Sumitomo Pharma Co., Ltd. (4506) Earnings Call Transcript & Summary

Thank you very much for taking time out of your busy schedule to join us today for th Sumitomo Dainippon Pharma, Frontier business meeting, FBO Showcase. FBO is the abbreviation for Frontier Business Office. We would like to introduce the vision, portfolio and major projects of frontier business. Today's presentation material was e-mailed to you and is also available on our website. You can also see it on the screen. However, the slides for each part are not numbered sequentially. So please note that the page numbers are different from those in your handouts. There will be time for questions after the presentations. Please note that this meeting will be recorded for later distribution on the website. I would now like to introduce today's attendees. From left to right, the first row of the screen, President and CEO, Hiroshi Nomura, Executive Vice President and Chief Scientific Officer, Toru Kimura. Senior Executive Officer in charge of Frontier business, Hiroyuki Baba. Second row from left, Senior Director, Frontier Business Office, Takehiko Nomura. Officers, [ Hori ], [ Oyama ], [ Misimaki ] and [ OTI ]. I am Harada of Corporate Communications and will serve as moderator today. We also invited some project partners, Mr. Kato, COO of Aikomi Limited; and Mr. Kasuya, CEO of MELTIN MMI. Thank you. Mr. Nomura will begin our presentation with an introduction.

Ladies and gentlemen, my name is Hiroshi Nomura, the President and CEO. Thank you very much for taking time out of your busy schedule to join us today at the Frontier business meeting, FBO Showcase. I am very grateful for this opportunity to present our Frontier business as a whole today, although we have been partially informing you about it in our earnings announcement and other press releases. We originally explored health care solutions outside the medicine as part of our beyond the pills initiative. And our employees came up with many ideas as we formulated our midterm business plan started in 2018. We have positioned these ideas as Frontier business and have decided to tackle it in earnest company-wide. I believe that some of the themes that I will present today to you were included at that time that Frontier business aims to provide solutions to health issues that cannot be solved by medicines in, areas that are close to our businesses. We plan to carefully nurture this business, to make it the next growth engine after the pharmaceutical business. To this end, we have established a Frontier business office, a division dedicated to this business starting in April 2019. This field is different from pharmaceutical research and development. In that if we do not quickly identify clinical and other lease and move ahead, we will get left behind the times. I believe it is needed that there's always a cross connection between the needs of the field and what we are doing. And that means absolving problems are technologically new. We are constantly reviewing and revising our branding projects from this perspective. We will proceed with the Frontier business in areas that are adjacent and close to our existing businesses. However, we believe that we will be able to create solutions in areas where we are not strong such as new technologies of software and devices by working with partners and utilizing the experience of those companies. We would like to expand the business to cover a wide range of patient journey from prevention in health care, treatment and prognosis and we expect to expand this business in Japan, U.S. and China. Now I would like to ask for your participation in the upcoming presentations. Next, Mr. Baba will explain the future vision of the Frontier business.

I'm Hiroyuki Baba in charge of the Frontier business. Thank you very much again for your time today. Although it is a bit presumptuous to talk about a vision for the future, I think it is important to have a vision or image of what kind of society we would like to have in the future when planning and promoting the Frontier business. So I would like to share my thoughts on this. It is a little abrupt to say, but the key concept here is good people. This world has many definitions and in some cases, it may be used in a negative way. But here, we are thinking of something like utopia, a world who of people with big hearts, good hearts, compassion and kind hearts. Of course, if there are only such people, society would become stagnant. So it may be a matter of degree. However, when we consider various trends in society, for example, various incidents occurred due to tangled human relationships. There are quite a few tragic incidents that occur in families. Some people might say that this is the way it has always been. And in a sense, it is human nature. So there is nothing we can do about it. However, it is said that it is human relationships that largely determine whether people are happy or unhappy. In the next era, or when we move on to the next phase of stabilization, I think it will be a good idea to address the fundamental issues of human society with a big concept such as increasing the number of good people which may be a little ridiculous. On the other hand, due to AI and other technological innovations or [ DX ], I believe some of the human abilities that have been considered so important will become unnecessary. However, even in such an age, I believe that the factors that make a good person, a good person will be respected more and more. On the contrary, in this age of AI, many things will become more open and difficult to hide, so it will be difficult to live unless you are a good person. The last point is mutual age. I think we are definitely entering such an era. The idea is to move away from the mindset that all that matters is what's good for you, your family or your friends and to contribute to society at large to the community at large and to others. In an age where people find meaning in this, I think good people is an important concept. However, when we think about it, most businesses ultimately or indirectly increase the number of good people. As FBO, we would like to operate more directly closer to such objectives. In terms of operations, the business of FBO is still in the process of development, although it is based on the various insights of ESG. In that sense, the above-mentioned third point of mutual aid is a strong element. We are currently working together with our business partners. I think well being is a very important concept. The key to this is that each individual should be healthy, both physically and mentally. With this as a base, we would like to make society itself healthy. While sharing such a vision for the future, we are thinking about various things. We will be introducing various projects later today. This is a showcase of such collaboration. Please keep your eyes on us. Thank you very much.

The officers in charge will now introduce each of 3 projects. First, Mr. Nomura, Senior Director, will give an overview of the business domain, followed by an explanation of the first project, digital devices for relieving BPSD.

I am Toru Kimura from the Frontier business office. Before we explain individual development themes, I would like to explain the domains that Frontier business will focus on. First, on the horizontal axis from left to right, the so-called patient journey is described, including the preventive phase, diagnosis, treatment, nursing phase and social rehabilitation phase. The vertical axis shows the disease areas that we focus on, psychiatry, neurology, motor dysfunction like cell-related disease and cancer. First, let me mention 2 platforms for all patient journey. The first domain is the mental resilience platform. The theme is how to recover from mental illness. For this, the concept is to detect signals and prevent deteriorations. The second is the active aging platform. This will literally improve, maintain and enhance the health of the elderly by enhancing their awareness, and will recover motor dysfunction and like cell-related diseases. A concept focusing in part on the patient journey is the personal health record monitoring platform, primarily focused on prevention and diagnosis. This is a solution technology for routine, continuous and precise diagnosis and screening. The last 1 is the body expansion platform focused on the nursing and social rehab spaces. This is a solution technology to augment or improve the sensory and motor functions. In particular, we would like to focus on areas where these platforms overlap and develop businesses to maintain and restore health, enhance health and resolve unmet needs.

Hello, everyone. I am Saeko Arai from the Frontier business office. I would like to introduce our digital devices for relieving BPSD. First of all, let me explain the positioning of this project in the portfolio of the Frontier business. This project is the business domain in area of psychiatry, neurology, and mental resilience platform. This project targets dementia and is unique in that it focuses on the peripheral symptoms of dementia which are necessary to be treated during the nursing phase of the patient journey. Next, I would like to discuss the positioning of BPSD in dementia care which is a unique feature of this project. First of all, the core symptoms of dementia, such as memory impairment are currently being treated with pharmacotherapy. On the other hand, or psychological and behavioral peripheral symptoms such as excitement, apathy and anxiety, the first choice in treatment guidance is non pharmacotherapy. However, non-pharmacotherapy still has challenges such as lack of evidence and effectiveness depends on the person. We have been searching for technology to provide a new solution to the problem of non-pharmacotherapy of BPSD. To solve these issues, we made Aikomi, Aikomi is developing a completely new and comprehensive digital technology for non-pharmacotherapy. By using this digital therapy technology, we aim to solve issues such as the lack of evidence for non-pharmacotherapies, promote communication and trust building between people, we ensure their families and caregivers and also provide a new care solutions that aim to reduce the burden of care. Ultimately, we hope to realize our goal of an independent senior life for people with dementia. Mr. [ Kato ], COO of Aikomi, will introduce the digital technology of Aikomi.

