Torii Pharmaceutical : Financial Results for the First Nine Months of Fiscal Year Ending December 2023

Financial Results for the

First Nine Months of Fiscal Year

Ending December 2023

I Summary Information	P. 1
①	Financial Results	P. 1
②	Financial Conditions	P. 1
③	Capital Expenditures	P. 1
④	Depreciation/Amortization	P. 1
II Financial Results for the First Nine Months of FY2023	P. 2
①	Statement of Income	P. 2
②	Sales of Products	P. 4
③	Research and Development	P. 5
III Financial Forecasts for the FY2023	P. 6
①	Statement of Income	P. 6
②	Sales of Products	P. 8

※ This material is prepared based on Japan GAAP.

※ Amounts are rounded down to the nearest million yen.

※ The forecasts presented in this material are forward-looking statements. Reflecting assumptions based on information available on the date of publication, these statements are subject to inherent risks and uncertainties. Accordingly, unforeseen factors may cause actual results to differ materially from the projections contained herein.

Torii will not necessarily revise this material regardless of any new information, future events or other results.

October 31, 2023

TORII PHARMACEUTICAL CO., LTD.

I Summary Information

The forecasts for the FY2023 have been changed from the previous forecasts announced at the first six months of FY2023 financial results announcement on July 31, 2023.

• R&D expenses fluctuate significantly due to aggressive business investments for medium-/long-term growth. For this reason, Torii sets operating income before deduction of R&D expenses as a numerical income indicator in the medium-term management plan.

① Financial Results

			FY2022	FY2023		Change
(Millions of Yen)		First nine	First nine	Change
	(%)
			months	months
			A	B	B-A	(B-A)/A
Net sales		35,315	39,132	3,817	10.8
Operating income		4,066	3,211	(855)	(21.0)
Ordinary income		3,918	3,315	(602)	(15.4)
Net income		2,856	2,368	(487)	(17.1)
(Reference)
R&D expenses		1,089	2,811	1,722	158.1
Operating income before	※	5,155	6,022	867	16.8
deduction of R&D expenses
Earnings per share	(￥)	101.66	84.27	(17.39)
(EPS)
Return on equity	(%)	2.4	2.0	(0.4)
(ROE)
Ratio of ordinary income	(%)	3.0	2.5	(0.5)
to total assets
Ratio of operating income	(%)	11.5	8.2	(3.3)
to net sales
Return on assets	(%)	2.2	1.8	(0.4)
(ROA)
② Financial Conditions
(Millions of Yen)		December 31,	September 30,	Change	Change
	2022	2023	(%)
			A	B	B-A	(B-A)/A
Total assets		133,689	132,181	(1,507)	(1.1)
Total equity		119,224	118,595	(629)	(0.5)
Equity ratio	(%)	89.2	89.7	0.5
Book value per share (BPS)	(￥)	4,243.08	4,219.67	(23.41)
③ Capital Expenditures
			FY2022	FY2023		Change
(Millions of Yen)		First nine	First nine	Change
	（%）
			months	months
			A	B	B-A	(B-A)/A
Capital expenditures		612	147	(464)	(75.9)
	PP&E		452	118	(333)	(73.8)
	Intangible assets		159	28	(131)	(82.1)
④ Depreciation/Amortization
			FY2022	FY2023		Change
(Millions of Yen)		First nine	First nine	Change
	（%）
			months	months
			A	B	B-A	(B-A)/A
Depreciation and amortization		342	338	(3)	(1.1)
	of intangible assets
Amortization of long-term		592	502	(89)	(15.2)
	prepaid expenses

FY2022	FY2023		Progress
Full year	Revised forecast		ratio (%)
	C		B/C
48,896	54,000		72.5
5,540	4,500	71.4
5,537	4,700	70.5
3,944	3,400	69.7
1,661	3,600	78.1
7,201	8,100	74.4
140.39	120.99
3.3
4.2
11.3
3.0

FY2022	FY2023
Full year	Revised forecast

662	250
504	180
158	70
FY2022	FY2023
Full year	Revised forecast
454	460
767	670

－1－

II Financial Results for the First Nine Months of FY2023

The forecasts for the FY2023 have been changed from the previous forecasts announced at the first six months of FY2023 financial results announcement on July 31, 2023.

