SanBio : Consolidated Financial Results for the Fiscal Year Ended January 31, 2022

Consolidated Financial Results

for the Fiscal Year Ended January 31, 2022

[Japanese GAAP]

March 11, 2022

Company name: SanBio Company Limited

Stock exchange listing: Tokyo Stock Exchange

Code number: 4592

URL: https://www.sanbio.com/

Representative: Keita Mori, Representative Director and President

Contact: Yoshihiro Kakutani, Corporate Officer of Management Administration

Phone: [phone]

Scheduled date of the Annual General Meeting of Shareholders: April 27, 2022

Scheduled date of commencing dividend payments: -

Scheduled date of filing annual securities report: April 27, 2022

Availability of supplementary briefing material on financial results: Yes

Schedule of financial results briefing session: Yes (for institutional investors and analysts)

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

1. Consolidated Financial Results for the Fiscal Year Ended January 31, 2022 (February 1, 2021 to January 31, 2022)

(1) Consolidated Operating Results

(% indicates changes from the previous corresponding period.)

Net income

Operating revenue

Operating income

Ordinary income

attributable to

owners of parent

Fiscal year ended

Million yen

%

Million yen

%

Million yen

%

Million yen

%

January 31, 2022

－

－

(6,620)

－

(4,579)

－

(4,677)

－

January 31, 2021

－

－

(5,801)

－

(6,530)

－

(3,385)

－

(Note) Comprehensive income: Fiscal year ended January 31, 2022: ¥(6,430) million [-%]

Fiscal year ended January 31, 2021: ¥(2,692) million [-%]

Net income

Diluted net

Ordinary income

Operating income

Return on Equity

to operating

per share

income per share

to total assets

revenue

Fiscal year ended

Yen

Yen

%

%

%

January 31, 2022

(90.33)

-

(95.1)

(48.6)

-

January 31, 2021

(65.38)

-

(35.7)

(45.1)

-

(Reference) Equity earnings (losses) of affiliates: Fiscal year ended January 31, 2022: ¥ - million Fiscal year ended January 31, 2021: ¥ - million

(Note) Diluted net income per share is not stated as net loss per share was recorded although there are potential shares with dilutive effect.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio	Net assets per share
	Million yen	Million yen	%	Yen
As of January 31, 2022	5,510	2,035	31.0	32.99
As of January 31, 2021	13,343	8,349	61.0	157.07

(Reference) Equity: As of January 31, 2022: ¥1,708 million As of January 31, 2021: ¥8,133 million

(3) Consolidated Cash Flows

			Cash flows from		Cash flows from		Cash flows from		Cash and cash
						equivalents at end
			operating activities		investing activities		financing activities
						of period
	Fiscal year ended			Million yen			Million yen			Million yen				Million yen
	January 31, 2022			(6,546)			(66)			(1,495)				4,557
	January 31, 2021			(5,215)			4,180			(56)				12,480
2. Dividends
				Annual dividends			Total			Payout		Dividends
															to
		1st	2nd		3rd					dividends			ratio
			Year-end		Total				net assets
		quarter-end	quarter-end	quarter-end		(Total)		(Consolidated)
					(Consolidated)
	Fiscal year ended		Yen	Yen			Yen	Yen			Yen	Million yen		%		%
		-	0.00			-	0.00		0.00	-			-		-
	January 31, 2021
	January 31, 2022		-	0.00			-	0.00		0.00	-			-		-
	Fiscal year ending
	January 31, 2023		-	0.00			-	0.00		0.00				-
	(Forecast)

3. Consolidated Financial Results Forecast for the Fiscal Year Ending January 31, 2023 (February 1, 2022 to January 31, 2023)

(% indicates changes from the previous corresponding period.)

	Operating		Operating				Net income		Net income
			Ordinary income	attributable to
	revenue (Note)	income		per share
				owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
First half	-	-	(3,067)	-	(3,168)	-	(3,169)	-	(61.19)
Full year	-	-	(5,858)	-	(5,991)	-	(5,997)	-	(115.79)

(Note) As of March 11, 2022, the NHI drug price which will be determined after the manufacture and marketing approval of the Company's regenerative medicine product SB623 for the chronic traumatic brain injury in Japan (hereinafter referred to as the "Approval") is not yet determined. For this reason, operating revenue related to SB623 is not reflected in the above financial results forecast. The Company will consider disclosing operating revenue and other data after the date of the drug price is determined. The financial results forecast figures in this document were estimated on the basis of projections until the Approval. The Company plans to revise these forecast figures to reflect its post-approval business plans once being sure that the Approval will be granted.

