Healios K K : FY2020 Q2 Financial Results

Healios K.K.

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August 06, 2020 at 07:09 am

FY2020 Q2 Financial Results

Company

HEALIOS K.K. (TSE 4593)

Date

August 6, 2020

Strategy/Updates
HLCM051 Stroke
HLCM051 ARDS
iPSC Platform
HLCN061：Immuno-oncology(NK Cells)
HLCR011 AMD
HLCL041 Liver Organ Bud Platform
Financial Highlights
Appendix

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Hybrid strategy

Generate near term profits in stroke and ARDS indications;

Reinvest profits in our innovative IPSC platform to create next generation therapies for the global market; Engage deeply with regenerative medicine innovation around the world through our venture fund activities.

MultiStem		iPSC Platform
Japan		Global

New Products

Global

STROKE

ARDS

iPSC

Gene Editing

Immuno-oncology

Ophthalmology

Organ buds

(Somatic stem cell product			iPSC
obtained from	Reinvest	Manufacturing	x	Reinvest
Immuno
adult bone marrow)
		Oncology

…

Venture Capital Fund

Update

Pipeline

		Development		Pre-	Apply-	On	Progress status
Market	Field	Indication	clinical	Clinical trial
Code	approve	Market
			test

Somatic Stem Cell

Ischemic

Enrollment of patients will be completed

Stroke

in Q4 FY2020

Regenerative

HLCM051

Enrollment of patients will be completed

Medicine

ARDS

in Q4 FY2020

Japan

HLCR011

Wet AMD

Undergoing preparation for clinical trial

Joint development with Sumitomo Dainippon Pharma

iPSC Regenerative

HLCL041

Metabolic Liver

Joint research with Yokohama City University

Medicine

Disease

NK cell

HLCN061

Solid Tumors

Research and development of genetically modified NK

(*3)

cells(*1)

Joint research with the National Cancer

Center Japan

Development

Pre-

Phase 1

Phase 2

Phase 3

Apply-

Progress status

Market

Field

Indication

Clinical

code

trial

approve

Market

test

HLCR012

Dry AMD

iPSC

Regenerative

Medicine

HLCN061

Solid Tumors

Research and development of genetically

modified NK cells(*1)

*1) NK Cells：Natural Killer Cells

New

HLCN061: Started joint research with the National Cancer Center Japan

The National Cancer

Center Japan

Research utilizing PDX（Patient-Derived Xenograft）

・Investigate the expression of several molecules recognized by HLCN061

・Clarify the characteristics of solid cancers to which HLCN061 exerts antitumor effects

Based on the results of these studies

PDX models ＊１ will be used to consider what solid cancers we should target with our therapy.

Gene edited

NK cells

PDX

*1 PDX models

Transplant human patient cancer tissue into immunodeficient mice Dramatically improves the predictability of clinical response

HLCM051 Stroke

	iPSC	Manufacturing
	x
	Platform
STROKE	Gene editing	iPSC-RPE

ARDS	iPSC	iPSC-NK	iPSC-LIVER
	x
	Immuno
	-Oncology

Update

HLCM051 Stroke: TREASURE Study Ongoing

Ongoing Placebo-Controlled, Double -Blind, Phase 2/3 Efficacy and Safety Trial of HLCM051

(MultiStem®) in Patients With Ischemic Stroke

Development Plan

The pandemic of COVID-19 affected on our clinical trial

Q4 FY2020

November 2017Last patient will be enrolled

First patient enrolled

Progress in patient enrollment

Preparation	Apply	Approval
/Sales

Overview of TREASURE study

Trial	Placebo-Controlled,Double-Blind,
	Phase 2/3 Efficacy and Safety Trial
	of HLCM051 (MultiStem®) in
	Patients With Ischemic Stroke
	（TREASURE study）

Subjects	Ischemic stroke within 18 to 36
	hours

Conditions	Placebo-Controlled,Double-Blind

Enrollment	220 (HLCM051 [n=110], placebo
	[n=110], randomized)

Primary	Proportion of subjects with an
Endpoints	excellent outcome defined by
	functional assessments
	[ Time Frame: Day 90 ]

The approval period may be shortened from 12 months to 6 months by the SAKIGAKE

Designation System

"Excellent Outcome" is defined as achieving mRS ≤1, NIHSS ≤1, and BI ≥95. mRS, NIHSS, and BI are the three major indices of functional assessment for stroke patients.

Results of Double-blind Study Conducted by Athersys

The proportion of patients who achieved Excellent Outcome was statistically significant

in the group of patients who received MultiStem within 36 hours of the onset of cerebral infarction

Analysis of the Double-blind study conducted by Athersys

29.0%

MultiStem

Overview of the Analysis

	The placebo-controlleddouble-blind
Trial	Phase 2 study conducted by Athersys
in the US and the UK

	（MASTERS study)

16.1%

(n=31)

p=0.01

Subjects	Administered MultiStem or Placebo
within 36 hours of the onset of stroke


Endpoint	Proportion of subjects with an Excellent
Outcome on Day 90 and Day 365

p=0.02

		Placebo
0%	(n=19)	0%


Day 90		Day 365

(Source) This material was based on Lancet Neurol. 2017 May;16(5):360-368; 16 360-68 Supplementary appendix Table 5

*is defined as mRS score of ≤1 (scale, 0 to 6), NIHSS score of ≤1 (scale, 0 to 42), and BI score of ≥95 (scale, 0 to 100).

HLCM051 Stroke: Outline of Ischemic Stroke in Japan

Expected development of a new therapy that can be applied in a longer treatment window period following the onset of ischemic stroke (ability to help more patients)

Treatment in Accordance with the Period After Onset

Ischemic Stroke

Ischemic stroke,

Period after onset

which represents the

most common form of

10h

20h

30h

40h

stroke (70 - 75％ of

cases in Japan), is

Clot-dissolving agent*1

caused by a blockage

There is a time limit

of blood flow in the

because of the risk of

brain that cuts off the

Mechanical reperfusion

cerebral hemorrhage

supply of oxygen and

nutrients, resulting in

（Source）Athersys

tissue loss.

