Financial Results for the Fiscal Year ended March 31, 2015 ...pdf.irpocket.com/C4571/Q8aV/FN51/cE5I.pdf · Scheduled date of submission of securities report June 25, 2015 . Supplementary

Financial Results for the Fiscal Year ended March 31, 2015 [Japan GAAP] (non-consolidated)

May 14, 2015 Name of Company NanoCarrier Co., Ltd Listed Market Mothers, TSE TSE Code 4571 URL http://www.nanocarrier.co.jp Representative (Title) President & CEO (Name) Ichiro Nakatomi Contact (Title) CFO (Name) Tetsuhito Matsuyama (TEL) (03) 3241-0553 Scheduled date of annual meeting of stockholders June 24, 2015 Scheduled date of dividend payment

commencement -

Scheduled date of submission of securities report June 25, 2015 Supplementary materials for financial statements : Yes Briefing of financial results : Yes ( for institutional investors and analysts)

(Millions of yen, rounded down to the nearest million) 1. Results of the fiscal year 2014 (April 1, 2014 – March 31, 2015) (1) Results of Operation (Percentages represent changes from the same period of previous year) Net sales Operating income Ordinary income Net income Million yen % Million yen % Million yen % Million yen %

Fiscal 2014 (ended March 31, 2015) 675 43.1 △1,108 - △171 - △207 -

Fiscal 2013 (ended March 31, 2014) 472 26.3 △1,123 - △1,094 - △1,113 -

Net earnings per

share

Fully diluted net

earnings per share

Return on

shareholders’ equity

Ratio of ordinary

income to total assets

Operating

margin

Yen Yen % % % Fiscal 2014 (ended March 31, 2015) △5.12 - △1.5 △1.2 △164.0

Fiscal 2013 (ended March 31, 2014) △30.44 - △12.4 △11.0 △237.8

(Reference) Equity in earnings of affiliate

Fiscal 2014 - Million yen Fiscal 2013 - Million yen

(Note) Effective on April 1, 2014, the Company implemented a stock split, pursuant to the resolution made on February 12,

2014 by the Board of Directors, at a ratio of 100 shares per one share of common stock. Accordingly, the net earnings

per share have been calculated on the assumption that the said stock split was implemented at the beginning of the

previous fiscal year ended March 31, 2014.

(2) Financial Positions Total assets Net assets Equity ratio Net assets per share Million yen Million yen % Yen

As of March 31,

2015 14,704 14,501 98.0 338.35

As of March 31,

2014 14,340 13,597 94.6 336.86

(Reference) Shareholders’ equity As of March 31, 2015 14,416 Million

yen As of March 31, 2014

13,563 Million yen

(Note) Effective on April 1, 2014, the Company implemented a stock split, pursuant to the resolution made on February 12,

2014 by the Board of Directors, at a ratio of 100 shares per one share of common stock. Accordingly, the net earnings

per share have been calculated on the assumption that the said stock split was implemented at the beginning of the

previous fiscal year ended March 31, 2014.

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http://www.nanocarrier.co.jp/

(3) Cash Flows

Cash flows

from operating activities

Cash flows from

investing activities

Cash flows from

financing activities

Cash and cash equivalents

at end of period Million yen Million yen Million yen Million yen

Fiscal 2014 (ended March 31, 2015) △1,120 △2,562 504 2,052

Fiscal 2013 (ended March 31, 2014) △1,086 △7,059 9,581 5,034

2. Dividends

Annual Dividends Total

dividends

paid (annual)

Payout ratio

Ratio of

dividends

to net assets End of 1Q End of 2Q End of 3Q Year-end Annual

Yen Yen Yen Yen Yen Million yen % % Fiscal 2014 (ended March 31, 2015) - 0.00 - 0.00 0.00 - - -

Fiscal 2013 (ended March 31, 2014) - 0.00 - 0.00 0.00 - - -

Fiscal 2015 (projection) - 0.00 - 0.00 0.00 -

3. Projected financial results for fiscal year ending March 31, 2016 (April 1, 2015 – March 31, 2016)

(Percentages represent changes from the same period of previous year)

Net sales Operating income Ordinary income Net income Net income per share

Million yen % Million yen % Million yen % Million yen % Yen Full year 137 △79.7 △2,666 - △2,617 - △2.772 - △65.06

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※ Notes (1) Changes in significant accounting policies, changes in accounting estimates and restatements

① Changes in accounting policies due to revisions of accounting standards, etc. : None

② Changes in accounting policies due to other reasons than above ① : None

③ Changes in accounting estimates : None

④ Restatements : None

(2) Number of shares outstanding (common stock)

① Number of shares outstanding at the end of fiscal term (including treasury stocks) March 2015 42,606,858 shares March 2014 40,265,200 shares

② Number of treasury stocks at the end of fiscal term March 2015 - shares March 2014 - shares

③ Average number of shares during the fiscal term March 2015 40,455,531 shares March 2014 36,581,297 shares

(Note) Effective on April 1, 2014, the Company implemented a stock split at a ratio of 100 shares per one share of common stock. For

this reason, the number of outstanding shares (including treasury stock) at the end of the fiscal term, and the average number of

shares during the fiscal term are calculated on the assumption that the said stock split was implemented at the beginning of the

fiscal year ended March 31, 2014.

※ Disclosure regarding the implementation of audit procedures.

・This summary of financial results is exempted from Audit Procedures, which otherwise would be required under the Financial

Instruments and Exchange Act, and the audit procedures being applied to the financial statements as required by the Financial

Instruments and Exchange Act have not been completed at the time of disclosure of this summary of financial results.

※ Explanations regarding appropriate use of forecasts and projections of financial results, and other specific notes.

・All forecasts and projections contained in this presentation are based on the information currently available to the management

and various assumptions deemed reasonable, and therefore the actual results may differ materially from those anticipated as a

result of a number of factors. Please refer to the “Analysis of operating results” on page 5 of the attached materials for more

details of specific notes regarding the appropriate use of conditions used for assumptions and projections of future financial

performances.

・The briefing of financial results is scheduled on May 15, 2015 for institutional investors and analysts. The presentation materials

(audio record), along with the supplementary materials used for the briefing of earnings release, will be promptly posted on the

Company’s Home Page.

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Contents 1. Analysis of operating results and financial conditions .................................................................................................................. 5

(1) Analysis of operating results ................................................................................................................................................... 5

(2) Analysis of financial conditions .............................................................................................................................................. 8

(3) Basic policy on profit distribution and dividends for the current and next fiscal years ........................................................... 8

(4) Risks relating to our business ................................................................................................................................................. 9

2. The corporate group ....................................................................................................................................................................16

3. Management policy .....................................................................................................................................................................16

(1) Basic management policy ......................................................................................................................................................16

(2) Management policy and target key performance indicators and medium- to long-term corporate management strategy ......16

(3) Agendas for the company.......................................................................................................................................................16

4. Basic approach to selection of accounting standards ...................................................................................................................18

5. Financial statements ....................................................................................................................................................................19

(1) Balance sheets ........................................................................................................................................................................19

(2) Statements of operations ........................................................................................................................................................21

(3) Statements of changes in net assets ........................................................................................................................................23

(4) Statements of cash flows ........................................................................................................................................................25

(5) Notes to financial statements .................................................................................................................................................27

(Notes regarding the going concern assumption) ....................................................................................................................27

(Significant accounting policies) .............................................................................................................................................27

(Note regarding the balance sheets) .........................................................................................................................................28

(Note regarding the statements of operations) .........................................................................................................................28

(Notes regarding Statements of changes in the shareholders’ equity) ......................................................................................29

(Notes to the statement of cash flows) .....................................................................................................................................31

(Notes regarding financial instruments) ..................................................................................................................................32

(Note regarding stock options) ................................................................................................................................................36

(Asset retirement obligations) .................................................................................................................................................48

(Segment information, etc.) .....................................................................................................................................................48

(Equity in earnings of affiliates, etc.) ......................................................................................................................................49

(Per share information) ............................................................................................................................................................49

(Significant subsequent events) ...............................................................................................................................................49

6. Other ............................................................................................................................................................................................50

(1) Changes in officers ................................................................................................................................................................50

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1. Analysis of operating results and financial conditions (1) Analysis of operating results

During the year, in an environment of rising stock prices due to government economic policies and large scale monetary

easing by the Bank of Japan, economic conditions gradually recovered, and a trend of improvement in corporate results and

employment conditions was seen as well. However, factors such as the effect of the increased consumption tax and

increased prices due to the effect of weak yen have dampened growth in personal consumption, and the outlook continues to

be uncertain.

Under these economic conditions, we have been actively engaging in further development of the main pipelines,

exploration of new pipelines, and cultivation of cooperation with new business partners.

(Progress in the R&D activities for main pipelines)

Described below are the current R&D activities for four (4) main pipelines.

As for Nanoplatin® (NC-6004), the first product that we have developed ourselves, a global development has been in

progress, with our company’s proprietary development and co-development with the licensee. In the Asia region (including

Oceania, but excluding Japan, China and India), we have implemented Phase III clinical trials for the indication of

metastatic and progressive pancreatic cancer in Taiwan, Hong Kong, Singapore, and South Korea with the licensee OEP

(Orient Europharma Co., Ltd. (Taiwan). In-house development has progressed both in Japan and in the United States. In

Japan, we have nearly completed a Phase I clinical trial for the indication of solid tumors. In addition, in the United States,

Phase Ib/II clinical trials for the indication of non-small-cell lung cancer are underway in several facilities, including MD

Anderson Cancer Center of University of Texas, where administration of the investigational drug to patients is already in

progress.

Regarding DACH-platinum guiding micelles (NC-4016), the Phase I clinical trial of the second platinum preparation

developed in-house is being carried out in the US for the indication of solid tumors, and in the MD Anderson Cancer Center

of University of Texas, administration of the investigational drug to patients is in progress.

A Phase I clinical trial of Epirubicin micelles (NC-6300/K-912) for the indication of solid tumors is being conducted in

Japan together with Kowa Co., Ltd. under the co-development and licensing agreement which we have made granting them

exclusive worldwide rights, and the administration of the investigational drug to patients is in progress.

As for the paclitaxel micelles (NK105), Nippon Kayaku Co., Ltd., to which we granted the license for Asia, including

Japan, is proceeding with the Phase III clinical trial (global collaborative study) for the indication of metastatic/recurrent

breast cancer.

＜Pipelines developed＞

Pipeline/ Products Indication Stage of clinical

trial Regions Status of IND application & Clinical trial

Development form/ Developers

NC-6004

Pancreatic cancer Phase III Asia

Taiwan Administration to patients License &

Co-development/ Orient Europharma (OEP)

Singapore Administration to patients

Hong Kong Administration to patients

Korea Administration to patients

Lung cancer Phase Ib/II USA Administration to patients

In-house development

Solid tumors Phase I Japan Almost completed In-house development

NC-4016 Solid tumors Phase I USA Administration to patients

In-house development

NC-6300/ K-912 Solid tumors Phase I Japan Administration to

patients

Co-development/ Kowa Co., Ltd.

