Business Plan - · PDF fileBusiness Plan ‐ProjectReborn90Project Reborn 90‐ January 1, 2014 January 1, 2014 ––December 31, 2016December 31, 2016 February 28, 2014

llBusinessPlanBusinessPlan‐‐Project Reborn 90Project Reborn 90‐‐ProjectReborn90ProjectReborn90‐‐

January1,2014January1,2014–– December31,2016December31,2016

February28,2014February28,2014RaQualiaRaQualia PharmaPharma Inc.Inc.

Copyright RaQualiaPharmaInc. AllRightsReserved. 2014

F b 28 2014February28,2014

CompanyName ： RaQualia Pharma Inc.Security ID Code ： 4579 (JASDAQ Growth)SecurityIDCode ： 4579(JASDAQGrowth)URL ： http://www.raqualia.com

[Contact]： NaokiTani,PresidentandCEO

：KiichiroKawada,SeniorVicePresidentandCFO

TEL ： +81569‐84‐0700

2Copyright RaQualiaPharmaInc. AllRightsReserved. 2014Note:Thisdocumenthasnotbeenpreparedforthesolicitationofinvestments.Inmakinganyinvestments,investorsarekindly

requiredtobasetheirdecisionsontheirownjudgments.Pleasebesuretoreadthenotesattheendofthispaper,withoutfail.

TableofContents

BusinessPlanOverview

R l i f R h F i

4

8RelocationofResearchFunctions

Strengths and Capabilities

8

13StrengthsandCapabilities

BusinessForecast&Projections

13

26j

Policy/MeasuresTowardtheStableIncome‐Earning 33

StatusofLicensedPortfolio 39



BusinessPlanOverview



（1）PreviousFiscalYear’sSummary

• Withregardtoourcompany’sresultsinthepreviousfiscalyear,ouroperatingrevenuewassignificantlylowerthantheoriginalplanbutbyselling/effectivelyutilizingourownedassets,our net deficit in the net earnings in the current term has been improved as compared to theournetdeficitinthenetearningsinthecurrenttermhasbeenimprovedascomparedtotheoriginalplan.

• Clinicalstudies(development)atourcompanyandbusinesspartnerhavebeenbasicallyprogressingasplannedandcollaborativeresearcheswiththefivemajorpharmaceuticalcompanies etc have been steadily progressing

Generalcompanies,etc.,havebeensteadilyprogressing.

• Wewillcontinuetopushontowardtheplanaccomplishmentinorderforustoimproveshareholder’svalueandobtainclearunderstandingfromtheexistingshareholders.

• ConcludedapatentlicenseagreementwithH.Lundbeck A/S• NewlyconcludedacollaborativeresearchagreementwithAsahiKaseiPharmaCorporation• CompletionofthephaseIstudyofthe5‐HT4partialagonist(RQ‐10)byourcompanyinEngland• StartedthephaseIItrialoftheacidpumpantagonist(RQ‐4)byourbusinesspartner,CJinKoreaBusiness g ( ) y• CommencementofbusinessofAskAt Inc.

• Operatingrevenue:228millionyen(Operatingrevenueinthepreviousterm:28millionyen)

Results

p g y ( p g p y )• OperatingLoss:‐2,137millionyen(Operatingprofitinthepreviousterm:‐2,636millionyen)• CurrentLoss:‐1,819millionyen(Currentprofitinthepreviousterm:‐2,891millionyen)• CurrentTermnetLoss:‐1,108millionyen(Currentnetincomeinthepreviousterm:‐2,905million yen)



millionyen)

（2）BasicPolicyandOutlineoftheMid‐TermBusinessPlan

[Basic Policy of the Mid‐Term Business Plan]Development and execution/accomplishment of the business plans with highp / p p gprobability and improvement of our corporate value Presentation of specific policy/measures toward the steady income‐earning

[Outline of the Mid‐Term Business Plan] Enhancement and improvement of the research and development portfolio

• Accelerationof thedrugdiscovery research through the industry‐academia collaboration• Creationofnewdevelopmentcompoundsbycollaborative researcheswithexternal agencies, etc.• Continuouscreationofnewdevelopmentcompoundsbyourcompany’sownevaluation system

Improvement of the monetization of our research and development results• The milestone and royalty income‐earnings that are expected in the mid‐ and long‐termy y g p gby strengthening alliance management

• Promotion of the program derivation through the program value improvement andacquisition of revenue



• Monetization of the study results by the industry‐academia collaboration

（3）BasicPolicyandOutlineoftheMid‐TermBusinessPlan

[Outline of the Mid‐Term Business Plan] Compression of the operating costs by concentrating management resourcesp p g y g g

• Improvement of our development stages by utilizing our own fund for ourCore programs and external project finances

• Compression of the fixed costs (facility‐related costs) by graduallyCompression of the fixed costs (facility‐related costs) by graduallytransferring our research and development center

• Continuous reviewing of the fixed costs and reduction efforts

Management stabilization and business continuity• Consideration and execution of the fund procurement that can go over the so‐called “Death Valley” until we acquire steady income

• Promotion of a strategic capital (business) alliance• Consideration and execution of the merit‐based incentives for employeesConsideration and execution of the merit based incentives for employees



RelocationofResearchFunctions



（1）AccelerationoftheDrugDiscoveryResearchbytheIndustry‐AcademiaCollaboration

As the first step, establish the industry‐academia development department inand transfer our research and development center to Nagoya University

Accelerationofthedrugdiscoveryresearch

p g y y

Nagoya

N

Establishmentoftheindustry‐academiacollaborativeresearchdepartment

Taketoyo

NagoyaUniversity

pTransferofourR&Dcenter

Provisionofthebaseandknowledge

FY2014‐15(Plan)

Business AcademiaLeverageeachside’sstrength( )

Activelyutilizethecollaborationwithacademiaandacceleratethe drug discovery research



thedrugdiscoveryresearch

（2）OutlineofNewResearchCenter

[Overview]• pharmacologyinNagoyaUniversity.Withtheexecution,RaQualia willaccordinglyp gy g y y , Q g yrelocateitsresearchfunctionstoHigashiyamaCampusoftheuniversity.

