Nxera Pharma Co., Ltd. (4565) Earnings Call Transcript & Summary

We will start the 33rd Ordinary General Meeting of Shareholders of Sosei Group. Please be advised that David Roblin, a member of the Board of Directors was unable to arrange his schedule to Japan today and cannot attend this meeting. We would appreciate your kind understanding. Questions and comments from the attending shareholders will be collectively accepted after all reports on matters to be reported and explanations of the contents of proposals on matter to be resolved have been completed. [Operator Instructions]. Our staff may come talk to the shareholders present at the meeting if they appear to be unwell or not in good health condition. And if deemed necessary, I may ask them to leave the meeting to maintain the health of the surrounding shareholders. I would like to ask you for your understanding. In the event of an earthquake or other unforeseen circumstances during the proceedings, please remain calm and follow the instructions of the staff. Please understand that in some cases, at my discretion, I may give priority to the voting on resolutions. The contents of the matters to be reported at today's general meeting of shareholders are set forth in the notice of convocation provided on the company's website in accordance with Article 325-3 of the Companies Act, but written materials have not been sent to you in accordance with laws and regulations and the Articles of Incorporation. The content of the materials will be projected on the front screen. So please look at them. You may also view the convocation notice provided on the company's website by using your smartphone or other devices. First of all, the secretariate will report on the number of shareholders attending the meeting and the number of voting rights held by them. Let me report. Of the 25,523 shareholders, 23,447 shareholders are entitled to vote at the meeting and the number of voting rights held by those shareholders is 818,850. The number of shareholders who attended the meeting today, including those who exercised their voting rights via the Internet or by e-mail, is 7,715 and the number of voting rights held by them is 488,086. Thank you. As reported by the secretariat, I am pleased to report that the quorum necessary to deliberate today's agenda is met. Now first of all, the Audit Committee would like to report on the results of the audit. Mr. Tohyama, Chairman of the Audit Committee, please report.

I am Tohyama, Chairperson of the Audit Committee. I am pleased to report on the results of the audit conducted by the Audit Committee. The Audit Committee audited the execution of duties by directors and executive officers during the 33rd fiscal year from January 1, 2022, to December 31, 2022. In our opinion, the business report and the supporting schedules present fairly the condition of the company in conformity with the applicable laws and regulations and the Articles of Incorporation. We have found no misconduct or material fact of violation of laws, regulations or the Articles of Incorporation in connection with the performance of duties by the directors or executive officers. In our opinion, the contents of the resolution of the Board of Directors regarding the internal control system are fair and reasonable. We also find no matters to be pointed out with respect to the contents of the business report and the execution of duties by the directors and executive officers concerning such internal control system. The auditing methods and results of the accounting auditor EY ShinNihon LLC with report to the -- respect to the consolidated financial statements and the nonconsolidated financial statements and supplementary schedules are fair and reasonable. That concludes my report.