Thank you, Mr. Hori. My name is [indiscernible] [ Kato ] from Aikomi Limited. We signed a joint research agreement with Sumitomo Dainippon Pharma in 2019 and raised funds for the project the following year. Since then, including Sumitomo Japan Insurance, Inc., with 3 companies have been collaborating. This year, we have started to test and sell our products, Aikomi Care. We have also won awards in business contest in Japan and abroad. In no opinion, there are 3 main points that make dealing with dementia difficult. The first is that there is no cure. The second is that it causes not only cognitive decline, but also behavioral and psychological changes. And the third is that it is easy to do social interactions by suffering from dementia. And furthermore, the loss has a negative impact on dementia. This data was reported in the news article by Hiroshima University last year. It shows that refraining from going out and restricting visits to family members due to the COVID-19 pandemic has a negative impact on dementia. Since our founding, we have believed that 1 solution to dementia is to maintain the connection between people with dementia and the people who work with them. Based on this idea, Aikomi Care is a tool that can create connections between people and institutions at home or remotely while providing non-pharmacotherapy. And the goal is to maintain the social mutuality that we tend to lose. Here is on this specific Aikomi Care services. The first step is to interview the family in order to obtain information related to the person with dementia. The next step is to create a video program based on it and collect data as the person watches the program. After that, we will analyze what kind of images the person liked and did not like and improve the program for the next time. We have conducted several joint research projects with domestic and international research institutes and have found that psychological interventions using unfamiliar tools for dementia, such as tablets are highly important for people with dementia. The following video will show you how Aikomi Care is used in practice. Let's take a look at the changes in behavior of people with dementia when using Aikomi Care. [Presentation]

Next, we introduced the voice of a family that uses Aikomi Care. [Presentation]

The video shown here is only a small part of our activities, but I believe that the concept we've been thinking about since our founding are now being verified. In the future, we would like to develop our business with various partner companies, including Sumitomo Dainippon Pharma so that more people with dementia can realize an autonomous senior life. After this, Mr. Hori will talk about future developments.

Thank you very much, Mr. [ Kato ]. From here, I would like to introduce the future development of this project. First, let's look at the business environment surround dementia care. According to data released by the cabinet office, the social cost of dementia is expected to exceed JPY 20 [ trillion ] within 10 years. Under these circumstances, here for BPSD is being practiced in various ways in nursing homes. Therefore, we believe that in order to develop this project's business for nursing care applications, we need to collaborate with companies that are familiar with the nursing care business. In light of this business environment, we have been promoting a 3-company alliance, including SOMPO Japan Insurance since August last year. SOMPO Japan has been 1 of the first companies in the industry to implement a variety of initiatives to address dementia. Within the group company, it also operates a nursing care business. In this collaboration, we are receiving support to create a market for Aikomi Care by verifying its need in the field. We believe that it is truly a partner company with expertise in the nursing care field. In addition, in this collaboration, we will provide our knowledge such as building evidence cultivated in pharmaceutical business. And when we -- when developing products for medical applications, we will consider taking charge of conducting clinical trials as necessary. This Aikomi technical platform at the core, we hope to combine the capabilities of the 3 companies to establish the gold standard in dementia care. Lastly, here's an image for future business development. For the time being, we will focus on business development for consumer and nursing care applications. We started test sales for nursing care applications at the end of last year and now preparing for full-scale marketing. In preparation for full-scale marketing, we are examining and improving our service model, establishing a business model and also considering supporting an acquisition of evidence through clinical research, wholesale marketing for nursing care applications are targeted for FY 2022. As for medical applications, we are preparing clinical research to determine whether or not to conduct clinical trials. If we develop medical devices, we would like to be able to play a part in the refabrication of dementia aiming to treat peripheral symptoms associated with dementia. Thank you. Thank you very much.

Next, we would like to explain the VR content for social anxiety disorder.

I am Tetsuya Uyama from Sumitomo Dainippon Pharma America. From here, we will introduce SAV-985, a VR content development project that Frontier business is working on in collaborations with BehaVR. The VR goggle shows you the position of this project in the business domain of Frontier business. This project is the development of a virtual reality program aimed at alleviating social anxiety disorder and is part of the mental resilient platform lineup. The positioning in the patient journey is shown by the red label. This project provides patients who are already suffering from symptoms with the VR program to help alleviate or overcome social anxiety disorder. The treatment of social anxiety disorder is effectively a combination of medical and cognitive behavioral therapy or CBT, depending on the patient symptoms. However, everyone has access to interpersonal therapy due to partly constraints caused by the limited number of therapists. According to the Anxiety & Depression Association of America, and international society that conducts research and anxiety disorders and depression, about 36% of patients with social anxiety disorder do not seek medical attention and begin interpersonal therapy until about 10 years after the onset of symptoms. This is the reality. In addition, cognitive behavioral therapy and exposure therapy conducted in the real world come with certain limitations and risks social anxiety disorder is set to be a disorder that can be improved with proper treatment. In addition to treatment, lifestyle modification is also set to be effective in helping patients regain their social life. We believe that by providing a soft training menu, which is equivalent to exposure therapy and the menu to practice changing one's perspective to a positive 1 through VR content, we can provide a new tool for patients to learn how to deal with social anxiety at their own pace. This is the vision of this project. To be able to bring back social activities, such as shopping, eating or working. As its name suggests, behavior's strength is in developing the VR content that aims to promote behavioral change. We have developed VR programs for stress management, chronic pain relief and prenatal and postnatal mental care, and have already started selling these programs in the United States. Our strength is in clinical trials in the field of neuropsychiatry, and we have the advantage of having experience in drug development, negotiating with the FDA and relationships with key doctors and customers. These companies VR programs social and anxiety disorder with the common understanding that they can propose a new way of health care by applying VR modalities. First, we are aiming to commercialize the product as a general wellness product that does not require FDA review. Next, I would like to introduce our partner company BehaVR. [Presentation]