• RaQualia aims to create a drug discovery base in Chubu area through theRaQualia aimstocreateadrugdiscoverybaseinChubuareathroughthepartnershipwithNagoyaUniversity.

• Th l ti ill b i R Q li ith i ifi t d ti f th ti l• TherelocationwillbringRaQualia withasignificantreductionoftheoperationalcosts,whichwillallowRaQualia toinvestmoreresourcestothecollaborationresearchwithNagoyaUniversity.

[RelocationSchedule]– ResearchInstituteofEnvironmentalMedicine EfficacyPharmacologyGroup（April2014）– InstituteforAdvancedResearch MolecularPharmacologyGroup（July2014）– HigashiyamaCampus（TBD） ChemistryGroup （2015）



（3）OverviewofAcademic‐IndustrialCollaboration

• NameofDivision– DivisionofAnalyticalStudyonEfficacyPharmacologyy y y gy

• Purpose– Comprehensiveevaluationofefficacy,pharmacokineticandsafetyofdrug

candidatestounderstandthepropertiesfordrugdevelopment

• ResearchThemes– Studyonefficacyandmechanismofactionofsmallmoleculesbyusing

pharmacologicalmodelsinprocessoptimization– Pharmacologystudieswithpharmacokinetics

• Roles and Names of Researchers• RolesandNamesofResearchers– Park,Hyi‐Man(AssociateProfessor)

StudyonpharmacologicalefficacyofsmallmoleculesinprocessoptimizationMoriguchi Yukiko (Assistant Professor)



– Moriguchi,Yukiko(AssistantProfessor)Pharmacologystudieswithpharmacokinetics

（4）RelocationofHeadOffice

[Overview]• Name: Honsha (Head Office)Name:Honsha(HeadOffice)

• RelocationDate:May2014(scheduled)

• Address:8F Daiwa Meieki Bldg 1 21 19 Meieki Minami Nakamura Nagoya8FDaiwaMeieki Bldg.,1‐ 21‐19Meieki Minami,Nakamura,Nagoya

• Departmentstobemoved:Non‐researchp

Relocate Head Office to the center of Chubu area



to promote business development

StrengthsandCapabilities



（1） BusinessDomainandStrategy

Confirmefficacyandsafetyofdevelopmentcompoundswithsmallnumberofpatients

Discovery Pre‐ Phase 1 Phase 2 Phase 3 NDA

SelectionofCompound

Proof‐of‐Concept(POC)

RegulatoryApplication LaunchStartofClinical

DevelopmentResearchIdea

p

Discovery Clinical Phase1 Phase2 Phase3 NDA

Reinforcement of “drug discovery capability”and continuous generation of candidate1 Reinforcementof drugdiscoverycapability andcontinuousgenerationofcandidatedevelopmentcompounds1

Promotion of research collaboration from the discovery phase2 Promotionofresearchcollaborationfromthediscoveryphase2

ImprovementofDevelopmentProgramsvalue3 p ove e t o eve op e t og a s va ue3

Long‐termsecurityofrevenuefromAllianceManagement4



（2）StatusofKeyR&DPortfolio:Program&Stage

Discovery Pre‐Clinical Phase 1 Phase 2

AsofJanuary2014

▲ ASpecificIonChannelProgram

Discovery Pre Clinical Phase1 Phase2

Pain ProgramCore

Program ▲ TRPM8Blocker

▲ AcidPumpAntagonist▲ AcidPumpAntagonist

▲

Gastrointestinal

Antagonist（RQ‐00000004）

p g（RQ‐00000774）

▲ 5‐HT4PartialAgonist（RQ‐00000010）

▲ 5 HT A i▲

▲

▲Motilin ReceptorAgonist（RQ‐00201894）

CoreProgram ▲

▲ 5‐HT2B Antagonist（RQ‐00310941）

▲



（3）DrugDevelopmentCapability

Maximize the infrastructure that is in the highest class among biotechnologyventure companies in Japan and aim to create development compoundsp J p p p

SoftInfrastructureHardInfrastructure

• CompoundlibraryC ti t d i h

• Abundantresearchersh h d d

B d th i hNumberowned:380,000

- Continuetoexpandrichcompounds

whohaveadvancedtechniques

• Researchers with Basedontherichresources,wewill

efficientlyconducttheexploratory research and

• Synthesisandanalysisofthecompounds- Establishmentoftheautomation system

Researcherswithexpertiseonthefieldsof“GI”and“Pain”

I l ti exploratoryresearchanddevelopmentandaimtocreateonedevelopmentcompound in one year

CompoundSynthesis:150/weekpossible

automationsystem

• Screening

• Implementingcollaborativestudiesinthefieldofionchanneldrugdevelopmentwith compoundinoneyearg

- IntroductionofaORCARobotSystem

- Introductionofanauto‐patch(Qpatch)

g pmultiplepharmaceuticalcompanies



HighThrough‐putScreening

（4）IonChannelDrugDevelopment(Summary)

[Major Drug Targets]Receptor Enzyme Ion ChannelReceptor

Protein to which hormone in thebody and neural transmittersubstances act and most of

EnzymeProtein which becomes a catalystfor chemical reactions and mostof the enzymes are inside of cell

IonChannelProtein which is always in thecell membrane and deliverssubstances in and outside the

Classification of 483 kinds of drugs by drug targets Drug targets of the top 20 selling drugs (2000)

receptors are on the cellularsurface

ycell membrane

34%

10% Receptor

Enzyme22%

Receptor

Enzyme

Classificationof483kindsofdrugsbydrugtargets Drugtargetsofthetop20sellingdrugs(2000)

34%

34%

22%Enzyme

IonChannelOther

45%

28%

5%Enzyme

IonChannelOther

One of drug targets and of importance for the future

Drews J. Science (2000) Yoshida T et al. FPJ(2005)



Oneofdrugtargetsandofimportanceforthefuture

（5）IonChannelDrugDevelopment(OurSuperiority)

The field where other companies cannot easily imitate and follow up

IssuesrelatedtotheIonChannelDrugDevelopment OurSuperiority

ManymattersunsolvedBecauseitisarelativelynewareaofstudy,therearemanyunsolvedmatterssuchas

Implementationofcollaborativestudieswithuniversities,publicresearch organizationsphysiologyandinvolvementinclinical

conditions

Limitationsofexistingmethods

researchorganizations,pharmaceuticalcompanies,etc.