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NK105 Breast cancer Phase III Japan, Asia Planning to file NDA application in 2015 *

License-out/ Nippon Kayaku

*Based on the materials provided at the time of press release made by Nippon Kayaku on May 12, 2015.

(Progress in R&D activities for new pipelines)

Regarding R&D activities for new pipelines, we are making progress in the development of next-generation drugs using

our proprietary advanced basic technology, ADCM (antibody/drug-conjugated micelle). ADCM is an active targeting

technology that may become a new concept for ADC (antibody drug conjugates), and makes possible the improvement of

the target therapeutic range of antibody drugs. By applying ADCM, we are conducting development with the aim of

expanding the therapeutic range, such as by advancing the reprofiling of candidate drug substances, improving the ability to

target the lesion area or reducing adverse effects. We are advancing the preparations for the start of a clinical trial on human

subjects that is to promote development of a new drug that expands the treatment range by improving the targeting ability to

deliver to cancer cells and reducing toxicity through the application of next-generation ADCM technology to E7974

introduced by Eisai Co., Ltd. In addition to small molecule drugs, we have expanded our activities to the development of nucleic acids such as small interfering RNA (siRNA) that would cause even fewer side effects, and are also developing applications of micellar nanoparticle technology for large molecule drugs such as protein drugs. One of the problems with large molecule drugs such as protein- and nucleic acid-based drugs, has been that, once administered inside the body, they would quickly dissolve before their efficacy is fully realized. There are high expectations around the world for development of new carrier systems that will solve this problem. As we establish our own nucleic acid delivery technology, called NanoFect®, we expect to improve even more through active-type NanoFect® to which the ADCM described above has been added, and improve the targeting ability, making progress in the development of the next generation of DDS drugs, which would enable the intracellular insertion and controlled release of large molecule drugs and could show more potent efficacy. Joint R&D is progressing with Chugai Pharmaceutical Co., Ltd., aiming at development of the first-in-class siRNA drug based on active-type NanoFect®, our nucleic acid delivery technology. Furthermore, we will also continue our active participation in joint research and development projects with pharmaceutical and biotechnology companies, universities and research institutions both in Japan and abroad.

(Progress of cosmetics business)

Regarding the cosmetics business, shipments are going well for Nanosesta which is a raw material for the beauty essence

Eclafutur marketed by ALBION Co., Ltd., (Albion). We are also conducting joint R&D and advancing the co-

commercialization of such products as new beauty essences and hair tonic with the same company. In seeking to expand

this kind of cosmetics business, our company created the Cosmetics Business Division in January 2015, and we are

strengthening the system to develop this business.

(Progress of business development)

Regarding business development activities, in June 2014, we concluded an exclusive licensing agreement to develop,

market, and sell the new drug candidate E7974 owned by Eisai Co., Ltd. Our company is advancing R&D taking the

implementation of clinical trials into account for an antibody conjugated micellar drug encapsulating E7974 that applies

ADCM technology to E7974 as a candidate for a next-generation pipeline. In addition, in February 2015, we concluded a

joint research agreement with Chugai Pharmaceutical Co., Ltd. agreeing to conduct joint research aiming at the development

of a first-in-class antibody conjugate micellar drug encapsulating siRNA, using siRNA and antibodies selected by Chugai

and applying our company's active-type NanoFect® technology. To expand our tie-up as a way to strengthen further the

relationship of trust and cooperation with Chugai, new stock was issued by third-party allocation to Chugai, raising 499

million yen in funds.

Sales for this fiscal year were 675,801 thousand yen (an increase by 43.1% compared to the previous fiscal year), mainly

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from contract revenues and supply revenues from trial drugs and cosmetics materials. The operating loss was 1,108,227

thousand yen (compared with 1,123,045 thousand yen for the previous fiscal year). The ordinary loss was 171,274 thousand

yen (compared with 1,094,935 thousand yen for the previous fiscal year) due mainly to the foreign currency translation gain

of 919,044 thousand yen resulting from the revaluation of foreign currency-denominated deposits affected by foreign

exchange market fluctuations, and 28,405 thousand yen in interest received from foreign currency-denominated time

deposits. The net loss was 207,156 thousand yen (compared with the net loss of 1,113,687 thousand yen for the previous

fiscal year), as a result of the impairment loss of 33,694 thousand yen on property, plant and equipment recorded in the

current period.

＜Outlook for the 20th period (the fiscal year ending March 31, 2016)＞

Regarding the outlook for the next fiscal year (ending March 31, 2016), taking into consideration the future applications

and approvals of the clinical trials currently in progress both in Japan and abroad, it will be a fiscal year in which investment

will be made in clinical development for a broader range of indications. It will also be a fiscal year where we begin full-

scale investment in R&D for new pipelines. Accordingly, a significant increase in R&D expenses such as clinical

development expenses and new pipeline development expenses is expected in the next fiscal year in comparison to this

fiscal year

Nevertheless, we firmly believe that these focused investments at this time will lead to the maximization of the corporate

value of our company over the medium and long term.

Regarding Nanoplatin® (NC-6004), together with OEP, our licensee for the Asian region, we are conducting the Phase III

clinical trials for the indication of pancreatic cancer, but we are considering expanding both the region and the indication to

include head and neck cancers. In addition, in our in-house development in the United States as well, in addition to the

Phase Ib/II clinical trial currently being conducted for the indication of non-small-cell lung cancer, we are expanding Phase

I/II or Phase II clinical trials for several kinds of indications including head and neck cancers, and planning to strategically

expand clinical trials aiming at early approval.

By adding new indications to previous clinical trials, and expanding the selectivity of indications, and focusing on the

advancement of clinical trials focused on indications deemed to have a high likelihood of early approval, we aim to reduce

the lead time of clinical trials and improve the approval rate.

Regarding DACH Platinum derivative micelles (NC-4016), although the present Phase I clinical trial for the indication of

solid tumors in the USA is being carried out in-house, in the future we are aiming to obtain approval by adding Phase I/II

clinical trials for indications with a high likelihood of early approval.

Epirubicin micelles (NC-6300/K-912) have been under co-development by NanoCarrier and Kowa Co., Ltd. under the co-

development and licensing agreement we made with Kowa Co., Ltd., granting them exclusive worldwide rights. In Japan,

we have been conducting Phase I clinical trial for the indication of solid tumors, but in the future, while considering

additional indications, we are developing Phase I/II clinical trials for the indication of breast cancer.

Regarding R&D for new pipelines, we are advancing the preparations for the start of clinical trials on human subjects to

promote development of a new drug that expands the treatment range by improving the targeting ability to deliver to cancer

cells and reducing toxicity through the application of next-generation ADCM technology to E7974 introduced by Eisai Co.,

Ltd.

Joint R&D is progressing with Chugai Pharmaceutical Co., Ltd., aiming at development of the first-in-class siRNA drug

based on active-type NanoFect®, our nucleic acid delivery technology.

Because of the increase in strategic investment centered on revision of the clinical development strategy to expand

indications and aimed at early approval of existing pipelines, and the acceleration of R&D for antibody/drug-conjugated

micelles, etc. that are our next-generation pipelines, R&D expenses are expected to increase by 109.0% over the current

business year to 2,202 million yen. As a result, the main economic indicators in the next fiscal year--net sales, operating loss,

ordinary loss, and net loss--are expected to be, respectively: 137 million yen (compared to 675 million yen in the current

fiscal year), 2,666 million yen (compared to operating loss of 1,108 million yen in the current fiscal year), 2,617 million yen

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(compared to ordinary loss of 171 million yen in the current fiscal year), and 2,772 million yen (compared to a net loss of

207 million yen in the current fiscal year). For net sales in the next fiscal year, the main component is expected to be sales of

raw materials for cosmetics, etc. sold by Albion Co., Ltd.

(2) Analysis of financial conditions ① Assets, liabilities, and net assets

Assets at the end of the fiscal year increased 363 million yen for the previous fiscal year to reach 14,704 million yen. This was

mainly due to an increase in notes and receivables (trade) and an increase in lease and guarantee deposits. Liabilities at the end of

fiscal year decreased by 541 million yen for the previous fiscal year to reach 202 million yen. This decrease is mainly from

conversions of convertible bonds with stock acquisition rights. Net assets increased by 904 million yen for the previous fiscal

year to reach 14,501 million yen. This increase is mainly from the increase in shareholders’ equity and capital surplus, due

mainly to the issuance of new stock in connection with third-party allotment and conversions of convertible bonds with stock

acquisition rights.

② Cash flows

Cash and cash equivalents (capital) at the end of the current fiscal year has decreased by 2,981 million yen from the previous

period to reach 2,052 million yen. Details on the cash flows for this year are as follows.

(Cash flows from operating activities)

Net cash used in operating activities for the current fiscal year was 1,120 million yen (increased from an outflow of 1,086

million yen for the previous fiscal year), as a result of adjustments such as 919 million yen in foreign exchange gains, an increase

of 209 million yen in trade receivables, and a decrease of 151 million yen in raw materials and supplies being applied to the 205

million yen net loss before taxes.

(Cash flows from investing activities)

Net cash used in investing activities for the fiscal year was 2,562 million yen (decreased from an outflow of 7,059 million yen

for the previous fiscal year). The decreased cash outflow for investing activities was the result of depositing of 8,700 million yen

into term deposits, the withdrawal of 6,417 million yen from term deposits, as well as the outlay of 159 million yen used for the

purchase of property, plant and equipment,

(Cash flows from financing activities)

Net cash provided by investing activities for the fiscal year was 504 million yen (decreased from an inflow of 9,581 million yen

for the previous fiscal year), mainly from the issuance of new shares associated with third-party allotment.

(Reference) Key ratios relating to cash flows

FY ended March 31, 2011





Equity ratio (%) 90.7 49.9 77.6 94.6 98.0

Market value based equity ratio (%) 288.5 262.0 2,257.3 395.6 339.0

Ratio of interest-bearing debt to operating cash flows (years) - - - - -

Interest coverage ratio (times) - - - - -

(3) Basic policy on profit distribution and dividends for the current and next fiscal years We have not paid out any dividend so far since the founding of the company, and dividends are not expected to be declared for

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the current and the next fiscal years.

We will place a higher priority on securing of funds necessary for the continuation of the R&D activities, as we have to

continue the R&D activities for our core pharmaceutical business growth. We recognize the importance of returning profit to our

shareholders as one of our important management responsibilities, and we intend to consider future profit distributions such as

dividends by taking into account the results of operations and financial conditions when the net result turns out to be positive.

(4) Risks relating to our business There are factors that could affect our operating results, financial conditions, and stock price, which are described below.

① Overview of our business

a. Current business operations

(i) License agreements with collaboration partners

We own patents and other intellectual properties based on our micellar nanoparticle technology, and in order to be able to

provide new pharmaceutical products that would meet the medical needs for improving the usefulness (effectiveness and

safety), we are focusing on the research and development of new drugs based on the nanotechnology-based formulation

technology. We are operating based on a set of business strategies in order to achieve the commercialization through

accelerated R&D activities for each pipeline. Our current business models are classified into three patterns, namely, ① in-

house development, ② co-development, and ③ out-licensing.