Notes:

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): No
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
4. Total number of issued shares (common shares)

1. Total number of issued shares at the end of the period (including treasury shares): January 31, 2022: 51,793,402 shares
   January 31, 2021: 51,785,505 shares
2. Total number of treasury shares at the end of the period:

January 31, 2022: 196 shares

January 31, 2021: 196 shares

3) Average number of shares during the period

Fiscal year ended January 31, 2022: 51,789,136 shares

Fiscal year ended January 31, 2021: 51,785,102 shares

(Reference) Overview of Non-Consolidated Financial Results

Non-Consolidated Financial Results for the Fiscal Year Ended January 31, 2022 (February 1, 2021 to January 31,

2022)
(1) Non-Consolidated Operating Results	(% indicates changes from the previous corresponding period.)
		Operating revenue	Operating income	Ordinary income		Net income
	Fiscal year ended	Million yen	%	Million yen	%		Million yen	%	Million yen	%
	January 31, 2022	－	－	(1,477)	－	932	－	(6,439)	－
	January 31, 2021	－	－	(1,579)	－	(1,827)	－	(2,976)	－
		Net income per share	Diluted net income
		per share
	Fiscal year ended		Yen		Yen
	January 31, 2022	(124.35)		-
	January 31, 2021		(57.49)		-

(Note) Diluted net income per share is not stated as net loss per share was recorded although there are potential shares with dilutive effect.

(2) Non-Consolidated Financial Position

	Total assets	Net assets	Equity ratio	Net assets per share
	Million yen	Million yen	%	Yen
As of January 31, 2022	4,883	2,033	35.0	32.96
As of January 31, 2021	12,718	8,357	64.0	157.22

(Reference) Equity: As of January 31, 2022: ¥1,707 million As of January 31, 2021: ¥8,141 million

*Non-Consolidated Operating Results compared to the previous fiscal year

A change in ordinary income from the previous fiscal year is mainly due to the foreign exchange gains resulting from fluctuations in foreign exchange rates. A change in net loss from the previous fiscal year is mainly due to sales of investment securities held in the previous fiscal year.

*These financial results are outside the scope of audit procedures by a certified public accountant or an audit corporation.

* Explanation of the proper use of the financial results forecast and other notes

(Note on forward-looking statements, etc.)

The earnings forecasts and other forward-looking statements herein are based on information available to the Company at the time of preparation and certain assumptions deemed to be reasonable, and the Company does not assure the achievement of any of these. Furthermore, actual results may vary significantly due to various factors. For the assumptions and notes for earnings forecasts, please refer to "1. Overview of Operating Results, etc., (4) Future Outlook" on page 4 of the attachment.

Table of Contents

1. Overview of Operating Results, etc. .................................................................................................... 2

(1)	Overview of Operating Results for the Fiscal Year Under Review .................................................	2
(2)	Overview of Financial Position for the Fiscal Year Under Review ................................................	3
(3) Overview of Cash Flows for the Fiscal Year Under Review ...........................................................	4
(4) Future Outlook ................................................................................................................................	4
(5) Basic Policy for Distribution of Profit and Dividends for FY2022.1 and FY2023.1 ......................	4
2. Basic Policy on Selection of Accounting Standards ............................................................................	5
3. Consolidated Financial Statements and Primary Notes .......................................................................	6
(1)	Consolidated Balance Sheets ..........................................................................................................	6
(2)	Consolidated Statements of Income and Comprehensive Income ..................................................	7
	Consolidated Statements of Income ................................................................................................	7
	Consolidated Statements of Comprehensive Income ......................................................................	8
(3) Consolidated Statements of Changes in Net Assets ........................................................................	9
(4) Consolidated Statements of Cash Flows .......................................................................................	11
(5) Notes to the Consolidated Financial Statements ...........................................................................	12
	(Notes on going concern assumption) ......................................................................................	12
	(Segment information) .............................................................................................................	12
	(Per share information) .............................................................................................................	14
	(Significant subsequent events)..................................................................................................	15