AbundantcompoundlibraryandgBecausethenaturalligand doesnotexist,naturalbiologicallyactivesubstanceswillnotbeaclue

establishmentoftheautomatedcompoundrefiningandanalyzingsystem

DifficulttoexploreAstheexistingHTSmethodcanonlydotheindirectobservation,cumbersomemeasurement systems to measure living cells

AcollaborativedevelopmentofanionchannelactivitymeasuringinstrumentwithHamamatsu



measurementsystemstomeasurelivingcellsareessential PhotonicsK.K.

（6）Ion‐channeldrugdiscovery

Signed joint research contracts with several international and domesticpharmaceutical companiesp p

Company Contractdate Description

EliLillyandCompany (U.S.) December2010 Jointresearch targetingaspecificion‐channelinthe pain fieldthepainfield

AjinomotoPharmaceuticalsCo.,Ltd. October 2012 Jointresearch targetingaspecificion‐channelinthedigestivefield

AsahiKaseiPharma Corp. November2013 Jointresearch targetingaspecificion‐channel

Joint research in the exploratory research phase• Join effort to create a new drug by combining the company’s high throughput screeningtechnology on the ion channel as well as unique technology know how on overall drug

sa ase a a Co p ove be 0 3 Jo t esea c ta get g a spec c o c a e

technology on the ion‐channel as well as unique technology know‐how on overall drugdiscovery research with partners’ know‐how of drug discovery and development.

Exploretargetmoleculesfor

Establishevaluation

Exploreleadcompound

Optimizeleadcompound

Determineacompoundto Preclinicaltest

Jointresearchscope

drugdiscovery systemcompound compound

develop

Lump‐sumpayments;earningsfrommilestonepaymentsbasedonthedevelopment



Lump‐sumpayments;earningsfrommilestonepaymentsbasedonthedevelopment,approval,anddistribution;androyaltyaftersales.

（7）GastrointestinalFranchise

I i A tit dIncreaseinAppetiteandGastrointestinalMotility– Ghrelin ReceptorAgonist

（RQ‐5）SuppressionofGastricAcidSecretion– AcidPumpAntagonist

（）

RestorationofImpairedUpperGastrointestinalMotility in the Inter‐digestive

（RQ 5）

（RQ‐4）MotilityintheInter‐digestiveState– Motilin ReceptorAgonist

（RQ‐201894）AccelerationofGastrointestinal Motility（ Q ）

AttenuationofVisceralHypersensitivityandExcessive Colonic Motility

GastrointestinalMotility– 5‐HT4 PartialAgonist

（RQ‐10）ExcessiveColonicMotility– 5‐HT2B antagonist

（RQ‐310941）



（8）5‐HT4PartialAgonist(RQ‐10):PhaseIClinicalStudyCompletedintheU.K.andPOCStudyUnderConsideration

Discovery Pre‐Cl l Phase 1 Phase 2 Phase 3 NDA

DevelopmentCompound POC Submission ApprovalClinicalStudyTargetIdea

Discovery Clinical Phase1 Phase2 Phase3 NDA

• Thetargetisoneoftheserotoninreceptors(5‐HT4),whichplaysanimportantroleingastrointestinal

Improvement of GI functionsp y p g

motilityandhasmarketperformance.• StrongerefficacyandhighersafetyareexpectedcomparedwithMosapride,whichisa5‐HT4 agonistwith annual sales of 21 2 billion yen (FY2011) in the

ImprovementofGastricMotility•Gastroparesis

1

withannualsalesof21.2billionyen(FY2011)intheJapanesemarket.

• APhaseIclinicalstudywasconductedinhealthyadultsubjects(88subjectswereincluded)intheU.K.Safetyand tolerance were determined an effect on stomach

•Gastroparesis•FunctionalDyspepsia

11

andtoleranceweredetermined,aneffectonstomachdischargefunctionasabiomarkerwasinvestigated,andpromotionofstomachdischargefunctionwasclearlyconfirmedinverylowdoses(3μg/body).D l f h d ibl

ImprovementofMotilityinthesmallandlargeintestines•Functional

２

２

２

２

２

• Developmentofthecompoundasapossiblypromisingtreatmentrelatingto1)improvementofgastricmotility(gastroparesis,functionaldyspepsia)and2)improvementofmotilityinthesmallandlargei i (f i l i i ) i l d

Constipation•Diarrhea‐TypeIrritableBowelSyndrome

•PostoperativeIleus

２



intestines(functionalconstipation)iscurrentlyunderconsideration.POCstudyisunderconsideration.

（9）AcidPumpAntagonist(RQ‐4):PhaseIIclinicalstudyisconductedbyCJCheilJedang inKorea

• Rapid, Continuous and Excellent Gastric Acid Inhibition

Research& Development• RQ‐4isapromisinggastricacidsecretioninhibitorofthenextgenerationwithsuperiorefficacytotheexistingprotonpumpinhibitors(PPIs).

• 1)Rapid,2)continuous,3)efficacyinthefastedstate,and4)efficacyatnight:thedifferentiatedpointsasdefinitelydifferentcharacteristicsfromPPIsweredemonstratedinclinicalstudies.

• In clinical studies conducted in the USA and Korea its excellent gastric acid inhibition as wellInclinicalstudiesconducted intheUSAandKorea,itsexcellentgastricacidinhibitionaswellassafety,tolerabilityandpharmacokineticsprofileswereconfirmed.

• PhaseIIclinicalstudyinpatientswithrefluxesophagitis isongoinginKorea.

EstimatedMarketSize

• Globalmarketsizeofacompetingexistingdrugwasapproximately2trillionyenin2009.• Target of RQ‐4 is the market by replacement of PPIs (all indications of PPI including reflux• TargetofRQ‐4isthemarketbyreplacementofPPIs(allindicationsofPPIincludingrefluxesophagitis).