Thank you, Chairman, Tohyama. Now we would like to move on to the explanation of the matters to be reported and business outlook. As for the matters to be reported for this fiscal year, you will be able to find them in accordance with the convocation notice on our website. And I would like to explain the summary and the future business outlook. Slide 8, please. Last year, we achieved good revenue and cash generation, which enabled continued investment in R&D. Our revenue was in U.S. dollar basis, $119 million. Again, this was over $100 million, which is a great result. We again achieved profitability. This is unique for a biotech company. We have a sustainable business model. Lastly, we have a strong balance sheet with cash available for future strategic investments. Slide 9, please. I will remind you of the 2022 business highlights. In line with the first pillar of our business strategy, we enhanced the platform technology value by completing multiple new collaborations. We are proud of the new major collaborations with AbbVie and Lilly, which have potential to create significant future value for our company. Slide 10, please. In line with the second pillar of our business strategy, we supported our partners to advance major cash flow-generating programs. We were excited to see Pfizer advance its GLP-1 program into Phase II and Neurocrine to advance its M4 program into Phase II. These programs are potential blockbusters that have potential to make a difference for patients. We expect partners to advance more programs into the clinic in 2023 and 2024. As for the third pillar of our business strategy, we continue to transform our in-house R&D operations. We are excited about the EP4 program with Cancer Research U.K. and also the selection of a new preclinical M1 candidate for potential future development for DLB in Japan. Slide 11, please. Our auditors, EY ShinNihon have audited our accounts for 2022. I'm pleased to announce that EY ShinNihon indicated that they intend to issue a clean, unqualified audit opinion for 2022. Slide 12, please. Now I want to talk about the outlook. Our mission is to invest in world-leading science to create life-changing medicines. Our vision is to become one of Japan's global biopharma champions. Slide 13, please. It has been a long journey to build this great company from Tamura [indiscernible] founding in 1990, then Series A and B financing, then IPO of Mothers plus 2 major acquisitions, Arakis and Heptares. I'm so proud of our employees and shareholders for supporting this journey. Slide 14, please. And last week, finally, we achieved a long-term goal to become a Japanese biotech on the Prime Market. Let me express our gratitude to our shareholders for all your support. Slide 15, please. This is the pipeline we have built over many years. It is solid, diversified and balanced between low-risk partnered programs and high-value potential in-house programs. As I said earlier, we are excited for these partnered and in-house programs to advance further into clinical development over 2023 and 2024. This will enhance the long-term value of the company. Slide 16, please. We have a clear strategy to grow focused on 4 business pillars. The long-term goal is to build a fully integrated biotech company. Pillar number one is platform technologies which provide the foundations for drug discovery. Pillar number two is partnerships, which provide an important source of expertise and non-dilutive finance to the company. Pillar number three is to continuously evolve our in-house R&D operations to advance programs faster into early clinical development. Pillar number four is to take steps to build late-stage clinical development and commercial operations in Japan so that we can make a difference to patients in this country and region. At any time, these 4 pillars could be accelerated by opportunistic strategic actions such as investments or M&A. We have the capital and the capability to make this company a success. Slide 17, please. Taking the 4 pillars, in 2023, we intend to do the following. Pillar number one, we intend to make investments in new SBDD platform technologies. Pillar number two, we intend to execute at least one new major cash flow generating collaboration with a global partner. Pillar number three, we intend to advance at least 2 in-house programs into early clinical development. Pillar number four, we intend to take steps to build a Japan-based pharma unit with clinical development capabilities and, in the future, lean commercial operations. Slide 18, please. In summary, executing this strategy is designed to deliver on our vision by 2030, which is to become one of the Japan's global fully integrated biopharma champions. Specifically, by 2030, we expect the organization to have the following profile: Novel, approved medicines on the market globally via our partners; a commercial business in Japan; a broad and deep pipeline of programs; sustainable financial performance in terms of revenues and profits; a position as the leading biotech in Japan. Thank you very much. That completes my presentation on the outlook. And I will now return to the AGM formalities. As for the audit results of the consolidated financial statements, we would like to report to you that we have received from the audit firm that it is appropriate as an opinion. With this, we would like to conclude the explanation for the reporting item and the business outlook. Next, I seek your approval for the proposal. And we would like to take the questions for the matters to be reported at the end. And first of all, we would like to seek your approval for election of 9 directors, please turn to the convocation notice in front of you. The term of office of all of current 8 directors will expire at the conclusion of the meeting. In accordance with the decision by the Nomination Committee, the election of total 9 directors, which includes 1 new director will be proposed. The candidates are as follows: Shinichi Tamura; Tomohiro Tohyama; Kuniaki Kaga; David Roblin; Noriaki Nagai, Rolf Soderstrom, Miwa Seki; Eiko Tomita; and myself, Christopher Cargill. The career summary of each candidate is as shown in the convocation notice. In addition, the date of inauguration of the newly elected director candidate, Eiko Tomita, will be April 1, 2023, in relation to her current position. Now we would like to move on to the vote for the election of the 9 directors. And this is, as we explained earlier, please applaud if you could support. [Voting]

Thank you very much. With that, we have received a majority of the votes, including those of the shareholders who exercised their voting rights via the Internet and by voting card. The majority of the votes were in favor of the proposal. Therefore, the proposal was approved as proposed. Thank you very much. With that, all matters for the purpose of this general meeting of shareholders have been concluded and the 33rd Ordinary General Meeting of Shareholders of Sosei Group Corporation is now adjourned. Thank you very much. Now Ms. Eiko Tomita, a newly appointed director, would have delivered her speech, but since she is absent from this meeting, she will deliver her speech by video message.

Good morning. My name is Eiko Tomita. I'm sorry, I am not able to come in person to the venue. Thank you very much for electing me as the Internal Director of the company, Sosei Heptares. I am hoping that I will be able to be involved in the development of the company. Personally, I have the experience for the pharmaceutical development and also multi-country submission, and I am hoping to make contribution to deliver products in Sosei, and I'm looking very much forward to that. The majority of my career was in the development of new drugs and obtaining approval in the past 16 years in the U.S. company, Japan, Asia, Australia, South America and in Middle East. I had the responsibility to obtain the approval in such countries. In the company I worked for 11 years, based in Japan, I am involved in the regulatory work in Japan and Asia. And for the recent 5 years based in the U.S., Asia, Australia, Russia, Brazil and South America, in such countries, I have been committed to make contribution to the regulatory approval, especially in Japan in view of the launch in Japan for the formulation of the development strategy in the pharmaceutical, and I also contributed to the consensus making in the regulatory. I'm hoping to use this experience for the pharmaceutical development in Sosei Heptares. Also, as an Executive Officer of Japan branch of the U.S. pharmaceutical company, diversity and inclusion executive champion is whether I fulfilled my responsibility. And I developed a framework for welfare supporting diversity and inclusion and creating the culture for that. I would like to share this experience with Sosei Heptares and to be conducive to the growth of the company. I'm especially grateful that you trusted me and to become the member of Sosei Heptares. It is a pleasure for me, and I'm looking forward to meet with you in person. Thank you very much for today.

Thank you very much. Directors and executive officers, please rise. Thank you very much for your attendance today. We will work as one to further enhance our corporate value, and I would like to ask you for your continued support. [Statements in English on this transcript were spoken by an interpreter present on the live call.]