Solasia Pharma K K : Consolidated Financial Results for the First Six Months of the Fiscal Year Ending December 31, 2022 (under IFRS)

(Percentages indicate year-on-yearchanges.)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the Japanese original shall prevail.

August 15, 2022

	Consolidated Financial Results for the First Six Months of
	the Fiscal Year Ending December 31, 2022
	(under IFRS)
Company name:	Solasia Pharma K.K.
Listing:	Tokyo Stock Exchange
Securities code:	4597
URL:	https://www.solasia.co.jp/en/
Representative:	Yoshihiro Arai, President and Chief Executive Officer
Contact:	Toshio Miyashita, Chief Financial Officer
	TEL: [phone]

Scheduled date to file quarterly securities report:	August 15, 2022
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results presentation meeting:	Yes (for institutional investors and analysts)

(Millions of yen with fractional amounts discarded, unless otherwise noted)

1. Consolidated financial results for the first six months of the fiscal year ending December 31, 2022 (from January 1, 2022 to June 30, 2022)

(1) Consolidated operating results (cumulative)

			Revenue				Operating profit	Profit before tax			Profit
Six months ended		Millions of yen			%		Millions of yen		%		Millions of yen	%		Millions of yen		%
June 30, 2022	189			(31.9)		(1,228)				-	(1,233)	-			(1,247)		-
June 30, 2021	278			15.8		(1,362)				-	(1,383)	-			(1,394)		-
			Profit attributable to		Total comprehensive		Basic earnings			Diluted earnings
			owners of parent				income						per share					per share
Six months ended		Millions of yen		%	Millions of yen			%					Yen					Yen
June 30, 2022		(1,247)				-	(1,231)					-					(8.98)						(8.98)
June 30, 2021		(1,394)				-	(1,386)					-					(10.91)						(10.91)
(2) Consolidated financial position
																			Ratio of equity	Equity attributable
			Total assets		Total equity			Equity attributable		attributable to
							to owners of parent
					to owners of parent		owners of parent to
														per share
																			total assets
As of			Millions of yen			Millions of yen				Millions of yen			%			Yen
June 30, 2022		3,072			2,590							2,590			84.3			17.31
December 31, 2021		3,144			2,587							2,587			82.3			19.38
2. Cash dividends
									Annual cash dividends per share
			First quarter-end	Second quarter-end				Third quarter-end		Fiscal year-end	Total
Fiscal year ended				Yen				Yen							Yen			Yen			Yen
				-			0.00								-			0.00				0.00
December 31, 2021
Fiscal year ending					-			0.00
December 31, 2022
Fiscal year ending
December 31, 2022																	-			0.00				0.00
(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Consolidated earnings forecasts for the fiscal year ending December 31, 2022 (from January 1, 2022 to December 31, 2022)

(Percentages indicate year-on-year changes.)

										Profit		Basic earnings
	Revenue	Operating profit	Profit before tax	Profit		attributable to
		per share
										owners of parent
	Millions	%	Millions	%	Millions	%	Millions		%	Millions		%	Yen
	of yen		of yen		of yen		of yen			of yen
Fiscal year ending	2,300	311.4	(1,100)	-	(1,100)	-	(1,200)		-	(1,200)		-	(8.02)
~	~	~	~	~	~	~		~	~		~	~
December 31,2022
3,800	579.8	150	-	150	-	50		-	50		-	0.33

Note: Revisions to the consolidated earnings forecasts most recently announced: None

• Notes
• 1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
  2. Changes in accounting policies and changes in accounting estimates
  3. 1. Changes in accounting policies required by IFRS: None
     2. Changes in accounting policies due to other reasons: None
     3. Changes in accounting estimates: None
  4. Number of issued shares (ordinary shares)
  5. 1. Total number of issued shares at the end of the period (including treasury shares)

		As of June 30, 2022	150,092,310 shares
		As of December 31, 2021	133,946,210 shares
2)	Number of treasury shares at the end of the period
		As of June 30, 2022	436,210 shares
		As of December 31, 2021	440,010 shares
3)	Average number of shares during the period (cumulative from the beginning of the fiscal year)
		For the Six months ended June 30, 2022	138,912,094 shares
		For the Six months ended June 30, 2021	127,890,216 shares

• Quarterly consolidated financial results reports are not subject to quarterly review procedures by the Company's independent auditor.
• Proper use of earnings forecasts, and other special matters

The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. Actual business and other results may differ from the statements herein due to various factors.

A financial results presentation meeting will be held on Friday, August 19, 2022 for institutional investors and analysts.

The presentation materials used at the meeting will be available on our website immediately after the meeting.

