Shionogi : Section 3 SHIONOGI Innovation and Evolution

Section 3SHIONOGI Innovation and Evolution

Protect People Worldwide from the Threat of Infectious Diseases

Materiality

One of the material issues (materiality) that SHIONOGI prioritizes in particular is "protect people worldwide from the threat of infectious diseases." We feel that above anything else, the realization of that materiality constitutes our mission as a leading company in the area of infectious dis- eases. At SHIONOGI, we aim to simultaneously achieve the resolution of challenges surrounding such diseases and the establishment of a sustainable business model.

Initiatives	Related Indicators	Current Progress
Providing products and	• Number of acute infectious	(1) R&D for solutions for a
services for acute infec-	disease-related pipelines:	wide range of acute
tious diseases	4 products	infectious diseases
	• Number of serious infectious	• Influenza virus,
	disease-related pipelines: 2	SARS-CoV-2, norovirus,
	products	RS virus, and other
	• Number of countries adopt-	diseases.
	ing subscription-type reim-	• Stockpiling of Xofluza by
	bursement model: 2	the national government
	• Number of countries where	(2) Handling of antimicro-
	cefiderocol can be supplied	bial resistance (AMR)
	through partnership with	• Launch of cefiderocol in
	GARDP and CHAI: 135	U.S. and Europe
	• Number of contracts for	• Adopting subscription
	wastewater-based epidemiol-	model for cefiderocol in
	ogy (WBE) survey services	two countries

Providing products and	• Number of HIV-related prod-	(1) Initiatives targeting HIV
services for chronic	ucts in pipeline: 1 product	infections
infectious diseases	• Contributing to improvement	• Launch of long-acting
	of QOL with cabotegravir	therapeutic and preven-
	• Developing antimycobacterial	tive drugs
	disease drugs, antimalarial	(2) Initiatives targeting
	drugs and a malaria vaccine	mycobacterium tubercu-
		losis (TB)/Nontuberculous
		Mycobacterial (NTM)
		diseases
		• Research into new action
		mechanism mycobacterial
		treatments
		(3) Initiatives targeting
		malaria
		• Research into innovative
		antimalarial drugs
Building a vaccine	• Providing a COVID-19	(1) Building a vaccine
business	vaccine	business
	• Establishing vaccine manu-	• Developing a COVID-19
	facturing facilities	vaccine
		• Establishing manufactur-
		ing facilities aimed at sta-
		ble supply

Remaining Issues/Needs

1. Provide solutions for a wide range of acute infectious diseases
2. • Provide solutions for various viruses
   • Provide therapeutic drugs that are effective and safe against COVID-19
   • Maximize the value of Xofluza and prepare against mass out- breaks of influenza virus infections
3. Further handle serious infec- tious diseases that include AMR bacteria
4. • Expand the number of countries of sale and countries adopting the subscription model
   • Create new solutions

1. Initiatives targeting HIV infections
2. • Further improving QOL through remedying side-ef- fects and drug administration frequency
3. Initiatives targeting myco- bacterium tuberculosis (TB)/ Nontuberculous Mycobacte- rial (NTM) diseases
4. • Providing therapeutic drugs that are effective against resis- tant bacteria
5. Initiatives targeting malaria
6. • Handling resistance to antima- larial drugs
   • Providing an effective vaccine

1. Building and bolstering a vaccine business
2. • Providing a COVID-19 vaccine
   • Providing a nasal vaccine
   • Providing a combined, polyva- lent vaccine
   • Providing a universal vaccine
   • Expanding the vaccine to cover other illnesses

Value Created

Provision of wide-ranging solutions and contributions to protect people worldwide from the threat of infection through total care as a leading company in the area of infectious diseases

54 Shionogi & Co., Ltd.  Integrated Report 2022

Initiatives targeting acute infectious diseases

SHIONOGI continues to create innovative infectious disease treatment drugs and provide them to society. These include the anti-HIV drug dolutegravir and cabotegravir, the influenza antiviral drug Xofluza, and the siderophore cephalosporin antibiotic cefiderocol. It is the possession of knowhow cultivated over more than 60 years of continued research and development for infectious diseases that has enabled us to bring forth new drugs in that domain on an ongoing basis. Today, we continue to leverage that knowhow in promoting initiatives targeting the creation and provision of wide-ranging solutions that include the likes of wastewater-based epidemiology, preventive vaccines and diagnostic drugs in addition to therapeutic drugs to counter acute infectious disease pathogens such as the influenza virus, the norovirus, the RS virus and the like.

