Chiome Bioscience : Non-Consolidated Financial Results (Japanese GAAP) for the Fiscal Year Ended December 31, 2021

Non-Consolidated Financial Results (Japanese GAAP)

for the Fiscal Year Ended December 31, 2021

		February 14, 2022
Company Name:	Chiome Bioscience Inc.	Tokyo Stock Exchange
Stock Code:	4583	URL https://www.chiome.co.jp
Representative:	Shigeru Kobayashi, President & CEO
Inquiries:	Arihiko Bijohira, Executive officer, Head of Corporate	TEL: [phone]

Administration

Scheduled date of the Annual General Meeting of Shareholders : March 25, 2022

Scheduled dividend payment commencement date: －

Scheduled filing date of the Securities Report : March 25, 2022

Supplementary materials prepared for the financial results : Yes

Holding of a financial results explanatory meeting : Yes (For institutional investors and securities analysts)

(Amounts of less than one million yen are rounded down)

1. Financial Results for the Fiscal Year Ended December 31, 2021 (January 1, 2021 to December 31, 2021)

(1) Operating Results

(% figures are the increase / (decrease) compared with the previous fiscal year)

Net Sales

Operating Income

Ordinary Income

Net Income

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Fiscal year ended

712

48.3

(1,334)

－

(1,329)

－

(1,479)

－

Dec. 31, 2021

Fiscal year ended

480

7.4

(1,283)

－

(1,291)

－

(1,293)

－

Dec. 31, 2020

Net Income per

Diluted Net Income

Ordinary

Operating

Return on Equity

Income to Total

Income to Net

Share

per Share

Assets

Sales

Yen

Yen

%

%

%

Fiscal year ended

(36.74)

－

(59.9)

(45.6)

(187.2)

Dec. 31, 2021

Fiscal year ended

(36.06)

－

(45.6)

(41.0)

(266.9)

Dec. 31, 2020

(Reference) Equity in earnings (losses) of affiliates:

Fiscal year ended Dec. 31, 2021 － million yen

Fiscal year ended Dec. 31, 2020 － million yen

Notes:

1. Despite the existence of shares with a dilutive effect, diluted net income per share is not stated because Chiome incurred a loss for each respective period.

(2) Financial Position

	Total Assets		Net Assets	Equity Ratio	Net Assets per Share
	Million yen		Million yen	%	Yen
As of Dec. 31, 2021	2,339		1,893	79.4	45.55
As of Dec. 31, 2020	3,494		3,109	88.2	77.99
(Reference) Equity As of	Dec. 31, 2021: 1,857 million yen	As of Dec. 31, 2020: 3,081 million yen
(3) Cash Flows
	Cash Flow from	Cash Flow from	Cash Flow from	Cash and Cash
	Equivalents as of the
	Operating Activities	Investing Activities	Financing Activities
	End of the Period
	Million yen		Million yen	Million yen	Million yen
Fiscal year ended	(1,131)		(35)	271	1,790
Dec. 31, 2021
Fiscal year ended	(1,360)		(3)	1,944	2,686
Dec. 31, 2020

2. Dividends

		Annual Dividend			Total	Dividend		Dividend
	1Q-End	2Q-End	3Q-End	FY-End	Total		Dividend	Payout		s to Net
		(Annual)	Ratio		Assets
	Yen	Yen	Yen	Yen	Yen		Million yen	%	%
Fiscal period ended	－	0.00	－	0.00	0.00		－	－		－
Dec. 31, 2020
Fiscal year ended	－	0.00	－	0.00	0.00		－	－		－
Dec. 31, 2021
Fiscal year ending
Dec. 31, 2022	－	0.00	－	0.00	0.00			－
(forecast)

3. Forecast of Financial Results for the Fiscal Year Ending December 31, 2022 (January 1, 2022 to December 31, 2022)

As it is difficult to provide reasonable estimates for Drug Discovery and Development Business at present, Chiome discloses only business forecasts for Drug Discovery Support Business (net sales of ¥620 million). For details, please refer to "1. Overview of Operating Results (4) Outlook for the Fiscal Year Ending December 31, 2022" on page 5 of the attached materials.

