Kaken Pharmaceutical : Presentation material for meeting

Consolidated Financial Results

for the Second Quarter of FY2023

(Six Months ended September 30, 2023)

November 9, 2023

KAKEN PHARMACEUTICAL CO., LTD.

Cautionary notes regarding forward-looking statement

• The performance forecasts described in this material are rational based on the information currently available and have been determined by the Company as reasonable.
• Considerable financial investment and a long development time are required before a new drug is launched. The Company carefully develop new drugs by confirming their efficacy and safety. There is a possibility that their development may be discontinued before completion, in such case where anticipated efficacy has not been proven or safety issues have been identified.
• The "Projects under Development" is based on the current development plans. The status may change depending on their progress.
• The information about pharmaceutical products (including those under development) included in this material is not intended as an advertisement or medical advice.

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Consolidated Financial Results for 2Q of FY2023

Hiroyuki Horiuchi

President and Representative Director

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Consolidated Statements of Income

	(amounts are rounded down to the nearest million yen)
	2Q of	2Q of	YoY	Change
	FY2022	FY2023	Change	（％）
Net sales	36,819	36,171	▲648	98.2
Cost of sales	16,432	16,450	18	100.1
Gross Profit	20,387	19,720	▲667	96.7
Selling, General and	12,178	14,207	2,029	116.6
Administrative Expenses
R&D Expenses	4,330	5,738	1,407	132.5
Operating Profit	8,209	5,512	▲2,696	67.2
Ordinary Profit	8,555	5,722	▲2,832	66.9
Profit before Income Taxes	8,229	5,658	▲2,571	68.7
Profit	5,964	4,068	▲1,896	68.2

No change in plan for the fiscal year

ending March 31, 2024

• Reason for decline in net sales ・decrease in overseas sales
  ・impact from NHI drug price revision and competitive products
• Reason for decline in profit

・increase in SG&A expenses

• mainly from increase in R&D expenses (increase in testing costs due to progress in development of each project)
• increase in advertising and sales promotion expenses in relation to new products (Ecclock in twist-type bottle and NexoBrid)
• expenses related to Digital Transformation and human resources development

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Consolidated Net Sales by Segment

		(amounts are rounded down to the nearest million Yen)
	2Q of	2Q of	YoY	Change
	FY2022	FY2023	Change	(%)
Domestic Pharmaceuticals and	30,493	30,377	▲116	99.6
Medical Devices
Agrochemicals	1,906	1,943	36	101.9
Real Estate Business	1,219	1,212	▲6	99.4
Others (overseas pharmaceuticals,	3,200	2,637	▲562	82.4
bulk substances, etc.)
Total	36,819	36,171	▲648	98.2

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Consolidated Balance Sheets / Consolidated Statements of Cash Flows

Consolidated balance sheets (amounts are rounded down to the nearest million yen)

	As of Mar.	As of Sep.	YoY
	31, 2023	30, 2023	change
Current assets	109,903	112,745	2,841
Non-current assets	56,425	58,906	2,480
Total assets	166,328	171,651	5,322
Current liabilities	20,838	22,160	1,321
Non-current liabilities	8,653	8,762	109
Total liabilities	29,491	30,922	1,430
Total net assets	136,836	140,728	3,892

【Major changes】

• Total assets:

Cash and cash equivalents: ¥70,060 million (decrease by ¥4,200 million)

Investment securities: ¥20,025 million

(increase by ¥2,514 million)

• Total liabilities:

Interest bearing debt: ¥3,850 million (no change)

• Total net assets:

Retained earnings: ¥127,390 million (increase by ¥1,255 million)

Treasury stocks: ▲¥28,612 million (decrease by ¥1,414 million)

Non-controlling interests: ¥0 (decrease by ¥578 million)

Consolidated statements of cash flows (amounts are rounded down to the nearest million yen)

