Takara Bio : Annual Report 2023

TAKARA BIO REPORT 2023

About Us

Our Vision

Corporate Philosophy

Contributing to the health of humankind through the development of revolutionary biotechnologies such as gene therapy

Through our efforts aimed at life science research support and implementation of advanced medicine such as gene therapy, we are contributing to the creation of a society in which people can stay well and enjoy life.

1

CONTENTS

About Us																					1
Our History																3
Our Business																		5
Financial and
Non-Financial Highlights									7
Message from the President										9
Takara Bio Group "Medium-Term
Management Plan 2026"			12
Value Creation Process													15
Business Strategy														17
Message from the Officer in
Charge of Business Administration				21
Promoting Sustainability Management				23
Wellness													25
Safety													26
Environment													27
Human Resources					30
Governance														31
Human Rights/Procurement			34
Sustainability Plan 2026
(List of Theme, Measures, and
Targets for Each Materiality)					35
Sustainability Indices				37
Messages from External Directors		38
Members of the Board, Audit &
Supervisory Board Members, and
Executive Officers								39
Investor Information			40

Scope of reporting:

Entities within the scope of consolidation of the Takara Bio

Group (Some figures included are non-consolidated data.)

Period of reporting:

Fiscal 2023 (From April 1st, 2022 to March 31st, 2023)

*Activities and initiatives implemented in or before 2022 and in or after April 2023 are also reported.

Reference guidelines

IFRS Foundation, "International Integrated Reporting Framework"

Ministry of Economy, Trade and Industry, "Guidance for

Collaborative Value Creation 2.0"

Takara Bio Report 2023

2

Our History

Shifts in Life Science Research and Industry

1970s-1980s

1990s

2000s

2010s-present

Researches on microbes led to the successive discoveries of restriction enzymes, which recognize and cut certain DNA sequences, and modifying enzymes, which can synthesize, degrade, or bind DNA and RNA. This, together with the invention of PCR technology, laid the foundation for today's biotechnology involving genetic modification.

The 1990s saw a spread of biotechnology mainly in the developed countries, with universities and corporate research laboratories around the world actively utilizing genetic information to understand biological phenomena and develop practical applications. Under the Human Genome Project, research groups in Japan, the U.S. and other developed countries worked towards complete sequencing of human genome, which would serve as a basis for such genetic research.

Following on the researches in human genome, the advancement in technologies for measuring biomolecules and processing information gave rise to a surge in the "-omics" studies of proteins (proteomics), transcripts (transcriptomics), metabolites (metabolomics) and others aimed at understanding life as a whole, the fruits of which became available for drug discovery researches. In the field of genomic studies, a series of developments in new-generation sequencing technologies, combined with the advancement in information processing technologies, led to a boom in the utilization of genetic information.

New technologies that make ingenious use of biological phenomena, such as genome editing technologies and stem cell technologies including iPS cells and ES cells, are being discovered or invented and utilized in life science researches. These new technologies are being used to develop pharmaceuticals and therapies.

1920

1980

1990

2000

2010

2020

1925

Established Takara Shuzo Co., Ltd. (currently, Takara Holdings Inc.)

1995

Developed the RetroNectin® method for highly efficient retroviral

2005

Acquired Clontech Laboratories, Inc. (currently Takara Bio USA, Inc.) in the U.S.

2013	2015
Launched genome editing services	Relocated Headquarters functions to Kusatsu,
	Shiga

2020

Launched the Center for Gene and Cell Processing II

1970

Completed the construction of the Central Research Laboratories in Otsu, Shiga

1979

Commenced sales of the first domestically produced restriction enzymes as reagents for genetic engineering research

transduction in hematopoietic stem cells

Established Takara Bio Europe S.A.S. in Paris, France, in order to sell life science research reagents

Established Bohan Biomedical Inc. (currently Takara Korea Biomedical Inc.) in Seoul, Korea

2000

Launched full-scale gene analysis services

2006

Began next-generation sequence analysis services

2008

2014

Completed construction of the Center for Gene and Cell Processing in Kusatsu, Shiga