Next, I would like to talk about social anxiety disorder in detail. Social anxiety disorder is 1 of the most common mental disorders. The illustration shows the main physical symptoms. The disorder is characterized by their extreme intensity. This can lead to a pattern of not wanting to be seen, giving up on tenor indications, attending parties, attending meetings at work and on public presentations. And gradually, from social life. According to the NIMH, the National Institute of Mental Health, the 12-month prevalence rate in the U.S. population over the age of 18 is as high as 7.1%. In addition, according to our 2013 report by the American Psychiatric Association, approximately 12% of the adult population in the United States is experiencing social anxiety disorder. The next slide explains the mechanism of why we think VR is superior for the treatment of this social entity disorder. There are 2 routes by which the human brain catches external input and sends signal to the muscles, skeleton and autonomic persistence. The cognitive route and the precognitive route. Without VR, the input is first received by the preclinical context and from there, it is sent to the mill which is, in turn, transmitted to the bones, muscles, autonomic nervous system and neuroendocrine system. The flow of the cognitive world is shown in yellow and white. In contrast, when we set it, the brain also catches the input in the pharmas and sense signals from there through the visual cortex to the front -- prefrontal cortex and [indiscernible]. The precognitive growth is shown in green. This is a mechanism that makes a VR experience a powerful stimulus compared to a 2-dimensional screen. Exposure therapy in VR is characterized by the activation of both cognitive and precognitive routes. It has been suggested that it may be more effective than traditional [ and marginal ] exposure therapy. In addition, there are various limitations and risks involved in conducting exposure therapy on the person's body, that with VR exposure therapy, we do not have to worry about these difficulties. As you can see in terms of age structure, the prevalence tends to be higher in the 18-year-old to early 40 age group. In terms of gender, this disease is characterized by a higher percentage of females compared to males. In terms of the impact of social anxiety disorder on daily life, we and BehaVR have found that the 18-year-old to 20-year old and 21-year-old to 29-year old age groups tend to be -- tend to score higher in terms of perceived impact on social situations in daily life. I will talk about the scale and timeline of the impact of social significance that this project pursues. In the U.S., the number of patients with social anxiety disorder is estimated to be around 17 million. For these people to be satisfied with our products, factors that will be taken into consideration include the strength or weakness of the individual's symptoms, whether or not the individual is already receiving treatment for his or her symptoms. The level of interest in using VR and whether or not the product has content that will allow each user to experience a response. We believe that reaching as many users as possible will lead to the implementation of our Frontier business vision of contributing to mental resilience, and we will work with BehaVR on marketing strategies to make this a success. Today, it is September 2021. Based on the results of a small scale new excess, we are now preparing per test to confirm the effectiveness. Based on the feedback of these tests, we will finalize the commercial product and start selling the general wellness product in the United States. Preparations are underway with the expectation that sales will start around October 2022. We are also planning to upgrade the version with improvements based on the feedback and data we received after the sales launch. VR Technology will not only bring joy and excitement to people through games and entertainment but will also be used in training and educational fields. I believe that the day is coming soon when VR modalities will be applied as a new way of health care. In addition to the traditional way of health care, such as receiving and taking medication and seeing a doctor at the clinic or hospital. Through VR technology, we will strongly promote our partnership with BehaVR towards the realization of the future, where health care is more accessible and the society that is more into these people and their lives. This is an introduction of SAV-985, a VR program development projects we are working on with BehaVR. Thank you very much for your attention.

Next, we would like to explain about the third item, the neurorehabilitation device for hand and fingers.

I'm [ Yukako Nishimaki ] from the Frontier business office. Today, together with Mr. Kasuya [ Meti ], who will be introduced later. I would like to introduce the development of a new rehabilitation device for hand and fingers that the company is working with MELTIN. First of all, the positioning of the MELTIN project in the Frontier business domain is between the active aging platform, which focuses on motor dysfunction, antibody expansion platform. In the patient journey, it focuses on motor dysfunction in the treatment and nursing phases. MELTIN is a cyborg venture started in 2013. While Mr. Kazuya was a university student and Sumitomo Dainippon Pharma has been working with the company since they signed a joint research and development agreement in October 2018. Mr. Kazuya, please give us the figures and [ Masa Hiroki ] the President of MELTIN. Thank you.

MELTIN and Sumitomo Dainippon Pharma hit it off because they share the same vision of the future. We are working together to realize a future where everyone can maximize their potential in their own way and constrain by limitations. In order to achieve this goal, we would like to combine the robotic and biosignal processing technologies of MELTIN with the knowledge, expertise and experience of Sumitomo Dainippon Pharma. From here, Mr. Kazuya will introduce the core technology of MELTIN. Mr. Kazuya, please.

Thank you very much. Now I would like to introduce the core technology of MELTIN. First of all, we define cyborg as a fusion of 2 things: a biological interface and artificial body composed of robotic technology. You are probably familiar with robots to some extent, but you may not be familiar with this biological interface, especially biological signals. These signals are actually electrical signals flowing through our bodies in the form of so called EET, electromyogram and neuro signals. For example, when we move our hands, the inpatient to move our hands from a brain is transmitted through the nerves and reaches the muscles in the form of electrical signals. As a result of hands moved by muscle contraction and the muscles that hire difference depending on the difference in the movement of the hand, the reform will be different depending on that. By using our technology to distinguish the differences in these reforms, we're able to decipher what kind of movements people are making or want to make from just nerve signals that are being needed. For example, in the example on the left, a person who lost his right hand in an accident has a robotic hand that we have developed at touch right hand. The boat hand itself since the biosignal that the person is producing and can distinguish whether the person wants to grip an object or turn his wrist and by actually controlling the hand. It can act as if the person has a right hand, even though the person does not actually have. In the middle is a body augmentation, where I am temporarily using a third hand, which is a [ prophetic ] and using my biological signals. This would allow us to do more complex tasks and could only be done -- that could only be done 3 hands. Thirdly, this person also suffered a spinal cord injury in an accident and is unable to move his lower body at all. As you can see in this video, by attaching electrodes and sending electrical signals through it, we can be activated the body that is not moving. For example, by adjusting the timing of the right and left legs and balance, people eventually be able to had by school like this. The combination of the biosignal and the technology will provide new possibilities for human beings. This is such an area of technology.

Thank you very much, Mr. Kazuya. Both companies are doing well in developing and deploying the robot neurorehabilitation device. That is developed based on this kind of technology. So let me give you a little clinical background. Although robotic neurorehabilitation devices are indicated for motor dysfunction, brain stroke is by far the most common cause of motor dysfunction, with approximately 1.2 million patients in Japan, 7.2 million in the United States and 13 million in China. Brain stroke is the #1 cause of bedridden patients in Japan and the #2 cause of nursing care and has become a social issue. The MELTIN device can be used to treat hand paralysis, which is the most common form of motor dysfunction. There are a few epidemiological reports on the percentage of patients with hand paralysis after stroke. We conducted a questioner survey of physicians and estimated that 80% of patients have hand paralysis at the time of admission, whether in the acute or chronic phase. For those patients, we have patients commenced immediately after admission. However, the percentage of patients who are able to recover to a level where they can actually use their hands in daily life is lower than that of patients with lower limb paralysis. And in patients who cannot expect for recovery of hand movement functions, and replacement may be focused on without waiting for the recovery of the paralyzed hand. Therefore, the emergence of a method that can obtain improvement in motor functions by implementing rehabilitation based on brain science or neurorehabilitation is expected. In addition to starting rehabilitation early in hospitalization. In response to this expectation, the neurorehabilitation device with the patient's motor in pensions from body surface electromyography and operates the robot attached to the fingers in conjunction with the motor intentions. By learning to link the activity of the motor cortex of the brain with the motor sensation of the fingers, the reconstruction of a series of motor mechanisms is demonstrated so that the users can expect to regain usable figures even after the devices be removed. There are several robotic rehabilitation devices that are attached to larger joints such as lower limbs or elbows, but there are no robotic neurorehabilitation devices for the fingers yet. Mr. Kazuya, clinical trials have already started, right?