	As of Mar.	As of Sep.	YoY
	31, 2023	30, 2023	change
Net cash provided by (used in)	6,427	▲245	▲6,672
operating activities
Net cash provided by (used in)	▲1,410	▲1,141	269
investing activities
Net cash provided by (used in)	▲4,174	▲2,813	1,361
financing activities
Cash and cash equivalents at	75,467	70,060	▲5,407
end of period

【Major cash flow activities】

• Net cash provided by (used in) operating activities: Profit before income taxes: ¥5,658 million
  Upfront payment for in-licensing of Tildacerfont: ¥2,045 million
• Net cash provided by (used in) investing activities:

Purchase of tangible/intangible assets: ¥920 million

• Net cash provided by (used in) financing activities: Cash dividends paid: ¥2,813 million

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Domestic Pharmaceuticals & Medical Devices Sales by Products (Non-consolidated)

		(amounts are rounded down to the nearest million Yen)
	2Q of		2Q of	YoY	Change
	FY2022		FY2023	Change	(%)
Clenafin	9,633		9,199	▲434	95.5
Artz	8,673		8,929	256	103.0
Seprafilm	4,014		3,544	▲470	88.3
Fiblast	1,378		1,321	▲56	95.9
Ecclock	823		1,387	563	168.4
Regroth	444		442	▲1	99.6
Hernicore	209		188	▲21	89.9
Generic Products	4,190		4,024	▲166	96.0
(total)

• For Clenafin, net sales declined due to NHI drug price revision and competitive products
• For Artz, net sales increased due to replacement of competitive product which is announced to be discontinued
• For Seprafilm, net sales declined due to competitive products
• For Ecclock, net sales increased due to release of twist-type bottle and increased recognition of primary axillary hyperhidrosis
• For generic products, net sales declined due to NHI drug price revision

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Financial Performance Forecast

	(amounts are rounded down to the nearest million Yen)
FY2022	FY2023	YoY	Change
Plan	Change	(%)

Net sales	72,984	73,100	116	100.2
Cost of sales	33,428	33,400	▲28	99.9
Gross Profit	39,555	39,700	145	100.4
Selling, General and	31,556	32,100	544	101.7
Administrative Expenses
R&D Expenses	15,789	15,100	▲689	95.6
Operating Profit	7,998	7,600	▲398	95.0
Ordinary Profit	8,727	8,000	▲727	91.7
Profit before Income Taxes	6,817	7,900	1,083	115.9
Profit	5,440	6,700	1,260	123.2

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Domestic Pharmaceuticals & Medical Devices Sales Forecast by Products (Non-consolidated)

			(amounts are rounded down to the nearest million Yen)
		FY2023	YoY	Change		FY2023
	FY2022	Revised
	Change	(%)		Plan
		Plan
Clenafin	17,985	17,700	▲285	98.4	17,700
Artz	17,062	18,100	1,037	106.1	18,000
Seprafilm	7,790	7,000	▲790	89.9	7,300
Fiblast	2,759	2,700	▲59	97.9	2,700
Ecclock	1,257	2,100	842	167.1	1,900
Regroth	891	900	8	101.0	900
Hernicore	392	400	7	102.0	400
Generic Products	8,201	7,900	▲301	96.3	7,900
(total)

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Ecclock Gel 5%

Primary Axillary Hyperhidrosis Market

（in million Yen)

2,500

2,170

2,000			1,813
1,500
	1,027
1,000
500
166
0
FY2020	FY2021	FY2022	1H of FY2023

Source: Copyright © 2023 IQVIA. JPM 2021/3MAT-2023/9. All rights reserved.

• market is expanding due to new product launch and active disease awareness of the hyperhidrosis

• released new design (twist-type) bottle in June
• continued disease awareness activity as a pioneer provider of the drug (Nikkei DTC advertisement, public lectures, etc.)

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Ecclock (Twist Bottle) received Good Design Award 2023

Characteristics

1. Mechanism that discharges fixed amount
2. Easy to use design that keeps hands clean
3. Simple and small, easy to carry size bottle

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