Solasia Pharma K K : Supplementary materials for Aug 13, 2020 announcement

Supplementary materials for Aug 13, 2020 announcement

Agreement regarding exclusive in-license of new pipeline SP-05 and Financing

August 13, 2020

Solasia Pharma K.K. (Ticker:4597)

Copyright© 2020 Solasia Pharma K.K. All Rights Reserved.

目次

1．Summary	P.	3
2．Product/ Pipeline-Progress of development and investment	P.	4
3．SP-05in-license agreement, Description of SP-05	P.	5
4．Financing ～① Use of proceeds	P.	7
4. Financing ～② Development investment plans	P.	8
4．Financing ～➂ Financing method	P.	9
5．Relationship with major shareholders	P.	10

Copyright© 2020 Solasia Pharma K.K. All Rights Reserved.

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1. Summary

Agreement regarding SP-05 exclusive in-license

• Exclusive development and commercialization rights for SP-05 (arfolitixorin) in Japan

Use of proceeds for this Financing

• R&D investment, etc for SP-05,SP-04,SP-02

Issuance of unsecured straight bond and warrants

• Utilize proceeds from the bond to timely commencement Phase III clinical trials for new pipeline SP-05 which was in-licensed today

Copyright© 2020 Solasia Pharma K.K. All Rights Reserved.

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2. Product/R&D pipeline - Product development progress & future investment

• Development of indication line extension, Development investment in China

• Development investment in case additional clinical development is required

• • Immediately invest in Global Phase III clinical study
• Plan the in-licensing looking the development progress. Raise reserve funds for development investment

Copyright© 2020 Solasia Pharma K.K. All Rights Reserved.

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3. SP-05in-license agreement, Description of SP-05

Agreement for in-license of new pipeline SP-05

• Exclusive development and commercialization rights for SP-05(arfolitixorin) in Japan
• Global Phase III clinical study is on going, and Solasia will continue development in Japan
• Plan disclosure the result of interim analysis in 2021

【Agreement for exclusive in-license in Japan】

 Agreement with public biotech company Isofol Medical AB ("Isofol") for exclusive in-license of new pipeline (Development code: SP-05, Generic name: arfolitixorin）in Japan

 Upon this agreement, Solasia has acquired exclusive rights for development commercialization of SP-05in Japan

【What is SP-05 (arfolitixorin)?】

 Expected to to increase in the antitumor efficacy of fluorouracilwhich is an existing anticancer drug used as standard therapy for various cancer treatments, especially colorectal cancer, etc

 Currently, in areas such as North America, Europe, Oseania, and Japan, Isofol already conducts

Global Phase III clinical trial, and with the agreement, Solasia will takeover the development commercialization in Japan

【Economic terms of in-license agreement】

 Solasia will pay Isofol a total amount of up to JPY 10.4 billion (approximately USD 100 million) as upfront, development, regulatory and sales-based milestone payments and clinical development cost. In addition, Solasia will pay royalties on net sales

Copyright© 2020 Solasia Pharma K.K. All Rights Reserved.

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3. SP-05 (arfolitixorin)

【Mechanism of Action of SP-05(arfolitixorin)】

5-FU metabolite competes to inhibit TS (and DNA synthesis),

Arfolitixorin stabilizes 5-FU metabolite

But binding can be reversed due to insufficient MTHF

to inhibit TS (and block DNA synthesis)

5-FU displaced due to

MTHF shortage

Thymidine

Normalized thymidine

Persistent

shortage

availability

thymidine shortage

Arrested

Normal

Persistent DNA

DNA synthesis

DNA synthesis

synthesis arrest

Tumor cell survival

Tumor cell death

Tumor cell death

【Clinical Trial Overview 】

Study Design	: A randomized, multicenter, parallel-group,
	Phase III study to compare the efficacy of
	arfolitixorin
	versus leucovorin in combination with 5-FU,
	oxaliplatin, and bevacizumab in patients with
	advanced colorectal cancer
Primary Endpoint : Overall Response Rate (ORR)
	(Ratio of complete response plus partial
	response for tumor shrinkage)
Study Countries	: USA, Canada, Europe, Australia, Japan

Target # of cases : 440～660

（Interim analysis planned on 330 cases： Scheduled to announce interim analysis results within 2021）

【Multi-step activation of folates】

Active metabolite

5-FU

Currently available

[6R]-5,10-

[6R]-10-

[6R]-5,10-

Thymidylate

Folates, including

[6S]-5-formyl-THF

[6S]-THF

methenyl-

formyl-

leucovorin and

THF

THF

methylene-THF

synthase

levoleucovorin

Multi-step metabolic activation

arfolitixorin

([6R]-5,10-

methylene-THF)

5-FU,5-fluorouracil; THF, tetrahydrofolate.