Help to tackle serious infectious diseases including AMR bacteria

By bringing forth new drugs to counter serious infectious diseases that include AMR bacteria, while simultaneously promoting the proper use of infectious disease treatments, SHIONOGI prevents the outbreak of new resistant bacteria and viruses and continuously works towards ensuring that patients can keep receiving treatment both now and in the future.

• AMR is a real, pressing global threat. It is estimated that if there continues to be no measures taken against it, the num- ber of resulting deaths will exceed those from cancer by the year 2050, and will reach 10 million people per year. As a leading company in the area of infectious diseases, SHIONOGI is reinforcing its cooperation with national governments, inter- national agencies, pharmaceutical companies, doctors who prescribe antibiotics and other stakeholders to push forward with initiatives geared towards AMR countermeasures.

challenge in healthcare. As a promising treatment option to address that challenge, we created cefiderocol, the world's first siderophore cephalosporin antibiotic. We initiated sales of cefiderocol in the U.S. and Europe in 2020, after which it was included on the WHO's Model List of Essential Medicines.

• Moreover, cefiderocol was granted application of New Technology Add-on Payment (NTAP), a system of reimbursing hospitalization and treatment costs to hospitals for encourag- ing the introduction of new medical technology, by the U.S. Department of Health and Human Services. This is leading to improved access to drugs for patients who require cefidero- col. Furthermore, a subscription-type reimbursement model (a system in which countries can receive antibiotics as necessary in exchange for the payment of fixed remuneration from their national government to SHIONOGI) was adopted in both the UK and Sweden.
• Up until now, numerous patients, particularly those in the U.S. and Europe, have benefited from the use of cefiderocol. Meanwhile, however, AMR has been exerting even more seri- ous effects on low- and middle-income countries, not just their developed countries. We therefore executed a partnership agreement with GARDP and CHAI for the global provision of cefiderocol to low- and middle-income countries as well. This represents the first agreement that a pharmaceutical company and NGOs that tackle public health as a priority issue have entered with respect to therapeutic drugs for serious bacterial infections. We believe it to be a significant step towards addressing the challenges posed by AMR. While also promot- ing initiatives by the three parties to this agreement, going for- ward, we will continue to endeavor towards ensuring that we can get such medicines into the hands of patients who need them without delay.

Please see p. 65 for details on initiatives for promoting proper use and p. 63 for details on improving access to cefiderocol.

EvolutionSHIONOGIand ovationIn3 Section

Providing cefiderocol

	Initiatives targeting serious infectious diseases
Among AMR, gram-negative bacteria, which has gained resis-
tance to existing drugs, has a high incidence rate and is exhib-	In May 2022, SHIONOGI executed a new agreement with F2G
iting a greater trend of infection, is cited as a priority	for the development and exclusive distribution of olorofim, a

• Actions that SHIONOGI believes are necessary in order to tackle the problems posed by AMR

	Creating predicable, sustainable markets for
AMR therapeutic drugs with the introduc-
	tion of new value evaluation for pull incen-
	tives and insurance reimbursement

Harmonizing international regulations on the development and approval of new antibiotics

Building networks that enable clinical trials and research with greater efficiency

Promoting the proper use and management of antibiotics, including that for animals, and surveying resistant bacteria epidemiology over time

Creating new effective antibiotics on our own or in cooperation with other companies

Mitigating the impact of antibiotic manufacturing processes on the environment

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Section 3SHIONOGI Innovation and Evolution

Protect People Worldwide from the Threat of Infectious Diseases

new antifungal drug intended to treat invasive aspergillosis, in the European and Asian regions. Invasive aspergillosis is a fungus infection with a high case mortality rate that occurs when the functions of the immune system decline. Expectations are that olorofim, given its new action mechanism, will provide a new treatment option for patients who cannot use existing therapeutic drugs due to having resistance to them or for tolerance or drug interaction-based reasons.

