financial results · 11/26/2014 · note: this material includes forward-looking statements based...

Note: This material includes forward-looking statements based on assumptions and beliefs in light of the information currently available to management and subject to significant risks and uncertainties. Actual financial results may differ materially depending on a number of factors including adverse economic conditions, delays in new product launch, pricing and product initiatives of competitors, the inability of the company to market existing and new product effectively.

Financial Results for the Second Quarter of Fiscal Year 2014

ending March 2015

November 26. 2014 TRANS GENIC INC.

～ For Healthy and Affluent Lives of People Around The World ～

http://www.transgenic.co.jp

Copyright© TransGenic Inc. All Rights Reserved.

Table of Contents

Ⅰ. Overview of Consolidated Financial Results for the Second Quarter of FY2014

Ⅱ. Consolidated Business Forecast for FY2014

Ⅲ. Business Topics

Ⅳ. Current Status of Research and Development

Ⅴ. Technical Expertise

Ⅵ. Research Topics

1

Copyright© TransGenic Inc. All Rights Reserved. 2

Ⅰ. Overview of Consolidated Results for the Second Quarter of FY2014


Overview of Consolidated Financial Results Consolidated Financial Results Highlight of 2Q-FY2014

Unit: thousand yen Second Quarter FY2013

Second Quarter FY2014 Change

Net Sales 561,499 717,376 155,877

Cost of Sales 421,990 526,403 104,413 Gross Profit of Sales 139,508 190,973 51,465

SG&A expenses （R&D expenses）

271,379 （17,809）

317,280 （20,485）

45,901 （2,676）

Operating Loss ▲131,870 ▲126,307 5,563

Ordinary Loss ▲168,287 ▲132,516 35,771

Net Profit ▲179,798 ▲130,713 49,085

Constructed management base to accomplish mid-term business planning Vision Sales amount increased by 27.8%, gross margin increased by 36.9% from the previous year due to the M&A effect Operating loss improved and ordinary loss substantially reduced by the construction of flexible group management system

3


Overview of Consolidated Financial Results Consolidated Financial Results of 2Q-FY2014: Sales amount

Expect about 24% sales growth in this fiscal year

Transition of sales amount of first and second half in the

past 3 years

4

(Forecast)

（million yen）


Overview of Consolidated Financial Results Consolidated Financial Results of 2Q-FY2014 :Operating profit/loss

・Operating profit/loss improved in the first half despite the second half-oriented business-style ・Expect surplus expansion with an enlargement of business scale in the second half

Transition of operating profit/loss in the past 3 years

（million yen）

(予想) First half Second half (Forecast


2Q Sales amount 2Q Operating profit

Revenue increased due to steady performance of contract genetically engineered mouse production

Profit decreased because of change in sales structure and increased operating expenses in association with rising reagent price

Introduced new technologies actively, and conducted research and development for sales promotion of disease model mouse

Genomics business

Overview of Sales Revenue Performance Summary： Genomics Business

(thousand yen) (thousand yen)

6


2Q Sales amount 2Q Operating profit/loss

Revenue declined because of insufficient order backlog at the beginning of FY2014, and second half-intensive delivery

Order backlog as of end-September: 302,415,000 yen (213% over the previous year)

Operating profit/loss improved by streamlining business operation Enhanced cooperation with each group business, established revenue model,

and ensured profit

CRO business

7

241,265

200,488

0

50,000

100,000

150,000

200,000

250,000

2014 2015


Overview of Sales Revenue Performance Summary: Contract Research Organization Business



Significantly increased in revenue due to M&A effect Operating profit decreased because of second half-oriented business style and

slump in reagent sales Constructed flexible management system, launched gene testing business,

and focused on operating molecular pathology analysis

Dynamic Biomedicals business

Overview of Sales Revenue Performance Summary : Dynamic Biomedicals Business


8



Both sales amount and operating profit did well, consequently marked increases in sales and profit

Revenue expanded by launching new service

Pathological diagnostics business

Overview of Sales Revenue Performance Summary: Pathological Diagnostics Business


9


Ⅱ. Consolidated Business Forecast for FY2014


Unit: thousand yen FY2013 （result）

FY2014 （forecast） Change Note

Sales amount 1,617,572 2,000,000 ＋382,428

Genomics 279,773 280,000 ＋227 Sales amount in the first half : ＋8,850,000 yen compared with the previous year

CRO 668,477 820,000 +151,523 Order backlog as of end-Sep.: ＋160,187 thousand yen

Advanced medical 418,385 520,000 +101,615 GeneticLab was incorporated in

August of FY2013

Pathological diagnostics 250,935 380,000 +129,065 GeneticLab was incorporated in

August of FY2013

Operating expenses 1,702,594 1,980,000 +277,406

Operating profit ▲85,022 20,000 +105,022

Ordinary profit ▲122,231 20,000 +144,231

Net profit ▲113,642 15,000 +128,642

2 billion yen of sales amount and surplus in operating/ordinary/net profit are expected in the FY2014, due to the facts that performance in the first half was healthy, orders were smoothly secured, and sales tend to increase in second half.