Regarding ② co-development and ③ out-licensing among the above models, the timing and the terms/conditions of each

agreement for each pipeline, whether it is for license or co-development, with a potential counterparty of the agreement,

could affect materially our business planning in terms of the business operations. Also in a case where an agreement is not

executed as anticipated or in another case where our co-development agreement is terminated because of disagreement on

the future course of directions between both parties even when the contract is concluded as anticipated, our operating

performance and financial conditions, as well as our R&D projects, could be materially affected.

(ii) Reducing risks associated with the drug development through the use of existing compounds

The key element of our projects lies in the fact that a new formulation drug or a new active ingredient is developed by

using the micellar nanoparticle technology on the existing compounds. Therefore, we believe that the risk associated with

the development of a new drug is lower and the possibility of achieving a successful outcome is higher than those

compounds that have a completely new structure (i.e. never existent as a known structure).

However, the development risk or success rate may not fall within the scope of our expectations due to changes in the

regulatory rules and regulations that could be enforced at any time during the long period of development, and if the

development risk increases or the success rate is reduced by more than we anticipated, it could hinder the progress of our

business development plan.

(iii) Expansion of pipelines

It is very important for us to file a patent application for and secure the exclusivity of the new inventions which are

discovered through the research and development of a new active drug ingredient by combining the drug substances with

our core polymers. We believe that we need to increase the pipelines based on this technology that has been well

corroborated by these patents. However, whether we could increase the pipelines that are based on the approved patents as

expected is not known, and there is no guarantee that we could expand the research and development for each pipeline as

projected. If we are not able to increase the pipelines as expected, or if we are not able to expand the R&D activities as

projected, our business development itself could be adversely affected.

(iv) Review and evaluation of our product candidates by regulatory authority

We are pursuing the development of new drugs by utilizing our core technology with both existing and new compounds to

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form new active substances, and therefore we believe that most of these new drug candidates will be evaluated as new

molecular entities in the application for approval. However, they may not be necessarily classified and evaluated as we

believe they will be, and if we are unable to obtain the regulatory authority’s evaluation and approval, such disapproval

could adversely affect our business development itself.

b. Current status in the development of drug product candidates

(i) Our pipelines

We currently have no drugs that are approved for marketing and sales. We have four (4) products in total under

development at the clinical development stage, Nanoplatin® (NC-6004), DACH platinum guiding micelles (NC-4016),

Epirubicin micelles (NC-6300/K-912), Paclitaxel micelles (NK105), and other new development pipelines are still in the

stage of exploratory studies. All of these pipelines are still under development, and therefore there is no guarantee at the

moment that they will be approved for marketing and sales as pharmaceuticals, meanwhile there is a possibility that the

development itself will be suspended due to SAEs (serious adverse events) experienced in subject patients during a clinical

trial or a possibility that the development itself will be delayed. In fact, the clinical trial for DACH platinum guiding

micelles (NC-4016) was suspended because of the termination of the license agreement with Debiopharm S.A.

(Switzerland) in March 2011. If, similarly, we terminate an agreement with another collaborative partner, our R&D activities

will be delayed and hence, such a delay could materially affect our development planning, as well as our operating results.

Furthermore, a decision of approval or disapproval on those drug candidates in the stage of clinical trials ahead of the

above pipelines could materially affect our business operations.

In addition, as for the pipelines that are scheduled to be placed on the market in Japan and overseas, a delay in the clinical

development in a region where the development has been conducted ahead of other regions could lead to the delay of the

clinical development in other regions, which could adversely affect the progress of our business planning and projects.

Even if any of our pipelines are approved as a drug product and are marketed in the future, there is no guarantee that it

will be accepted as a pharmaceutical in the market, and also because there is a possibility that it may be subject to local

pharmaceutical approval systems or regulations concerning intellectual property that are different in each country, there is

no guarantee that such a drug would be manufactured and marketed/sold as we have anticipated.

(ii) Our reliance on third parties

We entrust the operation of clinical trials of drug candidates developed by ourselves to the outside organization such as

CROs (contract research organizations) and the manufacturing of investigational drugs to be used for clinical trials to the

outside manufacturing entities. If these outside organizations do not comply with rules and regulations imposed by their

regulatory authorities, our outsourcing contracts with them could be terminated, and if we do not conclude a new contract

with other development subcontractors or manufacturing subcontractors on the conditions desirable to us, the progress of

clinical trials could be interrupted. Furthermore these events could harm the future manufacturing of commercialized drugs

in the relationship with outsourced manufacturing entities.

In light of the marketing and sales of commercialized drugs, we are expecting to grant the marketing and sales rights to

third parties and to receive royalties from them in return. But there is no guarantee that we are able to conclude a license

agreement with those third parties. In the event where we are unable to conclude such a sales agreement with a third party

for a particular drug product, we will have to market and sell the product by ourselves, in which case, we could incur

substantial cost for the organizing of our own sales force, eventually preventing our own marketing and sales activities from

being handled as we have planned.

c. Outlook of our future business

Although we are conducting advanced R&D aiming at early manufacturing and marketing approval of new drugs, the

development of new drugs requires significant R&D investment over a long period. We have secured our objective for R&D

capital for now through measures such as the public offering carried out in October 2013, but there is no guarantee that

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progress will be made as planned in R&D. In the event that progress is not made in research and development as planned, it

will not be possible to determine the timing of the manufacturing and marketing approval for new drugs, and there is no

guarantee that manufacturing and marketing will be carried out as planned.

If we are unable to obtain the approval for the manufacturing and commercialization for these drugs under development,

we would not be able to recover the development cost, and even if we would be able to obtain approval, there is a possibility

that we may not achieve the sales target as projected in our business plan.

d. Our reliance on certain business partners

(i) Reliance on certain clients

Our main sales clients include OEP, Kowa, and Albion, but there is no guarantee that these companies will continue to

trade with our company in the future. Any change in the relationships between these clients and our company, and/or

changes of earnings or discontinuance of business in these clients, could materially affect our business and operating results.

(ii) Reliance on certain suppliers

Our main suppliers of raw materials and research reagents include Nagase & Co., Ltd., Nichiyu Co., Ltd., and Ieda

Chemical Co., Ltd., but there is no guarantee that these companies will continue to trade with our company in the future.

Any change in the relationships between these suppliers and our company, and/or changes of earnings or discontinuance of

business in these suppliers, could materially affect our business and operating results.

e. Operating results and financial conditions

Since the Company was incorporated on June 14, 1996, we have been consistently focusing on R&D activities, aiming for

the development of new pharmaceutical drugs, and to date, we have reported a net loss every year, as expenses, especially

R&D expenses, have always exceeded the profits. Furthermore, cash flows from operating activities continue to be negative.

We currently derive revenues mainly from one-time up-front payments for licenses and other contracts, as well as

milestone payments based on the co-development and license agreements we have entered into with the third parties. In the

event that we are unable to enter these agreements with potential partners in the future, or where the counterparties of the

agreements fail to meet the milestone provision included in those contracts, we may not be able to collect such one-time up-

front payments of licenses and other contracts or milestone payments. If these events occur, the net loss could increase

significantly beyond our projected level.

f. Negative retained earnings carried forward

We are a venture company focused on research and development. Thus, we expect to continue reporting very high

amounts of R&D expenses, in excess of any income, until those pipelines that are currently in stages of clinical trials are

brought to the market and more stable revenue streams such as royalties help our earnings structure become profitable. For

that reason, we have continued to report a net loss, and for the current fiscal year, we have reported a negative retained

earnings carried forward.

We intend to turn around to report profitability as soon as possible by accelerating the development of existing pipelines

in accordance with our plans, in a speedy, efficient and steady manner, yet we may not be able to report positive net income

as soon as we are expecting to. If our business and the development of pipelines are not making progress as projected and a

net income is not reported as a result of such poor progress, the timing of retained earnings carried forward turning to

become positive could be significantly delayed.

g. Financing

As a pharmaceutical company dedicated to research and development, we conduct in-house development as well as co-

development in collaboration with universities and other research organizations, but we are always in need of very high

amounts of funding to support R&D activities. Therefore in the event we cannot secure the funding in time as projected due

―11―

to reasons including slow progress in the business plans, we may face a shortage of funds, and depending on the financial

condition, the sustainability as a going concern of our company could also be materially affected.

h. Tax losses carried forward

We have tax losses carried forward. Because it is usually possible to deduct tax losses carried forward from future taxable

income, reduction of the amount of future taxes is possible through use of tax losses carried forward. Nevertheless, there are

certain legal limits established for the amount of tax losses carried forward and the period of their use. As a result, because

tax losses carried forward may not be able to be used in the event that taxable income is not produced as planned, they

would be taxed at the ordinary tax rate based on the corporate income tax, etc., and it is possible that this will have an effect

on annual net income and cash flows.

i. Competition

We currently focus on drug development, especially dedicated to the development of anti-cancer agents, utilizing our core

micellar nanoparticle technology. Since the market for new drugs including anti-cancer agents spans worldwide, we face

potential competition from other companies in the same industry across the world, both within Japan and overseas. For

example, there are already oral formulations developed by other competitors, using a new liposomal formulation of taxol

conjugate paclitaxel and platinum-based anticancer agents such as cisplatin, and other similar agents, and our drug

candidates could directly compete with them. Although we are aiming for the early development and early approval for

commercialization, we may not be able to achieve expected earnings even when our products are approved for

commercialization, if the competitors first start selling their products with similar efficacy or that are safer than our product

before we begin sales, or if a more effective drug is brought to the market after we have started sales of our product.

② Important agreements with business partners

For business development, our company concludes agreements with other companies or organizations for in- and out-licensing

and joint research, joint development, etc. Because our corporate planning is formulated on the condition of revenue and other

income based on these agreements, if any of these important agreements is disrupted or terminated or unfavorable changes or

modifications to us are made to the conditions, and/or if any of them is not renewed after the end of the contractual term, there

could be an adverse effect on the company’s operating results.

③ Organization

a. Securing human resources and talents

Since our competitive edge lies in the capability of research and development, securing of researchers, scientists and

engineers with highly professional expertise is essential. It is also necessary to enhance manpower for business development,

manufacturing, and internal control in order to support further growth of our business. We continue to try to secure, highly

talented human resources and to train and educate our employees, but if we are unable to secure talented personnel or train

and educate our employees as planned, such a failure could hinder our business operations.

b. Small sized organization

Our company is a small scale organization, and the research and development system and internal corporate management

system corresponds to this scale.

Although we are striving to enhance business operations even in this kind of situation of limited human resources, any

hindrance preventing employees from performing their jobs and duties or resignations by many employees could easily

harm the business due to the reliance on limited human resources.

On the other hand, rapid business expansion would lead to an increase in fixed costs, which could adversely affect

financial results.