• PPImarketinJapanisgrowing.• CompetitorisTAK‐438underdevelopmentbyTakedaPharmaceuticalCo.Ltd.,ofwhicha



PhaseIIIclinicalstudyisongoing.

（10）BusinessProgress5‐HT2BAntagonist(RQ‐00310941)/Motilin ReceptorAgonist(RQ‐00201894)

[Major Topics]＜2 Development Candidates Upgraded from Exploratory Research＜2 Development Candidates Upgraded from Exploratory ResearchPhase to Development Phase＞• 5‐HT2B Antagonist (RQ ‐00310941): in pre‐clinical stageI i d h h 5 HT2B i i l d i i i l ili d i ThiIt is suggested that the 5‐HT2B receptor is involved in gastrointestinal motility and perception. Thiscompound, a 5‐HT2B antagonist with high activity and selectivity, has proven to clearly eliminate painsfrom visceral hyperesthesia and bowel movement disturbances in animal experiments. It has thepotential to be an effective drug for treating irritable bowel syndrome (IBS) and other functional

i i l di b All h h ki i d i i di ll fgastrointestinal tract disturbances. All the pharmacokinetics and toxicity studies as well as safetypharmacology study (GLP‐standardized) were conducted as scheduled. In 2014, the efficacypharmacology study, which has started the previous year, is expected to be completed.

• Motilin Receptor Agonist (RQ‐00201894): in pre‐clinical stageMotilin has a critical role as a gastrointestinal hormone in maintaining homeostasis in gastrointestinalmotility. This compound has the strongest agonistic activity and high selectivity at the motilin receptoramong the compounds currently in development At present there are no motilin receptor agonistsamong the compounds currently in development. At present, there are no motilin receptor agonistsapproved for manufacturing and marketing applicable to gastrointestinal diseases. The result from the4‐week repeated dose oral toxicity study (GLP‐standardized), which was undertaken in 2013, iscurrently being investigated. The evaluation of the results from other pharmacokinetics and toxicitystudies are in progress In 2014 these pre clinical studies will continue to be performed to move



studies are in progress. In 2014, these pre‐clinical studies will continue to be performed to moveforward.

（11）CorporateProfileofAskAt Inc.

T f t i IP

AsofJanuary2014

TransfercertainIP

Receive a certain % ofReceiveacertain%offutureearningsinexchange

Corporate Profile of AskAt IncCorporateProfileofAskAt,Inc.Address 5‐2Taketoyo,Chita‐gun,AichiRepresentative Shinichi Koizumi,PresidentandCEOBusiness description Research and development marketing licensing and consulting ofBusinessdescription Researchanddevelopment,marketing, licensing andconsultingof

pharmaceuticalproductsandhealth‐relatedproducts,andalloperationsincidentalandrelatedthereto.

Numberofemployees 4Capital １millionyenDateofincorporation January7,2013Businessmodel Utilizeexternalresources(public fundsandfinances,etc.)toacceleratethe



developmentprogressofprograms,enhancethevalueofeachprogram,andachievepotentialfutureearnings.

（12）CorporateProfileofAskAt Inc.StatusofKeyR&DPortfolio‐ Program&Stage‐

AsofJanuary2014

Discovery Pre-clinical Phase I Phase II

Pain/Oncology/

▲ EP4 Antagonist（RQ‐00000008）

▲ EP4 Antagonist（RQ‐00000007）Oncology/

Immunology ▲ COX‐2Inhibitor（RQ‐00317076）

CNS

▲ 5‐HT4 PartialAgonist（RQ‐00000009）

StrategicOptionProgram



BusinessForecast&Projections



（1）ThisTerm’sEarningsForecastandFutureEarningsTargets(Summary)

OperatingRevenue OperatingCost OperatingLoss OrdinaryLoss CurrentTermNet

Profit or Loss

（Unit:1millionyen）

Revenue ProfitorLoss

Full FY 2014 (Plan) 300 1,984 △1,684 △1,685 △282Full FY 2015 (Target) 600 1,698 △1,098 △1,100 △1,155Full FY 2016 (Target) 1,200 1,686 △486 △485 △4８９Full FY 2016 (Target) 1,200 1,686 △486 △485 △4８９

Full FY 2013 (Result) 228 2,366 △2,137 △1,819 △1,108

• Promotionofcollaborativeresearchesandalliancemanagementandacquisition of the milestone income from pain and GI disorder programsacquisitionofthemilestoneincomefrompainandGIdisorderprogramsandtheincomeoftheupfrontlumpsumpayments

• AcquisitionoftheincomeofanupfrontlumpsumpaymentthroughlicensingoftheGIdisorderprogram

CalendarYear2014

• Acquisitionoftheincomeofupfrontlump‐sumpaymentsbyimprovingtheprogramvalue

• Acquisitionofthemilestoneincomebypromotingalliance

CalendarYear2015

• Acquisitionoftheincomeofupfrontlump‐sumpaymentsbyimprovingtheprogramvalue

• AcquisitionofthemilestoneincomebyprogressingprogramsA f h l l h h f d h d h lf

CalendarYear2016



• Acquisitionoftheloyaltyincomewiththeaimofdoingsointhesecondhalfofthefiscalyeartothefirsthalfofthefiscal2017

（2）ThisTerm’sEarningsForecastandFutureEarningsTargets(BreakdownoftheProfitPlan)

1 200

1,400millionyenPlacingthelicensing‐outcompany’s

productsonthemarketResearchandDevelopmentPhases

631,200

1,000millionyen

1,200millionyen Studycooperationmoney(Ionchannel)LoyaltyMilestoneUpfrontlumpsumpayment

775600

800millionyen

250

50

300400millionyen

600millionyen

209300 363

20

20128

71228

200millionyen

80millionyenFY2013(Result) FY2014(Plan) FY2015(Target) FY2016(Target)

• Aim to acquire upfront lump-sum payments and milestone income in FY 2014-



15 and secure a stable revenue source with the loyalty associated with the placement of the products on the market from FY 2016

（3）Trend of the Operating Cost (Summary)

FY2013(Result)

FY2014(Plan)

FY2015(Target)

FY2016(Target)

（Unit:1millionyen）

(Result) (Plan) (Target) (Target)

