financial results fy12/15 and new business strategy · and new business strategy. ... liv-2008;...

Copyright © 2016 Chiome Bioscience Inc. All Rights Reserved.

12 February, 2016Chiome Bioscience Inc.

Securities code : 4583

Financial Results FY12/15and New Business Strategy

Copyright © 2016 Chiome Bioscience Inc. All Rights Reserved. 2

Agenda

Overview of FY12/15 “Financial Results”

Overview of FY12/15 “Topics in Operation”


Financial Results: Profit and Loss

(¥million)

254

1,666

▲ 1,412 ▲ 1,407 ▲ 1,437

280

1,549

828721

▲ 1,269 ▲ 1,253 ▲ 1,282

▲ 2,000

▲ 1,500

▲ 1,000

▲ 500

0

500

1,000

1,500

2,000

Net sales COS / SGA R&D expenses Other costs Operatingincome

Ordinaryincome

Net income

FY12/15 Forecast FY12/15 Result


Financial Results: Balance Sheet

As of December 31, 2014 As of September 30, 2015（¥million）

Cash on handand

in banks

5,418 Net assets

5,815

Other current assets 156Property, equipment

and Intangible assets 419Other non-current assets 117

Liabilities 296

Othercurrent assets

2,972

Cash on handand

in banks1,301

and Intangible assets 458Property, equipment

Other non-current assets 186

Liabilities 354

Net assets4,564

Working capital￥4,000ｍ

On July 1, 2015, the Company has totally merged with its only consolidated subsidiary Livtech, Inc. and its consolidated subsidiary no longer exists. As a result, each figure is showed on the Company's non-consolidated basis.


Agenda

Overview of FY12/15 “Financial Results”

Overview of FY12/15 “Topics in Operation”


Topics and Operation (1)

Business development activities Due to its unique features, the fully human ADLib® system is

attracting wide acclaim from pharmaceutical companies. In order to out-license the ADLib® system under favorable financial conditions, we are accumulating further successful cases of antibody generation through collaborations. We plan to promote antibody generation projects for targets for which clinical proof of concept has already been achieved.

An Option License Agreement for a worldwide exclusive license for the development of LIV1205 as an Antibody Drug Conjugate (“ADC”) has been concluded with Switzerland-based company, ADC Therapeutics SA (“ADCT”)

“ADC” ADCs are monoclonal antibodies attached to biologically active drugs with chemical linkers. By combination the unique targeting of antibody with anti-cancer drugs, ADCs allow sensitive discrimination between healthy and diseased tissue.


Topics and Operation(2)

R&D Results Continuation of research activities for refining fully human ADLib®

system and developing therapeutic antibodies by using the ADLib®

system. The former LivTech laboratory has been upgraded and expanded to

a drug discovery laboratories, which had already commenced its operation.

Drug Discovery Alliance Chiome Bioscience has renewed its agreement with the Chugai

Pharmaceutical group to continue research and development collaboration.

LIV-2008; terminated the agreement with Yakult Honsha, settlementprocedures were completed and an amount totaling ¥24,927 thousand posted for the current period.


Topics and Operation(3)

Lead Antibody Licensing Seeking out-licensing opportunities of humanized anti-semaphorin

3A antibodies (BMAA) during current period.

LIV-2008, humanized anti-TROP-2 antibody, has been introduced to pharma companies through One-on-One meetings at conferences. For LIV-1205 and LIV-2008, we are working on aggressive promotion activities towards out-license deals.

Licensing Out Platform Technology Receiving license fees from Fujirebio for its use of the original

ADLib® system. Expecting their R&D activities aimed at developing new diagnostic kits based on the ADLib® system.


Investment in EVEC, Inc

9

Strengthening R&D capability in infectious diseases by synergizing with EVEC, Inc.

EVEC, Inc.Venture backed biotech, EVEC owns an unique technology to develop fully human antibodies from human B cell lymphocytes which are responsible for antibody production in the body. They have track records to develop lead antibodies for infectious diseases, and signed license agreements with Boehringer Ingelheim and Astellas Pharma.