―12―

c. Reliance on certain key personnel

The leader of our business is Ichiro Nakatomi, who is Representative Director, President and CEO of our company. As

Chief Executive Officer, Mr. Nakatomi has an influence on the decision-making of the business strategies and business

development, R&D activities as well as the internal management and control. As a part of our efforts to build up a corporate

structure that does not rely excessively on Mr. Nakatomi, we are trying to strengthen the management structure, yet in the

event it becomes difficult for Mr. Nakatomi to continue to perform his duties, this could hinder execution of business

strategies of our company.

d. Advisors and counselors

We have built up a system where the most advanced research findings and results can be applied to our research and

development activities by engaging the external researchers and advisors through advisory agreements and counseling

agreements.

The advisory and counseling agreements are to be renewed every year, and inability to continue such agreements in cases

such as failure to renew the agreements for any reason could adversely affect our research and development activities.

e. M&A

We consider investments and mergers and acquisitions of other pharmaceutical and biotechnology companies to be one of

our business strategies, in addition to the in-licensing of product pipelines from third-parties, but there is no guarantee that

we will succeed in executing such options as in-licensing or mergers and acquisitions for completion.

④ Intellectual property rights

a. Our patent strategy

We will continue to protect and promote our proprietary rights by keeping our competitive advantages over others through

the patent portfolio, while respecting legitimate rights of others.

Our pipelines that are currently progressing in clinical development are protected by our own or jointly-owned patent

rights or patent applications obtained through in-licensing from others. These patents and patent applications have been filed

in countries where a large pharmaceutical market exists, such as the United States, Europe, Japan and Asia.

However, there is no guarantee that all the patents or patent applications of our own or obtained through in-licensing

which are currently under review will be successfully approved. In addition, all of our patent applications have not been

necessarily filed in the regions where we have operating activities or where our competitors exist. Furthermore, even if these

patent applications are approved, there is always a possibility that our patented technologies could be taken over by more

advanced technologies developed by competitors. In addition, a competitor making a new breakthrough development of a

highly advanced technology that is not covered by and not included in the scope of our patent rights, or a disapproval of an

approved patent right, could also materially affect our business strategies and operating performance.

Our in-licensed patents are those that are necessary for the development of our current main pipelines and the

development of new pipelines.

However, our business strategies and business performance could be materially affected in the event we are unable to

reach in-license agreements where the need for such patent in-licensing arises in the future, or such in-licensing requires a

substantial amount of payment for the patent right use.

b. Lawsuits and claims on intellectual property

We are currently not involved in any proceedings of lawsuits or claims against us with any third party concerning our

patents or other intellectual property rights relating to our research and development activities, as of March 31, 2015.

However, we cannot give any assurance that our competitors are not conducting the research and development activities

similar to ours, nor that our product candidates will not give rise to any patent infringement claims or lawsuits against us by

others.

―13―

In order to prevent such an incident from occurring, we continue to monitor our research and development activities and

to conduct patent infringement investigations through patent offices, and to date, we are not aware of any fact that our

product and technology development activities would infringe on the patent rights of others. However, for a research and

development focused company like us, it is extremely difficult to prevent any occurrence of infringement of intellectual

property rights. Therefore, any dispute involving patent rights with a third party or any involvement in the disputes and

litigations between a third party and our co-development partners could materially affect our business strategies and

financial performance as well.

⑤ Risks relating to product liability

There is always an inherent risk of being subject to product liability claims in the development and manufacturing of

pharmaceutical drugs. If any of drugs we develop happens to cause health problems in the future, or if inadequate or

inappropriate events are to be found during our clinical trials, manufacturing or business operations including sales and

marketing, we might become liable for product liability, which could materially affect our entire business and financial

conditions. Even if such damage claims and product liability litigations are dismissed, the negative image caused by such

claims and litigations may damage public confidence in our company and our drug products, resulting in adverse effects on

our business operations and performances.

⑥ Compliance with laws and regulations

We are currently focusing on the research and development of new drug candidates, but going forward we aim to focus on

the manufacturing of pharmaceutical drug products based on the results of research and development. In Japan, we are

subject to the Pharmaceuticals, Medical Devices and Other Therapeutic Products Act and other relevant laws and

regulations. These laws and regulations are intended to require the assurance of quality, effectiveness and safety of

pharmaceutical products, quasi-pharmaceutical products, cosmetics, and medical devices, and the manufacturing and sale of

these products would require approval or permission from the applicable regulatory authorities.

Going forward, depending on the progress of our development activities, we will need to obtain relevant permission or

approval. We are also subject to similar laws and regulations in other countries.

In addition, for the development, manufacturing and marketing/sale of our pipeline in other countries, we are also subject

to the local laws and regulations concerning the local health insurance system and patient privacy, as well as other

applicable regulations, applicable in each country.

⑦ Preconditions for main business activities

License agreements for main pipelines

a. In-licensing of intellectual property rights from universities and other institutions

In order to use and apply the “research seeds” – outcomes of and results from the research conducted by universities – to

the development of pharmaceutical products for commercialization, we actively seek opportunities of in-licensing of

intellectual property rights from universities and research institutes, and we recognize and attach importance to the

following the main license agreements relevant to our core pipelines as being critical to our business platform.

To date, there has never been any incident that could hinder the existence and continuance of the following agreements,

but if any difficulties arise with regard to the extension of these agreements, or unfavorable amendments are to be made to

the existing agreements, or the renewal of the agreement cannot be achieved, they could materially affect our development

projects and business performances.

Name of agreement Company (date of agreement) Contents of agreement

License agreement TODAI TLO (January 26, 2001) Exclusive license and exclusive rights to utilize the patent of "Cisplatin-incorporated macromolecular micelles"

License agreement TODAI TLO (May 19, 2004) Exclusive license and exclusive right to utilize the patent of "Coordination complex of

―14―

Memorandum The University of Tokyo and TODAI TLO (March 31, 2006)

diaminocyclohexane platinum (II) with block copolymer containing poly (carboxylic acid) segment and anti-tumor agent comprising the same"

b. Out-licensing to business partners

In an effort to reduce research and development expenses before commercialization and to minimize financial risks, we

have implemented 3 different research and development models for collaboration, namely, ① in-house development, ② co-

development, and ③ out-licensing. Among our core pipelines, three (3) pipelines are being developed in the arrangement of

out-licensing, specifically, Paclitaxel micelles (NK105), Nanoplatin® (NC-6004), and Epirubicin micelles (NC-6300/K-912).

We recognize and attach importance to the following license agreements, which are relevant to the development of core

pipeline products and critical to the development of our business platform.

To date, there has never been any incident that could hinder the existence and continuance of the following agreements,

but if any difficulties arise with regard to the extension of these agreements, or unfavorable amendments are to be made to

the existing agreements, or the renewal of the agreement cannot be achieved, they could materially affect our development

projects and business performances.

Name of agreement Company (date of agreement) Contents of agreement

Basic license agreement Nippon Kayaku Co., Ltd. (June 12, 2002)

Agreement on the exclusive license for micellar nanoparticles encapsulating Paclitaxel and pharmaceutical formulation containing the same in Japan and Asia, and non-exclusive license for sale of such in other regions

EXTENDED LICENSE AGREEMENT for NC-6004 Technology

Orient Europharma Co., Ltd. (November 7, 2012)

Right for development and marketing of Nanoplatin® (NC-6004) in the Asia region, and non-exclusive manufacturing license for the bulk substance and final product worldwide.

NC-6300 license and co-development agreement

Kowa Co., Ltd (September 26, 2011)

Worldwide license for the manufacture and sale of Epirubicin micelles (NC-6300)

⑧ Dividend policy

Since the inception of our business, we have been reporting net losses and therefore we have not paid dividends.

Because we need to continue the research and development activities as a development-stage biopharmaceutical company,

our current priority is on securing necessary funds to ensure the continuation of those activities. Although we recognize the

return of profits to our shareholders as an important management responsibility, we have not yet had a positive net income

and when we are able to report such a net income, we will take into account both operating results and financial conditions,

and decide upon the appropriate dividend policy at that time.

⑨ Issuance of stock acquisition rights including stock options

As a part of our compensation program, we set up a stock option plan, and as of March 31, 2015, the number of

outstanding stock acquisition rights issued as stock options was 609,000 shares (excluding those rights already exercised).

The number of potentially dilutive shares corresponds to about 1.41% of the total number of potential shares (43,215,858

shares), which is the sum of the dilutive shares and 42,606,858 shares outstanding as of March 31, 2015, and the value of

one share of the stock will likely be diluted.

We are considering of continuing the stock option compensation plan in order to secure talented human resources.

Therefore, if more stock acquisition rights are issued and they are exercised, it is highly likely that the stock value per share

will be diluted.

Under the new accounting standard, we are required to record associated expenses for newly granted stock options, and

depending on the granting conditions of new stock option plans, the future financial results may be affected.

―15―

⑩ Foreign currency exchange gains or losses

We conduct clinical trials in Europe and United States, and our payments of expenses associated with the clinical trials are

made in foreign currencies. Therefore we keep deposits denominated in foreign currencies as a reserve for payments in those

currencies. Also a portion of the revenues is sometimes recorded in foreign currencies. As a result, foreign currency

exchange rate fluctuations could affect our operating results and financial condition.

2. The corporate group None

3. Management policy (1) Basic management policy Our corporate philosophy is to “contribute to human health and improvement of QOL (quality of life) by providing new, high-

quality pharmaceutical products,” and we are aiming to be the “first-one” and the most needed innovative pharmaceutical

company in the field of anti-cancer. Our core business is to develop and manufacture new pharmaceutical drug products,

especially the anti-cancer drugs, based on our core technology, nanotechnology-based micellar nanoparticles technology.

(2) Management policy and target key performance indicators and medium- to long-term corporate management strategy We will strive for sustainable growth and the increase of enterprise value by utilizing the funds secured through the public

offerings to support long-term and stable development projects, by accelerating and promoting in-house development with the

aim of early approval for the commercialization, and then by securing sales revenue after the commercialization and other

contractual revenues by out-licensing of internally developed products.

We are a company dedicated to research and development, promoting basic research and clinical development by utilizing one-

time up-front payments, research and development assistance funds, and milestone payments under contracts received from the

business partners and other pharmaceutical companies. In the future, when and if our proprietary products developed internally

are approved for commercialization and brought to the market, sales revenues and royalties received from business partners will

be recorded, and this is expected to significantly expand operating income.

However, any development of a pharmaceutical product requires a lengthy period and a very large amount of research and

development funds. During the development period, the expenses for research and development will be substantially increased as

the in-house development is being accelerated and progressed until the product is approved for manufacturing, marketing and

commercialization. We will enhance our business strength by utilizing various financial resources, including long-term and stable

financial resources for development, secured by the public offerings, the milestone revenues received based on the achievement

of contractual conditions through steady progresses in the development of existing products, one-time up-front fees from new

license agreements, reduction of the cost burden through collaborations with other companies by concluding co-research and/or

co-development agreements, and public funds, while also securing operating stability and financial soundness.

We will also seek new business opportunities that could contribute to securing corporate financial stability by increasing cash

sales and revenues from cosmetics and other businesses than the pharmaceutical products, through expanding the application of

our technologies to the development of these products and reinforcing these products and material supply.