Initiatives geared towards wastewater-based epidemiology (WBE)

It is difficult to predict exactly when and where pandemics of infectious diseases will occur and what kind of pathogens will be behind them. Wastewater-based epidemiology (WBE) surveys are an effective method of detecting such signs early on. As such, they are anticipated to be used as an objective indicator when taking preventive measures against the spread of

Implementing wastewater monitoring in Japanese

society at an early stage

• Partnering with Shimadzu Corporation
• Technology that is not susceptible to the effects of bias in clinical tests and is required in ascertaining the state of infection of society as a whole with greater accuracy
• Developments in social implementation in the U.S. and Europe as triggered by the pandemic

Initiatives for fiscal 2022

• Activities to popularize and build evidence for WBE surveys through supplementary budgets and Ministry of Land, Infra- structure, Transport and Tourism (MILT) projects
• Selling kits for new methods with super-high sensitivity that can be automated

infections. Viewing outbreak projections as a key element in realizing total care for infectious diseases, in June 2021, we commenced the provision of WBE survey services for COVID-

19. Through these services, using high-sensitivity detection technology developed through joint research with Hokkaido University, we regularly monitor the concentration of the virus content in wastewater and survey the state of infection in the affected region. These surveys were also implemented in the Tokyo 2020 Olympic and Paralympic Village, and was reported to have prevented cluster infections from occurring when paired with individual tests.

  Additionally, in January 2022, SHIONOGI and Shimadzu Corporation established AdvanSentinel, a joint venture intended to monitor wastewater and otherwise assess public health risk. AdvanSentinel aims to do its part for infection countermeasures by establishing an all-Japan framework aimed at efforts such as ascertaining the next pandemic beyond COVID-19 and the risk to public health that it poses.

Number of hospitalized patients

Number of individuals

testing positive

Number of clinical tests

(PCR/antigen tests)

Number of infected individuals that can be verified through wastewater or environmental water (asymptomatic individuals included)

All infected individuals (asymptomatic individuals included)

*From "WHO: Environmental surveillance for SARS-COV-2 to complement public health surveillance - Interim Guidance" following partial modification

Developing solutions for the three major and other chronic infectious diseases

Among chronic infectious diseases, the three major infectious diseases in particular constitute a massive threat and challenge from the standpoint of global health, and are positioned as infectious diseases that necessitate countermeasures in order to achieve SDG Goal 3: Good Health and Well-Being. As a leading company in the area of infectious diseases, in addition to expanding its preexisting forte of HIV research to that on the three major infectious diseases, SHIONOGI tackles these challenges through various forms of collaboration with external parties.

Initiatives targeting HIV

Since discovering Tivicay (dolutegravir), a highly effective, highly safe HIV integrase inhibitor with minimal risk of drug resistance, SHIONOGI has continued to tackle HIV infections. By keeping up the challenge of addressing troubles experi-

enced by patients, we have successfully mitigated side effects and reduced drug administration frequency and otherwise made considerable contributions to improving the QOL of HIV patients while preserving the effects of drug treatment.

• For the mitigation of side effects, the adoption of dolute- gravir as key drug made it possible to treat patients with a two-drug combination. In turn, this led to the launch of Juluca (dolutegravir + rilpivirine) and Dovato (dolutegravir + lamivudine). Today, prescriptions of this two-drug treatment centered on Dovato, which was added to the U.S. guidelines on the management of HIV infection, are expanding.
• For the reduction of drug administration frequency, SHIONOGI discovered a long-acting formulation of the HIV integrase inhibitor cabotegravir (generic name). Given the expectation that the significant reduction in the number of days taken per year will help improve patient QOL and adher- ence to the drug regimen, there are considerable patient and

56 Shionogi & Co., Ltd.  Integrated Report 2022

medical institution needs that are expected to translate to a larger market for long-acting pharmaceuticals. Prolonged action preparation with the simultaneous use of cabotegravir and rilpivirine (U.S. product name: CABENUVA) enables treatment with administration intervals of once every two months. This is being supplied to a large number of countries, starting with the U.S. and European nations. Additionally, regarding uses intended to prevent HIV infection, while it was necessary up to now to ingest oral medication daily, the launch of Apre- tude (a cabotegravir prophylaxis) has made it possible to prevent HIV infection with bimonthly administration.