Consolidated Business Forecast for FY2014

11


Ⅲ. Business Topics

Copyright© TransGenic Inc. All Rights Reserved. M

anagement

companies

（cosmetic

・ food com

panies etc.

）

TG M

olecular Analysis Center

Order ・Sending sample

Analysis/measurement result

Order・ Sending sample

Analysis result Analysis/ measurement result

Sending sample

Contract analysis/measurement service

Contract genetic test service

General

consumers

Re

se

ar

ch

er

s

Order ・ Sending sample

Analysis result

Providing health advice and supplement

Partnering companies/

medical institutions

Genetic Test Business

Business expansion in the new market; Full-scale entry to genetic test business in healthcare field

Reinforcing contract service system in association with business expansion; Establishment of TG Molecular Analysis Center

13


Ⅳ. Current Status of Research and Development


Research and Development Topics in FY2014

May

Jun.

Sep.

Entered into collaborative research agreement on follicle function marker in the blood

Patent on Trap-Mouse Technology has been granted in the US

Oct.

Apr. Entered into exclusive licensing agreement (in China) on cancer diagnosis utilizing pancreas cancer marker

Founded “Visualized mouse study meeting”

Launched anti-human HSD3B2 monoclonal antibody for primary hyperaldosteronism research

15

Agreement

Launched lifestyle disease biomarker measurement service

Patent

Entered into collaborative research agreement with AIST

Product/service Others

Jul.

Filed a patent application on inflammatory stress-visualized mouse

Established TG Molecular Analysis Center Aug. Entered into exclusive licensing agreement (in China) on cancer diagnosis utilizing urological cancer marker

Nov. Participated in the 37th Annual Meeting of the Molecular Biology Society of Japan

Academic conference

Hosted luncheon seminar at the 56th Annual Meeting of Japanese Association for Oral Biology


Our Intellectual Property Current Status of the Major Patents

16

‘JP3816512’ Patented in Japan ‘US7,700,741’ Patented in the U.S. ‘JP4608432’ Patented in Japan (diagnosis of early stage cancer)

Jun. 2006 Apr. 2010 Nov. 2010

‘JP4319700’ Patented in Japan ‘US8,883,972’ Patented in the U.S

Jun. 2009 Nov. 2014

Cancer marker in urine：Assay system for cancer diagnosis using urine sample

Pancreatic cancer marker：Antibody and its diagnosis application

‘AU778719’ Patented in Australia ‘US7,312,075’ Patented in the U.S. ‘EP1201759’ Patented in Europe ‘ZL00812904.5’ Patented in China ‘HK1048830B’ Patented in Hong Kong ‘JP4664554’ Patented in Japan ‘ZL200510084464.6’ Patented in China ‘US8,722,408’ Patented in the U.S.

Apr. 2005 Dec. 2007 Mar. 2010 Jun. 2010 Dec. 2010 Feb. 2011 Apr. 2013 Apr. 2014

Exchangeable Gene-trap Mouse Technology

‘ZL2003801028324’ Patented in China ‘AU2003277620’ Patented in Australia ‘EP1559318’ Patented in Europe ‘JP4426728’, ‘JP4478577’ Patented in Japan ‘KR941905’ Patented in Korea ‘JP4478577’ Patented in Japan ‘US7,919,674’ Patented in the U.S. ‘ZL200710193915.9’ Patented in China ‘HK1124363B’ Patented in Hong Kong ‘JP5080597’ Patented in Japan

Jul. 2008 Feb. 2009 Apr. 2009 Jan. 2010 Mar. 2010 Apr. 2010 Apr. 2011 Sep. 2011 Dec. 2011 Sep. 2012

GANP® Mouse Technology


Target identification

Antibody production

Utility verification

Assay system establishment

Licensing & clinical

development Market launch

Approx. 3 years Approx. 2 years

Cancer marker in urine Kyushu University etc.

Pancreatic cancer marker National Cancer Center

Urological organ cancer marker

Juntendo University

Bile duct cancer marker Kumamoto University

Lung cancer marker Kumamoto University

Development of antibody product

Develop the product from external research institutes

Mid term

Short term

In progress to launch (domestic diagnostic company）

Negotiating potential licensees Accumulating additional data Assay kit on sale

Assay kit on sale

Considering utility

Considering utility

※Collaboration with IBL

※Began clinical trial at Chinese company

Small-cell lung cancer marker

National Cancer Center

Considering utility

Metabolic syndrome marker：AIM The University

of Tokyo Assay kit on sale

※Joint Patent Filing with National Cancer Center

※Exclusive license agreement with Chinese company

※ Exclusive license agreement with Chinese company

Overview of Research & Development Pipeline Status of the Development Pipeline

Clinical depression marker AIST Preparing antibody

Follicle Function Marker St. Marianna University Preparing antibody


Ⅴ. Technical Expertise

18


Technical Expertise Reporter System utilizing Firefly Luciferase

Visualized mouse Luciferin (substrate)

Imaging by CCD camera

Luciferase gene

Firefly Luciferase

Luciferin + ATP + O2 Oxyluciferin + AMP + CO2 +

Luciferase protein

IVIS system

Luciferase-expressing cell

Luminescence


Useful tool for pathological condition model analysis

20

Technical Expertise Pathological Condition-Visualized Mouse ~ Stress Indicator Mouse (on sale) ~

ERAI-Luc KI mouse

Tunicamycin-treated （endoplasmic reticulum stress）

Endoplasmic reticulum stress Oxidative stress Neurodegenerative disease Metabolic syndrome Cancer etc.