(3) Agendas for the company The following agendas are being considered for the company.

① Acceleration of in-house development and expansion of indications

We aim to maximize product value through promoting in-house development so that we will be able to control the

progresses of development by ourselves and conduct development according to the planned schedules. We will continue to

―16―

accelerate the clinical trials, especially of Nanoplatin® (NC-6004) and DACH Platinum guiding micelles (NC-4016), to

obtain early approval for commercialization, in the belief that such an early approval and commercialization will help us

maximize and optimize the corporate value of our company. In addition, when considering application and approval, we aim

to reduce the lead time of clinical trials and improve the approval rate by expanding the selectivity of indications and

advancing clinical trials that focus on indications that are deemed to have a high likelihood of early approval.

② Expansion of pipelines

Along with planning the expansion of pipelines by accelerating R&D using such technologies as the next-generation

ADCM technology and nucleic acid delivery technology (active-type NanoFect®) and turning the results into main pipelines,

from the accumulation of these technologies and applications, we are accelerating alliances with other biotechnology and

pharmaceutical companies.

③ Expansion of network and collaboration

We will continue to explore further opportunities to build up new partnerships for out-license and/or co-development of

our products by advancing development activities of new product candidates to be the next major pipelines. In the pursuit of

new collaboration opportunities, we will try to identify and obtain potential technologies and pipelines that are expected to

create synergies, in addition to potential collaborations with pharmaceutical companies by taking advantage of a wide global

network covering Japan and overseas countries, in addition to aiming to expand our business and product portfolio with an

eye to introduction of external product pipelines, and investment in and acquisition of pharmaceutical and biotech

companies.

④ Reinforcement of life-cycle management and patent strategy

We will develop networks with excellent pharmaceutical companies to create new business models which would help us

contribute to life cycle management of their existing products and their new drug candidates. In addition, we use a product

life cycle management strategy and build and develop a patent strategy.

⑤ Optimization and enclosure of technology

We will pursue optimization of our basic technologies through collaboration, including collaborative research with

universities and research institutes and co-development and other partnerships with other companies. We also aim to secure

the revenue sources by developing our own know-how in the core functions and fields that are the key base of our

competitive edge.

⑥ Expansion of the range of applications of technology

We are pursuing reliable revenue sources by expanding the range of applications of R&D to fields outside of

pharmaceuticals, especially by realization of early development of new products in the cosmetics field.

⑦ Project selection through prioritization and product implementation throughout-sourcing

We prioritize projects in terms of strengths and weakness as well as project feasibility of individual technologies. We also

aim to make effective use of collaboration and cooperation with external organizations such as universities, research

institutes, and contract organizations.

⑧ Ensuring financial stability

Our company is conducting ongoing R&D investments, and depending on the topic of R&D, there are cases in which

substantial investments are expected. Regarding securing investment capital, while making the utmost effort to secure it

from revenue earned from business operations, we ensure financial stability by financing in ways that are efficient and

effective.

―17―

4. Basic approach to selection of accounting standards We apply Japan GAAP in its accounting standards. Concerning the future consideration of IFRS (International Financial

Reporting Standards), it is our policy to respond appropriately based on domestic and international circumstances.

―18―

5. Financial statements (1) Balance sheets

(Thousands of Yen)

Previous fiscal year (Ended March 31, 2014)

Current fiscal year (Ended March 31, 2015)

ASSETS Current assets Cash and deposits 7,141,793 13,666,475 Notes receivable, trade - 42,994 Accounts receivable, trade 27,240 193,627 Securities 105,173 105,217 Raw materials and supplies 202,560 51,400 Prepaid expenses 61,983 77,225 Consumption taxes receivable 32,751 54,995 Accounts receivable, other 5,905 12,361 Other 11,597 4,972 Allowance for doubtful accounts -24 -24 Total current assets 7,588,982 14,209,243 Non-current assets Property, plant and equipment Facilities attached to buildings 47,282 42,754 Accumulated depreciation * -47,282 * -3,476 Facilities attached to buildings, net 0 39,277 Structures - 1,705 Accumulated depreciation * - * -113 Structures, net - 1,591 Machinery and equipment 292,670 392,523 Accumulated depreciation * -255,100 * -269,345 Machinery and equipment, net 37,570 123,177 Tools and fixtures 14,726 13,361 Accumulated depreciation * -14,726 * -8,281 Tools and fixtures, net 0 5,079 Construction in progress 1,840 - Total Property, plant and equipment 39,410 169,126 Intangible assets Patent rights 275 0 Telephone subscription rights 149 149 Software 1,923 6,225 Total intangible assets 2,347 6,375 Investments and other assets Investment securities 99,729 113,026 Long-term prepaid expenses 6,109 16,809 Long-term time deposits 6,500,000 - Construction assistance fund receivables 94,521 - Lease and guarantee deposits 9,464 189,446 Total investments and other assets 6,709,825 319,282 Total non-current assets 6,751,584 494,784 Total assets 14,340,566 14,704,027

―19―

(Thousands of Yen)

Previous fiscal year (Ended March 31, 2014)

Current fiscal year (Ended March 31, 2015)

LIABILITIES Current liabilities Accounts payable, trade 40,039 17,112 Accounts payable, other 91,261 119,921 Accrued expenses 16,400 5,867 Income taxes payable 33,993 25,699 Deposits payable 5,464 4,816 Asset retirement obligations 15,822 - Total current liabilities 202,980 173,417 Non-current liabilities

Convertible bonds with stock acquisition rights 540,000 -

Deferred tax liabilities 531 5,238 Asset retirement obligations - 23,372 Total non-current liabilities 540,531 28,610 Total liabilities 743,512 202,028 NET ASSETS Shareholders' equity Capital stock 10,242,904 10,768,406 Capital surplus Legal capital surplus 10,224,098 10,749,591 Total capital surplus 10,224,098 10,749,591 Retained earnings Other retained earnings Retained earnings carried forward -6,904,256 -7,111,413 Total retained earnings -6,904,256 -7,111,413 Total shareholders' equity 13,562,747 14,406,584 Valuation and translation adjustments

Valuations difference on available-for-sale securities 969 9,559

Total valuation and translation adjustments 969 9,559 Stock acquisition rights 33,337 85,854 Total net assets 13,597,054 14,501,999 Total liabilities and net assets 14,340,566 14,704,027

―20―

(2) Statements of operations (Thousands of Yen) Previous fiscal year

(from April 1, 2013 to March 31, 2014)

Current fiscal year (from April 1, 2014

To March 31, 2015) Net sales 472,197 675,801 Cost of goods sold *1 182,243 *1 211,832 Gross profit 289,953 463,969 Selling, general and administrative expenses *2,*3 1,412,999 *2,*3 1,572,197 Gross operating loss (-) -1,123,045 -1,108,227 Non-operating income Interest received 17,686 28,405 Foreign exchange gains 224,727 919,044 Other 1,134 360 Total non-operating income 243,548 947,810 Non-operating expenses Stock issuance expenses 211,085 7,641

Issuance expenses of new stock acquisition rights 4,302 3,216

Other 51 - Total non-operating expenses 215,438 10,857 Ordinary loss (-) -1,094,935 -171,274 Extraordinary income Gain on sale of non-current assets - 9 Total extraordinary income - 9 Extraordinary losses

Loss on sale and retirement of non-current assets

*4 83 *4 684

Impairment loss *5 16,248 *5 33,694 Total extraordinary losses 16,332 34,379 Loss before income taxes (-) -1,111,267 -205,644 Income taxes-current 2,420 1,512 Net loss (-) -1,113,687 -207,156

―21―

Detailed schedule of cost of goods produced

Previous fiscal year



To March 31, 2015)

Components Note No.

Amount (Thousands of Yen)

Composition ratio (%)


Composition ratio (%)

I. Materials cost 74,485 40.9 137,405 64.9

II. Labor cost 18,210 10.0 14,734 6.9

III. Direct and overhead expenses * 89,547 49.1 59,692 28.2

Total manufacturing expenses for the period 182,243 100.0 211,832 100.0

Cost of goods sold for the period 182,243 211,832

Previous fiscal year (from April 1, 2013

to March 31, 2014)


To March 31, 2015) *1 The main components comprising direct and overhead

expenses are as follows (Thousands of Yen): Outsourcing expenses 78,546 Original cost of each item is used in our cost accounting.

*1 The main components comprising direct and overhead expenses are as follows (Thousands of Yen): Outsourcing expenses 47,928 Original cost of each item is used in our cost accounting.

―22―

(3) Statements of changes in net assets Previous fiscal year (from April 1, 2013 to March 31, 2014)

(Thousands of Yen)

Shareholders' equity

Capital stock

Capital surplus Retained earnings

Total shareholders' equity Legal capital surplus Total capital surplus

Other retained earnings Total retained

earnings Retained earnings carried forward

Beginning balance 5,081,181 5,062,382 5,062,382 -5,790,568 -5,790,568 4,352,995

Change during the period

Issuance of new shares 5,161,723 5,161,716 5,161,716 10,323,439

Net loss (-) -1,113,687 -1,113,687 -1,113,687

Net changes in items other than shareholders' equity during the period

Total changes during the period

5,161,723 5,161,716 5,161,716 -1,113,687 -1,113,687 9,209,752

Ending balance 10,242,904 10,224,098 10,224,098 -6,904,256 -6,904,256 13,562,747

Adjustments for valuations and currency translations

Stock acquisition rights

Total net assets Valuations difference on

available-for-sale securities

Total adjustments for valuation and

currency translation

Beginning balance - - 48,003 4,400,998


Issuance of new shares 10,323,439

Net loss (-) -1,113,687


969 969 -14,665 -13,696


969 969 -14,665 9,196,056

Ending balance 969 969 33,337 13,597,054

―23―

Current fiscal year (from April 1, 2014 to March 31, 2015)

(Thousands of Yen)

Shareholders' equity

Capital stock

Capital surplus Retained earnings

Total shareholders' equity Legal capital surplus Total capital surplus

Other retained earnings Total retained

earnings Retained earnings carried forward

Beginning balance 10,242,904 10,224,098 10,224,098 -6,904,256 -6,904,256 13,562,747


Issuance of new shares 525,501 525,492 525,492 1,050,994

Net loss (-) -207,156 -207,156 -207,156



525,501 525,492 525,492 -207,156 -207,156 843,837

Ending balance 10,768,406 10,749,591 10,749,591 -7,111,413 -7,111,413 14,406,584

Adjustments for valuations and currency translations

Stock acquisition rights

Total net assets Valuations difference on

available-for-sale securities

Total adjustments for valuation and

currency translation

Beginning balance 969 969 33,337 13,597,054


Issuance of new shares 1,050,994

Net loss (-) -207,156


8,590 8,590 52,516 61,106


8,590 8,590 52,516 904,944

Ending balance 9,559 9,559 85,854 14,501,999

―24―

(4) Statements of cash flows (Thousands of Yen) Previous fiscal year



To March 31, 2015) Cash flows from operating activities Loss before income taxes (-) -1,111,267 -205,644 Depreciation and amortization expense 5,300 18,807