Notes:

1. Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatements
2. 1. Changes in accounting policies in line with revisions to accounting and other standards : No
   2. Changes in accounting policies other than 1) above : No
   3. Changes in accounting estimates : No
   4. Retrospective restatements : No
3. Number of Shares Issued (Common Stock)

1)	Number of shares issued as of the end	As of	40,781,500	As of	39,505,200
	of the period (including treasury stock)	Dec. 31, 2021	Shares	Dec. 31, 2020	Shares
2)	Number of treasury stock as of	As of	146	As of	146
	the end of the period	Dec. 31, 2021	Shares	Dec. 31, 2020	Shares
3)	Average number of shares for the	Fiscal year ended	40,277,819	Fiscal year ended	35,879,467
	period (cumulative total for the period)	Dec. 31, 2021	shares	Dec. 31, 2020	shares

• This summary report on Chiome's financial statements is not subject to review procedures.
• Explanation Concerning the Proper Use of Financial Results Forecasts and Other Relevant Specific Items

1. Forward-lookingstatements including forecasts of financial results contained in this report are based on management's assumptions and beliefs that are determined to be reasonable in light of currently available information. Chiome cautions readers that due to a variety of factors actual results may differ materially from forecasts. For the assumptions that underpin financial results forecasts as well as other related items, please refer to "1. Overview of Operating Results (4) Outlook for the Fiscal Year Ending December 31, 2022" on page 5 of the attached materials.
2. Chiome plans to hold a financial results explanatory meeting by online for institutional investors and securities analysts on February 17, 2022. Plans are also in place to post a copy of the supplementary materials distributed at the meeting on Chiome's website in conjunction with disclosure to the Tokyo Stock Exchange today.

CONTENTS
1. Overview of Operating Results	2
(1)	Overview of Operating Results in the Fiscal Year Under Review	2
(2)	Overview of Financial Position in the Fiscal Year Under Review	4
(3)	Overview of Cash Flows in the Fiscal Year Under Review	4
(4)	Outlook for the Fiscal Year Ending December 31, 2022	5
2. Fundamental View on Selection of Accounting Standards	5
3. Financial Statements	6
(1)	Balance Sheets	6
(2)	Statements of Income	8
(3)	Statements of Changes in Net Assets	10
(4)	Statements of Cash Flows	12
(5)	Notes to Financial Statements	13
	(Notes Regarding Going Concern Assumptions)	13
	(Equity in earnings or losses)	13
	(Segment Information)	13
	(Per Share Information)	16
	(Important Subsequent Events)	17

-1-

1. Overview of Operating Results

(1) Overview of Operating Results in the Fiscal Year under Review

Our company is involved in the research and development (R&D) and research support for antibody drugs. Antibody drugs are prescribed in medical practice, mainly for cancer and autoimmune diseases, and in 2020 the share of biopharmaceuticals, mainly antibody drugs, in the global ethical pharmaceutical market have reached 30%, accounting for more than half of the Top 100 in sales. As there are number of clinical studies underway, the market for antibody drugs is expected to grow further. On the other hand, the economic environment in Japan and abroad during the period under review remain uncertain due to the spread and contraction of new coronavirus (COVID-19) infection repeatedly observed.

Under this external environment, the Company's net sales for the period under review amounted to ¥712,932 thousand (an increase of ¥232,078 thousand year-on-year) due to the receipt of upfront payments from licensing of LIV-2008 and LIV-2008b in the drug discovery business and the expansion of contract research transactions in the drug discovery support business. R&D expenses amounted to ¥1,312,188 thousand (an increase of ¥155,605 thousand year-on-year) due to the CMC development costs, mainly for manufacturing the study drug for CBA-1535. Operating loss amounted to ¥1,334,319 thousand (operating loss of ¥1,283,622 in the previous fiscal year), ordinary loss was ¥1,329,312 thousand (ordinary loss of 1,291,606 thousand in the previous fiscal year), and net loss was ¥1,479,895 thousand (net loss of ¥1,293,798 in the previous fiscal year). An overview of the Company's business activities during the year under review is as follows.

In the drug discovery business, the enrollment of patients in the first part of the Phase I study of CBA-1205, a first- in-class antibody being developed in-house, has been completed in patients with solid tumors, in which the safety of the drug is being assessed by gradually increasing the dose. There have been no serious adverse reactions reported to date, and as a result of the safety assessment in this part of the study, the decision has been made to move to the second part of the Phase I study to assess safety and initial efficacy in patients with hepatocellular carcinoma. The second clinical development product, CBA-1535, a multi-specific antibody, is being prepared for the start of clinical study in Japan in 2022. In drug discovery projects which are in discovery stage, we continue to work on the creation of lead antibodies and on R&D for intellectual properties. We will strive to expand the number and quality of our development pipelines by collaborating with drug discovery companies and academia to launch new drug discovery projects, as well as promoting new themes using our Tribody technology.

• Drug Discovery Pipeline (out-licensed products)

Regarding ADCT-701, an ADC format of LIV-1205 that was licensed out to Switzerland-based ADC Therapeutics SA, they are currently preparing for an IND application and clinical study in the US for 2022. The collaborative development with the National Cancer Institute (NCI) in the USA for the drug for neuroendocrine cancer has been announced.