Operating Cost 2,366 1,984 1,698 1,686(Of which) Labor Cost 859 708 682 682(Of hi h) R&D C t 429 557 481 457(Of which) R&D Cost 429 557 481 457(Of which) Administrative Control Cost 299 289 287 286(Of which) Facility‐Related Cost 641 307 124 106(Of hi h) Oth 135 119 121 154(Of which) Others 135 119 121 154

• Reductionofthefacility‐relatedcostassociatedwiththetransferofresearchanddevelopmentcenter(Thefirstperiod)P i f h li i l d l f hi h l j fi

CalendarYear2014 • Promotionoftheclinicaldevelopmentforwhichexternalprojectfinances,

etc.areutilized2014

• Reductionofthefacility‐relatedcostassociatedwiththetransferofresearch and development center (The second period)CalendarYear researchanddevelopmentcenter(Thesecondperiod)

• MaintaintheresearchanddevelopmentcostattheFY2013level2015

Maintain the research and development cost at 400 million yen levelCalendarYear



• Maintaintheresearchanddevelopmentcostat400million‐yenlevel2016

（4）TrendoftheOperatingCost(BreakdownoftheOperatingCostPlan)

2,366

1 984859

2,500millionyen

900millionyen

1,000millionyen

680millionyen680millionyen(28 7%)(28 7%)1,984

1,6981,686

859

708 682 682641

2,000millionyen

700millionyen

800millionyen

LaborCost,R

(28.7%)(28.7%)DownDown

429

557

481 457

1,500millionyen

500millionyen

600millionyen OperatingC

R&DCost,Facil 540 illi540 illi429

307

1,000millionyen

300millionyen

400millionyen

ost

lity‐RelatedCo

OperatingCost

Labor Cost

540millionyen540millionyen(83.4%)(83.4%)DownDown

124

106million yen

500millionyen

million yen

100millionyen

200millionyen

ost LaborCost

R&DCost

Facility‐RelatedCost

TransfertheR&DcentertoNagoya

UniversityCompletionofthetransfer

millionyenmillionyenFY2013(Result) FY2014(Plan) FY2015(Target) FY2016(Target)

• Graduallytransfertheresearchanddevelopmentcenterin2014‐15



• Exertsynergywithacademiaandatthesametime,reducetheoperatingcostby680millionyenfromthecurrentamount

（5）TrendoftheManpowerPlanningandResearchandDevelopmentCapacity

7480people

65 65 65

60people

70people

5046 46 46

40people

50peopleTotalNumber

Research and

20people

30people

ResearchandDevelopmentDepartment

people

10peopleTransfertheR&DcentertoNagoyaUniversity

Completionofthetransfer

peopleFY2013(Result) FY2014(Plan) FY2015(Target) FY2016(Target)

• AfterthetransferoftheresearchanddevelopmentcentertoNagoyaUniversity,the



scaleoftheResearchandDevelopmentDepartment’spersonnelwillbemaintainedataboutthepresentlevel

（6）FinancingPlan

[Basic Policy]• R li th f d i i f 2 billi4 035 4,137

4 000 4 0004,500millionyen

• Realize the fund raising of 2 billion yenevery year.

• Aim to reduce the operating cost in thefinal year of the 3‐year plan to 1.6 – 1.7billion yen.

4,035 ,4,000 4,000

3,500millionyen

4,000millionyen

billion yen.• Maintain the end‐of‐term fund balance ineach fiscal year at around 4 billion yen

• Allocate excess funds to Core programs’development cost and aim to improve

2,366

1 9842 000million yen

2,500millionyen

3,000millionyen

p pvalue of the programs for the earlymonetization.

[Fund Raising Methods]

1,9841,698 1,686

1,000millionyen

1,500millionyen

2,000millionyen

• Execution of the share acquisition right(Allocation of new shares to a third party)

• Project finances• Effective utilization of owned assetsmillionyen

500millionyen

FY2013 FY2014(Plan) FY2015 FY2016

FundBalance

OperatingCost

(Result)( )

(Target) (Target)

• Consideration and execution of the fund raising that can go over the so‐



Considerationandexecutionofthefundraisingthatcangoovertheso‐called“DeathValley”untilweacquiresteadyincome

P li /M T d h S blPolicy/MeasuresTowardtheStableIncome‐Earning



（1）ResearchCollaborationwithIndustrialCompanies

Concept ActualCase

OurCompanyHumanresources,knowledge,

researchinstruments,andlibraryinherited

IonChannelDrug Discovery

OurCompany

UniversityPh ti l C i

fromformerPfizerCentralResearchLaboratory

Aji t A hi K i Hamamatsu

DrugDiscovery

PharmaceuticalCompaniesMeasurementInstrumentManufacturers,

etc.CandidatesfortheCollaborative

Research

AjinomotoPharmaceuticals(Gastrointestinal

Diseases)

AsahiKaseiPharma

Corporation(Non‐disclosed)

PhotonicsK.K.(Developmentofmeasurementinstruments)

EliLillyandCompany(Painfield)

Collaborativeresearchandlicensingf d i t t tofcompounds,instruments,etc.

• Aim for the collaborative R&D on compounds and instruments with



AimforthecollaborativeR&Doncompoundsandinstrumentswithpharmaceuticalcompanies,measuringinstrumentmanufacturers,etc.

（2） SituationsoftheDevelopmentStrategy‐ Pipeline

• With regard to the compounds in the field of GI disorder (acid pump antagonist and 5‐HT4partial agonist) that we have advantages of, we will aim for the early acquisition of

i b i i l th h th l ti f i hilearnings by improving value through the acceleration of program progression whileutilizing our resources and external resources such as project finances, etc.

• With regard to the motilin receptor agonist and 5 HT2B antagonist we will aim for the• With regard to the motilin receptor agonist and 5‐HT2B antagonist, we will aim for thelicensing based on the previous clinical data or clinical development by our company.