HLCM051

Possibility as a

It is estimated that 37.9％ of bedridden

new alternative

patients and 21.7％ of persons who

※1 Dissolves blood clots in the brain vessels

were in need of care were affected by

※2 Insertion of the catheter into a blood vessel and recovery of the thrombus directly with a wire.

ischemic stroke.

(Note) This material was prepared to explicitly describe the major therapeutic options for ischemic stroke and their treatment window periods after onset. Appropriate treatments are conducted according to patients' conditions and classification of their symptoms. Experimental or investigational treatments not included in the above are also performed.

HLCM051 Stroke: Annual number of New Patients with Ischemic Stroke in Japan

The number of patients in Japan targeted for HLCM051 is estimated to be 62,000 a year

Number of patients (yearly)

230,000～ 330,000

Severe patients

130,000

Patients within 36H after onset

62,000

Number of patients with ischemic stroke in Japan (yearly)

Severe patients

（atherothrombotic and cardiogenic cerebral infarction)

Patients within 36 hour after onset

(Source) Healios estimated the annual number of new patients with ischemic stroke in Japan according to materials issued by the Fire and Disaster Management Agency, the Ministry of Internal Affairs and Communication, and the Ministry of Health, Labour and Welfare - DATAMONITOR epidemiological estimates also shown as upper end of range.

(Source) Healios estimated the percentage of patients who reach the hospital within 36 hours after onset at 47% according to the results of its market research.

HLCM051 Stroke: Mechanism of HLCM051 Treatment

With HLCM051

Stroke-induced

neuronal damage

Primary Damage

Without

HLCM051

（Source）This figure was based on Stroke. 2018 May;49(5):1058-1065.Fig.2

HLCM051

-suppress the mobilization/ release of inflammatory cells (lymphocytes, cytokines) -activate the mobilization/ release of anti- inflammatory cells

Activate mobilization / release of inflammatory cells (lymphocytes, cytokines) in the spleen

Attenuate neuronal damage in the acute phase of stroke caused by inflammatory cells

Secondary Damage

mitigation

Neuronal damage exacerbated by inflammatory chemokines/cytokines Inflammatory cells are released from the spleen and exacerbate the neuronal damage of the ischemic site.

Secondary Damage

HLCM051 ARDS

	iPSC	Manufacturing
	x
	Platform
STROKE	Gene editing	iPSC-RPE

ARDS	iPSC	iPSC-NK	iPSC-LIVER
	x
	Immuno
	- Oncology

Update

HLCM051 ARDS: ONE-BRIDGE Study Ongoing

Ongoing Phase 2 trial for patients with pneumonia induced ARDS in Japan (ONE -BRIDGE study) The first COVID -19 patient was enrolled in July 2020

Development Plan

	Q4 FY2020
	Last patient will be enrolled
April 2019	申請
First patient enrolled
準備

Progress in patient enrollment

Preparation	Apply	Approval
/Sales

Overview of ONE-BRIDGE study

Clinical Trial	Efficacy and Safety Study of
	HLCM051 (MultiStem®)
	For Pneumonic Acute Respiratory
	Distress Syndrome (ONE-BRIDGE)

Subjects	Patients with pneumonia induced
	ARDS

Conditions	Open label, Standard therapy-
	controlled
Enrollment	30 (HLCM051: 20, Standard
	therapy: 10）Randomized

Primary	The number of days out of 28 in
Endpoint	which a ventilator was not used for
	the patient (i.e. ventilator free days)

HLCM051 has been designated as an orphan regenerative medicine product for use in the treatment of ARDS.

Update

HLCM051 ARDS: New Cohort for COVID-19 Induced ARDS Patients

The new group of patients with COVID -19 pneumonia (Cohort 2) is separated from the ongoing treatment group (Cohort 1). The addition of this COVID -19 cohort should not effect the progress of the originally planned clinical trial.

ARDS trial cohorts

ARDS	negative
COVID-19
Patients
Test

positive

Cohort 1

(the ongoing clinical trial since April 2019)

HLCM051

Random 2

1 Standard therapy

Cohort 2

(The first patient was enrolled in July 2020)

Administration

of HLCM051

Entry of approximately five subjects is planned in Cohort 2

Overview of the ARDS trial (on April 13, 2020～)

Subjects	Patients with pneumonia	Patients with pneumonia-
	induced ARDS	induced ARDS caused by
		COVID-19

Enrolment	30	Approximately 5
	(HLCM051: 20, Standard	(HLCM051: 5)
	therapy: 10)

Objective	Efficacy and safety evaluation	Safety evaluation

The Cohort 2 is conducted at more than 15 of the more than 25 facilities in the ONE-BRIDGE trial.

HLCM051 ARDS: About Acute Respiratory Distress Syndrome (ARDS)

There is demand for new treatments for ARDS that will lead to improvements in patients' symptoms

and prognosis

About ARDS

Acute Respiratory Distress Syndrome (ARDS) is a

general term for the symptoms of acute respiratory

failure suddenly occurring in all seriously ill patients. The major causes are severe pneumonia, septicemia, trauma etc.

Inflammatory cells are activated in response to these diseases or injuries, causing damage to the tissue of the lungs. As a result, water accumulates in the lungs, leading to acute respiratory failure.

（Source）Athersys

Typically, ARDS is said to occur within 24 to 48 hours of the onset of the illness

or injury that caused it. The mortality rate is approximately 30 to 58%*.

（* ARDS treatment guideline 2016)

Current Treatment

Artificial respiration using an endotracheal tube or mask is used to treat for respiratory failure in an intensive care unit (ICU).