Began full-scale CDMO business*

Acquired all shares of Cellectis AB in Gothenburg, Sweden, making it a subsidiary and changing the trade name to Takara Bio Europe AB (which was absorbed by Takara Bio Europe S.A.S. in 2022)

2016

Changed listing to the First Section of the TSE

2018

Designated NY-ESO-1 siTCR™ as a product under the SAKIGAKE Designation System

Began selling Takara SARS-CoV-2 Direct PCR kit, an in vitro diagnostic

NY-ESO-1 siTCR™ designated as an Orphan Regenerative Medicine

1988

Acquired exclusive distribution rights in Japan for a gene amplification system using PCR technology

2002

Established Takara Bio Inc.

Succeeded Takara Shuzo Co.'s biotechnology

Started Japan' s first sponsor-initiated clinical trial of ex vivo gene therapy

2009

*CDMO (Contract Development and Manufacturing Organization)

CDMO refers to provision of contract services for drug development and manufacturing, in all steps of the process from formulation to final manufacturing, for clients such as pharmaceutical companies.

Takara Bio provides CDMO focused on regenerative medicine / gene and cell therapy.

2022

Changed listing to the Prime Market of the TSE

1993

Obtained worldwide, broad-rangingPCR-related patent licenses

Established Takara Biotechnology (Dalian) Co., Ltd. in Dalian, China, to manufacture life science research reagents

business and established Takara Bio Inc. in the city of Otsu, Shiga

2004

Listed on the TSE Mothers Index

Established Takara Biomedical Technology (Beijing) Co., Ltd. in Beijing, China

Began iPS cell manufacturing services																			78.1		(Billion yen)
																					80.0
2011																			67.6				70.0
Established DSS Takara Bio India Private																					60.0
Ltd. in New Delhi, India
																	46.0
																					50.0
Net sales														29.7	29.3	32.3	35.8	34.5					40.0
																6.1
											23.9	25.9
																				30.0
											20.5								8.5
R&D expenses					20.9	20.2	18.9	19.3		19.5								28.9
14.3	13.5		16.5	18.7									20.0
Operating profit	13.6															5.5		20.5
												4.1	4.6	4.3
	3.1	2.7	2.9	3.1	3.2	3.2	2.9	3.2	2.6	2.6	2.7	3.0	3.4	4.2	3.8	13.9				10.0
	2.6	3.2	3.5	5.4	6.2
						0.5	0.4	0.5	1.0	1.5	1.6	1.9	2.3					0
	2002,			2006					2011					2016					2021	2023	(FY)
	Established

Takara Bio's Progress in Value Creation

3

Takara Bio Report 2023

4

Our Business

Reagents/Instruments Business

Takara Bio supports academic and corporate life sciences activities by offering reagents and instruments.

CDMO Business

Through our CDMO (Contract Development and Manufacturing Organization) business, Takara Bio provides contract services for biologics development and manufacturing, in all steps from process development to product manufacturing, for clients such as pharmaceutical companies.

Reagents	84.4%
Instruments	1.7%	Research support
Research reagents
CDMO	10.5%	Academic and
and scientific	corporate
		instruments
		Diagnostic reagents Sales	Use
		In vitro	Clinical
		laboratories
		diagnostics	and medical
			institutions

• Basic research and advanced research for the life sciences

• Biologics development and other applied research
• Reagents to detect pathogens such as COVID-19

Contract services related to		• Clinical development and commercial
regenerative medicine products	Pharmaceutical
production of regenerative medicine products
Manufacturing and development of
industry	such as gene therapies for pharmaceutical
viral/plasmid vectors and gene-transduced
	companies and bio ventures
cells, quality and safety testing, etc.
	Contracting	Use
Contract services related to gene		• Basic research and advanced research on
analysis and testing	Academic
Gene analysis such as human genome	the field of the life sciences
and
sequence analysis, etc. and contract research	• Biologics development and other applied
corporate
for genetic engineering such as genome editing	research

We have a range of around 10,000 research reagents needed for genetic and cellular research. We also sell instruments such as PCR instruments and cellular analysis devices and in vitro diagnostics for COVID-19 testing.