Project Compound PrincipalIndication

ExploratoryResearchP li i l

ClinicalStudyLicensing‐

Out PartnersContractualT itj p p ‐Preclinical

TestOut Partners TerritoryPhaseI PhaseII PhaseIII

AcidPumpAntagonist RQ‐00000004 Gastroparesis,Functionaldyspepsia,Functional

Undercontemplationatourcompany(inJapan)

Beingcarriedoutatthelicensing‐outpartner(Korea)

‐ ‐

constipation5‐HT4PartialAgonist RQ‐00000010 Undercontemplation ‐ ‐

Motilin ReceptorAgonist RQ‐00201894 Gastroparenis ‐ ‐

5‐HT2B Antagonist RQ‐00310941 Irritablebowelsyndrome ‐ ‐



syndrome

（3）AllianceStrategy

• Wewill exertouradvantageof theability toprovideuseful information forclinical tests thatwecultivatedatPfizerCentralResearchLaboratory, apredecessorof our company, toourpartner companies, promoteli i l t d ffi i d d t th lli t t d th l t f d t thclinical study efficiency, and conduct the alliancemanagement toward the placement of products on themarketinashortertime.

• With regard toMeiji SeikaPharma's ziprasidone, Aratana’s twoanimaldrugs, andCJ’s (Korea) twodrugsinthefiledofGIdisorderwewillparticularlystrengthenandpromotethealliancemanagementinthefiledofGIdisorder,wewillparticularlystrengthenandpromotethealliancemanagement.

• AlsowithregardtoDurata’sdalbavancin,wewillsupporttopromotethedevelopmentinJapan.

Preclinical Phase I Phase II Phase IIISubmission/ApprovalPreclinical PhaseI PhaseII PhaseIII Approval

Period Subject to the Alliance Management

Upfront lump sum payment / Milestone

OurCompany PartneredCompaniesLicense

Upfront lump sum payment / Milestone/ Payment of the royalty after placing it onthe market

Informationusefulforstudy

Underthecooperativestructurewithlicensing‐outpartners,aimtoprovide



p g p pappropriatedevelopmentsupportasmuchaspossibletowardtheplacementof

productsonmarketandpromptlyacquirelong‐termstableincome

（4）LicensingStrategy

ExploratoryResearch Preclinical PhaseI PhaseII PhaseIII

Improvethevalue

Improvethevalue

[License‐out][Development]

[License‐out][Development] [License‐out]

Developmentofcandidatesubstances

×Inprinciple,wedonotconductthis

at our companyDevelopment Development

atourcompany

License

Theo Co

to

License‐out License‐out License‐out Small

Upfrontlumpsumpayment(Medium)

Upfrontlumpsumpayment(High)

Upfrontlumpsumpayment(Low)

License

License

eAmount

ofProfit

ombin

e them

m

axim

ize the

profit

Weaimfortheearlyderivationbyunderstandingcandidatealliance L

PharmaceuticalCompanies

e gpartners’needsthrough

multifacetedcommunicationincludingcollaborativeresearches Fast SlowPeriodofMonetization

Research and Development Cost

Large

Identifycustomers’needsbyexploitingnetworksandexpandrevenuesbycombining

Small LargeResearchandDevelopmentCost



“EarlyLicense‐out&Monetization”and“ImprovementoftheValuethroughIn‐HouseDevelopment”

（5）StrategyfortheIntellectualProperty

Theintellectualpropertyequalsourproduct.－ Constructionofahighly‐valuedintellectualpropertyportfolio

ExpectedEffects

g y p p y p

Strategy for the• Promptapplicationforapatent• Solidacquisitionofright• Creationoftheintellectualpropertytailored to customers’ needs

StrategyfortheIntellectualProperty

tailoredtocustomers needs• Licenseproposalsbasedontheintellectualproperty

• Extensionofthelifecyclebytheintellectual property

ResearchandDevelopmentStrategy

BusinessStrategy

intellectualproperty

SubstancePatent Extension of the life cycle (Acquisition of the peripheral patents)

Ex

Extensionofthepatentterm

Upto5years

ExpirationExtensionofthelifecycle(Acquisitionoftheperipheralpatents)xpiration

Patentonuse,patentoncrystalpolymorphism,patentonbase,processpatent,patentondrugformulation,patentoncombinedtreatment,patent on dosage and administration etc

PeripheralPatents



patentondosageandadministration,etc.

EarningsbylicensingperipheralpatentsEarningsbylicensingabasicpatent

StatusofLicensedPortfolio



（1）KeyLicensedR&DPortfolioStatus

Program Company Area

ResearchCollaboration AsofJanuary2014

ASpecificIonChannelProgram

EliLillyandCompany Pain

AjinomotoPharmaceuticalCo.,ltd Gastrointestinal

AsahiKaseiPharma Corporation Nondisclosed

Program CompoundCode Company Rights

Maruishi Japan,Korea,China,Taiwan

Licensing

EP4 Antagonist RQ‐00000007 PharmaceuticalCo.,Ltd (i.v.formulation)

AratanaTherapeutics Inc. Global(Animal)

AcidPumpAntagonist RQ‐00000004RQ‐00000774 CJCheilJedang Corporation Korea,China,TaiwanRQ 00000774

Ghrelin Agonist RQ‐00000005 Aratana Therapeutics Inc. Global(Animal)

Dalbavancin （MRSAinfection) RQ‐00000002 Durata TherapeuticsInc. Japan

Ziprasidonep（SchizophreniaBipolardisorder)

RQ‐00000003 MeijiSeikaPharmaCo.,Ltd. Japan

5‐HT4PartialAgonist(Gastrointestinal)

RQ‐00000010 CJCheilJedang Corporation Korea,China,Taiwan,IndiaandSoutheastAsia



( )

（2）PipelineSituation(HumanDomain)

• For ziprasidone to which the phase III study is scheduled to be conducted, we will continue to providesupporttowardthetestinitiation.

• For dalbavancin, we will continue to provide support in order for the test to be smoothly conducted inJapan.

• With regard to the acid pump antagonist (RQ‐00000004), the phase II test was initiated in 2013 asscheduled Wewillcontinuetoprovidedatanecessaryforthetestscheduled.Wewillcontinuetoprovidedatanecessaryforthetest.

• With regard to the5‐HT4partial agonist,wewill providenecessary information toourpartner to supporttheinitiation ofthephaseIstudyinKorea.