Yes.

Can you tell us about the competition? The overall image of this device is as shown in the photo. It is a device that wraps around the back of the hand like this. This is where our core technology comes in. It measures bio signals in the forearm. And based on those signals, it uses an algorithm to determine how the person wants to move their figures. And depending on that, even if the person fingers don't move, the device can lift the fingers or make them clinch so that the person can exercise his or her fingers. Most of the device is housed in this card shaped housing on the right, which also contains the computer that analyzes the biosignals and the motor that actually drives the fingers. What are the features of this device? Earlier, I explained the motor is housed in the box, a little further away from the actual device, but the reason for this is actually here. People who are paralyzed have a strong grip on their fingers. It takes a rather large amount of force to bring this to open. Therefore, if we put a large motor in here, the device would become larger and heavier. So by placing it in the remote location, we are able to create a very light and compact housing while generating enough power to defy the spasticity. This is the first feature. The second feature is that when the person suffers from paralysis due to brain stroke, the biosignals become quite weak. By amplifying the weak biosignal and analyzing them in our algorithm, we're able to provide neurorehabilitation by performing the movements at the time when the person actually wants to grip or open the hand. Third is the identification of movement by the waveform of biosimilars. This is also related to the spasticity I mentioned earlier. When you have spasticity, you're basically applying force in the direction of gripping, with conventional devices, for example, the biosignal in the direction of gripping the hand and the biosignal in the direction of opening the hand are compared. And control is applied to the larger of the 2. For example, if the biosignal in the direction, gripping is stronger, it means that the person is trying to grip. If the biosignal to open is stronger, the person must be trying to open. But if we do that, as people with spasticity is basically putting power into the direction of gripping, the device can only determine the person wants to grip. On the other hand, our device doesn't analyze the biosignal is bigger, but the difference of waveform of biosignals. So even if the person is gripping all the time, it can identify the movement by the -- for differences in the wet forms, whether the person is trying to open the hand or really trying to grip. Our equipment can be used even for people with spasticity. This is third feature. The fourth is that it can be used for occupational therapy as the device is located on the back of the hand, there's nothing on the palm side of the hand. By being on the back side of the hand, you will be able to work as such as grabbing something. Furthermore, in addition to this, independent control of the 5 fingers allows for a firm and stable grip with 5 fingers on the round or square object, a large or small object. It has those characteristics. By combining these features 1 to 4, the neurorehabilitation device that can perform occupational therapy and also cope with spasticity can be treated. Specific clinical research at Juntendo University is still in progress. So I guess the results are not available yet. But have you heard about the patients who are wearing the device?

Yes, people who have been doing rehabilitation for a long time, seems to have a hard time seeing the effects of rehabilitation because they are unable to move their own bodies. In fact, when some patients saw the wave form of bio signals as EMG and the actual movement of the device in response to the waveform, they began to work on habitation in a positive and proactive way, although they had almost given up because they could not move hands at all. I've seen such people, and I hope that our devices will contribute to rehabilitation in this way. I'm looking forward to the results.

Yes. Thank you very much. I would like to summarize what we have presented today. In clinical reputation, there are various issues such as biofeedback, issue dependency, quantity dependency and handling over expert skills. Our goal is to provide an easy-to-use robotic neurorehabilitation device for paralyzed fingers that detect and visualizes EMG even from paralyzed tandem fingers so that it can actually classify the user's motor in patients people EMG to exercise with no time lag. This is expected to facilitate the neuro rehabilitation to promote recovery of neurological options after injury and to promote brain plasticity and rig construction of neural networks. Finally, as for the future business development, we are planning to acquire a certification of existing devices with generic names as certified devices. After certification, we plan to start selling the device on a small scale, collect evidence in actual clinical practice, upgraded device to a new version based on the evidence and conduct another test on the upgraded device to obtain approval as a new medical device for improved medical device. After that, miniaturization of the device will allow us to expand the market for home and promote medical care. And we would like to expand the market, including overseas development. That's all for today. I've introduced our project with MELTIN. Thank you for your attention.

Thank you very much. Now at the end of the presentation, Mr. Takehiko Nomura, Senior Director of the Office will give us an overview of the entire portfolio.