However, it is known that prolonged use of a ventilator worsens a patient's prognosis.

At present, there are no therapeutic drugs that can make a direct improvement to a patient's vital prognosis when ARDS develops. There is demand for new treatments for ARDS that will lead to improvements in patients' symptoms and prognosis.

HLCM051 ARDS: Number of ARDS Patients

Number of ARDS patients in Japan estimated approximately 7,000～12,000 per year

Approximately 1/3 of ARDS cases caused by pneumonia

Epidemiological data			Underlying diseases of ARDS


		The estimated
Epidemiological data	Incidence rate	number of ARDS patients in
		Japan＊１
Epidemiology, Patterns of Care, and
・0.42 cases per ICU bed
Mortality for Patients With Acute
・10.4% of ICU admissions
Respiratory Distress Syndrome in	11,937
・23.4% of patients
Intensive Care Units in 50 Countries.
requiring mechanical

Source：JAMA.2016; 315(8): 788-800	ventilation

Epidemiology of Acute Lung Injury
(ALI) / Acute Respiratory Distress	6.1 per	7,320
Syndrome (ARDS) in Chiba Prefecture
100,000 persons
Source：Journal of Japanese Association for Acute

Medicine 2007; 18(6): 219-228

Approximately one-third of ARDS cases are caused by pneumonia. Seasonal infections may progress from
pneumonia to ARDS. Some data indicate that approximately 71%*2 of avian-origin influenza A (H7N9) infections
result in ARDS.
＊1（Source）The number of ARDS patients in Japan is estimated by Healios based on the incidence rate of epidemiological data and the total demographical population in Japan.	（Source）Respiratory Investigation; 55(4): 257-263
＊2 （Source）Gao HN. et al., N Engl J Med. 2013 Jun 13;368(24):2277-85.

© HEALIOS K.K. All rights reserved.			15

HLCM051 ARDS: Relationship between COVID-19 and ARDS

In 2019, an outbreak of SARS -CoV-2 was first identified near Wuhan City, China, followed by a COVID -19 pandemic.
According to the data published on the initial group of cases of the new coronavirus (COVID -19) in Wuhan, 31 to 41.8% of hospitalized patients developed ARDS and ARDS complications were confirmed in
54 to 93% of fatal cases※1※2, indicating that ARDS is a major cause of mortality in COVID -19 patients.

(Note) As the above two reports studied the initial group of patients, the incidence rate and mortality of ARDS patients is expected to fluctuate depending on the current situation in each country.

Athersys, Inc., our partner company based in the United States, has initiated a Phase II/III clinical trial evaluating MultiStem for COVID -19 induced ARDS. On May 5 (local time), the first patient was enrolled in this trial.

Electron micrograph of SARS -CoV-2

(Sou r c e) Th e N ational Institute of Infectious disease

In China, several clinical trials using mesenchymal stem cells in patients with COVID -19 are in progress.

S o u r c e ）*1 Zhou F, et al . L ancet . 2020 Mar 11 . pii: S0140 - 6736( 20) 3 05 6 6 - 3
Sour c e ）*2 Wu C , et al . JAMA Inter n Med . 2020 Mar 13 . doi: 10 . 1001

HLCM051 ARDS: Pathological Process and HLCM051 Expected Mechanism of Action

Following intravenous administration after ARDS, HLCM051 accumulates in the lungs and controls excessive inflammation, protects damaged tissue and promotes restoration.

-Underlying disease (pneumonia, etc.) -Injury (Traffic accident, etc.)

Suppresses excessive inflammation in the lungs.
Protects damaged tissue and facilitates healing.

When the tissue is damaged, inflammatory cells are released in large quantities.

The inflammatory cells attack the lungs. As a result, hypoxia develops and the patient falls into severe respiratory failure.

HLCM051 accumulates in the lungs as a result of intravenous administration.

We can anticipate earlier ventilator removal and a lower mortality rate.

Results of Double-blind Study Conducted by Athersys

Based on one -yearfollow-up summary results, an evaluation of quality -of-life suggests further potential benefits from MultiStem treatment including faster rehabilitation.

No serious adverse events were observed.

Analysis of the Double-blind study conducted by Athersys

	MultiStem	Placebo

Mortality	25%	40%

Ventilator- free (VF) days	12.9 days	9.2 days
Intensive Care Unit (ICU) free days	10.3 days	8.1 days

Post-hoc Analysis of patients in severe condition and pneumonia-induced ARDS

	MultiStem	Placebo
Mortality	20%	50%
Ventilator- free (VF) days	14.8 days	7.5 days
Intensive Care Unit (ICU) free days	12.0 days	5.0 days

In the above analysis based on data obtained 90 days after administration, the mortality rate and the number of ventilator-free days (VFD) within a 28-daypost-administration period et al. tended to improve in the MultiStem group compared with the placebo group. The results of the 1-yearfollow-up after administration showed a similar trend.

Overview of the Analysis

Clinical trial	Exploratory clinical trial （Phase 1/2)
	conducted by Athersys in US and UK
	（MUST-ARDS study)

Subjects	ARDS patients administered MultiStem
	or Placebo intravenously In Phase 2
	（
	trial, MultiStem 20, Placebo 10)

Endpoints	- Mortality
	- Ventilator Free days
	(The number of the days out of 28 in
	which a ventilator was not used for
	the patient)
	- ICU Free Days
	The number of the days out of 28 in
	which the patient was out of Intensive
	Care Unit

（Source）Athersys

iPSC Platform

	iPSC	Manufacturing
	x
	Platform
STROKE	Gene editing	iPSC-RPE

ARDS	iPSC	iPSC-NK	iPSC-LIVER
	x
	Immuno
	-Oncology

Update

iPSC Platform

Proprietary gene-edited iPSC platform: "Universal Donor Cells"

Current iPS Cell Line	Patient

Anonymous	Immune
donor	response

Existing	Allogeneic	Requires additional
hiPS cell line	hiPS cells	immunosuppressive drug

• Heavy patient burden

• Short efficacy duration

		Patient
		Reduce
		immune
Gene-edited		response

iPS cell line
		Reduce or eliminate

Healios Universal Donor		immunosuppressive
Cell Line		drug requirement
•	Reduce patient burden


	•	Increase efficacy duration

Targeted cell programming through gene editing

・Generating hypoimmunogenic human pluripotent stem cells (universal donor cells or UDCs) as a starting material for allogeneic transplantation

・Leading the development of a clinical grade universal donor cell line in accordance with global standards.