• R&D expenses fluctuate significantly due to aggressive business investments for medium-/long-term growth. For this reason, Torii sets operating income before deduction of R&D expenses as a numerical income indicator in the medium-term management plan.
• Statement of Income

(Millions of Yen)		FY2022	FY2023	Change	Change	FY2023	Progress
	First nine months	First nine months	(%)	Revised forecast	ratio (%)
			A	B	B-A	(B-A)/A	C	B/C
Net sales		35,315	39,132	3,817	10.8	54,000	72.5
	Sales of products		35,055	38,904	3,849	11.0	53,700	72.4
	Renal disease and hemodialysis		8,756	8,602	(154)	(1.8)	11,970	71.9
	Skin disease		9,107	10,347	1,239	13.6	13,980	74.0
	Allergens		13,077	15,290	2,212	16.9	21,440	71.3
	Other		4,113	4,665	552	13.4	6,310	73.9
	Other sales		260	227	(32)	(12.5)	300	75.9
Cost of sales		18,394	21,098	2,703	14.7	29,300	72.0
	Cost of products sold		18,355	21,057	2,702	14.7
	Other cost		39	40	0	2.4
Gross profit		16,920	18,034	1,114	6.6	24,700	73.0
Selling, general and		12,854	14,823	1,969	15.3	20,200	73.4
	administrative expenses
	R&D expenses		1,089	2,811	1,722	158.1	3,600	78.1
	Others		11,765	12,012	246	2.1	16,600	72.4
Operating income		4,066	3,211	(855)	(21.0)	4,500	71.4
	Operating income before	※	5,155	6,022	867	16.8	8,100	74.4
	deduction of R&D expenses
Non-operating income and expenses		(147)	104	252
Ordinary income		3,918	3,315	(602)	(15.4)	4,700	70.5
Extraordinary income and loss		187	(2)	(189)
Income before income taxes		4,105	3,312	(792)	(19.3)
Income taxes		1,249	944	(304)
Net income		2,856	2,368	(487)	(17.1)	3,400	69.7
(Reference) Ratio to net sales
(%)		FY2022	FY2023	Change
	First nine months	First nine months
			A	B	B-A
Cost of sales		52.1	53.9	1.8
SG&A		36.4	37.9	1.5
R&D expenses		3.1	7.2	4.1
Operating income		11.5	8.2	(3.3)
	Operating income before	※	14.6	15.4	0.8
	deduction of R&D expenses
Ordinary income		11.1	8.5	(2.6)
Net income		8.1	6.1	(2.0)

－2－

【Factors in increase/decrease compared with the same term of the last fiscal year】

Operating income (¥3,211 million : Decrease ¥855 million year-on-year)

• Increased sales and decreased profits due to increased R&D expenses and cost of sales, despite increased sales of Allergens and CORECTIM

(Millions of yen)

8,000

6,000

4,000

2,000

0

+3,817

4,066

(2,703)

(1,722)

(246)

3,211

FY2022	Net sales	Cost of sales	R&D expenses	Others	FY2023
First nine months					First nine months

Major factors in increase/decrease (Rounded down to the nearest 0.1 billion yen)

Net sales	Renal disease	:	Decrease ¥0.1 billion in sales	REMITCH Decrease ¥0.6 billion (impact of generic drugs and drug price
	and hemodialysis			revisions),KAYEXALATE decrease ¥0.1 billion(drug price revisions),Riona Increase ¥0.3
			Increase ¥1.2 billion in sales	billion ,ENAROY Increase ¥0.2 billion(increase in sales quantity)
	Skin disease	:	CORECTIM Increase ¥1.4 billion, ANTEBATE Increase ￥0.2 billion(increase in sales
				quantity),ZEFNART Decrease ¥0.1billion(decrease in sales quantity)
	Allergens	:	Increase ¥2.2 billion in sales	CEDARCURE Increase ¥1.2 billion, MITICURE Increase ¥1.0 billion (increase in sales
				quantity)
	Other	:	Increase ¥0.5 billion in sales	BIO-THREE Increase ¥0.4 billion, ORLADEYO Increase ¥0.1 billion (increase in sales
				quantity)
Cost of sales		: Increase in sales quantity
			Increase in purchasing unit price
			Increase due to the effect of foreign exchange rates
R&D expenses	: Increase due to upfront licensing fees for license agreement with Nogra Pharma Limited
			Increase in clinical study expenses（TO-208）
Others		: Increase in sales-linked expenses
			Increase in expenses for operating activities
			Payment of one-time special allowance to employees (inflation allowance)
			Decrease in contract MR