Established January 10, 2003

Officer Kenzo Takada, MD, PhD, Representative Director, ChairmanHisato Doi, Representative Director, President

Office Mitsuiseimei-Odori Bldg 8F,Odori W6,Chuo-ku,Sapporo

Directors and employees 19 （6 Directors, 13 Employees）

Capital 419 million yen

Execute an investment in capital of to EVEC, Inc. and to build collaboration with them having complementary technology of ADLib® system


Option License Agreement for LIV-1205, an anti-cancer antibody

Receive up to max 9 billion yen milestones

In total 9 billion yen Milestones + Royalties

In the Option License Agreement, Chiome granted ADC Therapeutics (ADCT) an option to a worldwide exclusive license to develop LIV-1205 as an ADC for anti-cancer therapeutic use.

Upfront payment on execution of this Option License Agreement

Upfront payment on execution of the option right upon evaluation

under Option License Agreement

Milestone payments based on the progress of development

Royalties based on the sales in market


New Business Strategy


Current progresses in ADLib® system

12

Fully human ADLib ® system

Original and mouse chimeric ADLib® system

Successfully generated new antibodies for a Japanese pharma to support their drug development

Enhancement of efforts to obtain new contracts in the field including infections diseases

Needs functional evidence by further accumulation successful cases of antibody generation, to develop our business

【Out-Licensing】Needs many successful cases in generation of human antibodies to

obtain pilot-study agreement to evaluate the technology.

【Library Development, Antibody generation】 Securement of library diversity as well as original ADLib® system Antibodies against same target as launched antibody were

successfully obtained, as evaluation of library performance.


Topics : Fiscal 2015

13

Execution of Option License Agreement for LIV-1205 with ADC Therapeutics

Integration with LivTech and reorganized into Drug Discovery Laboratories

Investment in EVEC, Inc

An Option License Agreement for a worldwide exclusive license for the development of LIV-1205 as an Antibody Drug Conjugate (“ADC”) has been concluded with ADC Therapeutics (“ADCT”). In addition to an upfront on signing the agreement Chiomewill receive from ADCT an Option fee on exercising of the option right. In total Chiome are eligible to receive up to 9 billion yen plus royalties based on the sales.

LivTech, Inc. (“LivTech”) was fully merged into Chiome. The former LivTechlaboratory has upgraded and expanded its human resource and research facility as a Drug Discovery Laboratory, which commenced its operation.

To contribute to achieve business vision and boost the corporate value, Chiomehas invested into Evec who possesses proprietary platform technologies for generating fully human antibodies from human B lymphocyte which is responsible for antibody generation in the body, also has track record of out-licensing lead antibodies to pharmaceutical companies.


Key strategies for the rapid growth in the future

A Two-pronged Growth Strategy

14

Strengthening drug discovery engine through strategic alliances

Fulfilling and advancing development of pipelines

Promote strategic alliances to enhance the capability of drug discovery using ADLib® system and establish drug discovery platform.

Generating competitive antibodies against new targets of unmet medical needs

Antibody against validated targets with high probability of success in development.

Consider conducting early clinical study to add values to pipeline antibody


Empower drug discovery engine through strategic alliances

15

Expansion of Antibody Drug Pipeline

ADLib® system + Other Drug Discovery technologies

Promoting new collaborative research and business alliance for the enhancement of drug discovery technology in the future

Track records to develop lead antibodies Platform of evaluation of drug efficacy

ADLib® system

Drug Discovery Platform

Investment

Merger with Chiome

Collaborative research

Enhancement of Drug discovery technology

Track records to develop lead antibodies Antibody production using EB virus

Academia Pharmaceutical companies

Identification of antibody drug candidates

Antibody generationInnovation of new technology


A Scenario for Expanding Pipeline

16

Basic research, Drug Discovery Pre-clinical study Clinical study Approval Launch

LIV-2008

ADLib® system

LIV-1205

New targets in unmet medical needs area

Development of Pipeline

Important POINT ①

Important POINT②

CBAntibody generation technology A Antibody engineering

Animal study

Antigen preparation

Development of Drug Discovery Platform

BMAA(Anti-Sema3 A antibody)