・There are no problems with clinical use at present after consulting the FDA and PMDA

・A research cell line has been established, and we are currently working towards the completion of a clinical-grade line

・Discussing usage in relation to therapies for various diseases with several companies and academia.

iPSC Platform

HLA knockout procedure to generate HEALIOS Universal Donor Cells

Clinical grade MCB	HLA Class I KO	HLA Class I/II KO	HEALIOS
Universal Donor Cells
	(intermediate)	(intermediate)

Knock-out	Knock-out	Knock-in
gene X,Y,…
HLA Class I	HLA Class II
suicide gene

iPSC Platform: Self-recognition of HLA Protein and UDC

HLA (human leukocyte antigen) protein:

HLA is a group of cell-surface proteins that are encoded by the MHC (major histocompatibility complex)gene and responsible for the regulation of the immune system.
・There are a myriad of HLA variations
・Immune cells distinguish between autologous and allogeneic cells and tissue.

HLA protein

UDC:

・Deletion of HLA protein

・Introduction of immunosuppression-related molecules ・Introduction of suicide genes as a safety mechanism

Somatic cell

Immune cells

UDC

Immune cells

HLA protein mismatch causes immune rejection

UDC is a safer and more versatile iPS cell

HLCN061: iPSC Derived Gene-Modified NK Cells

By using UDCs, graft rejection may be avoided, and sustained efficacy may be expected. Target an off-the-shelf product: stable production and quality with lower cost of goods.

(Technological development）

"Autologous"

Peripheral blood derived

"Allogenic /

off-the-shelf"

Biomaterial or iPSC derived

"Universal Donor Cell

derived"

Function enhanced by

multiple gene

modifications

1st Generation

2nd Generation

3rd Generation

(Time)

＊See Appendix for additional explanation.

HLCN061

	iPSC	Manufacturing
	x
	Platform
STROKE	Gene editing	iPSC-RPE

ARDS	iPSC	iPSC-NK	iPSC-LIVER
	x
	Immuno
	-Oncology

New

HLCN061 Cancer is the leading cause of death in Japan

The No.1 cause of death in Japan is cancer

(approximately 90% of which are caused by solid tumors)

Mortality rate

Blood cancer

Solid Tumors

(出所)国立がん研究センターがん情報サービス「がん登録・統計」（人口動態統計）.2018

HLCN061: Leading the Development of iPSC Derived Gene-Modified NK Cells

Natural killer (NK) cells, a type of white blood cell, plays a central role in a cell mediated defense system that human bodies naturally have, and attacks cancer cells and virus -infected cells.

Best in class, enhanced anti-tumor efficacy by introducing/modulating various factors related to NK cells killing activity
Broad applicability across tumor types irrespective of specific cancer antigens
Life-extension,promotion of healing, relief of symptoms, and improvement of quality of life.

iPSC

Gene editing

Avoid rejection /

Functionally enhanced

Dendritic cell

Cytotoxic

T-lymphocyte

Activation

NK cell Recognize and attack

Migration /

Infiltration

Solid Tumors

HLCN061: Mechanism of NK Cell Attack of Cancerous or Virus-Infected Cells

Normal cells

Cancerous or virus-infected cells

NK cells do not attack normal cells by recognizing normal marker

NK cell

Normal cell

Activated by abnormal markers

NK cell

② Release the brake

allowing for the attack

Cancer cell

Virus-infected cell

Recognize the antibodies that are attacking the cancer
and further activate.

Release the degrading enzymes and destroy
cancer cells

New

HLCN061: Market leading range of functional enhancements

	HEALIOS	Company-A	Company-B	Company-C

	iPS Cell	iPS Cell①	iPS Cell②	Cell①	Cell②	Cord blood
Recognizes cancer cells	✔		✔		✔	✔
Enhanced function in	✔	✔	✔	✔	✔
combination with antibodies

Migrates to cancer cells	✔
Attracts host immune cells	✔
Activates surrounding T-cells	✔		✔			✔
and dendritic cells

Self-activation and maintenance	✔		✔			✔
of survival

Avoids immune rejection in	✔
patients

					（Source） Adapted by Healios from public information

HLCR011 AMD

	iPSC	Manufacturing
	x
	Platform
STROKE	Gene editing	iPSC-RPE

ARDS	iPSC	iPSC-NK	iPSC-LIVER
	x
	Immuno
	-Oncology

HLCR011 AMD: Pathological Conditions

Age-related Macular Degeneration(AMD) causes Retinal Pigment Epithelial (RPE) cells to degenerate, which damages function

Regular Macular Part	Developed Dry-AMD
	Immunity barrier maintained
	→ Degeneration of photoreceptor→ Dry AMD

					Wet AMD


		Macula		Destruction of immunity barrier → Invasion of immune cells
					→ Inflammation → Wet AMD
Photoreceptor Cells
	Retinal Pigment
			Epithelial (RPE) Cell

HLCR011 AMD: Manufacturing for iPSC-derived RPE products

In Japan, HEALIOS and Dainippon Sumitomo Pharma jointly develop a treatment using iPS cell-derived RPE cells.