• With regard to the EP4 antagonist wewill continue to provide support for the development strategy andWith regard to the EP4 antagonist, wewill continue to provide support for the development strategy andplan development by Maruishi Pharmaceutical and strive to achieve early acquisition of the milestoneloyaltyearnings.

Project Compound PrincipalIndicationExploratoryResearch

Clinical StudyLicensing‐OutPartners

ContractualTerritory‐PreclinicalTest Partners TerritoryPhaseI PhaseII PhaseIII

Ziprasidone RQ‐00000003 Schizophrenia,Bipolardisorder

Inpreparation

MeijiSeikaPharmaCo.,Ltd.

JapanDalbavacin RQ‐00000002 MRSAinfection Durata

Therapeutics Inc.

AcidPumpAntagonist

RQ‐00000004

Gastroesophagealrefluxdisease

Beingcarriedout (Korea)

CJCheilJedang

Korea,China,andTaiwan

RQ‐00000774 Undercontemplation

5‐HT4PartialAgonist RQ‐00000010

Undercontemplationatthelicensing‐outpartner(Korea)

Korea,China,Taiwan,IndiaandEastAsia



EP4Antagonist RQ‐00000007Chronicinflammatorypain,acutepain,etc.

UndercontemplationMaruishiPharmaceuticalCo.,Ltd.

Japan,China,Korea, andTaiwan

（3）Ziprasidone /MeijiSeikaPharma Co.,Ltd.

NewHuman‐UseDrug

Indications ： SchizophreniaandBipolarDisorder

Ziprasidone /MeijiSeikaPharma Co.,Ltd.

Target markets ： Japan

Progress ： Progressingonschedule• PhaseIIClinicalStudyinJapan,byMeiji,wascompletedin2012.• PlanningonPhaseIIIClinicalStudyinJapanisongoing.• Developmentofdrug productisunderconsideration.

Practicalmeasures

： • Applymoreefficientpracticesinalliancemanagementforearlieracquisitionofmilestoneprofitsand/orroyaltyrevenues,aswellasimprovementinaccuracyregardingprofitforecastsandtiming.

l ff d l b S k h• FacilitateefficientdevelopmentexecutionbyMeijiSeikaPharmabyexpeditiouslyassemblingrequireddatafromPfizerstudies.



（4）AcidPumpAntagonist(RQ‐00000004)/CJCheilJedang Corporation

NewHuman‐UseDrug

Indications ： RefluxEsophagitis

AcidPumpAntagonist(RQ‐00000004)/CJCheilJedang Corporation

Target markets ： SouthKoreaandChina(includingTaiwanandHongKong)

Progress ： Progressingonschedule• PhaseIIClinicalStudyinSouthKoreaisongoing.• PlanningonPhaseIClinicalStudyinJapanbyRaQualia isongoing.

Practical ： • Applymoreefficientpracticesinalliancemanagementforearliermeasures

pp y p gacquisitionofmilestoneprofitsand/orroyaltyrevenues,aswellasimprovementinaccuracyregardingprofitforecastsandtiming.

• Facilitateefficientdevelopmentexecutionandgloballicensingactivities by CJ via providing clinical study design input based onactivitiesbyCJviaprovidingclinicalstudydesigninputbasedonRaQualia’s extensiveexperiencewithalimentarydisordersanddrugdevelopment.



（5）5‐HT4PartialAgonist(RQ‐00000010)/CJCheilJedang Corporation

NewHuman‐UseDrug

Indications ： Allapplicablegastrointestinaldiseases(includingGastroesophagealR fl Di d F i l G i i l Di d GERD

5HT4PartialAgonist(RQ‐00000010)/CJCheilJedang Corporation

RefluxDiseasesandFunctionalGastrointestinalDisorders;GERDandFGIDs)

Target markets ： SouthKorea,China(includingTaiwanandHongKong),IndiaandSouth East Asian countries (11 countries)South‐EastAsiancountries(11countries)

Progress ： Progressingonschedule• PhaseIClinicalStudyinUKbyRaQualia wascompletedinOctober2012.Pl i Ph I Cli i l S d i S h K b CJ i i• PlanningonPhaseIClinicalStudyinSouthKoreabyCJisongoing.

• PlanningonPhaseIIClinicalStudybyRaQualia isongoing.

Practicalmeasures

： • Applymoreefficientpracticesinalliancemanagementforearlieracquisition of milestone profits and/or royalty revenues as wellmeasures acquisitionofmilestoneprofitsand/orroyaltyrevenues,aswellasimprovementinaccuracyregardingprofitforecastsandtiming.

• FacilitateefficientdevelopmentexecutionandgloballicensingactivitiesbyCJviaprovidingclinicalstudydesigninputbasedon



RaQualia’s PhaseIclinicalstudydatafromtheUKandextensiveexperiencewithalimentarydisorders.

（6）EP4Antagonist(RQ‐00000007)/Maruishi PharmaceuticalCo.,Ltd

NewHuman‐UseDrug

EP4Antagonist(RQ‐00000007)IVFormulation/Maruishi PharmaceuticalCo.,Ltd

Indications ： Acuteandchronicinflammatorypain

Target markets ： Japan,Korea,China,Taiwan

Progress ： Non‐clinicalstage• Developmentstrategyanddevelopmentplanarebeingestablished.

Practical ： • TheCompanywillcontinuetosupportMaruishi Pharmaceuticalmeasures

p y ppasitexecutesitsdevelopmentstrategy.ALiaisonCouncilwillbelaunchedtoensureefficientbusinessplanimplementation,inordertoachieveearlymilestoneincomeandroyaltyrevenue.



（7）PipelineSituation(AnimalDrug)

• With regard to the ghrelin receptor agonist, we will continue to provide informationnecessary for the development through cooperation with our licensing‐out partner ind f th t b bl t d l f d t i t t l f h b t l forder for them to be able to develop as food antagonist not only for humans but also for

pet animals.• With regard to the EP4 antagonist, we will continue to provide support toward thedevelopment test initiation through cooperation with our licensing‐out partner in orderdevelopment test initiation through cooperation with our licensing out partner in orderfor them to be able to develop an analgesic drug not only for humans but also for petanimals.