• Presently, drug administration intervals are once every two months for both treatment and prevention. We will continue our research and development for new drugs with the aim of pro- longing those intervals even further to once every three or six months. S-365598, which SHIONOGI out-licensed to ViiV in fiscal 2021, is a compound expected to prolong those intervals to three or more months. Nonclinical studies are currently underway at ViiV with the goal of commencing clinical trials in fiscal 2022.

Initiatives targeting mycobacterium tuberculosis (TB) and Nontuberculous Mycobacterial (NTM) diseases

Mycobacterial diseases are caused when patients are infected with mycobacteria (mycobacterium TB and NTM). In recent years, a rise in the number of such patients has been reported in developed countries, Japan included. As existing therapeutic drugs involve long treatment times and do not yield sufficient therapeutic effects, hopes are being placed on the development of new, highly effective drugs.

  In May 2018, SHIONOGI commenced joint research with

Hsiri Therapeutics with the goal of discovering drugs with new mechanisms of action to treat mycobacterial diseases, and has since pursued research on drug discovery together. In October 2019, as an endeavor to further bolster this joint research, we entered a new licensing agreement aimed at the discovery of therapeutic drugs for mycobacterial diseases that have different mechanisms of action.

Initiatives targeting malaria

According to a report by the WHO, in 2020, over 240 million people developed malaria during the year, predominantly in tropical regions. Moreover, this infectious disease took the lives of more than 600,000 people that year, most of which were children aged five and under. While the number of malaria patients had been trending downwards due in part to improved public health, that trend has reversed in recent years, and strains resistant to mainstay drugs are currently spreading. Additionally, the habitats of the Anopheles mos- quito, a known carrier of malaria, have expanded due to the impact of climate change, with concerns that infection will possibly spread to nations in the northern hemisphere, including Japan and North America. SHIONOGI has been promoting drug discovery efforts by establishing a collaborative system with Nagasaki University since 2019 and with the National Institute of Infectious Diseases and Kitasato University since 2020. Going forward, we will continue to bolster our collaboration as we aim to discover innovative antimalarial drugs.

Please see the below website for details on the WHO report.

https://www.who.int/teams/global-malaria-programme/reports/world-malaria-report-2021

EvolutionSHIONOGIand ovationIn3 Section

Developing vaccines aimed at total care for infectious diseases

The COVID-19 pandemic resulted in elevated levels of interest in vaccines. The fact is that ever since the discovery of the smallpox vaccine by Edward Jenner, vaccines against numerous infectious diseases have been put into use over our long history. For years, it has been an earnest wish at SHIONOGI to move into the vaccine business with a view to realizing total care for infections that goes beyond therapeutic drugs. By welcoming UMN Pharma as a wholly-owned subsidiary of SHIONOGI, we have taken a major step towards our transformation into a HaaS* company.

• We have been moving along with vaccine development efforts with the use of BEVS, a recombinant protein vaccine manufacturing technology owned by UMN Pharma that uses viral antigen proteins. As a technology, BEVS is well-suited to high-speed,low-cost mass production, with multiple products having already been approved and put to use. For that reason, it is known as a technology whose effectiveness and safety have already been established. Furthermore, SHIONOGI is the sole company in the world to have established rhabdo-free insect cell cultivation technology without the inclusion of rhabdoviruses,

which we recognized as one of our competitive advantages.