Sighregen, a joint venture with Sumitomo Dainippon Pharma, is establishing a manufacturing facility

"SMaRT", the Manufacturing Plant for Regenerative Medicine & Cell Therapy by Sumitomo Dainippon Pharma

Sighregen rents the facility in SMaRT and is establishing the iPSC-RPE manufacturing system and facility for iPSC-RPE cell products

HLCL041 Liver OrganBud Platform

	iPSC	Manufacturing
	x
	Platform
STROKE	Gene editing	iPSC-RPE

ARDS	iPSC	iPSC-NK	iPSC-LIVER
	x
	Immuno
	-Oncology

HLCL041: Liver Organ Bud Platform

By creating an "Organ Bud" of each organ with iPS cells, we have laid the groundwork for paradigm shifting therapies to emerge for various severe disease.

UDCs allow for the realization of organ replacement using organ buds.

Cell derived from	Vascular	MSC
endothelial cell
various organs

Transplanted to mice

*movie

The vascularization was confirmed in vivo by transplantation to mice.

Green：Cells of each organ

Red：Vascular endothelial cell

Black：MSC

（Sours） Japan Science and Technology Agency Science News "Diverse Approaches in Regenerative Medicine
from Cell to Tissue/Organ" (Distributed October 3, 2013)
https://sciencechannel.jst.go.jp/M130001/detail/M130001005.html	（Sours） Modified from Takebe T. et al., Cell Stem Cell, 2015

© HEALIOS K.K. All rights reserved.	33

HLCL041: Liver Organ Bud Platform: Survival rate of liver failure in mouse model

Survival rate improves significantly in transplantation experiments

Treatment effects of liver bud transplantation to mouse using hiPSC

Process

Survival rate (%)

100

Liver organ bud transplantation group using human iPS cells

Human adult liver cell transplantation group

Liver organ bud transplantation group using human fetus iPS cells

Non-transplantation

Process by which organ forms from organ bud links mouse's vascular network autonomously

0102030

Days

（Source）Takebe,T., et al.

Nature Protocols, 9, 396-409 (2014)

（Source） Adapted by Healios from Takebe. T, et al. Nature, 499 (7459),（2013)

Financial Highlights

Voluntary adoption of International Financial Reporting Standards (IFRS)

HEALIOS K.K. (the "Company") hereby announced that, at the executive officers meeting held on February 13, 2020, it has resolved to voluntarily adopt International Financial Reporting Standards ("IFRS") as its accounting standard for its consolidated financial statements instead of the Japanese Generally Accepted Accounting Principles ("J-GAAP") from the fiscal year ending December 31, 2020 as follows.

The Company decided to adopt IFRS voluntarily in order to improve the international comparability of its financial information in the capital markets.

The disclosures for the fiscal year ending December 31, 2020 are as follows:

Accounting period	Disclosure materials	Accounting standards

	1st to 3rd quarters	Quarterly Earnings Report	IFRS

	Quarterly Report	IFRS

Fiscal year ending
	Earnings Report	IFRS
December 31, 2020

Year end	Consolidated Financial Statements (Note)IFRS


		Annual Securities Report	IFRS

(Note) The Company discloses the information in its consolidated financial statements from the fiscal year ending December 31, 2020.

Update

Statement of income

				(Units: one million US dollar)

	FY2019		FY2020 Q2(YTD)
	Q2(YTD)		YoY variance	Main reasons for increase/decrease


	0.68	0.13	-0.55	Milestone revenue was recorded only in the first quarter
Sales	of the previous year, resulting in a decrease in revenue
				compared to the same period last year.
Operating income	-17.64	-17.08	0.56	Mainly due to increase in SG&A expenses	ｰ	$1.03mn

				and decrease in R&D expenses +$2.11mn.

				Mainly due to increase in finance costs -$6.80mn
	-17.92	-24.11	-6.19	as a result of change in fair value of derivatives
Net income	embedded in convertible bonds (non-cash)-$4.57mn
				and increase in the carrying amount of bonds by the
				amortized cost method (non-cash)-$2.08mn.

R&D expenses	14.10	11.99	-2.11

Number of employees	111	109	▲2

(Note) * Financial figures for the second quarter of the fiscal year ended December 31, 2019 are presented in accordance with IFRS.

For details of the financial figures, please refer to the summary of the financial results for the second quarter announced today.
Adopt average exchange rate (JPY/USD) over respective 6-month periods for P&L; FY2019 Q2 110.05 yen per dollar and FY2020 Q2 108.22 yen per dollar.

Update

Supplemental explanation of financial expenses

Details of financial expenses

In the second quarter, we recorded financial expenses of ¥759 million. This was mainly due to the recording of ¥494 million in derivatives expenses*1, ¥245 million in interest on bonds*2, and ¥17 million in interest expenses.

*1 Derivative expenses

Derivative expenses are the net unrealized gains/losses on the convertible bond -type bonds with subscription rights to shares, which our company issued to overseas investors in July 2019, at fair value as of the end of the second quarter. These are non-cash expenses booked in accordance with the International Financial Reporting Standards (IFRS), which was introduced by the Company in the first quarter of the fiscal year ending December 2020.

*2. Interest on bonds

Of the total interest on bonds of 245 million yen posted in the second quarter, 225 million yen was charged to income using the amortized cost method. As in *1 above, this is a non -cash expense recorded in accordance with the International Financial Reporting Standards (IFRS), which was introduced in the first quarter of the fiscal year ending December 2020.

Under JGAAP, convertible bond issuances were accounted for as liabilities and issue fees were accounted for as expenses. Under International Financial Reporting Standards (IFRS), however, proceeds, after deducting issue fees from convertible bond issuances, are accounted for as liabilities and equity, based on a certain standard. As a result, the difference between the face value of convertible bonds and the amount recorded as liabilities is amortized (expensed) over the period.