Arteriosclerosis Diabetes Rheumatism etc.

Visualization by bio-imaging using luciferase Tracking cellular stress (endoplasmic reticulum stress, oxidative stress) non-invasively, over time, and on a long term basis.

Cellular stress-visualized mouse

ERAI-Luc system


Technical Expertise Pathological Condition-Visualized Mouse ~ New Mouse to Visualize Inflammation ~

Visualizing inflammation New tool for pathological condition

model analysis

Bio-imaging by using luciferase Visualizing inflammation non-invasively, over time, and on a long term basis

Inflammation indicator mouse (in product development stage)

LPS-treated (inflammatory stimulus)

IL1b-Luc mouse

IL1b-Luc system

Patent pending Collaborative research with Dr. Iwawaki (Gunma University)


Technical Expertise Inflammation and Pathological Condition

Aging Cancer

Arteriosclerosis Obesity

Alzheimer disease etc.

Inflammatory stress Chronic inflammation

Redness, swelling, fever, pain

Major key inflammatory factor Interleukin 1β(IL-1β)

Wound Microbial infection Autoimmune disease etc.

Acute inflammation


Technical Expertise Production and Secretion Mechanism of Inflammatory Factor IL-1β

Stimulation by microbial infection etc.


Technical Expertise Construction of Inflammatory Reporter System using IL-1β

Normal During inflammation

High specificity due to two-staged adjustment

Degradation

Weak expression Strong expression

Degrade other than Luc


Technical Expertise Visualized Mouse Utilizing Inflammation Reporter System

Inflammation indicator mouse： Useful for basic and preclinical research on various inflammation-related diseases (such as cancer, arteriosclerosis, obesity, Alzheimer disease, and aging)

Signal coming from inflammation reporter mouse stimulated with LPS


VI. Research Topics

Maehara, N., Arai, S., Mori, M., Iwamura, Y., Kurokawa, J., Kai, T., Kusunoki, S., Taniguchi, K., Ikeda, K., Ohara, O., Yamamura, K. and Miyazaki, T. Circulating AIM prevents hepatocellular carcinoma through complement activation. Cell Reports 9:61-74, 2014.


Research Topics

Non-Alcoholic Steatohepatitis （NASH)

Possible number of patients: two million Would-be NASH patients: ten million

Conventional liver cancer

Non-viral/Non-alcoholic steatohepatitis (NASH)

Hepatitis B, Hepatitis C, Alcoholic hepatitis

Cirrhosis

Liver cancer

Obesity

Hepatitis, liver cancer

New liver cancer

Chronic hepatitis

27


Research Topics

Onset of Liver Cancer at AIM-/-

Liver cancer marker gp73

Frequency of liver cancer

HFD (w)

Liver cancer

High fat diet

100%

28


Fatty liver

29

Research Topics What’s happening at AIM-/-

ER stress Oxidative stress

Inflammatory cytokine

Normal concept “Fatty liver⇒ Inflammation⇒ Cirrhosis” is not applicable!

Stress and inflammatory response


rAIM Administration to AIM-/-

30

Research Topics Administration of rAIM： Accumulation at surface of liver cancer cells

HFD 0 w

HFD 52 w

AIM IgM gp73

AIM accumulates at the surface of liver cancer cells with IgM


Change after inducing membrane-type AIM expression

Complement System C3 AIM

31

Research Topics Activation of Complement System and Cell Death of Liver Cancer

Membrane attack complex

(C5b-C9)

Before inducing

AIM

After Inducing

AIM

Hepa1.6 (liver cancer cell）


Research Topics

Onset of Liver Cancer at AIM-/-

rAIM administration to AIM-/- 肝癌

Effect on transplanted tumor

Liver cancer marker Gp73 disappeared

Tumor shrinkage

Hepa1.6 (liver cancer cell）

Transplant to AIM-/-

before inducing AIM

after inducing AIM

Liver cancer disappeared by AIM administration 32


AIM Intake Suppression of fat accumulation in the liver cells Suppression of fatty liver

Healthy liver

AIM accumulation on the cell surface Activation of complement system necrosis causing specifically to cancer cells

Cell necrosis

Phagocytosis by macrophage

AIM

Maehara et al, Cell Rep 2014

Complement system-induced

cytotoxicity

AIM

FA

FA FA

neutral fat

fatty acid

Research Topics

Regulation of Liver Cancer by AIM

oncogenesis

Low in AIM

Increased liver cancer

Normal in AIM

Weak activation of complement system

33

Activation of complement system

oncogenesis

～ For Healthy and Affluent Lives of People Around The World ～

http://www.transgenic.co.jp

financial results · 11/26/2014 · note: this material includes forward-looking statements based...

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