Issuance expenses of new stock acquisition rights 4,302 3,216

Interest received -17,686 -28,405

Foreign exchange gains/losses (- indicates unrealized gain on the translation of foreign currency exchanges)

-222,092 -919,497

Stock issuance expenses 211,085 7,641 Impairment loss 16,248 33,694

Loss (gain) on sale and retirement of non-current assets 83 674

Stock-based compensation expenses 12,020 48,148 Decrease (increase) in receivables, trade -22,026 -209,381

Decrease (increase) in raw materials and supplies -21,849 151,160

Decrease (increase) in consumption taxes receivable -13,440 -22,243

Decrease (increase) in prepaid expenses 12,555 -15,241 Increase (decrease) in accounts payable-trade -10,060 -22,927 Increase (decrease) in accounts payable-other 22,269 31,413 Increase (decrease) in accrued expenses 897 -10,532 Increase (decrease) in deposits payable -4,411 582 Other-net 39,749 -4,062 Subtotal -1,098,323 -1,142,596 Interest income received 14,130 24,329 Income taxes paid -2,420 -2,420 Net cash used in operating activities -1,086,613 -1,120,686 Cash flows from investing activities Payments into time deposits -8,891,760 -8,700,695 Proceeds from withdrawal of time deposits 1,957,842 6,417,183 Purchase of property, plant and equipment -24,613 -159,533

Proceeds from sales of property, plant and equipment - 10

Purchase of intangible assets -2,477 -6,900

Payments of construction assistance fund receivables - -90,000

Investment in securities -98,229 - Payments for asset retirement obligations - -14,477 Payments for lease and guarantee deposits - -12,694

Proceeds from collection of lease and guarantee deposits - 5,004

Other-net -5 - Net cash used in investing activities -7,059,242 -2,562,103

―25―

Previous fiscal year (from April 1, 2013 to March 31, 2014)


To March 31, 2015) Cash flows from financing activities Proceeds from issuance of common stock 8,868,231 499,989

Proceeds from issuance of shares resulting from exercise of stock acquisition rights 716,537 743

Proceeds from issuance of stock acquisition rights 900 6,987

Payments for issuance of stock acquisition rights -4,302 -3,216

Net cash provided by financing activities 9,581,366 504,504 Effect of exchange rate change on cash and cash equivalents 144,668 196,527

Net change in cash and cash equivalents (- indicates a decrease) 1,580,179 -2,981,757

Cash and cash equivalents at beginning of period 3,453,995 5,034,174 Cash and cash equivalents at end of period 5,034,174 2,052,417

―26―

(5) Notes to financial statements (Notes regarding the going concern assumption)

None

(Significant accounting policies)

1. Valuation standard and the method used for securities

Other securities

Securities without fair market value are stated at cost, with cost being determined by the moving average method.

2. Valuation standard and the method used for inventories

(1) Raw materials and work-in-process

Specific-identification cost method is used (the amount recorded posted on the balance sheet is calculated by reducing the

book value based on the declines in profitability).

(2) Supplies inventories

The moving average cost method is used (the amount recorded on the balance sheet is calculated by reducing the book

value based on the declines in profitability).

3. Depreciation and amortization method for non-current assets

(1) Property, plant and equipment

The straight-line method is used. The useful lives of the depreciable items are listed below:

Facilities attached to buildings: 3-18 years

Structures: 10 years

Machinery and equipment: 4-12 years

Tools and fixtures: 2-15 years

(2) Amortization method for intangible assets

The straight-line method is used.

Software used in-house is amortized over its estimated useful life for the internal user (5 years).

Patent rights are amortized over the period from the time of application to the time when the ownership of the industrial

property rights expires (8 years).

(3) Amortization method for long-term prepaid expenses

The straight-line method is used.

4. Accounting treatment of deferred assets

(1) Stock issuance expenses

The full amount of stock issuance cost is expensed as incurred.

(2) Stock acquisition rights issuance expenses

The full amount of stock acquisition rights issuance cost is expensed as incurred.

5. Accounting standard for the translation of foreign currency-dominated assets and liabilities into Japanese Yen

Foreign currency amounts are translated into Japanese yen on the basis of spot rate in effect on the balance sheet date for

monetary assets and liabilities. The resulting gains and losses are included in profit or loss for the period.

6. Accounting standard for allowance

Allowance for doubtful accounts

To prepare for potential losses on doubtful accounts such as receivables and loans, specific allowances are provided and

recorded at estimated amounts determined as uncollectible, after considering collectability of individual doubtful accounts.

―27―

7. Scope of “cash” in the statement of cash flows

“Cash” (cash and cash equivalents) in the statement of cash flows consists of cash on hand, deposits that can be withdrawn

on demand, and short-term investments with an original maturity of three months or less and with negligible risk of value

fluctuations.

8. Other important matters, on which the preparation of financial statements is based

Accounting for the consumption tax and the local consumption tax is based on the tax exclusion method.

(Note regarding the balance sheets)

* Accumulated impairment loss is included in the account item “accumulated depreciation and amortization”.

(Note regarding the statements of operations)

*1 Previous fiscal year (from April 1, 2013 to March 31, 2014)

The book value of inventories that are held for the selling activities was reduced by 8,242 thousand yen, due to the

declines in profitability, and this reduction was included in the cost of goods sold.


The book value of inventories that are held for the selling activities was reduced by 2,275 thousand yen, due to the

declines in profitability, and this reduction was included in the cost of goods sold.

*2 The account “Selling, General and Administrative Expenses” is comprised of the selling expenses, which account for

approximately 3.6% of the total, and of the general and administrative expenses, which account for approximately 96.4%

of the total.

The main items included in this account, with the amount recorded, are as follows.

Previous fiscal year (from April 1, 2013

to March 31, 2014) (Thousands of Yen)


To March 31, 2015) (Thousands of Yen)

Salaries, allowances, and bonuses, and remuneration for officers 147,676 149,314

R&D expenses 926,404 1,053,688 Fees & commissions paid 72,380 96,552 Taxes and dues 68,078 53,711 Consulting expenses 46,174 34,598 Depreciation and amortization expense 253 956


The total amount of R&D expenses that was included in selling, general and administrative expenses is 926,404 thousand

yen.


The total amount of R&D expenses that was included in selling, general and administrative expenses is 1,053,688

thousand yen.


The loss on the retirement of non-current assets was mainly the loss incurred from the disposal of tools and fixtures

associated with the disposal of idle assets (83 thousand yen).

―28―


The loss on retirement of non-current assets was mainly the loss incurred from the disposal of buildings and

accompanying facilities, machinery and equipment, tools, furniture and fixtures, and software associated with transfers and

the disposal of idle assets (684 thousand yen).


The detail regarding the treatment for impairment loss is described below:

(1) Method of grouping assets

All business assets are counted as one group.

(2) Events leading up to the recognition of impairment loss

As the cash flows from the operating activities has remained negative and because the future cash flows are expected to

fall below their book value, the book value has been reduced to the amount deemed recoverable (by recognizing the

impairment loss).

(3) The impairment loss is comprised of the following items (Thousands of Yen): Machinery and equipment 16,017 Patent rights 231

The components listed above are the impairment loss recognized and recorded in the current period for the research

facilities and office equipment, etc. at headquarters (Kashiwa City, Chiba Prefecture).

The recoverable value of the asset group was measured in terms of its net realizable value, and is computed based on a

reasonable estimate under the cost method.


The detail regarding the treatment for impairment loss is described below:

(1) Method of grouping assets

All business assets are counted as one group.

(2) Events leading up to the recognition of impairment loss

As the cash flows from the operating activities have remained negative and because the future cash flows are expected to

fall below their book value, the book value has been reduced to the amount deemed recoverable (by recognizing the

impairment loss).

(3) The impairment loss is comprised of the following items (Thousands of Yen): Machinery and equipment 31,969 Patent rights 237 Software 1,487

The components listed above are the impairment loss recognized and recorded in the current period for the research

facilities and office equipment at headquarters (Kashiwa City, Chiba Prefecture).

The recoverable value of the asset group was measured in terms of its net realizable value, and is computed based on a

reasonable estimate under the cost method.

(Notes regarding Statements of changes in the shareholders’ equity)


1. Outstanding shares

Share class Beginning of current period

Increase in number of shares during current

period

Decrease in number of shares during current

period End of current period

Shares outstanding Common stock (shares) 325,307 77,345 - 402,652

Annual 325,307 77,345 - 402,652

―29―

(Note) The increase of 77,345 shares in the number of common stock is the sum of an increase of 33,600 shares from the issuance of new shares through the public offering (global offering), an increase of 1,625 new shares issued through the third-party allotment in the over-allotment distributions, and an increase of 42,120 new shares from the exercise of stock acquisition rights.

2. Notes regarding treasury shares

None

3. Stock acquisition rights

Itemization of stock acquisition rights

Share classes available for

stock acquisition rights

Number of shares available for stock acquisition rights Balance at end of current

period (Thousands

of Yen)

Beginning of current period

Increase in number of shares during current period

Decrease in number of shares

during current period

End of current period

No. 7 Stock acquisition rights (A) Common stock - 3,160 1,600 1,560 24,080

No. 7 Stock acquisition rights (B) - - - - - 5,075

No. 7 Stock acquisition rights (C) - - - - - 3,281

No. 8 Stock acquisition rights Common stock 19,000 - 19,000 - -

No. 9 Stock acquisition rights - - - - - 900

No. 10 Stock acquisition rights - - - - - -

No. 1 convertible bonds with stock acquisition rights Common stock 6,426 - 6,426 - (Note 6)

No. 2 convertible bonds with stock acquisition rights Common stock 30,702 - 11,424 19,278 (Note 6)

Total - 56,128 3,160 38,450 20,838 33,337 (Note) 1 The increase in the number of shares issuable under No. 7 Stock acquisition rights (A) was due to the commencement of

exercise date during the period, and the decrease was due to the cancellation as a result of either the exercise of the rights or the retirement of the holders during the period.

2. The decrease in the number of shares issuable under No. 8 Stock acquisition rights is due to the exercise of stock acquisition rights during the period.

3. The No. 9 Stock acquisition rights were issued as stock options granted on June 10, 2013. 4. The No. 10 Stock acquisition rights were issued as stock options granted on June 10, 2013, however the Company

acquired these rights on August 12, 2013 when the conditions were satisfied and retired them on September 13, 2013. 5. The decreases in the No. 1 convertible bonds with stock acquisition rights and the No. 2 convertible bonds with stock

acquisition rights were due to the exercise of the stock acquisition rights during the period. 6. Convertible bonds with stock acquisition rights are handled according to the lump sum method. 7. For No. 7 Stock acquisition rights (B) and (C), the commencement date of the exercise period has not come yet as of

the balance sheet date. And the conditions for the exercise (“milestone provision”), as provided in the prospectus on the issue of No. 9 stock acquisition rights, have not yet been satisfied as of the balance sheet date.