I would like to conclude by explaining the status of the entire portfolio, including the 3 products that we explained in detail today as well as other products in development. As a part of our midterm business plan, we have set the goal of accelerating the development of Frontier business and launch new businesses in order to establish a growth engine. In addition to the 3 products introduced today, we have already announced a mobile application for type 2 diabetes management, which is part of the lifestyle related diseases field and automated blood collection storage device that also specializes in the personal health record monitoring platform. In this section, we have plotted the published development teams with the horizontal axis representing the patient journey, which consists of the prevention phase diagnosis treatment, nursing base and social rehab base and the vertical access representing the disease area such as psychiatry, neurology, motor dysfunction and lifestyle-related diseases. Using this chart, I will introduce other Frontier business projects that we are currently considering. First, let me explain about the wearable EEG meter. This is from the backup material, a wearable EEG meter can measure EEG with dry sensors at 2 points on the front of the head, enabling measurements at home and make it easy to evaluate EEG trends that could be -- could not be grasped in the past. We are planning to obtain approval for medical devices and would like to develop business in the field of mental disorder. Next, I will explain about Violet Light, which is being developed for dementia and depression. This is also from the reference material. Violet Light is developed through a partner with Tsubota Laboratory, Inc. a venture company from Keio University School of Medicine to develop a neuromodulation device that aims to prevent and treat depression and dementia by irradiating the eyes -- violet light. Since violet light is almost invisible to the human eye, we expect superior usability by making it a wearable device in the form of glasses, which can be used in daily life we sell any discomfort. Next, I would like to introduce the development of the digital diagnostics medical device, also in the area of progression. This is also from the reference material. This device is to enable simple screening and assessment of severity of illness by objectively, qualitatively and continuously monitoring patient's daily data with an active meter, also utilizing AI technology. We aim to standardize the patient assessment regardless of physician's specialty or experience. Next, the last, in the neuropsychiatric portfolio, I'd like to introduce smart glasses for the hearing impaired. This is also from the back-up slide. This is a partner with Pixie Dust Technologies, Inc. to create smart glasses that display real-time subtitles of what was said by any speaker, even in situations where there are multiple speakers with the aim of overcoming communication challenges caused by hearing loss. This solves communication issues in one-to-many conversations that are difficult to solve with conventional hearing aids. In this section, I have introduced the positioning of the development teams based on the patient journey and disease areas. The following is a summary of the competitive situation for the 3 development items introduced in this report. Regarding devices for relieving BPSD, Dthera Sciences in the U.S. was conducting clinical trials using reminiscence therapy, but the development has been discontinued. The treatment of BPSD with pharmaceuticals mainly targets improvement of mental symptoms and is not considered to be in competition with this case. Next, regarding the VR content for social anxiety disorder, the only drugs approved by the FDA for social anxiety is SSRI and SNRI, which are symptomatic treatments. As for the development of VR solutions for social anxiety disorder by other companies, Psious in Spain and Oxford VR in the U.K. have already launched VR content. However, the strengths of BehaVR is that it can present VR sessions that are most suitable for each user's needs using its unique algorithm. Lastly, regarding neurorehabilitation device for hand and fingers, there are similar development companies in Japan and overseas that use EMG and robotic technologies to assist in the functional recovery and movement of upper limb. The competitive advantage of MELTIN is that it recognizes the EMG itself and responds to the person's intentions with AI, which is different from devices of other companies that recognize the amplitude and strengths of EMG. In addition, while other companies use a motor-driven mechanism, the MELTIN is differentiated by its wire-driven mechanism that powerfully drives the finger joints and firmly assists the pinching action of the fingers. As for the sales method of this product for non-medical devices, in addition to the case of direct sales to users, we envision sells through the facilities to which the users belong and the use of employee benefit programs through contracts with employers. In the case of medical devices, the scheme is basically the same as that for pharmaceuticals where the product is provided to the patient through a doctor's prescription, subject to insurance reimbursement. With the Frontier business portfolio we have described, we will build systems in each business domain we focus on. And in the future, we hope to provide total solutions. First of all, in the area of mental resilience, we aim to realize sustainable cures and care that are integrated with medicine by having the system-building concept of making diseases measurable on a daily basis. Specifically, we believe that care that is integrated with activities of daily living is important for all patient journeys. In other words, we provide sensing of lifestyle behaviors, psychology and emotions, vital signs and other biological responses. These data are stored as PHR to detect mental health changes and provide preventive interventions. As an example of this solution is the Violet Light and VR content for social anxiety disorder products for general wellness. In addition, PHR can be used as objective indicator of symptoms and treatment effects, so-called digital biomarkers. For example, by using Wearable EEG meter to measure brain waves on a daily basis, it may be possible to detect signs of mental illness from changes in brain wave trends. In addition, we believe that the devices for relieving BPSD and VR contents for social anxiety as medical devices can be mentioned as non-drug treatment options in conjunction with drug treatment to support precision prescription. In the construction of systems in the active aging platform, we aim to provide solutions that can accompany patients through their lives by offering life planning and realization options based on their physical functions, jobs and lifestyle. First of all, by improving mental health, as mentioned earlier, we can promote the transformation of lifestyle habits linked to the mind. As a means to this, we believe that automated blood collection and storage devices will enable simple and low-cost home testing. In addition, we believe that an application for type 2 diabetes management may play a role in centralizing PHR accumulated through the device. Furthermore, devices for relieving BPSD can be positioned as one of the devices that enable remote intervention through digital technology. With these solutions, it becomes a home doctor and personal trainer function encouraging the continuation of treatment. We also aim to develop solutions that can provide continuous monitoring of physical functions and life planning even after treatment. Neurorehabilitation devices for hand and fingers can be used to activate the remaining functions of the body and smart glasses for the hearing impaired can be used to acquire self-specified physical functions. As described above, we would like to build a total care system by enriching solutions that have affinity with platforms such as mental resilience and active aging. I have introduced our existing portfolio so far. But in the field of digital health care, technologies become obsolete quickly. So it is important to constantly watch the latest technologies and search for new businesses. Therefore, we are investing up to approximately JPY 2 billion in Kicker Ventures, which consists of people with deep experience and a broad network in the digital health care domain. One of the features of this venture capitalist is that Mr. Kiyomine, a venture capitalist, has extensive venture investment experience in the U.S. and management experience in digital health care. In addition, as a global BD function, Ms. Ishikura, a business development professional, can advise us on potential partnership with promising start-ups. Furthermore, for projects that have already started business development, Mr. Sawada of Co-Studio, our in-house lab function, will use his experience in business development at large companies to quickly establish the system to confirm the POC. This page shows the scheduled launch dates for the main items among the development items introduced today. Non-medical devices and medical devices are color-coded. First of all, the devices for relieving BPSD and VR content for social anxiety disorder, which will be explained in detail today, are scheduled to be launched as non-medical devices in Japan and the U.S., respectively, by the end of FY 2022. For other non-medical devices, we are planning to launch several products between FY 2023 and 2025. Next in the area of medical devices, we plan to launch via content for social anxiety disorder as a non-medical device in the U.S., acquire real world data, begin development as DTx and hope to obtain approval in FY 2026. In the same way for devices for relieving BPSD, Aikomi will first start a non-medical device business in the nursing care field and then conduct clinical trials and obtain approval as a medical device development. In addition, the neurorehabilitation device for hand and fingers is scheduled to be certified as a medical device by the end of FY 2022. And after upgrading the device, clinical trials will be conducted to obtain approval as a rehabilitation device by FY 2025. In addition, we are aiming to launch medical devices product related to diabetes, lifestyle-related diseases and mental disorders in the time frame shown here. We show here the target values as future business potential based on Frontier portfolio. First, we are targeting sales of JPY 20 billion to JPY 30 billion for the period up to FY 2027, which is the period of the next midterm business plan. The main components of the business are the businesses in the mental resilience platform in Japan and the general wellness business using VR content for social anxiety and other disorders in the U.S. Furthermore, by FY 2032, 5 years from now, in addition to the expansion of the Japan business, we would like to expand sales in the U.S. by expanding the existing business in the U.S., especially expanding the general wellness business to the DTx business and by considering the development of domestic products in North America. We will grow the business to a business that support the pharmaceutical business with sales of JPY 100 billion range in Japan and the U.S. In addition, by selling Frontier products through the same sales channels and platforms as existing drugs, we expect to generate synergies such as increased sales of drugs currently on the market. Finally, I would like to summarize the value provided by system development in each of the business domains that we have described today. The first is the improved mental health. By making diseases measurable on a daily basis, we can achieve a sustainable cure and care that is integrated with medicine. Secondly, in the active aging area, as for cognitive function, we would like to predict the risk of onset and the pattern of symptom progression at an early stage and provide an environment that supports the maintenance of cognitive functions and life. Finally, for lifestyle physical functions in the area of active aging, we will provide life planning and realization options based on the patient's physical functions and job lifestyle and provide the value of solutions that can accompany the patient throughout life. That's all. Thank you.

I would now like to move on to the question-and-answer session. When it is your turn to speak, I will read out your name. Please ask your question after stating your name and affiliation. First of all, Mr. Hashiguchi.

Hashiguchi from Daiwa Securities. I would like to ask my first question to Mr. Kato of Aikomi or Mr. Kasuya of MELTIN. How much value do you think you have added by working with Sumitomo Dainippon Pharma? And also, what do you think can be expected in the future? I'm sure you had a variety of partners in mind when you started your business, but I would like to know why you chose Sumitomo Dainippon? What your expectations were? And how the results have been so far?

This is Takehiko Nomura. Let's start with Mr. Kato from Aikomi. Yes, Kato is here.

Our products are intended to treat the mental and structural changes and peripheral symptoms of dementia. As you know, Sumitomo Dainippon Pharma has a great deal of experience in the field of psychiatric disorders and connection to this range of experts. This is one of the reasons why we are currently working with Sumitomo Dainippon Pharma in this way. In addition, there are opportunities like today if we showcase where Sumitomo Dainippon come together to support start-ups like ours or where people like Mr. Hori work together with us to support our business. Including these type of things, we have benefited in many ways.