Activation not required

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4. Financing ～① Use of proceeds

Issuance of unsecured straight bond and warrants

• Utilize bond proceeds timely commencement of Phase III clinical trials for new pipeline SP-05 which was in-licensed today

【In-license and development cost for SP-05】JPY2.0bn

• Together with JPY1.689bn received as proceeds from issuing new shares to Maruho Co., Ltd. last December, expect to utilize for One time in-licensepayment, milestone payment, development cost, etc, as well as development investment until commercialization in Japan

【Development for SP-04】JPY2.0bn

• Utilize for potential additional clinical developmentgoing forward
• In regards to additional clinical development, data cut off by Q3 2020, and decide on development plan and commence additional trials by Q1 2021

【Development for SP-02】JPY1.5bn

• SP-02,which has cleared key evaluation outcomes in the final clinical trial for Peripheral T-cell lymphoma, Solasia will utilize proceed to aim to line-extensiondevelopment and development for China
• Assessing the progress of peritoneal seeding drug candidate which Solasia acquired exclusive negotiations rights in July 2020, Solasia will look to acquire the right and develop, and utilize the proceeds for development

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#12 Warrant

JPY2.7bn

JPY2.8bn

Unsecured straight bond JPY2.5bn

4. Financing ～② Development investment plans

• Structure of Financing 】

#12 Warrant Aimed to exercise at higher share price than current levels, having exercise restriction depending on outcome of SP-05 interim results

#11 Warrant exercise proceed will be utilized to pay back unsecured straight bond

Includes JPY2bn for in-license and commencement of clinical trial for SP-05

				JPY2.8bn
	Unsecured
		Unsecured
	Straight
		straight bond
	bond
			JPY2.5bn
	JPY2.5bn

Repay with

Proceed from warrant exercise

2020.8.31

2021.1.31

~2021.8.31

【 Development investment plan 】

Maturity of

warrants

SP-05

2021

Acquisition of rights and

Development investment

commercialization in Japan and

Disclosure of

（Milestone / Clinical trials）

commencement Phase III clinical trials

interim results

SP-04

3Q 2020

-1Q 2021

Preparation for development

Data cut off

Decision of development plan

SP-02

Line-extension・development for China /

Drug candidate

Acquisition of right and development for

peritoneal seeding drug candidate

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4. Financing ～➂ Financing method

Issuance of unsecured straight bond and warrants

• Accomplish one-time financing and timely capital raise by combining unsecured straight bond and warrants

Method		JPY		Summary
Unsecured straight		2.5bn		 Coupon 0.0%
bond				 Term 1 year (Maturity Aug 31, 2021)

Feature and reason for the financing structure

• To accomplish immediate investment for SP-05 and SP-04,selected unsecured straight bond which raises cash upfront at issuance date at once
• Expect repayment of the bond by exercise of the warrantwhich is issued concurrently

#11 Warrant	2.8bn  MS warrant where strike price resets from issuance
	 14,000,000 shares (11.98 of S/O)
	 Floor exercise price JPY121 (60% of Aug 12, 2020)
	 Strike price resets to 92% of previous close of exercise day

• Proceed from the exercise will be utilized to pay back the bond
• Commitment by the allotted party to exercise all of #11 warrant within 100 qualified trading days from issue date for the redemption of a certain amount of the bond

#12 Warrant	2.7bn  Fixed strike price of JPY300
	 9,000,000 shares (7.70% of S/O)
	 May switch to MS warrant upon board approval (floor
	price post the switch equal to that of #11 warrant)
	 Also, upon completion of # 11 warrant, if unsecured
	straight bond is outstanding, will switch to MS warrant
	and proceed will be utilized to pay back the bond

• Set a fixed strike priceand aim to finance at higher share price than current price
• Exercise conditions in regards to SP-05
  Interim results for Phase III clinical trial for SP-05 is publicly disclosed and must be that
• • Completed successfully and will move to preparations

for the New Drug Application or

• Solasia can continue the clinical trials after the interim results because the results are positive

Exercise condition is invalid before bond redemption completion / exercise commitment period by the Allottee / post switch to MS warrant

Copyright© 2020 Solasia Pharma K.K. All Rights Reserved.

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5. Relationship with major shareholders

• Itochu Corporation (Top shareholder)
• • Investor of Solasia since establishment, and current top shareholder ( 19.55 of S/O as of June 30 2020)
  • Distribution agreement for China：Have signed agreement regarding
    Solasia's products distribution in China
  • Business consignment agreement：Agreement of business consignment contract regarding providing information centered on pharmaceutical industry and China, proposal and assistance on acquisition of new rights and in-licensing
  • Agreement on continuous ownership：1 year lock up since Dec 26, 2019

As above, Solasia has established capital ties, business relationship, and varieties relationships with Itochu, and will continue to have good and stable relationship with Itochu

• Maruho Co., Ltd. (#2 shareholder)
• • Exclusive distribution rights for SP-04: Partner for SP-04 distribution in Japan
  • Capital alliance：#2 shareholder (9.68% of S/O as of June 20, 2020)
  • Agreement on continuous ownership：Agree on lock up until announcement of first results of clinical trial after the two currently on- going Phase III clinical trials

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Disclaimer

This presentation material, including any comments made during or following the presentation, is provided solely for the purpose of reference to those investors who make their own evaluation of the company at their own risk. This material contains estimates, such as plans, strategies and judgements, that are forward-looking statements which are made based on management's assumptions and beliefs in light of the information currently available to it and may contain risks and uncertainty. Therefore you should not place undue reliance on them in making investment decisions.

Solasia cautions you that actual results may differ substantially from those discussed in this material due to various factors. We do not guarantee the accuracy or completeness of the information herein. Unless otherwise stated. estimates or forecasts are solely those of our company and subject to change without notice. We accept no liability whatsoever for any direct or consequential loss arising from any use of this presentation.

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