4. Notes regarding dividends

None


1. Outstanding shares

Share class Beginning of current period

Increase in number of shares during current

period

Decrease in number of shares during current

period End of current period

Shares outstanding Common stock (shares) 402,652 42,204,206 - 42,606,858

Annual 402,652 42,204,206 - 42,606,858 (Note) The increase of 42,204,206 shares in the number of common stock is the sum of an increase of 39,862,548 share from

stock split (100 shares per common share) on April 1, 2014, and increase of 1,952,258 shares from the issuance of new

―30―

shares upon the exercise of stock acquisition rights and an increase of 389,400 new shares issued upon third-party allotment.

2. Notes regarding treasury shares

None

3. Stock acquisition rights

Itemization of stock acquisition rights

Share classes available for

stock acquisition rights

Number of shares available for stock acquisition rights Balance at end of current

period (Thousands of

Yen)

Beginning of current period

Increase Decrease End of current

period

No. 7 Stock acquisition rights (A) Common stock 1,560 154,440 10,000 146,000 22,536

No. 7 Stock acquisition rights (B) Common stock - 15,000 3,000 12,000 4,303

No. 7 Stock acquisition rights (C) Common stock - 15,000 - 15,000 3,538

No. 9 Stock acquisition rights - - - - - 900

No. 11 Stock acquisition rights - - - - - 41,310

No. 12 Stock acquisition rights Common stock - 279,500 - 279,500 6,987

No. 13 Stock acquisition rights - - - - - 6,277

No. 2 convertible bonds with stock acquisition rights Common stock 19,278 1,909,980 1,929,258 - -

Total - 20,838 2,373,920 1,942,258 452,500 85,854 (Note) 1 The increase in the number of shares issuable under No. 7 Stock acquisition rights (A) was due to the stock split (100

shares per common stock share), and the decrease was due to the exercise of the rights during the period. 2. The increase in the number of shares issuable under No. 7 Stock acquisition rights (B) was due to the commencement

of exercise date during the period, and the decrease was due to the exercise of the rights during the period. 3. The increase in the number of No. 7 Stock acquisition rights (C) is due to the commencement of exercise date during

the period. 4. The increase in the No. 12 Stock acquisition rights were issued as stock options on September 3, 2014. The

commencement date of the exercise period has not come yet as of the balance sheet date 5. The increase in the number of No. 2 convertible bonds with stock acquisition rights was due to a stock split (100 shares

for each common share) and the decrease in the No. 2 convertible bonds with stock acquisition rights was due to the exercise of stock acquisition rights during the period.

6. For No. 11 Stock acquisition rights and No. 13 Stock acquisition rights, the commencement date of the exercise period has not come yet as of the balance sheet date. And the conditions for the exercise (“milestone provision”), as provided in the prospectus on the issue of No. 9 stock acquisition rights, have not yet been satisfied as of the balance sheet date.

4. Notes regarding dividends

None

(Notes to the statement of cash flows)

*1. Details of the ending balance of “Cash and cash equivalents” and the amounts included in the balance sheets are shown below.

(Thousands of Yen)




To March 31, 2015) Cash and deposits 7,141,793 13,666,475 Securities (MMF) 105,173 105,217 Time deposits with maturity over three months -2,212,792 -11,719,274 Cash and cash equivalents 5,034,174 2,052,417

―31―

2. Significant non-cash transactions


Transactions pertaining to No. 1 convertible bonds with stock acquisition rights

Increase in capital stock from exercise of stock acquisition rights 90,000 thousand yen

Increase in legal capital surplus from exercise of stock acquisition rights 90,000 thousand yen Decrease in convertible bonds with stock acquisition rights due to

exercise of stock acquisition rights 180,000 thousand yen



Increase in legal capital surplus from exercise of stock acquisition rights 160,000 thousand yen Decrease in convertible bonds with stock acquisition rights due to exercise of stock acquisition rights 320,000 thousand yen




Increase in legal capital surplus from exercise of stock acquisition rights 270,000 thousand yen Decrease in convertible bonds with stock acquisition rights due to exercise of stock acquisition rights 540,000 thousand yen

Items related to real estate lease agreement Amount transferred to lease and guarantee deposits from construction assistance fund receivables due to leasing contracts 175,560 thousand yen

(Notes regarding financial instruments)

1 Notes regarding the financial instruments

(1) Accounting policy for financial instruments

The company raises funds mainly through the public offerings, as considered necessary in light of the Company’s R&D

projects. Meanwhile, when there is a temporary surplus in the funds, they are invested only in short-term deposits.

(2) Nature of financial instruments and their risks, and the risk management system

① Management credit risk (risk pertaining to the default on financial obligations of counterparties)

Notes and accounts receivable-trade, one of the operating receivables, is exposed to the credit risk of the customers.

In accordance with the Company’s internal credit policy, any commercial transaction may be entered into only after

ensuring the creditworthiness of a counterparty, and once the transaction is commenced, our Risk Management

Division regularly monitors the collectability of the receivables by confirming the due date and the balance for each

account with each counterparty, so that a doubtful collectability could be quickly identified and determined, and any

concern over such uncollectible claims can be quickly mitigated or dispelled.

Lease and guarantee deposits receivable are future payments receivable under real estate lease agreements. We are

checking the balance regularly to eliminate or minimize relevant risks.

As for trade accounts payable and accrued expenses, which are operating accounts payable, almost all of them are

due within three months.

② Management of market risk (volatility risk inherent to the foreign exchange market and interest rates)

As for marketable securities for investment, investment is limited to the MMFs (money market funds) that have

minimal risk of volatility and that could be easily terminated or canceled at any time. In addition, market prices are

being provided to us on a regular basis by the financial institution where the investment is managed.

The securities invested are non-marketable securities, which are mainly stocks of companies with whom the

―32―

Company maintains business relationships. This means that the investment is exposed to the credit risk of the stock

issuing companies, as well as the risk of volatility of foreign exchange market because of the foreign currency-

denominated transactions conducted with them. However the Company is regularly and continuously monitoring the

financial conditions of these companies.

③ Management of liquidity risk associated with financing (insolvency risk, a risk of inability to make payment on the due

date)

The Risk Management Division is in charge of the control over the liquidity risk (insolvency risk), responsible for

preparing and updating in a timely manner the budgeting and financial planning by using the reports collected from all

business units, while maintaining the liquidity of working capital.

(3) Supplemental information regarding the market value of financial instruments

The fair value of financial instruments includes the value based on market prices and, when there is no market price

available, the value determined by using prices reasonably estimated. Since the fair value calculation rests on variable

factors, it is hence subject to change depending on the different assumptions used.

2 Notes regarding the market value of financial instruments

Previous fiscal year (ended March 31, 2014)

Details of amounts recorded on the balance sheet, the respective fair value, and any difference between the reported

amounts and the fair value are shown below. As for account items where it is considered to be extremely difficult to

determine the exact fair value, they are not included in the table below. (See (Note) 2).

Amount reported on the

balance sheet (Thousands of Yen)

Market value (Thousands of Yen)

Difference (Thousands of Yen)

① Cash and deposits 7,141,793 7,141,793 -

② Accounts receivable, trade 27,240

Allowance for doubtful accounts (*) -24

Accounts receivable, trade : Net 27,215 27,215 -

③ Securities 105,173 105,173 -

④ Long-term time deposits 6,500,000 6,500,000 - ⑤ Construction assistance fund receivables 94,521 94,521 -

Total assets 13,868,704 13,868,704 -

① Accounts payable, trade 40,039 40,039 -

② Accounts payable, other 91,261 91,261 -

Total liabilities 131,301 131,301 -

(*) Accounts receivable, trade is shown with the amount reserved as allowance, which is deducted from the total amount of

receivables to show the net amount as collectible. (Notes) 1. Method of calculation for financial instruments and notes concerning securities Assets

① Cash and deposits, and ②Accounts receivable, trade These account items are recorded at their book value because these types of assets are usually collected within a short period and their market values are almost equal to their book values.

③ Securities These are money market funds, and the amount recorded is based on the market prices provided by the financial institution where they are held.

④ Long-term time deposits The amount of long-term time deposits are shown in the net present value, which is calculated by estimating the future value of principle and interests receivable, and discounting it at a rate that is expected if the same amount of principle and interests are deposited now as a new account.

⑤ Construction assistance fund receivables

―33―

The amount is shown in the net present value, calculated by estimating the future cash flows for an expected period from the end of this fiscal year to the completion of the return of funds entrusted, then discounting it at rate using the appropriate indices such as the Government bond yield.

Liabilities ① Accounts payable, trade and ② Accounts payable, other

These account items are recorded at their book value because these types of assets are usually collected within a short period and their market values are almost equal to their book values.

2 Financial instruments, for which determination of a fair value is extremely difficult

Components Amount recorded on the balance sheet (Thousands of Yen)

Securities for investment 99,729 Convertible bonds with stock acquisition rights 540,000

A market price does not exist for the instruments noted above and future cash flow cannot be estimated. Therefore it is determined to be extremely difficult to determine the fair value for the instruments above, and they are not included in the fair value information for the disclosure purpose.

3 Schedule of expected settlement amounts for financial receivables and securities that will mature after the close of the fiscal year

Within one

year(Thousands of Yen)

Over 1 years, but within 5

years(Thousands of Yen)



Over 10 years(Thousands of

Yen)

① Cash and deposits 7,141,793 - - - ② Accounts receivable, trade 27,215 - - -

④ Long-term time deposits - 6,500,000 - -

Current fiscal year (ended March 31, 2015)

Details of amounts recorded on the balance sheet, the respective fair value, and any difference between the reported

amounts and the fair value are shown below. As for account items where it is considered to be extremely difficult to

determine the exact fair value, they are not included in the table below. (See (Note) 2).

Amount reported on the

balance sheet (Thousands of Yen)

Market value (Thousands of Yen)

Difference (Thousands of Yen)

① Cash and deposits 13,666,475 13,666,475 -

② Notes receivable-trade 42,994 42,994 -

③ Accounts receivable, trade 193,627

Allowance for doubtful accounts (*) -24

Accounts receivable, trade : Net 193,602 193,602 -

④Securities 105,217 105,217 -

⑤ Lease and guarantee deposits 176,751 176,751 -

Total assets 14,185,040 14,185,040 -

① Accounts payable, trade 17,112 17,112 -

② Accounts payable, other 119,921 119,921 -

Total liabilities 137,033 137,033 -

(*) The accounts receivable, trade, is shown with the amount reserved as allowance, which is deducted from the total amount of

receivables to show the net amount as collectible. (Notes) 1. Method of calculation for financial instruments and notes concerning securities Assets

―34―

① Cash and deposits, ② Notes receivable, trade and ③ Accounts receivable, trade These account items are recorded at their book value because these types of assets are usually collected within a short period and their market values are almost equal to their book values.

④ Securities These are money market funds, and the amount recorded is based on the market prices provided by the financial institution where they are held.

⑤Lease and guarantee deposits The amount is shown in the net present value, calculated by estimating the future cash flows for an expected period from the end of this fiscal year to the completion of the return of funds entrusted, then discounting it at rate using the appropriate indices such as the Government bond yield.