Now I would like to pass the questions to Mr. Kasuya from MELTIN.

Thank you. As I mentioned earlier, I was a student when we registered in 2013, and I finally graduated in 2016 and started fundraising. It was great to have the support of Sumitomo Dainippon. The company has a wealth of knowledge in this field. This was our first venture, and the medical industry has a lot of regulations. So it was great to have their support. In particular, Ms. Nishimaki and I traveled all over the country to look for joint research partners. We were able to receive strong hands-on support in terms of strategy, such as what kind of devices and concepts should be developed. I'm very grateful for that. Another factor is that shared vision is quite significant. At first, I thought that the pharmaceutical industry was not that related to our robotics and biological signal work. However, I was surprised to find that Sumitomo Dainippon Pharma has a vision in relation to this. They provide drugs for nervous system and conduct related research. In fact, when we talked to each other, we found that we could expect considerable synergies in terms of both actual research and product development as well as in terms of vision. From that, we decided to ask them to support us.

I have a question for someone from Sumitomo. I would like to ask you to introduce the profit structure of these Frontier-related projects. To put it another way, could you describe the basic concept of sharing costs and profit and explain if there is anything common to each project? If each project is different, could you please tell us how the sales and profits are organized for the 3 projects you mentioned today?

Thank you for your question. I will respond to your question. We have not yet established clear sales forecast for each project. The business potential shown at the end of the presentation is only a target, not an accumulation of earnings forecast for each project. Therefore, the profit and loss structure for each project is not yet clear. There are a number of projects that require finalization of business model. We will need to clarify this in consultation with our partners and through market research.

Is there a common basic concept among the partner companies regarding risk, cost-sharing and profit sharing, such as 50-50 or a given percentage?

Basically, I think it is done on a case-by-case basis. In many cases, the R&D costs and other expenses are split 50-50. And in some cases, we bear a little more. Depending on the situation, we will decide how to divide the profit after the launch of sales. I think it will be done on a case-by-case basis.

Okay. Is it correct to say that what you introduced on Page 67 is not the scale of the market or the sales that Sumitomo will venture record, but rather the final level of added value?

Yes. I think you could say that. This target has been set since April 2019, when the Frontier business office was established and since the beginning of the CRC planning process.

I see. At this point, I guess, it would be difficult for you to indicate the contribution of profit even if it is just an image.

Yes, that's right. At this point, I think it is so difficult to say.

Next, Mr. Wakao.

Wakao from JPMorgan Securities, Japan. I would like to ask about Page 67. I was able to understand the explanation of each product and service very well with the help of the video and other information. However, when it came to the diagram of sales and business potential, it was difficult to fill in the gap between the sales scale and each product. I would like to know more about this. Although it is not a detailed breakdown, I would like to know more about what is behind these numbers. So for example, which products will contribute more to growth? I would like to know regarding Page 66. If it is a medical device, will it be reimbursed by insurance? Or is it -- if it is a consumer product, will the consumer be the source of money? In addition, when you say there will be a large jump from 2027 to 2032, why will there be such a large leap? The reason for this jump is probably the expansion of the number of products, but could you tell us about this change?

Thank you for your question. I will answer this as well. First of all, as for the JPY 20 billion to JPY 30 billion target by 2027, we will focus on the mental resilience business in Japan, which includes both medical devices and non-medical devices. We would like to discuss a framework that would allow us to contribute to the profit of the nursing care business currently being conducted by Aikomi, which we presented today. Also, outside Japan, the VR content for social anxiety disorder was presented today, and it will be mainly for the general wellness business. The challenge for us for the future is how to uncover potential patients with social anxiety disorder and the users who are not yet ill. This will be a challenge for us in the future. We would like to maximize our business value by developing platform technologies that can solve such problems, and we have set targets for these as well. Also by 2032, I believe that the VR content for social anxiety disorder that I just mentioned will contribute to sales. We will also have the launch of DTx products. All of these are expected to contribute to sales. In terms of revenues, I think you know that the scale of revenue will be larger than that of general wellness product. So one of the things we will do in this area is to target indications other than social anxiety disorder. In addition, there are projects that are currently considered in Japan that we have the rights to develop overseas, especially in North America, we will gradually develop and launch such projects in North America.

I understand. Also in this chart, it seems to be that the synergy with the pharmaceutical business is quite modest. How do you view the scale of sales in this synergy with the pharmaceutical business?

Regarding the synergy effect, as you can see in the bottom right corner of the diagram, these products will be sold through the same types of channels as pharmaceutical products. We also expect this to increase recognition of our pharmaceutical products. We believe that by developing a platform that recognizes both the pharmaceutical and non-pharmaceutical businesses, there will be a synergistic effect between them. But we don't have concrete numbers yet, so this is just an image of how much qualitative synergy we can expect.

I understand. Lastly, what do you consider to be the potential bottlenecks in achieving these sales? For each technology, there are various issues such as whether or not the product will be launched properly and who will pay for it. I think this business is currently running on the project basis. But when you look at it over the long term, will it become a business that you develop in-house? Or will it be a platform for incubation and sales, where new technologies are constantly introduced by venture companies, incubated and sold? Please tell us about your thinking of the future of this business.

I will answer this as well. In the case of general wellness products, as you know, there are quite a few products on the market, some with considerable evidence and some with almost no evidence. Therefore, I think the important point is how to provide solid dividends at the pharmaceutical company and how to make users recognize the value of the product. There are licensing and approval issues when it comes to DTx. If a DTx product is approved, a question of whether or not insurance reimbursement will be made at the expected price will have a significant impact on profitability. I think that will be a very important point.

I understand. Also, what form will these products take in the end? Is this a business where you absorb new things all the time and are responsible for sales and development? Can you tell us if you envision your company doing development from 0 base?

In the future, we aim to accumulate capabilities within our company such as R&D in part through the process of collaboration with our partners. We are still in the process of trial and error so we haven't decided what we will prioritize. We are applying some of the technologies that we have been studying in our own drug discovery activities. We would like to steadily develop those technologies as our own fundamental technologies if possible.

Next, Mr. Yamaguchi.

My name is Yamaguchi from Citigroup Global. The first question is a general one. I think someone mentioned this a little earlier. I may not have looked at the materials properly, but I think that you are currently working on joint development projects and sales between each company and yourselves. Regarding stake, for example, how much stake do you have in each company? What will happen to that stake if these companies go public in the future? Would there be any intention to incorporate or bring a company within your group? Can you tell us about your stake in each business? And what kind of policies you have in place to manage these issues? I understand it may be handled on a case-by-case basis.

The company President will take your question.

Yes. As for the stake, I think this will vary on a case-by-case basis, depending on the circumstances of the other partner. In some cases, we will invest and in other cases, we will not. Basically, when we invest in a company, we do so in the hope that it will strengthen our relationship with that company or that it will enable us to make stronger progress on the project we are working altogether. Therefore, whether or not our partners go public is not really relevant to us. As for the share, as Takehiko Nomura explained earlier, this will vary on a case-by-case basis, depending on the relationship between us and our partners. It depends on how much each of us contributes until final product or service is completed. So it's all case by case. We are still discussing how to create individual solutions. So I think we still have a long way to go before we know what our share will be. We are still discussing how to build a business model.