Ordinary income (¥3,315 million : Decrease ¥602 million year-on-year)

	Non-operating income : Increase in interest on securities due to increase in marketable securities and investment	+¥101 million
	securities
(FY2022)	Non-operating expenses：Cancellation penalty of a manufacturing contract	¥140 million
Net income (¥2,368 million : Decrease ¥487 million year-on-year)
(FY2022)	Extraordinary income：Gain on sales of investment securities due to reduction of policy shareholdings	¥187 million

(Reference)

Operating income before deduction of R&D expenses (¥6,022 million : Increase ¥867 million year-on-year)

(Millions of yen)

10,000

7,500

5,000

(2,703)

+3,817

(246)

2,500

0

5,155

6,022

FY2022	Net sales	Cost of sales	Others	FY2023
First nine months				First nine months

－3－

② Sales of Products

(Millions of Yen)	FY2022	FY2023	Change	Change (%)
First nine months	First nine months
	A	B	B-A	(B-A)/A

Sales of Products		35,055	38,904	3,849	11.0
	[Renal disease and hemodialysis]
		Riona		5,037	5,403	366	7.3
		Agent for hyperphosphatemia, Iron-deficiency anemia
		REMITCH		2,613	2,011	(602)	(23.1)
		Oral anti-pruritus agent
		KAYEXALATE	※	914	780	(133)	(14.6)
		Agent for hyperkalemia
		Others		191	406	215	112.7
		Total		8,756	8,602	(154)	(1.8)
	[Skin disease]
		CORECTIM		3,945	5,392	1,447	36.7
		Topical Janus kinase (JAK) inhibitor
		ANTEBATE	※	2,959	3,201	242	8.2
		Topical corticosteroid
		LOCOID	※	1,103	1,065	(38)	(3.5)
		Topical corticosteroid
		ZEFNART		863	687	(175)	(20.3)
		Topical antifungal agent
		Others		236	(0)	(237)	－
		Total		9,107	10,347	1,239	13.6
	[Allergens]
		CEDARCURE	※	6,757	7,963	1,205	17.8
		Japanese cedar pollinosis (Allergen Immunotherapy)
		MITICURE	※	6,171	7,189	1,017	16.5
		House dust mite allergy (Allergen Immunotherapy)
		Others		147	137	(10)	(6.9)
		Total		13,077	15,290	2,212	16.9
	[Other]
		BIO-THREE		2,423	2,881	457	18.9
		Viable bacterial preparations
		ORLADEYO		959	1,107	147	15.4
		Plasma kallikrein inhibitor
		Others		730	677	(53)	(7.3)
		Total		4,113	4,665	552	13.4

• In-houseproducts

(References) Sales and ratio of in-house products

(Millions of Yen)	FY2022	FY2023	Change	Change (%)
First nine months	First nine months
	A	B	B-A	(B-A)/A
Sales of in-house products	18,598	20,845	2,246	12.1
Ratio of in-house product sales （%）	53.1	53.6	0.5	－

－4－

• Research and Development

Development code ｢Product Name｣

Indication

Formulation/

Route of

administration

Development stage (domestic)

PhaseⅠ

PhaseⅡ

PhaseⅢ Application Approval

Remarks

Skin disease

								・Compounds for which JT has entered into a license
								agreement with Dermavant Sciences GmbH for exclusive
								development and commercialization in the skin disease area
		Atopic dermatitis		Topical		Application		in Japan
								・License agreement signed with JT for joint development and
								commercialization in Japan
								・NDA filing by JT in September, 2023
								・Compounds for which JT has entered into a license
								agreement with Dermavant Sciences GmbH for exclusive
								development and commercialization in the skin disease area
JTE-061		Proriasis vulgaris		Topical		Application		in Japan
								・License agreement signed with JT for joint development and
								commercialization in Japan
								・NDA filing by JT in September, 2023

Atopic dermatitis	Topical
in children

PhaseⅢ

・Compounds for which JT has entered into a license agreement with Dermavant Sciences GmbH for exclusive development and commercialization in the skin disease area in Japan

・License agreement signed with JT for joint development and commercialization in Japan