[Attached Material]
	Index
1. Qualitative information regarding results for the first six months.......................................................................	2
(1)	Explanation of operating results ..................................................................................................................	2
(2)	Explanation of financial position.................................................................................................................	5
(3)	Explanation of consolidated earnings forecasts and other forward-looking statements..............................	5
2. Condensed quarterly consolidated financial statements and significant notes thereto ........................................	6
(1)	Condensed consolidated statement of financial position.............................................................................	6
(2)	Condensed consolidated statement of profit or loss ....................................................................................	7
(3)	Condensed consolidated statement of comprehensive income....................................................................	8
(4)	Condensed consolidated statement of changes in equity.............................................................................	8
(5)	Condensed consolidated statement of cash flows........................................................................................	9
(6)	Notes to condensed quarterly consolidated financial statements...............................................................	10

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1. Qualitative information regarding results for the first six months

1. Explanation of operating results

1. Overview of results Operating results

			(Millions of yen)
	Six months ended	Six months ended	Year-on-year
	June 30, 2021	June 30, 2022
Revenue	278	189	(88)
Gross profit	120	127	6
Operating profit (loss)	(1,362)	(1,228)	133
Profit (loss)	(1,394)	(1,247)	147

The Group intends to focus business operations on expanding its oncology development pipeline, which consists of two products that have already been launched and three in the later stage of development. Under this goal, the Group primarily engaged in the following business activities in the six months ended June 30, 2022.

[Launched products (development completed)] SP-01(Chemotherapy-induced nausea and vomiting)

SP-03 (Oral mucositis/stomatitis caused by chemotherapy and radiotherapy)

Prescription and delivery volumes of Sancuso® (SP-01) and episil® (SP-03), which are mainly sold in China, were adversely affected by the spread of COVID-19 and related city-wide lockdowns in the country. Specifically, the pandemic and lockdowns resulted in temporary closures of cancer treatment centers and significant reductions in patient treatments. Further, marketing activities of the Group's and sales partners' medical representatives (MRs), including their access to medical institutions, were restrained.

[Pipeline products in the clinical study and later phase] SP-02 (Relapsed or Refractory Peripheral T-cell Lymphoma)

The Company confirmed that the primary endpoints of the global Phase II clinical trial (pivotal study) of SP-02 were met in 2020, and on June 30, 2021, filed a New Drug Application (NDA) for the pipeline product with the regulatory authorities; it obtained approval in June 2022. The Company is preparing to launch the product as of the submission date of this document.

SP-05 (Increase in antitumor efficacy of fluorouracil）

In August 2022, the Company announced results that neither the primary endpoint of Overall Response Rate (ORR) nor the key secondary endpoint in Progression Free Survival (PFS) achieved statistical significance in the multi-center, international Phase III AGENT Study of arfolitixorin in combination with 5-FU, oxaliplatin and bevacizumab in metastatic colorectal cancer (mCRC).

[Pipeline products in the non-clinical study phase] SP-04(Chemotherapy-induced peripheral neuropathy)

Based on the results of the Phase III clinical trial of SP-04 targeting oxaliplatin-induced peripheral neuropathy, the Company has decided to park the development of the pipeline product for this indication; instead, we have determined to conduct additional animal studies to investigate the product's potential in

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treating taxane-induced peripheral neuropathy.

Further, Solasia implemented the following measures to improve its business structure and relationship with partners.

• On June 30, 2022, the Company resolved to dissolve its sales structure in China, which had been the main cause of the Group's losses, primarily for the purposes of reducing fixed costs and managing country risk of operating in China, including soaring labor costs and lockdowns in metropolitan areas. In specific, the Company decided to dissolve its sales organization operated by wholly-owned subsidiary Solasia Medical Information Consulting (Shanghai) Co., Ltd. in Beijing, Shanghai, and Guangzhou (hereafter, the "three cities") by the end of July 2022, which will bring down the number of Group employees from 77 (as of March 31, 2022) to around 27.
• Following the abovementioned decision to dissolve its own sales structure in China, on the same day, the Company entered into a sublicense agreement with Lee's Pharmaceutical (HK) Limited, granting the latter marketing rights to Sancuso® and episil® in the three cities in China.
• To lower product procurement costs and ensure stable supply of products, on July 8, 2022, the Company concluded an agreement with Camurus AB, under which it acquired from the latter global licensing rights, including manufacturing
• rights, to episil® (SP-03) oral liquid.

The Company has made progress in the development of its pipeline products as outlined above, and intends to enhance corporate value in the medium to long term through structural reforms aimed at improving earnings. However, in the short term, upfront expenditures for pipeline product development and investments in establishing sales structures continue to exceed earnings from product sales due to the impact of COVID-19-related lockdowns in China, the Company's main market, and product sales still being in the early stage. As a result, in the first six months of the fiscal year under review, financial performance was as follows.

[Revenue, Gross profit]

During the six months ended June 30, 2022, revenue totaled 189 million yen. Revenue mainly came from the sales of pipeline products of Sancuso® (SP-01) and episil® (SP-03). In addition, gross profit amounted to 127 million yen.

Breakdown of R&D and SG&A expenses

			(Millions of yen)
	Six months ended	Six months ended	Year-on-year
	June 30, 2021	June 30, 2022
R&D expenses	617	347	(269)
SG&A expenses	865	1,008	142
Total	1,483	1,356	(126)
(Breakdown)	383	421	37
Personnel expenses
Outsourcing expenses	760	493	(267)
Depreciation and
amortization of intangible	247	248	1
assets
Other	90	192	101

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