I would like to ask you one quick question about technology. First of all, it seems that Aikomi's competitors have stopped clinical trials using reminiscence therapy and that it did not work out. In Aikomi's case, given what we saw about suffering from anxiety and isolation, it seems like it would help. Is it correct to say you are adopting this approach that uses reminiscence therapy not because there's a bit scientific evidence for reminiscence therapy but because you think that you'll be able to generate evidence? What factors, if any, contribute to the failure of the reminiscence therapy study?

I will hand this over to Mr. Hori to answer.

Yes. I am Seiji Hori, the project manager. I'll be happy to answer. The first drug therapy we are focusing on is based on cognitive activation therapy, which is different from reminiscence therapy, and focus is on digitizing it. Basically, there is some evidence supporting cognitive activation therapy done by a person. So I think we can expect it to be effective on that basis. There is a small amount of evidence for reminiscence therapy done by people, but it is based on small-scale experiments. Our concept is based on the hypothesis that stimulating as many of the 5 senses as possible can alleviate peripheral symptoms. We are not just relying on reminiscence therapy but would like to stimulate the senses of hearing, sight and eventually smell in order to increase the probability of success.

I see. Also, if you know anything about BehaVR, please let me know. I heard that they are already developing -- they are developing VR solutions. So I think that both your company and the BehaVR solutions will have a general wellness launch. On the other hand, in order to develop DTx, although the effect will be stronger if VR is used, I couldn't figure out who will be the first to achieve it. Do you think that because your company's algorithms is different, your company will be the only one able to go from general to DTx? Is the algorithm an important differentiator?

Thank you for your question. I will answer this one. As you mentioned, some of the general wellness products are already on the market. So I think that would be a competitor. What we want to develop with BehaVR is the second-generation VR content as opposed to the first-generation exposure therapy done by a person implemented on VR. This includes second-generation VR content and VR solutions that provide the best content for each individual user by interfering -- inferring the best content from the acquired data such as vital data. We believe that in developing DTx, we'll be able to differentiate ourselves. So as we continue to update our general wellness products, I think we will gradually add such functions in the process.

Lastly, I would like to ask one question on MELTIN. I think there was a comment, but there's a company called Cyberdyne. It has HAL rehabilitation robot that can assist in walking and the use of upper limbs. I think the fingers are a different story though. Do these 2 products have a common scientific basis with respect to myoelectricity, moving object with biological wave forms? Would it be correct to say that your company is differentiating itself by developing hands and fingers? I would be grateful if you could briefly explain the principle behind Cyberdyne's robots and whether or not yours is different.

Thank you. I'll pass this question on to Mr. Kasuya of MELTIN.

Yes. Thank you for your question. The use of myoelectricity is the same in the sense that the science behind it is the same. The myoelectric signal is the same, myoelectric waveform itself and the kind of sensor used to measure myoelectricity are probably the same, we're using the same technology. The clear difference between us and Cyberdyne is how we process the signals from there. For example, with machine learning and AI, which was introduced in the previous presentation, it was possible to judge the strength of the myoelectricity in the closing or opening of the hand. What is different about our device is that the conventional devices that recognize the amplitude and strengths. Our device is different, even if the EMG is strong in the direction of closing for a long time, it can distinguish the thorough differences of intention in waveforms to see if the person is trying hard to open the hand, even while closing the hand.

Is that the algorithm?

Yes, that's right. Yes. That's what's in algorithm.

Now next, Mr. Oda.

Oda from Morgan Stanley. This is my first question. In the speech by company CEO, Nomura-san, you mentioned that you're reviewing the projects that are already running. I would like to know if there were many projects that were canceled in the early stage. And if so, could you explain the background of those cancellations? I would like to know what selection factors are being used in the review process and whether you are deciding which one to proceed with -- from the perspective of long-term business visibility.

I would like to pass this question to the company President, Mr. Nomura.

Thank you for your question. In the Frontier business, the first thing to consider is what unmet needs we should appeal to and what technologies we can use to solve those unmet needs. Can this technology be used to create services or solutions that can actually be provided to patients and others? Another point is, as I mentioned earlier, whether or not it is possible to build a business model that will allow us to receive fair compensation. We consider these 3 points as our priority checkpoints. I cannot tell you specifics about the projects that have been discontinued so far. But I can tell you that of those 3 main points, the last 2 have been the main issue. From this perspective, I think the key points that will be used to judge the progress of these projects, whether the solution will be feasible and whether a business model can actually be built.

Understood. The second question is a broad one. But you mentioned earlier that you're not necessarily building up the scale of sales. I would like to ask you about the business models for Aikomi that meet our products and the neurorehabilitation devices for hand paralysis. There was a mention of selling directly to consumers or something through employee benefits. What do you envision as being the biggest area of sales? For example, if you are selling neurorehabilitation equipment, do you sell the product, and then that's it? Or would you operate a subscription package?

Thank you for your question. You mentioned 3 projects, but is it all right to talk about each individual?

Yes, that would be great.

First of all, a few words on VR content for social anxiety disorder. As I mentioned a little bit earlier in terms of general wellness products, the biggest challenge is how to attract users at a certain price. This is where an employee assistant program could be useful. So we would like to consider targeting employers, having them use the product for the purpose of employee benefits. That seems to have the most potential. In case of DTx, the sales route will be similar to that of pharmaceuticals since it will be prescription-based and managed by doctors. Mr. Hori, in charge of Aikomi, will explain more about it.

Yes. Seiji Hori is here. I'll be happy to take your question. I mentioned that there are 2 uses for Aikomi project. The first is for nursing care and the second is for medical use. First, we have not yet made a decision on the development of the product for medical use, so we cannot say at this point about how we plan to obtain approval for a planned business model. As for the nursing care application, we already started trial sales. Since there are trial sales, we are trying to figure out the best service model. One of them is a business model in which the family of the person with dementia and Aikomi enter into a service provision contract. And there will be a monthly subscription fee.

Next, I would like to hand over to Ms. Nishimaki to talk about MELTIN.

Yes. I'm Yukako Nishimaki. Thank you for your question. As for the rehabilitation equipment used by MELTIN, it is a medical device. So it is covered by insurance reimbursement. It is still unclear how the insurance reimbursement will be categorized. We will have to set up our business model according to the insurance reimbursement we will receive. After approval, we will have discussions with the relevant academic societies and related parties to formulate a model. In any case, I think it will be similar to the model for the distribution of medical devices and pharmaceuticals.

Understood. I think you mentioned that the general wellness element of VR will be through the employee benefit program. Is it a subscription program? Or do you sell the equipment and record the unit price sales?

In terms of VR headsets, we are thinking in terms of rental business. So although the contract may be similar to subscription, I think it is possible to have a large contract. I think that the contract may be slightly different, depending on the business owner who becomes a partner.

Next, [ Mr. Ishi ].

[ Ishi ] from the Pharmaceutical News Agency. As for the digital devices relating to dementia, there are 2 types, non-medical devices and medical devices. What type of papers are you envisioning?