				・License agreement signed with Verrica Pharmaceuticals Inc.
TO-208	Molluscum contagiosum	Topical	PhaseⅢ	for exclusive development and commercialization in Japan
・In-house

・Verrica Pharmaceuticals Inc., the development code: VP-102

Allergens

TO-203

「MITICURE® House

Dust Mite Sublingual

Tablets」

House dust mite induced allergic asthma (Allergen Immunotherapy)

Sublingual tablet

PhaseⅡ/Ⅲ

(Study completed※)

・License agreement signed with ALK for providing exclusive development and sales rights in Japan

・In-house

※Examining the future development policy

Update since the previous announcement on July 31,2023：

・JTE-061 for the indication of atopic dermatitis in children has entered into the clinical stage(PhaseⅢ) in Japan in August 2023.(previous announcement：Development stage「PhaseⅡ」)

・JTE-061 NDA filing for the indication of Atopic dermatitis and Proriasis Vulgaris by JT in September 2023.(previous announcement：Development stage「PhaseⅢ」)

Additional Information

・In January 2023, Torii entered into a licence agreement with Nogra Pharma Limited(Nogra) for an exclusive licence in Japan to develop and commercialize NAC-GED-0507,a treatment drug for acne vulgaris developed by Nogra.

Torii and its parent company, JT (specifically, the pharmaceutical division of the company) each leverage their own pharmaceutical product and service strengths. Torii is primarily responsible for manufacturing and marketing functions, while the parent company is responsible for research and development functions. For the clinical research and development of JT, please refer to the following company's website.

https://www.jt.com/investors/results/S_information/pharmaceuticals/index.html

－5－

III Financial Forecasts for the FY2023

The forecasts for the FY2023 have been changed from the previous forecasts announced at the first six months of FY2023 financial results announcement on July 31, 2023.

• R&D expenses fluctuate significantly due to aggressive business investments for medium-/long-term growth. For this reason, Torii sets operating income before deduction of R&D expenses as a numerical income indicator in the medium- term management plan.
• Statement of Income

			FY2023	FY2023				Change
(Millions of Yen)		Previous	Revised	Change	FY2022	Change
	(%)
			forecast	forecast
			A	B	B-A	C	B-C	(B-C)/C
Net sales		52,700	54,000	1,300	48,896	5,103	10.4
	Sales of products		52,400	53,700	1,300	48,563	5,136	10.6
	Renal disease and hemodialysis		11,170	11,970	800	12,013	(43)	(0.4)
	Skin disease		13,540	13,980	440	12,391	1,588	12.8
	Allergens		21,500	21,440	(60)	18,499	2,940	15.9
	Other		6,190	6,310	120	5,658	651	11.5
	Other sales		300	300	－	332	(32)	(9.9)
Cost of sales		28,300	29,300	1,000	25,516	3,783	14.8
Gross profit		24,400	24,700	300	23,379	1,320	5.6
SG&A		20,300	20,200	(100)	17,839	2,360	13.2
	R&D expenses		3,530	3,600	70	1,661	1,938	116.7
	Others		16,770	16,600	(170)	16,177	422	2.6
Operating income		4,100	4,500	400	5,540	(1,040)	(18.8)
Operating income before	※	7,630	8,100	470	7,201	898	12.5
	deduction of R&D expenses
Ordinary income		4,400	4,700	300	5,537	(837)	(15.1)
Net income		3,100	3,400	300	3,944	(544)	(13.8)
(Reference) Ratio to net sales
			FY2023	FY2023
(%)			Previous	Revised	Change	FY2022	Change
			forecast	forecast
			A	B	B-A	C	B-C
Cost of sales		53.7	54.3	0.6	52.2	2.1
SG&A		38.5	37.4	(1.1)	36.5	0.9
R&D expenses		6.7	6.7	0.0	3.4	3.3
Operating income		7.8	8.3	0.5	11.3	(3.0)
Operating income before	※	14.5	15.0	0.5	14.7	0.3
	deduction of R&D expenses
Ordinary income		8.3	8.7	0.4	11.3	(2.6)
Net income		5.9	6.3	0.4	8.1	(1.8)

－6－

【Factors in increase/decrease compared with the previous forecast for the FY2023】

Operating income (¥4,500 million : Increase ¥400 million)

• Despite an increase in the cost of sales, operating income are revised upward due to sales of Riona and ANTEBATE exceeding previous forecasts.