Update

Balance sheet

（ Units: one million US dollar ）

December 31, 2019

June 30, 2020

Variance

Main reasons for increase/decrease

Current assets

176.86

152.46

Mainly due to decrease in cash equivalents $23.90mn.

-24.40

ｰ

（75.7%）

（62.2%）

(cash equivalent balance at 06/30/20 was $143.10mn)

Non-current assets

56.75

92.51

35.76

Mainly due to increase in other financial assets

+$30.89mn: as a result of the acquisition of additional

（

24.3

％）

（

37.8%

）

shares of Athersys, Inc. and a rise in Athersys shares.

Total assets

233.61

244.97

11.36

（100.0％）

（100.0%）

Current liabilities

17.93

35.71

17.79

Mainly due to increase in bonds and loans payable

+$13.92mn and other financial liabilities +$4.76mn.

（7.7％）

（14.6%）

Non-current liabilities

103.01

100.34

-2.67

Mainly due to decrease in bonds and loans payable

（44.1％）

（41.0%）

-$10.28mn and increase in deferred tax liabilities +$4.86mn.

Total liabilities

120.94

136.06

15.11

（51.8％）

（55.5%）

Total equity

112.67

108.92

-3.75

Mainly due to net loss -$24.11mn and

increase in other components of equity +$17.25mn as a

（

48.2

％）

（

44.5%

）

result of a rise in Athersys shares.

Total liabilities and equity

233.61

244.97

11.36

（100.0％）

（100.0%）

(Note) * Financial figures for the fiscal year ended December 31, 2019 are presented in accordance with IFRS.

For details of the financial figures, please refer to the summary of the financial results for the second quarter announced today.
Adopt spot rate (JPY/USD) at end of fiscal period for B/S ; FY2019 Q4 109.56 yen per dollar and FY2020 Q2 107.74 yen per dollar.

Appendix

Update

Overview of Healios

About us

Company Name	HEALIOS K.K.

Representative	Hardy TS Kagimoto, MD, Chairman and CEO

Company Overview

Establishment	February 24, 2011

Paid in Capital	4,814 million yen(As of June 30, 2020 ）

Head office	World Trade Center Building 15F
2-4-1 Hamamatsucho Minato-ku, Tokyo Japan 105 -6115

Number of	109 (As of June 30, 2020）
Employees


Business	Research, development and manufacturing of cell therapy/
regenerative medicine products


Research Institution	Kobe (77：(Ph.D. Holders :Over 30 people) As of June 30, 2020)
Yokohama


Affiliated Company	Sighregen Co., Ltd.
(Joint Venture with Sumitomo Dainippon Pharma Co . , Ltd . )


	・Healios NA Inc.

	Subsidiary	(Established in February 2018)
		・Organoid Neogenesis Laboratory Inc.
		(Established in June 2018 to promote the practical use of organ bud technology)

Update

Company History

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Company

Establishment of the company

Tokyo office opened

Listed on Tokyo Stock Exchange (MOTHERS)

A business and capital alliance with Nikon BBG250 Business transfer

Establishment of Healios NA, Inc. in the US

Establishment of Organoid Neogenesis

Laboratory Inc

Expansion of alliance with Nikon

Establishment of Sales and Marketing Department

Establishment of a new Healios research facility

In the field of iPSC

Regenerative Medicine

A patent licensing agreement concluded with RIKEN Joint Development Agreement with Sumitomo Dainippon Pharma Co., Ltd.

Joint research with Yokohama City University on Organ buds

Start universal donor cell research

CRADA with National Eye Institute

Sighregen establishes a manufacturing facility in SMaRT

Changes in joint development framework with Sumitomo Dainippon Pharma

In-house development of gene-modified natural killer cells（HLCN061） Establishment of UDC research line

Joint research with the National Cancer Center Japan

In the field of Somatic Stem Cell

Regenerative Medicine

HLCM051 license agreement with Athersys, Inc. Clinical trial for ischemic stroke initiated

Strategic investment and collaboration expansion with Athersys

ARDS development & clinical trial initiated

COVID-19 induced ARDS clinical trial cohort initiated

HEALIOS K.K. Leadership

Management Team Since July 2019

Jun Narimatsu	Richard Kincaid	David Smith	Michael Alfant	Gregory	Yoshinari	Seigo Kashii
Bonfiglio	Matsuda


Accountant	Executive Officer CFO	Served at Lonza	Group Chairman & CEO,	Founder & Managing	Attorney-at-Law, Senior	Ex-corporate auditor of
Supporting various		Extensive experience in	Fusion Systems, Co., Ltd.	Partner of Proteus, LLC.	Management Partner of	Astellas Pharma
venture companies in the	Experienced at Nezu	cell manufacturing	Presidents Emeriti, ACCJ	(Investment in RM	Uruma Law Offices Legal
field of IT/ Healthcare	Asia Capital			ventures)	Professional Corporation
	Management (hedge
	fund )

Masanori	Hardy TS	Kouichi Tamura
Sawada	Kagimoto

Executive Vice	Chairman and CEO	Executive officer
President, CMO	MD, Founder	Research and
(Chief Medical	Manufacturing field

Officer)
		Ex-Astellas US Director of
MD, PhD, MBA		Laboratories Expertise in
		Immunosuppressant
		Research

Michihisa

Nishiyama

Executive Officer Development field

Constructed network for Tacrolimus approval and sales at Astellas in the US and Europe

Koji Abe

Executive Officer

HR & GA field

Over 30 years experience

in HR

iPSC Platform

iPSC Platform: Allogeneic iPS cells (Universal Donor Cell: UDC) that suppress immune rejection

	Allogeneic transplantation		Autologous transplantation

			Introduce diversity factors
		biopsy
Donor	Blood and skin cell	Autologous iPS Cell

Allogeneic iPS cell	Differentiated cells

	HLA matched		Donor /Patients
	iPS Cell Bank
					Differentiated cells
				（Source）modified from Sackett et al, Transplant Rev, 2016