Validated targets which have high developability

Consideration of further development

Brushup of each technology

Synergistic value-up

Enhancement generation power Establishment of drug discovery technology

NewPipeline

NewPipeline

NewPipeline


Further development for early phase clinical study

17

Milestone

Upfront level

売上Estimated timing of

out-licensing

Planning further development for early clinical study and maximizing antibody value for out-licensing with good deal

early late

Developmentcosts

Increase greatly

Increase total value of contractIncrease loyalty rate

In case of advanced developmental stage

Increase own development costs

Basic research, Drug Discovery

Pre-clinical study Clinical study Approval Launch

※Expectation for effect of shortening of period toward launch


Pipeline - Therapeutic antibody -

18

Project Target TherapeuticArea

Basic research, Drug Discovery Pre-

clinical Study

Clinical Study Partner

Search of Drug Target

LeadSelection

LeadOptimization

LIV-1205 DLK-1

Oncology

Oncology/ADC

LIV-2008 TROP-2Oncology

Oncology/ADC

BMAA SEMA3A suspense

New PJ Undisclosed

ADCT


Features of LIV-1205

Project code : LIV-1205 (Humanized)

Potential drug candidate for liver cancer treatment, currently limited treatment options to cancer patients

First-in-class therapeutic antibody, targeting intractable cancers such as liver cancer etc.

DLK-1, a cell surface protein, is a therapeutic target. DLK-1 exhibits a very low level in normal tissue and increases a high expression level in cancer cell surface.

Expectation for development as a therapeutic agent with little side effects

Naked LIV-1205 antibody exhibited a noticeable inhibition effect on tumor growth whenadministered alone using animal model

Antibody Drug Conjugate (ADC) approach is one of options in drug development becauseLIV-1205 has an internalization activity that is taken into cells after binding to antigen


Mechanism of action and expected effects of LIV-1205

NK-cell macrophage

- Naked antibody- - ADC antibody-

① Growth inhibition of cancer cell② apoptosis induction of cancer cell

(caspase 3 activity↑)③anti-tumor effect by inductionADCC/ADCP activity※

“internalization ※※”

“clearance of anticancer drug”

Anti-tumor effect based on characteristics of anticancer drug

Anticancer drug

DLK-1

Development of therapeutic antibody to utilize anti-tumor effect (①〜③) of Naked antibody

Development pf ADC antibody to utilize an internalization activity

In addition to ADC approach, Naked antibody can be expected to have anti-tumor effect

(concluded an Option License Agreement with ADCT)

DLK-1

Cell membrane

(Aim for licensing out to pharmaceutical company）

Cell membrane

※A naturally immune function in human. The activity that a white blood cells kill targeting cells, such as cancer cell or taken into the cell and break down

※※A phenomenon that antibodies will be taken into cells after binding the antigen


Features of LIV-2008

Project code︓LIV-2008/LIV-2008b（Humanized）

Exception for development of various intractable solid cancer

Best-in-class therapeutic antibody, targeting various cancer typeTwo type of therapeutic antibody, recognizing different epitope and having different character

TROP-2, cell surface protein is a target. Expression of TROP-2 increased in various cancer type. TROP-2 is attracting molecule as a therapeutic target for cancer treatment.

Expectation for development as a therapeutic agent with little side effects

Potent anti-tumor activity was observed in various cancer with Naked antibody (LIV-2008)

alone using animal model.

ADC approach is one of options in drug development, because LIV-2008b has aninternalization activity that is taken into cells after binding to antigen.


Mechanism of action and expected effects of LIV-2008/LIV-2008b

TROP-2

Development of multifunctional therapeutic antibody to utilize anti-tumor effect (①) and ADCC/ADCP activity (②)

LIV-2008 and LIV-2008b having different characteristics are expected as a treating method of various solid cancer

TROP-2

“LIV-2008b”“LIV-2008”

LIV-2008 has Growth inhibition activity and is enhanced ADCC/ADCP activity by glycosylation



- Naked antibody- - ADC antibody-

NK-cell macrophage

Anticancer drug

Cell membraneCell membrane

“internalization ※※”

“clearance of anticancer drug”

① Growth inhibition of cancer cell②anti-tumor effect by inductionADCC/ADCP activity※

Development pf ADC antibody to utilize an internalization activity

※A naturally immune function in human. The activity that a white blood cells kill targeting cells, such as cancer cell or taken into the cell and break down

※※A phenomenon that antibodies will be taken into cells after binding the antigen

Internalization activity of LIV-2008b and anti-tumor effect based on characteristics of anticancer drug


Revision of segment

23

On January 1, 2016, the company is linked the report segment with new business development. The major changes are shown below.