• At present, we have been tackling the development of a COVID-19 vaccine with priority. At the same time, we are also moving along with preparations to divert that vaccine to those for influenza virus, pneumococcus bacteria, RS virus and other acute infectious diseases and to develop mixed vaccines. Fur- thermore, we are also working towards developing nasal vac- cines in addition to general intramuscular injections. As of now, we are pursuing nonclinical studies for nasal vaccines tar- geting COVID-19 and influenza virus infections. Nasal vaccines have the merits of allowing immunity to be effectively induced in the respiratory mucosa, the area that becomes infected, as well as in the entire body, and not necessarily requiring admin- istration using an advanced medical care system or by health- care professionals. To accelerate the development of these vaccines, in April 2022, we jointly established a research department with Chiba University. Endeavors aimed at rein- forcing our vaccine business continue to progress steadily.

• Healthcare as a Service: Provide a range of healthcare services in line with cus- tomer needs, rather than only providing pharmaceuticals

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Section 3SHIONOGI Innovation and Evolution

Improve Social Productivity and Extend Healthy Lifespans

Materiality

Around the world, the average lifespan continues to increase thanks to improvements in public health and advances in medical technology. How to extend healthy lifespans-the period during which people can live without restrictions on daily living due to health issues-and how to lessen differences from average lifespan are matters that SHIONOGI has identified as material issues. In the fields of psychoneurological disease and pain, factors that threaten healthy lifespans in developed countries and other aging societies, we will undertake improvement of the societal environment and the provision of products and medical services that go beyond conventional medicines, to help achieve a society of healthy longevity in which all can enjoy more rewarding lives.

Initiatives	Related Indicators	Current Progress
Creation of products and	• Number of psychoneurological	• Provision of ADHD medicines with
services for psychoneuro-	diseases-related pipelines: 7	differing mechanisms of action
logical diseases, which have	products	• Sales alliances for insomnia thera-
a high level of unmet medi-		peutic drugs
cal needs		• Development and sales alliances
		for therapeutic digital apps
		(ADHD, insomnia)
Provision of optimal treat-	• Number of pain-related pipelines:	• Development of pain therapeutic
ment choices for the causes	3 products	drugs with different mechanisms
of pain		of action
Securing of new assets to	• Number of oncology-related pipe-	• Continued development of the
deal with the super-aging	lines: 5 products	cancer area pipeline
society

Remaining Issues/Needs

• Provision of additional support and

new treatment options for psychoneu-

rological disease patients

• Provision of treatment options with

mechanisms of action different from

those of existing medicines

• Provision of more effective solutions

optimized for individual patients

Programs to promote public understanding of disease traits and the problems of people affected

• Number of educational activities held via webinars, etc.
• Number of support services pro- vided in the area of developmen- tal disorders

• Achieved the target amount of crowdfunding for initiatives to support persons with disabilities (educational comics to future healthcare professionals)
• Conclusion of a business coopera- tion agreement with various municipalities regarding a bright future for children

• Total support for patients with

disabilities

• Provision of enhanced support for

social issues involving developmental

disorders

• Further strengthening of cooperation

with municipalities and educational

organizations

Value Created

Contribution to a society in which everyone can live longer, more fulfilling, and more active lives

Achievement of medical services tailored to individual concerns

Under STS2030, SHIONOGI is advancing initiatives to solve social issues with a focus on the areas of the psychoneurological diseases and pain that threaten healthy lifespans, while also battling the threat of infectious diseases that lessen people's average lifespans. With the aim of achieving a society in which everyone can live longer, more fulfilling, and more active lives, we have provided therapeutic drugs to treat depression, ADHD, and pain. Because CNS disorders are caused by a combination of factors, solving all issues with a single solution is difficult. Solutions that consider the environment and the symptoms of each individual patient are neces-

Bringing about a world in which patients can receive the appropriate

healthcare products and services in a timely manner.

Communicate	Diagnose	Observe
Correct understanding of disease	Rapid testing of early symptoms and	Management of physical conditions and
symptom treatment methods	objective diagnosis based on data	the support necessary for living in society
Prevent	Cure
Routine handling according to	Healthcare choices optimized for the
disease traits and onset risk	individual, including non-medicinal options
		in combination with therapeutic drugs

58 Shionogi & Co., Ltd.  Integrated Report 2022