Net sales:

¥78.1billion

(FY2023)

Gene Therapy Business

Takara Bio is working on the commercialization of its proprietary platform technology for biologics development.

Platform technology for biologics development

Gene Therapy 3.4%	• RetroNectin®	Use	Ancillary materials	Approval	Social
for gene
• siTCR™ technology
	• JAK/STAT technology	Licensing	therapy product	Licensing and implementation
	• CereAAV™ technology		manufacture	partnerships

• RNA technology

5

In our CDMO business, we focus on contract services related to regenerative medicine products and contract services related to gene analysis and testing.

At our Centers for Gene and Cell Processing, which are the hubs for our CDMO business, we are enhancing our capabilities for manufacturing and quality control testing for viral vectors and transduced cells. As we expand our facilities, we are urgently working to meet the growing needs of pharmaceutical companies by developing efficient expansion culture methods and technology to scale up viral vector manufacturing, as well as by automating manufacturing processes.

• Application for marketing authorization of NY-ESO-1 siTCR™ gene therapy product (TBI-1301) utilizing siTCR™ technology in Japan (under preparation)

• Development of JAK/STAT technology suitable for CAR gene therapy and applied development of CereAAV™, a brain-tropicadeno-associated virus vector

• Development, manufacture, and sale of manufacture ancillary materials, such as RetroNectin®, used in the manufacture of gene therapy product

Takara Bio Report 2023

6

Financial and Non-Financial Highlights

Financial Highlights

Net Sales (billion yen) /

SG&A Expenses (billion yen) /

R&D Expenses (billion yen) /

Goss Profit to Net Sales Ratio (%)

SG&A Expenses to Net Sales Ratio (%)

R&D Expenses to Net Sales Ratio (%)

Net Sales

Gross Profit to Net Sales Ratio

SG&A Expenses

SG&A Expenses to Net Sales Ratio

R&D Expenses

R&D Expenses to Net Sales Ratio

(Billion yen)				78.1	(%)	(Billion yen)				24.2	(%)	(Billion yen)						(%)
80.0					100	25.0				100	10.0							40
				67.6						20.3								8.5
							20.0					8.0
60.0	66.1		69.2	72.7	75		17.9			75							30
61.1
					15.2										6.1
		46.0				14.8
										6.0			5.5
				57.3	15.0
	35.8									50								20
40.0	34.5				50							4.3	3.8
							10.0						4.0
							42.9
							42.5	38.9		31.0							11.0
20.0						25	5.0			30.0		25	2.0	12.1		12.0			10
											11.2	9.0
0						0	0					0	0							0
	'19	'20	'21	'22	'23	(FY)	'19	'20	'21	'22	'23	(FY)		'19	'20	'21	'22	'23	(FY)

Depreciation and Amortization (billion yen) /

Net Income Attributable to Owners of the

Depreciation and Amortization to

Operating Profit (billion yen) /

Parent (billion yen) / Net Income Attributable to

Net Sales Ratio (%)

Operating Profit to Net Sales Ratio (%)

Owners of the Parent to Net Sales Ratio (%)

Depreciation and Amortization

Operating Profit

Net Income Attributable to Owners of the Parent

Depreciation and Amortization to Net Sales Ratio

Operating Profit to Net Sales Ratio

Net Income Attributable to Owners of the Parent to Net Sales Ratio

(Billion yen)				4.0		(%)	(Billion yen)			28.9			(%)	(Billion yen)			19.8			(%)
4.0						20	30.0					60	20.0					40
			3.5
																		16.0
		2.9	3.2								42.7							29.3
3.0	2.6					15	22.5			20.5	45	15.0					30
										30.3							20.7			20.5
2.0							10	15.0			13.9		26.3	30	10.0			9.5		20
									18.2
		8.5						15.2						10.2	11.1
	7.5
	7.0			5.2
1.0				5	7.5	6.2					15	5.0						10
		5.2							3.8
								5.4						3.6
0							0	0						0	0						0
	'19	'20	'21	'22	'23	(FY)		'19	'20	'21	'22	'23	(FY)		'19	'20	'21	'22	'23	(FY)