1

1. Overview of Operating Results, etc.

1. Overview of Operating Results for the Fiscal Year Under Review

In the Japanese regenerative medicine industry, amid ongoing promotion of the industry by implementation of the Act on the Safety of Regenerative Medicine and the Revised Pharmaceutical Affairs Act of November 2014, a record number of five products were approved for manufacture and marketing as regenerative medicine products in 2021. In addition, in the US, the Regenerative Medicine Advanced Therapy (RMAT) Designation program was established under the 21st Century Cures Act which was passed in December 2016, which enables expedited approval of regenerative medicine products for the purpose of treatment of serious diseases. In 2021, biologics license applications (BLAs) were approved for three products designated as RMAT, including one that received BLA approval as an RMAT-designated product for the first time. As described above, practical application of regenerative medicine advanced greatly in Japan and the US in 2021.

In this environment, the Group (hereinafter referring to three companies: the Company, SanBio, Inc. of Mountain View, California, US, and SanBio Asia Pte. Ltd. of Singapore) promoted research and development aiming at the commercialization of its unique regenerative cell medicine, SB623, mainly for central nervous system diseases with high unmet medical needs.

For the SB623 development program for treatment of chronic traumatic brain injury, in the Phase 2 global clinical trial including Japan and involving 61 patients, the Group obtained positive results in November 2018 that the "patients treated with SB623 cells demonstrated a statistically significant improvement in their motor function compared to the control group, and the primary endpoint was met." In April 2019, the development program for treatment of chronic traumatic brain injury in Japan was chosen as a designated regenerative medical product by the Ministry of Health, Labour and Welfare under the "SAKIGAKE Designation System" (Note 1). Since the designation, under the framework of the SAKIGAKE Designation System, the Company has negotiated with the Pharmaceuticals and Medical Devices Agency (PMDA), completed the SAKIGAKE comprehensive evaluation consultation in January 2022, and submitted the application for approval of manufacture and marketing of regenerative medicine products in Japan (hereinafter referred to as the "application for approval") in March 2022 for the first time.

For the SB623 development program for treatment of chronic hemorrhagic stroke that began following the positive results of the program for treatment of chronic traumatic brain injury, efforts are being made to begin clinical trials in Japan.

For the SB623 development program for treatment of chronic ischemic stroke, efforts are being made to begin clinical trials in Japan based on the results of an additional analysis (Note 2) on the Phase 2b clinical trial in 163 patients in the US, which failed to meet its primary endpoint.

Under these circumstances, for the fiscal year ended January 31, 2022, the Company recorded ¥4,955 million in research and development expenses mainly consisting of manufacturing-related costs incurred in applying for approval with respect to the SB623 development program for treatment of chronic traumatic brain injury. As a result, operating loss was ¥6,620 million (operating loss of ¥5,801 million for the previous fiscal year). Ordinary loss was ¥4,579 million (ordinary loss of ¥6,530 million for the previous fiscal year) due to the recording of ¥1,961 million of foreign exchange gains as non-operating income owing to the foreign exchange gains resulting from fluctuations in foreign exchange rates. Furthermore, net loss attributable to owners of parent was ¥4,677 million (net loss attributable to owners of parent of ¥3,385 million for the same period in the previous fiscal year).

The Group consists of a single business segment, regenerative cell therapy using modified allogeneic stem cells. Therefore, description of business performance by segment is omitted.

Note 1: The SAKIGAKE Designation System is a system established under the "Strategy of SAKIGAKE" announced by the "Ministry Project Team to Lead the World in the Practical Application of Innovative Medical Products" at the Ministry of Health, Labor and Welfare in June 2014, which aims to enable early approval through priority review of innovative medical products which are developed in Japan ahead of other countries and the outstanding efficacy of which is expected at early clinical trial phases. The targeted total review period in priority review, from the application for approval to approval, is six months.

Note 2: For details, please refer to the Company's press release dated September 14, 2020 entitled "SanBio Announces Results of New Analyses on the Phase 2b Clinical Trial in the U.S. Evaluating SB623, a Regenerative Cell Medicine for Treatment of Patients with Chronic Stroke, and Consideration of Commencement of Clinical Trials in Japan for the SB623 Development Programs for Treatment of

2