19
Revised forecast (B)	76,000	16,500	17,000	9,200	242.14
Changes (B-A)	－3,200	－2,300	－2,200	－4,800
Percentage of changes (%)	－4.0	－12.2	－11.5	－34.3
Consolidated actual results for the previous period(Fiscal year ended March 2021)	74,979	17,788	18,222	13,405	347.37

(2) Reasons for revisions to earnings forecast

Mainly because of the above-mentioned extraordinary losses, net income attributable to owners of the parent is expected to fall below the earnings forecast. In addition, net sales, operating income, and ordinary income are expected to fall below the earnings forecast, because restricted patient visits to medical facilities due to the COVID-19 pandemic continue to impact sales of some of the core pharmaceuticals for longer than estimated.

*The above-mentioned forecast is based on information available as of the date of this announcement. Actual results may differ from the forecast due to various future factors.

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