Drug Discovery Alliance

Lead Antibody Licensing

Licensing Out Platform Technology

This is business to obtain upfront costs, milestone, royalties relating to out-licensing of platform technology for generation of therapeutic antibody or patents of drug discovery seeds, and income by collaborative research.

This is business to obtain income relating antibody generation service that necessary support for drug discovery research at pharmaceutical companies, or to offer our platform technology for diagnostic and research antibody generation.

Drug Discovery and Development

Drug Discovery Support




New segment of business model and phylogram

24

Upfront payment, Milestone payment, Royalties

Commercialization rights of antigen and antibody

Drug Discovery Platform

ADLib® system

Antibody engineering

＋various Antibody generation technology

Animal study

Antigen preparationA

cade

mia


Drug Discovery Support Ph

arm

aceu

tical

com

pani

es


Revenue model

25

Basic/Discovery Study

Pre-clinical Study

Approval review

Marketing

Milestone Royalties

Pharmaceutical companiesAcademia

Chiome

ChiomePharmaceutical companies

Upfront

Licensing-out

Business Revenue

¥,＄,€

¥,＄,€

Clinical Study

Col

labo

rativ

e re

sear

chC

hiom

ePr

ojec

ts

Dru

g D

isco

very

and

D

evel

opm

ent


Pharmaceutical companies


Long-term Business Strategy

26

Time

Com

pany

val

ue

2016 Early stage of growth

Late stage of growth

→Acquisition of stable earnings

LIV-2008LIV-1205


BMAA (Anti-Sema3A antibody)

New Pipeline

Source of growth


Stable & Expanded stage

Focusing investment on Drug Discovery and Development business for enhancing a company's value

Generation, development, and out-licensing of pipelines


Maximize value of Drug Discovery and Development Business

27

Ensure business fund from operational reforms and execute new corporate strategy

Downsizing of organization with the aim of coping with the cost of early clinical development for boosting corporate value

Acquiring stable earnings by promotion of Drug Discovery Support

Focusing on research that can obtain data required for out-licensing contract thoroughly

Optimizing number of employees by voluntary retirement


Fiscal 2016︓Sales of Drug Discovery Support and R&D Expenses

28

0

100

200

300

400

500

600

700

800

900

1,000

Sales R&D Expenses

Result of fiscal 2015 Forcast fiscal 2016

¥million

Sales of Drug Discovery Support

Selection and concentration of research projects

Acquisition of stable earnings by Drug Discovery Support

227246

828

585


Our Mission

29

We revolutionize the medical care

We aim for “a conversion into business model that produce highly added value”

For all people around the world who are waiting for new medical care

We generate innovative therapeutic antibodies

We continuously generate novel drug discovery technologies based on diversity of genetic information


Contributing to Human Society

Our Vision

A healthcare innovator creating drugs that are 100% effective

30

2018 Countermeasures for pandemic diseases

2023 The ultimate made-to-order medicine

Important assignment toward our vision


Ethics & Transparency

Evolution & Creation

Chiasma & Global Exchange

We strive to be a sound, well-respected company that values human life.We strive to create the future through the development of each person and the company as a whole.We are committed to the transcendence of national and international borders.


Disclaimer

32

• Materials and information provided during this presentation may contain so-called “forward-looking statements.” These statements are based on current expectations, forecasts and assumptions that are subject to risks and uncertainties, which could cause actual outcomes and results to differ materially from these statements.

• Risks and uncertainties include general industry and market conditions, and general domestic and international economic conditions such as interest rate and currency exchange fluctuations.

• The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

financial results fy12/15 and new business strategy · and new business strategy. ... liv-2008;...

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