		Autologous iPS Cell	Existing iPS/ES cell lines	HLA matched	UDC
		iPS Cell Bank


	Immune	None	Occurs (Immunosuppressive	Under consideration	None
	rejection	drugs are required）


		Several months～1 year	Ready-to-use	Ready-to-use	Ready-to-use
	Manufacturing	(Need to make from each	(One line of gene-edited
	（One line）	(Multiple lines required)
	term	patient)	cell)

	Cost	Very high	Low	High	Low


© HEALIOS K.K. All rights reserved.			45

iPSC Platform: Universal Donor Cell

iPS cell	Gene-Editing	Universal Donor Cell
（pluripotent stem cell）		（Safe and versatile stem cells）

By using gene editing technology to produce iPS cells that avoid immune rejection, it is possible to realize universal iPS cells that can respond to the need for "one cell for all patients."

iPSC Platform: Rejection of cell transplant

HLA type mismatch

HLA protein deletion

HLA

killer T-cell

HLA

NK cells

Immune response

iPSC Platform: Avoid rejection due to immune response

Immune suppression associated molecules

Killer T-cell

Gene-Editing

▶HLA deleted

▶Insertion of immune suppression

associated genes

▶Insertion of an inducible suicide gene

HLA

NK cell

We will produce the immune rejection free iPS cell and realize the safe and universal cell therapy.

iPSC Platform: UDC production process check items and quality checks

①Check of Gene editing

②Absence of malignant mutations

③ Retain the properties of iPS cells

self-renewal

			Pluripotency

	Quality check item	Contents
	Check of gene editing	Identification of target region sequence

	Expression level of HLA proteins		Loss of HLA Class I expression

		Loss of HLA Class Ⅱ expression


	Transgene expression	Expression of immune suppression associated molecules

	Expression of suicide genes


			No off target issues
	Gene mutation
	Normal karyotype

			None of cancer associated gene

			Sterility

			Endotoxin free

			Mycoplasma free

	Attribution	Gene expression analyses (Comparison with the parent cell line)

	Expression of undifferentiated markers


			Pluripotency（triploblastic differentiation）

			None of immunogenicity

			Function of suicide genes

© HEALIOS K.K. All rights reserved.	49

NK Cells

HLCN061 NK Cells

NK Cells：

Superiority of NK cells to T cells

NK cell

Normal cell

・NK cells are large granular lymphocytes (LGL) and critical to the innate immune system. The role of NK cells is to recognize and attack abnormal cells, such as cancer cells and virus-infected cells.

T cell

GVHD

Cancer cells

Allogeneic Normal cells

Graft-versus-hostdisease (GVHD) occur in allogeneic T cells
Solid cancers are heterogeneous and have few relevant targets of cancer antigens
Cytokine syndrome occur in T cells

HLCN061: Theory of Cancer Immunoediting

Normal cell

Cells that acts to eliminate cancer cells NK： Natural Killer cell

：T cell

DC： Dendritic cell

MΦ： Macrophage

Cells that interfere with the elimination of

cancer cells

Treg： Regulatory T cell

TAM： Tumor-associated Macrophage

MDSC： Myeloid-derived suppressor cell

Degeneration Cancer Formation

NK	NK	DC
		T

MΦ

		NK	T

			MΦ
NK	T
T	MDSC	Treg

			TAM

	Elimination	Equilibrium		Escape

	• NK and T cells attack and eliminate cancerous	• Equilibrium between cancer growth and		• Cancer cells avoid immunity
	cells	clearance by immune system		• Appearance of immune suppressive cells

			（Source）modified from Schreiber et al., Science 2011, 331 (6024): 1565

© HEALIOS K.K. All rights reserved.		52

Historical relaxation of Japanese regulations

Drastic reduction in the trial time period and number of patients with "Conditional and Time -limited Authorization System".

Insurance is listed at 'Conditional and Time -limited Authorization ' stage.

Conditional and Time-limited Authorization System

Traditional process of development

Clinical Research

Clinical Trials

Approval

Sales

Confirm effectiveness and safety

Development process upon introduction of early approval system

Clinical Research

Clinical Trial

Estimate the effectiveness and confirm safety

Approval with conditions and time-limit

After-sales effectiveness and further safety verification

Sales	Official	Sales
Approval

About Orphan Regenerative Medicine Designation

Orphan regenerative medicine designation is available in cases of rare diseases with small patient numbers and no existing direct treatments.

Criteria for designation as a rare disease】

１．Number of patients with this disease in Japan is lower than 50,000

２．Unmet medical needs

・A serious target disease with very high medical needs

・No alternative drug, medical device, regenerative medicine, or therapy exists

・A significantly higher efficacy and safety than that of existing drugs, medical devices, or regenerative medicines can be expected

３．A theoretical basis for using regenerative medicines exists and the developmental plan is considered appropriate

Benefits of receiving orphan designation】

Granting of subsidies to reduce development expenses
Tax measures, priority advice and consultations and priority review
Longer Reexamination period

ARDS is also a rare disease with an estimated incidence of 7,000 to 12,000 patients per year.

（(source)Definition of the Ministry of Health, Labour and Welfare：https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/0000068484.html 54

Important note on future events, etc

This material has been prepared solely for the purpose of disclosing relevant information regarding HEALIOS K.K. ("HEALIOS"). This document does not constitute an offer to sell or the solicitation of an offer to buy any security in the United States, Japan or any other jurisdiction.

This presentation contains statements that constitute forward-looking statements, including estimations, forecasts, targets and plans, and such forward-looking statements do not represent any guarantee by management of future performance. [In many cases, but not all, HEALIOS uses such words as "aim," "anticipate," "believe," "continue," "endeavor," "estimate," "expect," "initiative," "intend," "may," "plan," "potential," "probability," "project," "risk," "seek," "should," "strive," "target," "will" and similar expressions to identify forward-looking statements.] You can also identify forward-looking statements by discussions of strategy, plans or intentions. Any forward-looking statements in this document are based on the current assumptions and beliefs of HEALIOS in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause HEALIOS's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by such forward-looking statements.