Project Compound PrincipalIndicationExploratoryResearch

P li i l T t

ClinicalTest Licensing‐OutPartners

ContractualTerritory‐ Dose‐finding Large‐scale‐PreclinicalTest y‐ Dose‐finding Large‐scale

Ghrelin ReceptorAntagonist RQ‐00000005 Weightloss,

Anorexia AratanaTherapeuticsInc. Worldwide

EP4antagonist RQ‐00000007 Osteoarthritis Inpreparation



（8）Ghrelin ReceptorAgonist(RQ‐00000005)/Aratana Therapeutics,Inc.

AnimalDrug

Ghrelin Receptor Agonist (RQ‐00000005) / Aratana Therapeutics, Inc.

Indications ： AnorexiaNervosa,Cachexia andWeightLossinCompanionAnimals

Target markets ： Worldwide

Progress ： Progressingonschedule• DogsandcatstreatedwithRQ‐5exhibitedincreasedfoodintakeandweightgain,andstatisticallysignificantresultswereseenascomparedtotheplacebosinadogpilotstudy.

• Therandomized,placebo‐controlled,multi‐centerstudyisexpectedtoenrollclient‐owneddogsinthefirsthalfof2014.

Practicalmeasures

： • Applymoreefficientpracticesinalliancemanagementforearlieracquisitionofmilestoneprofitsand/orroyaltyrevenues,aswelli t i di fit f t d ti iasimprovementinaccuracyregardingprofitforecastsandtiming.

• FacilitateefficientdevelopmentexecutionbyAratana byexpeditiouslyassemblingrequireddatafromPfizer.



（9）EP4Antagonist(RQ‐00000007)/Aratana Therapeutics,Inc.

AnimalDrug

EP4 Antagonist (RQ‐00000007) / Aratana Therapeutics, Inc.

Indications ： AcuteandChronicPaininCompanionAnimals

Target markets ： Worldwide[excludingivformulationinJapan,SouthKorea,China,orTaiwan]

Progress ： Progressing on scheduleProgress ： Progressingonschedule• Positiveresultswereobtainedfromdose‐rangingfieldstudyindogswithosteoarthritis.

• Apivotalfieldeffectivenessstudyforregistrationisplannedin2014.

Practicalmeasures

： • Applymoreefficientpracticesinalliancemanagementforearlieracquisitionofmilestoneprofitsand/orroyaltyrevenues,aswellasimprovementinaccuracyregardingprofitforecastsandtiming.F ilit t ffi i t d l t ti b A t b• FacilitateefficientdevelopmentexecutionbyAratana byexpeditiouslyassemblingrequireddatafromPfizer.



（10）StatusofResearchCollaboration

NewHuman‐UseDrug

SpecificIonChannel/EliLillyandCompany

Indications ： Pain


Progress ： Exploratoryresearch• ExtendedcollaborativeresearchcontractinDecember2012• Identifypluralcandidatedevelopmentcompoundsfortoxicologicaltestandproduceacandidatedevelopmentcompound.

Practical ： • The Company will identify and produce a candidate developmentPracticalmeasures

： • TheCompanywillidentifyandproduceacandidatedevelopmentcompound.

• TheCompanywillimplementtheprojectinclosecollaborationwithEliLilly,withtheaimofsecuringmilestoneincomeandroyaltyrevenueasquicklyaspossible.




NewHuman‐UseDrug

SpecificIonChannel/AjinomotoPharmaceuticalCo.,ltd

Indications ： GastrointestinalDiseases


Progress ： Exploratoryresearch• ConcludedcollaborativeresearchcontractinOctober2012.• Beganresearchcollaborationtoproduceacandidatedevelopmentcompound.Thecollaborativeresearchhasprogressedonschedule.

Practical ： • The Company will identify a candidate development compoundPracticalmeasures

： • TheCompanywillidentifyacandidatedevelopmentcompound.• TheCompanywillimplementtheprojectinclosecollaborationwithAjinomoto,withtheaimofsecuringmilestoneincomeandroyaltyrevenueasquicklyaspossible.




NewHuman‐UseDrug

SpecificIonChannel/AsahiKaseiPharmaCorporation

Indications ： Non‐disclosed

Target markets ： Non‐disclosed

Progress ： Exploratoryresearch• Concludedcollaborativeresearch contractinNovember2013.• Thecollaborative researchhasprogressedonschedule.

Practical ： • TheCompanywillidentifyacandidatedevelopmentcompound.measures

p y y p p• TheCompanywillimplementtheprojectinclosecollaborationwithAsahiKaseiPharma, withtheaimofsecuringmilestoneincomeandroyaltyrevenueasquicklyaspossible.



NotesonBusinessProjections

• Materials and information provided in this document include forward‐looking statements.Th b d h i j i d iThese statements are based on the current expectations, projections and assumptionsinvolving risks, and contain uncertainties that could cause the actual results to besubstantially different from such statements.

• Such risks and uncertainties include general conditions of domestic and global economysuch as general industry and market conditions, interest rate, changes in exchange rates.Particularly, risks and uncertainties exist in forward‐looking statements related toy gproducts (R&D programs and compounds). Risks and uncertainties of products include,but not limited to, technical progress, acquisition of patents by competitors, completion ofclinical trials, claims and concerns regarding safety and efficacy of products, approval byregulatory authority health care insurance reforms within and outside Japan tendency toregulatory authority, health‐care insurance reforms within and outside Japan, tendency tocontain medical expenses, laws and regulations of the government affecting businesseswithin and outside Japan, challenges associated with new product development.

• The Company does not undertake to update or revise any forward‐looking statementscontained in this document, whether as a result of new information, future events, orotherwise.



5‐2Taketoyo,Aichi,Japan 470‐2341TEL+81569840700 FAX+81569840900

www.raqualia.co.jpwww.raqualia.com

Copyright RaQualia Pharma Inc. All Rights Reserved. 2014

Documents

Business Plan - · PDF fileBusiness Plan ‐ProjectReborn90Project Reborn 90‐ January 1, 2014 January 1, 2014 ––December 31, 2016December 31, 2016 February 28, 2014