I'll pass this to Mr. Hori.

Thank you for your question. We are considering it as a non-medical device. We hope that the device will promote communication between people who have peripheral symptoms of dementia and their families or caregivers and reduce the burden of care. For example, if the symptoms of withdrawal or depression make it difficult for a person to talk, suppressing the symptoms will allow the person to talk or communicate with each other. Medical devices, on the other hand, aim at alleviating specific symptoms relating to dementia. For example, when a patient with dementia is admitted to a hospital and has peripheral symptoms, the patient may or may not be treated with medication, but rehabilitation will be conducted. And care for peripheral symptoms will be provided in short-term intensive rehabilitation for dementia. We believe the occupational therapists and others who are involved in the rehabilitation can use this kind of device as an adjunct to rehabilitation to take care of BPSD, the peripheral symptoms of dementia. We are hoping that the device will be able to show the extent to which the peripheral symptoms have been alleviated.

If that's the case, can we consider combination therapy of Aikomi's product and the drug therapy for the combination with the medical device?

That's right. When the Aikomi system is used for medical purposes, we believe it can be used in combination with conventional drugs for hallucinations and delusions. I hope I have answered your question.

Next, [ Mr. Iwasaki ].

[ Iwasaki ] from the Chemical Daily. I would like to ask Company President Nomura-san to comment on the Frontier business, which was launched in April 2019. It has since launched a variety of projects, as you mentioned today. What is your overall impression so far?

Thank you for your question. The way I have been explaining the Frontier business so far has not been very good. And I think there are some misunderstandings, so I would like to clear up a few things. We are, at our core, a company that manufactures medicines. Originally, as I mentioned earlier about the patient journey, there are many elements such as prevention, managing pre-disease state, treatment, nursing care and reintegration into society. To date, the focus has been on treatment, especially drugs, and we have been competing in this area. However, with the advancement of science and technology, as you all know, we have a project called S-RACMO. This is in the field of regenerative and cellular medicine. The use of cells as medicine, nerve transplantation, generating and transplanting new tissues or creating whole organs, these things were unthinkable in the past, and we were moving forward in this area. In that sense, the focus has been on treatment, but we see advancement of various technologies, especially AI and digital technology, we are finally able to take on long-standing unmet medical needs. As a company in charge of health care, we have not been able to address these issues because we did not have the technology to do so. However, now that the technology is available, we'll be able to address these issues moving forward. This is the idea before behind the Frontier business. The business was established in April 2019. And in this context, I would say that it has made solid progress so far. We are making good progress. Of course, the U.S. is very advanced in this area. So there is no need to worry too much about the business model. In fact, there is a very high level of acceptance for these digital solutions. So as long as we can create good products, we have a lot of potential. However, in Japan, these digital solutions, both in the area of general wellness and in the reimbursable and regulated area, are still not very widely accepted. In this context, it is difficult to know how we can develop our business. As Mr. Takehiko Nomura explained earlier, we have a concrete plan to launch products in the market. So from that perspective, I think we have made very good progress so far. So from that perspective, I think we have made very good progress.

Next, Mr. Muraoka, would you like to ask a question?

This is Muraoka from Morgan Stanley. In the interest of time, I just want to know this. What kind of image should we have of the life cycle of these projects from the business perspective? In case of pharmaceutical drugs, I can easily imagine that the company will post a loss for a long time until the product is launched. The breakeven will be in the third year or so, after which the operating margin will be around 80%. That's my image, but I understand that each product is different. For example, in case of Aikomi's business, digital therapy for BPSD, for example, how much will the upfront cost be? How many years before the breakeven? And how long will it take to pick out? Maybe you don't even say pick out, but -- and will there be a process of upgrades? I would like to ask you to share what kind of business trajectory for this project we should be looking at for the next 5 to 10 years.

Thank you for your question. In case of Aikomi, I think there is a division between the nursing care business that is currently being promoted by Aikomi and the future medical equipment area. Kato-san, would you like to take this question?

Yes. I'm Junichi Kato from Aikomi. First, I think I am only able to talk about the nursing care business. The sales plan is included in the presentation shown by Sumitomo on Pages 66 and 67. And we are planning to increase sales in the nursing care business over the next 4 years to 5 years. In the meantime, the cost of these digital products is lower than that of hardware. So we expect that we will be able to turn the profit very quickly. However, there are some unforeseen factors that will affect how much it will cost in the future when we actually start selling the product in various parts of Japan, so we are currently looking at costs in the 4- to 5-year time frame.

I see. Is it to visualize when the life cycle of a drug will come to an end? How about with this type of product?

I think the factor here is the speed at which digital devices become obsolete. In addition, if technological innovation leads to the development of innovative drugs or regenerative medicine that can cure dementia, then the life cycle of products for dementia will naturally become shorter.

We are running out of time. But next, [ Mr. Hashimoto ].

[ Hashimoto ] from Nikkei BP. I would like to ask President Nomura-san about this business, which is quite different from a conventional pharmaceutical business in terms of cost ratio, manpower requirements and so on. At this stage, I'm not sure how much weight Sumitomo Dainippon is going to put behind this. And I didn't get the impression that more resources will be used supporting the commercialization of its partners than for the pharmaceutical business. In the future, for example, the current situation is still a question of visibility. But you have given us some figures for the next 5 years to 10 years. I would like to have an idea of how big the business will become. Would you consider starting the business unit? So if you could give me some insight as to how big the business could become.

Thank you for your question. In the first place, the creation of the FBO in April 2019 itself is intended to foster the development of these projects separately from pharmaceuticals. Therefore, the allocation of resources for the development of these projects will be kept separate from other areas. However, as I mentioned earlier, when we look at the unmet needs that we are trying to address and what kind of technology can be applied to those needs, at this point in time, it is difficult to determine what kind of technology can be applied. Both Aikomi and MELTIN already have established technologies to some extent. Therefore, we think that working together with such companies is the quickest way for us to achieve our goals. There has not been much focus on the technical background of these products in the presentation today. However, as I have said many times before, the first thing we need to do is to decide what kind of unmet needs we will appeal to and what kind of technology we will use to meet them. There's a possibility that such things will appear in the future. Therefore, I'm not sure if all Frontier projects will be the same format or not. So at this point, we are not at the stage where we see this as a major project. However, when sales start, for example, the distribution system, the distribution mechanism and the supply chain will be very different from those of pharmaceuticals or regenerative and cellular drugs. So I think we need to work on these areas as well. So at a certain stage, we will start to treat this business as a separate division from pharmaceuticals or regenerative cellular therapies. At the present stage, we are already considering how to establish the supply chain for each project. When we have completed the solution and have a business model that allows us to receive fair compensation for it, we will continue our efforts to grow these as independent businesses.

I see. Could you tell me about the timing in terms of years?

Yes, I believe we showed a rough time line in the presentation. But to add to that, I think it is also important to achieve a certain scale quickly. As a result, I would like to have some things set up within the next 2 years to 3 years.

I would like to conclude the question-and-answer session. Thank you very much for your many questions. This concludes the briefing. Thank you very much for your time today. [Statements in English on this transcript were spoken by an interpreter present on the live call.]