This presentation is based on the economic, regulatory, market and other conditions as in effect on the date hereof, and HEALIOS does not guarantee that the information contained in this presentation is accurate or complete. It should be understood that subsequent developments may affect the information contained in this presentation, which HEALIOS is not under an obligation, or does not plan, to update, revise or affirm. The information in this presentation is subject to change without prior notice and such information may change materially. Neither this presentation nor any of its contents may be disclosed to or used by any other party for any purpose without the prior written consent of HEALIOS.

The information in connection with or prepared by companies or parties other than HEALIOS is based on publicly available and other information as cited, and HEALIOS does not have independently verified the accuracy and appropriateness of, nor makes any warranties with respect to, such information.

The information about regenerative medicine products (including products currently in development) which is included in this material is not intended to constitute an advertisement or medical advice.

＜Contact information＞
Corporate Communications	Press contact: pr@healios.jp
HEALIOS K.K.	Investor contact: ir@healios.jp
	https://www.healios.co.jp/contact/

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Healios KK published this content on 06 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 August 2020 06:08:22 UTC

Healios Partners with AND Medical Group; Set to Receive Upfront Payment of 60 Million Yen	04-10	MT
Healios K.K. Enters into Joint Research Agreement with AND Medical Group	04-09	CI
Healios Concludes Purchase of Athersys Assets, Becoming Sole Owner of MultiStem IP	04-04	MT
Healios K.K. completed the acquisition of Substantially all assets of Abt Holding Company, Advanced Biotherapeutics, Inc, Athersys, Inc. (OTCPK:ATHX.Q), ReGenesys BVBA and ReGenesys, LLC .	04-02	CI
Japanese Shares Hit Fresh 52-Week Peak Ahead of Inflation Data	02-26	MT
Healios Proposes Reduction of Capital Stock, Reserves, Surplus Appropriation	02-26	MT
Jefferies Adjusts Healios K.K.’s Price Target at 140 Yen From 170 Yen, Keeps at Hold	02-20	MT
Healios K.K. announced that it has received ¥2.2600715 billion in funding	02-08	CI
Healios K.K. and ProcellCure Inc. Announce Start of ARDS Clinical Trial in Japan	02-02	CI
Healios K.K. announced that it expects to receive ¥2.2600715 billion in funding	01-24	CI
Healios and ProcellCure Initiate Clinical Trial for ARDS Treatment	01-18	MT
Japanese Shares Finish Lower After Key Economic Data	01-18	MT
Healios K.K. and Its Wholly Owned Subsidiary ProcellCure Inc. Announce Submission of ARDS Clinical Trial Notification in Japan	01-18	CI
Healios' Ischemic Stroke Trial Data Published in JAMA Neurology Journal	01-18	MT
Healios Secures LOI on Joint Research with AND	01-17	MT
Healios K.K. AND Medical Group Enter into A Letter of Intent for A Basic Agreement for Joint Research	01-16	CI
Healios Steps In as Primary Bidder and Lender for Athersys’s Asset Sale Amidst Bankruptcy	01-10	MT
Healios K.K. entered into an asset purchase agreement to acquire Substantially all assets of ABT Holding Company, Advanced Biotherapeutics, Inc, Athersys, Inc. (OTCPK:ATHX.Q), ReGenesys BVBA and ReGenesys, LLC for $2.8 million.	01-04	CI
Healios, Nobelpharma in Talks for Stem Cell Therapy Alliance for ARDS	12-28	MT
Healios Invests in Arktus Therapeutics at Undisclosed Amount	12-26	MT
Healios K.K. (TSE : 4593) agreed to acquire an unknown minority stake in Arktus Therapeutics Co., Ltd.	12-21	CI
California Institute for Regenerative Medicine Awards $1 Million from the California Institute for Regenerative Medicine for Healios' Hypo-immune UDC	29/10/23	CI
Athersys Delisted from Nasdaq Risks Bankruptcy; Healios Remains Committed to Drug Development	20/10/23	MT
Jefferies Adjusts Healios’ Price Target to 170 Yen From 280 Yen, Keeps at Hold	12/10/23	MT
Healios Secures Exclusive License for Cell Therapy Drug, Expanding Treatment for Acute Respiratory Distress Syndrome	11/10/23	MT

Duration

Period

More charts

HEALIOS K.K. is a Japan-based company mainly engaged in research and development of pharmaceutical products. The Company has compound pharmaceutical products line and induced pluripotent stem cell (iPSC) regenerative medicine product line. The compound pharmaceutical product line contains HLM0021, HLM0022 and HLM0023. The products are ophthalmological surgery adjuvants, mainly contain brilliant blue G-250 (BBG250) which help capsule temporarily safely stained to protect the inner limiting membranes and lens during surgery of vitreous and cataract. The iPSC regenerative medicine product line contains HLCR011 and HLCR012. The products are in the preclinical testing and preparation for trial in Japan, which are candidate of regenerative medicine products. The products are iPS cell derived retinal pigment epithelium (RPE) cell suspension and sheet developed in Japan, United States and Europe.

Sector

Biotechnology & Medical Research

Calendar

07/08/2024 - Q2 2024 Earnings Release (Projected)

More about the company

More financial data

Trading Rating

Investor Rating

ESG Refinitiv

More Ratings

Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

148 JPY

Average target price

280 JPY

Spread / Average Target

+89.19%

Consensus

Estimates Revisions

Company calendar

Inflammatory cells are released

Inflammatory cells attack

HLCM051 Administered

Lung function improves

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Bio Therapeutic Drugs