(Millions of yen)

6,000

4,500

3,000

1,500

0

+1,300		(1,000)				+170
		(70)

5,540

4,100	4,500

FY2023	Net sales	Cost of sales	R&D expenses	Others	FY2023	(FY2022)
Previous forecast					Revised forecast

Major factors in increase/decrease (Rounded down to the nearest 0.1 billion yen)
Net sales	Renal disease	:	Increase ¥0.8 billion in sales Riona Increase ¥ 0.6 billion (increase in sales quantity)
	and hemodialysis
	Skin disease	:	Increase ¥0.4 billion in sales ANTEBATE Increase ￥0.4 billion(increase in sales quantity)
	Allergens	: Decrease ¥0.0 billion in sales
	Other	:	Increase ¥0.1 billion in sales BIO-THREE Increase ¥0.1 billion (increase in sales quantity)
Cost of sales		: Increase in sales quantity
			Increase due to the effect of foreign exchange rates
			Increase in purchasing unit price
Others		:	Decrease in sales promotion expenses

Ordinary income (¥4,700 million : Increase ¥300 million)

Non-operating expenses：Increase in foreign exchange losses on trade payables etc. due to yen depreciation.

+125 million

Net income (¥3,400 million :Increase ¥300 million)

None

(Reference)

Operating income before deduction of R&D expenses (¥8,100 million : Increase 470 million)

(Millions of yen)

10,000

7,500

5,000

2,500

0

+1,300		(1,000)		+170

7,630	8,100
7,201

FY2023	Net sales	Cost of sales	Others	FY2023	(FY2022)
Previous forecast				Revised forecast

－7－

② Sales of Products

				FY2023	FY2023
(Millions of Yen)		Previous	Revised	Change	FY2022	Change	Change(%)
				forecast	forecast
				A	B	B-A	C	B-C	(B-C)/C
Sales of Products		52,400	53,700	1,300	48,563	5,136	10.6
	[Renal disease and hemodialysis]
		Riona		6,920	7,610	690	6,939	670	9.7
		Agent for hyperphosphatemia, Iron-deficiency anemia
		REMITCH		2,670	2,730	60	3,536	(806)	(22.8)
		Oral anti-pruritus agent
		KAYEXALATE	※	1,040	1,050	10	1,230	(180)	(14.7)
		Agent for hyperkalemia
		Others		540	580	40	306	273	89.3
		Total		11,170	11,970	800	12,013	(43)	(0.4)
	[Skin disease]
		CORECTIM		7,160	7,230	70	5,469	1,760	32.2
		Topical Janus kinase (JAK) inhibitor
		ANTEBATE	※	3,940	4,370	430	3,995	374	9.4
		Topical corticosteroid
		LOCOID	※	1,400	1,420	20	1,476	(56)	(3.8)
		Topical corticosteroid
		ZEFNART		1,040	960	(80)	1,091	(131)	(12.1)
		Topical antifungal agent
		Others		－	－	－	358	(358)	(100.0)
		Total		13,540	13,980	440	12,391	1,588	12.8
	[Allergens]
		CEDARCURE	※	11,230	11,170	(60)	9,608	1,561	16.3
		Japanese cedar pollinosis (Allergen Immunotherapy)
		MITICURE	※	10,070	10,090	20	8,694	1,395	16.0
		House dust mite allergy (Allergen Immunotherapy)
		Others		200	180	(20)	196	(16)	(8.6)
		Total		21,500	21,440	(60)	18,499	2,940	15.9
	[Other]
		BIO-THREE		3,800	3,900	100	3,361	538	16.0
		Viable bacterial preparations
		ORLADEYO		1,500	1,500	－	1,313	186	14.2
		Plasma kallikrein inhibitor
		Others		890	910	20	983	(73)	(7.5)
		Total		6,190	6,310	120	5,658	651	11.5

• In-houseproducts

(References) Sales and ratio of in-house products

		FY2023	FY2023
(Millions of Yen)		Previous	Revised	Change	FY2022	Change	Change(%)
		forecast	forecast
		A	B	B-A	C	B-C	(B-C)/C
Sales of in-house products		28,600	29,000	400	25,933	3,066	11.8
Ratio of in-house product sales	(%)	54.6	54.0	(0.6)	53.4	0.6	－

－8－