				EPS: net income per share (yen) /
Equity (billion yen) / ROE (%)		Total Assets (billion yen) / ROA (%)	BPS: net assets per share (yen)

Equity	ROE						Total Assets		ROA					EPS		BPS
(Billion yen)			23.3	112.2	(%)	(Billion yen)			19.3		（%）	(Yen)						(Yen)
120.0			24	150.0					20	200						931.93	1,000
			95.8								115.7	129.2					164.84	796.18
						120.0											800
90.0						18						15	150						132.97
		74.1			15.4					89.7			13.1					616.05
64.0	66.4				90.0						531.57	552.23			600
					75.0
							71.0
60.0		13.6				12		11.6			10	100
												79.29
							60.0													400
30.0						6	30.0		5.2				5	50	30.38	31.72				200
5.8	5.9						5.2
0						0	0						0	0	'19		'20				0
'19	'20	'21	'22	'23	(FY)			'19	'20	'21	'22	'23	(FY)			'21	'21	'23	(FY)

Non-Financial Highlights

CO

2

Emissions (1000 t-CO ) /

2

Comparison with Emissions in

the Base Year (FY2019) (%)

Volume of Water Used (1000 m3)

Waste Emissions (t)

Takara Bio

Takara Biotechnology (Dalian)

Takara Bio

Takara Biotechnology (Dalian)

Takara Bio

Takara Biotechnology (Dalian)

	Other offices	Comparison with emissions in	Other plants
		the base year (FY2019)						(t)
(1000 t-CO2)				（%）	(1000 m3)
20					100	120					400
	76							21		20					75
15				75	90	20		300
	4	5			88
										79
10	4	57		55	50	60					200
										325
		10		10	25		84	85		84		231
5	9		30					100	192
0	'21	'22	'23	(FY)	0	0	'21	'22	'23	(FY)	0	'21	'22	'23	(FY)

Overseas Employees (%)

Women Employees (%)

Women in Newly-Graduated Employees (%)

Japan

Overseas

Ratio

No. of employees

Women

Ratio

(Person)					（%）	（％）				(Person)					(%)
2,000					80	60				120					80
	63.0	59.8				42.6	43.6	46.6			60.0			61.2
1,500				57.1	60			90			60
			40					47.1
				1,024							67
		997
1,000	969		40					60		51			40
500					20	20				30					20
	669		769					15		41
	570								24
											9
0					0	0				0				0
	'21	'22	'23	(FY)		'21	'22	'23	(FY)		'21	'22	'23	(FY)

Women in Managerial Positions (%)	No. of Men who Have Taken Childcare Leave		Employees with Disabilities (%)
(%)				(Person)							(%)
25	22.0	23.0		15							5
19.7								10		4
			10					2.9
20										2.8	2.4
											3
15				5	4		5				2
								1
10				0							0
'21	'22	'23 (FY)		'21	'22		'23 (FY)		'21	'22	'23 (FY)

Capital Investment Expenses

(Billion yen)

15.0			13.1
12.0
9.0		8.8
6.0	5.3			6.5
6.0
3.0
0
'19	'20	'21	'21	'23	(FY)

FY2023

Net Sales by Business Segment (%)

CDMO						Gene Therapy
10.5%					3.4%
			Consolidated
				net sales
			¥78.1 billion
Instruments						Reagents
1.7%		84.4%

FY2023

Net Sales by Region (billion yen)

Europe	Other
¥4.9 billion	¥0.2 billion
Asia (excl.
Japan and	Consolidated
China)
¥3.5 billion	net sales
China	¥78.1 billion
¥10.7 billion
United States	Japan
¥12.8 billion	¥45.6 billion

7

Takara Bio Report 2023

8