For LIV-2008/2008b, we signed a license agreement with Shanghai Henlius Biotech, Inc. of China (hereinafter "Henlius") for development and commercialization of the anti-TROP-2 antibodies, LIV-2008/2008b, developed by Chiome. Under the agreement, we granted an exclusive license with sublicensing right to Henlius for development, manufacturing, and marketing of LIV-2008/LIV-2008b in the region of China, Hong Kong, Macau and Taiwan. In addition, we granted an option right in the rest of the world other than the abovementioned territories. The upfront payment of US$1 million received on signing of the agreement was recorded as sales for the fiscal year under review. In addition, there are pharmaceutical companies who continue to conduct in-licensing evaluations. We will primarily focus on alliance management under the agreement with Henlius so that they will exercise the option right, and in parallel, continue to pursue the out-licensing opportunity to a third party in maximizing the business value of this pipeline.

-2-

• Drug Discovery Pipeline (In-house programs, out-licensing candidates)

For CBA-1205, we have been conducting Phase I clinical study in Japan. In the first part of the study, we have been increasing the dose of the investigational drug to be administered to patients in increments, starting with small doses, to confirm the maximum dose that can be safely administered without causing unacceptable side effects. As the safety of the antibody has been shown to be high during the study, we have also changed our initial plan to obtain safety data at higher doses. During the fiscal year under review, the recording of all patients' results in the first part of the study has been completed and there were no serious adverse reactions. As a result, it was determined that the antibody was safe and well tolerated, and the second part of Phase I could be conducted at a higher dose than originally planned, therefore, the decision was made to move to the second part in December 2021.

For CBA-1535, CMC development is underway by a CMO to whom we outsourced the manufacturing of the study drugs, and the manufacture of drug substance and study drug has been completed. As the new coronavirus infection is unlikely to be brought under control, we have considered submitting an application for clinical study in Japan, rather than in the UK, which was originally planned, as this would have a relatively low impact on development.

After consultation with PMDA, regulatory authority in Japan, we have concluded that the data we have already obtained would allow us to apply for clinical study in Japan. We are currently preparing to submit an application for the clinical study in the first half of 2022. This would be first clinical study in the world to validate the mechanism of action of Tribody, which binds to both cancer cells and immune cells (T cells), and activates T cells to beat cancer. If this concept is proved in CBA-1535, this will open up the possibility of applying Tribody to many other cancer antigens.

For the humanized anti-Semaphorin 3A antibody, BMAA, the Collaborative Development License and Exclusive Option Agreement with SemaThera Inc. have been terminated as announced in May 2021. We have started new R&D, and business activities targeting diseases in which Semaphorin 3A is involved.

PCDC is a first-in-class cancer therapeutic antibody that targets CDCP1 involved in the growth and metastasis of cancer cells. We are currently conducting additional animal studies and other activities that are important to the progress of our R&D activities for PCDC program, while seeking opportunities for out-licensing or collaboration with external companies, mainly in the field of ADC. On July 1, 2021, the World Intellectual Property Organization (WIPO) published patent information on the application (WO/2021/132427).

In addition, we had five other drug discovery projects in the exploratory stage, and they were reviewed, prioritized, and replaced with a new project during the year under review after carefully examining the progress of research and data. For two of our drug discovery projects we have been focusing on, we will continue to promote research activities that will contribute to their commercialization in the future, while considering out-licensing and development plans. We are also in the process of selecting projects for which we conduct research activities in-house up to the filing of patent applications, then shift to licensing activities. In addition to the five drug discovery projects being announced so far, we are conducting drug discovery research through joint research, and we have launched new drug discovery projects on promising themes.

As described above, we will continue to select priority projects, change or cancel plans and launch new themes according to the progress of each project, and also continue our efforts to create a new drug discovery pipeline by constantly conducting drug discovery research on around 10 themes that include drug discovery projects. We are participating in a research program in the field of infectious diseases and technology development led by an academia in Japan, which is backed by a grant from the Japan Agency for Medical Research and Development (AMED).

As a result of above, the results for the current fiscal year in the drug discovery business are as follows: net sales of ¥103,013 thousand (an increase of ¥99,805 thousand year-on-year), R&D expenses amounted to ¥1,312,188 thousand (an increase of ¥155,605 thousand year-on-year), and segment loss of ¥1,209,270 thousand (segment loss of ¥1,154,004 thousand in the previous fiscal year).

Drug discovery support business contributes to the company's stable earnings. We offer research support to pharmaceutical companies and research institutions by undertaking antibody production work using our antibody technology ADLib system, our proprietary antibody production methods, as well as protein preparation work and

-3-