Liabilities ① Accounts payable, trade and ② Accounts payable, other

These account items are recorded at their book value because these types of assets are usually collected within a short period and their market values are almost equal to their book values.

2 Financial instruments, for which determination of a fair value is extremely difficult

Components Amount recorded on the balance sheet (Thousands of Yen)

Securities for investment 113,026

Lease and guarantee deposits 12,964

A market price does not exist for securities for investments and future cash flows cannot be estimated. Because it is recognized to be extremely difficult to determine the fair value for securities for investment, they are not included in the fair value information for the disclosure purpose. A market price does not exist for some of the lease and guarantee deposits, and because it is difficult to calculate the actual deposit period, future cash flows cannot be estimated. Because it is recognized to be extremely difficult to determine their fair value, they are not included in the fair value information.

3 Schedule of expected settlement amounts for financial receivables and securities that will mature after the close of the fiscal year

Within one

year(Thousands of Yen)

Over one year, but within 5




Over 10 years(Thousands of

Yen)

① Cash and deposits 13,666,475 - - - ② Notes receivable, trade 42,994 - - -

③ Accounts receivable, trade ⑤ Lease and guarantee deposits

193,602

-

- -

-

100,000

-

90,000

―35―

(Note regarding stock options)


1 Amounts and accounts recorded for expenses attributable to stock options


Cost of goods sold 5,467 Share-based compensation expenses included in selling, general, and administrative expenses 6,552

2 Nature, size, and changes in stock options

① Nature of stock options

No. 2 Stock acquisition rights (A) No. 2 Stock acquisition rights (B)

Job class and number of persons eligible for granting

External collaborators 1

Company directors 1

Number of stock options by class of stock (*) Common stock 300 shares

Common stock

2,000 shares

Date granted February 28, 2004 May 31, 2004

Vesting conditions

・The person possessing the stock acquisition rights must occupy a position of collaboration until the public offering date for the company.

・The person possessing the stock acquisition rights must occupy the position of a director, auditor, employee, or collaborator, even at the time the rights are exercised.

Requirement for the employment service term None Same as at left

Rights exercise period From January 15, 2006 to January 14, 2014 Same as at left

No. 2 Stock acquisition rights (C) No. 2 Stock acquisition rights (E)


Company directors 4

Company auditors 2

Company employees 22


Company employees 1


Number of stock options by class of stock (*) Common stock

7,380 shares

Common stock

1,320 shares

Date granted September 1, 2004 January 14, 2005

Vesting conditions


Same as at left


Rights exercise period From January 16, 2006 to January 14, 2014 Same as at left

No. 3 Stock acquisition rights (A) No. 3 Stock acquisition rights (C)


Company directors 1

Company employees 6

Company auditors 1



1,300 shares

Common stock 650 shares

―36―

Date granted September 1, 2005 November 1, 2005

Vesting conditions


Same as at left


Rights exercise period From June 28, 2007 to June 27, 2015 Same as at left

No. 3 Stock acquisition rights (D) No. 4 Stock acquisition rights (A)



Company employees 2




Date granted March 1, 2006 March 1, 2006

Vesting conditions


Same as at left


Rights exercise period From June 28, 2007 to June 27, 2015

From February 1, 2008 to January 31, 2016

No. 7 Stock acquisition rights (A) No. 7 Stock acquisition rights (B)


Company directors 6

Company auditors Company employees

3 24

Company employees 1


3,200 shares


Date granted August 15, 2011 May 11, 2012

Vesting conditions


・The closing price for common stock of the company must be at or above 32,000 yen on the business day prior to exercise of the stock acquisition rights.

Same as at left


Rights exercise period From August 16, 2013 to August 15, 2018

From May 12, 2014 to May 11, 2019

―37―

No. 7 Stock acquisition rights (C) No. 9 Stock acquisition rights


Company employees 7

Company directors 4

Company employees 3



Date granted May 23, 2012 June 10, 2013

Vesting conditions


・The closing price for common stock of the company must be at or above 32,000 yen on the business day prior to exercise of the stock acquisition rights.

・ Holders of stock acquisition rights may be able to exercise their rights only when Company has achieved the following conditions (as provided in the “Milestone Provision”), A, B and C below.

A 1/3 of the number of shares allocated The “Products under development” as described in “② Pipelines” of “(1) Basic management policy,” under “3. Management policy” of the Financial Results for Fiscal Year Ended in March 2013 (non-consolidated), which was disclosed on May 13, 2013, other products that have newly developed by the Company after May 24, 2013, and other products that were acquired from other parties have obtained the approval for “Manufacturing and Marketing/Sales” and also one or more of the stages in R&D among the pipelines listed in the said Financial Results above (hereinafter, “Main Pipelines”) has moved to the stage of the commencement of Phase III clinical trial.

B 1/3 of the number of shares allocated The R&D stage of "New Pipelines Under Development" (hereafter, “New Pipelines”), as described in “② Pipelines,” of “(1) Basic management policy,” under “3. Management policy” of the (Non-consolidated) Financial Results for Fiscal Year Ended in March 2013, which was disclosed on May 13, 2013, has already moved to the state of the commencement of Phase I clinical trial.

C 1/3 of the number of shares allocated License agreements must have been concluded for the development, sale, or manufacturing of the “main pipelines” and the “new pipelines” in Japan, Europe, or Asia (two or more of the following countries: China, India, Taiwan, Singapore, South Korea, and Hong Kong)

―38―

(excluding those agreements that were concluded on or before May 24, 2013).

・In the event where the closing price of the Company’s common stock on the Tokyo Stock Exchange is below the value equivalent to 25% of the exercise price of the stock acquisition rights for 5 consecutive days, the holders of stock acquisition rights must exercise all remaining rights at a price equivalent to 70% of the exercise price by the end of exercise period, regardless of whether the conditions described above of Milestone Provision have been achieved or not.

Requirement for the employment service term None None

Rights exercise period From May 24, 2014 to May 23, 2019

From June 10, 2013 to June 9, 2018

No. 10 Stock acquisition rights


Company employees 8


Date granted June 10, 2013

Vesting conditions

・If a recipient of stock acquisition rights, is withdrawn or retired from the position of either a director, auditor, employee, or outside collaborator, this holder is deemed to have lost the right of exercise, as a general rule.

・In the event where the closing price of the Company’s common stock on the Tokyo Stock Exchange is below a value equivalent to 60% of the exercise price of stock acquisition rights for five (5) consecutive days, the Company may acquire all those stock acquisition rights from the holders without compensation.

Requirement for the employment service term None


* The number of stock options in the table above is the number of shares, as converted upon exercise of rights.

② Size of stock options and changes in vesting of rights

i. Number of stock options

No. 2 Stock acquisition

rights (A)

No. 2 Stock acquisition rights (B)

No. 2 Stock acquisition rights (C)


(E) Prior to vesting (shares)

―39―

At end of previous fiscal year - - - -

Granted - - - -

Expired - - - -

Rights vested - - - -

Unvested - - - - Post vesting (shares)

At end of previous fiscal year 150 450 2,600 400


Rights exercised 150 450 2,350 400

Expired - - 250 -

Unvested - - - -


rights (A)


No. 3 Stock acquisition rights (D)

No. 4 Stock acquisition rights (A)

Prior to vesting (shares)


Granted - - - -

Expired - - - -


Unvested - - - - Post vesting (shares)

At end of previous fiscal year 300 100 50 150


Rights exercised 300 - - 100

Expired - - - -

Unvested - 100 50 50


rights (A) No. 7 Stock acquisition

rights (B) No. 7 Stock acquisition

rights (C) No. 9 Stock acquisition

rights Prior to vesting (shares)

At end of previous fiscal year 3,180 150 150 -

Granted - - - 225

Expired 20 - - -

Rights vested 3,160 - - -

Unvested - 150 150 225 Post vesting (shares)


Rights vested 3,160 - - -

Rights exercised 1,520 - - -

Expired 80 - - -

Unvested 1,560 - - -

―40―

No. 10 Stock

acquisition rights Prior to vesting (shares)

At end of previous fiscal year -

Granted 205

Expired 205

Rights vested -

Unvested - Post vesting (shares)

At end of previous fiscal year -

Rights vested -

Rights exercised -

Expired -

Unvested -

ii. Unit price information


rights (A)

No. 2 Stock acquisition rights (B)



(E)

Exercise price (Yen) 30,399.8 30,399.8 30,399.8 30,399.8 Average stock price at time of exercise (Yen) 237,200.0 223,000.0 234,304.7 285,075.0

Fair unit value on the date granted (Yen) (Note) (Note) (Note) (Note)


rights (A)




Exercise price (Yen) 30,399.8 30,399.8 39,691.2 39,691.2 Average stock price at time of exercise (Yen) 359,500.0 - - 406,500.0

Fair unit value on the date granted (Yen) (Note) (Note) (Note) (Note)


rights (A) No. 7 Stock acquisition



rights

Exercise price (Yen) 27,564 55,125 53,658 332,000 Average stock price at time of exercise (Yen) 221,193.4 - - -

Fair unit value on the date granted (Yen) 15,436 35,864 23,591 4,000

No. 10 Stock

acquisition rights

Exercise price (Yen) 332,000 Average stock price at time of exercise (Yen) -

Fair unit value on the date granted (Yen) 94,500

(Note) Because these stock options were granted before the Companies Act was enacted, no information of fair value is provided.

―41―

3 Estimation method of fair unit value of stock options granted during the current fiscal year

(1) Calculation method/model used

Monte Carlo simulation

(2) Baseline figures and estimation methods used

No. 9 Stock acquisition rights No. 10 Stock acquisition rights

① Stock price volatility

100.98% (Calculated based on the actual stock price for the most recent period, applied to the expected duration (5 years) up to the expected maturity date.

97.21% (Calculated based on the actual stock price for the most recent period, applied to the expected duration (4.5 years) up to the expected maturity date.

② Projected remaining contractual term 5 years (Exercise period)

4.50 years (Sufficient data has not been accumulated and it is difficult to produce a reasonable estimate, so this has been estimated by projecting the options exercised at the mid-point of the rights exercise period.)

③ Dividend ratio (to shareholders’ equity) 0% (based on the actual dividend payment of the company)

④ Risk-free interest rate 0.417% (This is the government bond yield for the period corresponding to the projected remaining contractual term.)

0.268% (This is the government bond yield for the period corresponding to the projected remaining contractual term.)

4 Estimation method of the number of stock options vested

It is basically difficult to produce a reasonable estimate of the number that will expire in the future, so a method that

reflects only the actual number expired has been used.


1 Amounts and accounts recorded for expenses attributable to stock options


Cost of goods sold 26,431 Share-based compensation expenses included in selling, general, and administrative expenses 21,717

2 Amounts and accounts recorded initially for assets attributable to stock options


Cash and deposits 6,987

3 Nature, size, and changes in stock options

① Nature of stock options

No. 3 Stock acquisition rights (C) No. 3 Stock acquisition rights (D)


Company auditors 1




65,000 shares

Common stock

5,000 shares

Date granted November 1, 2005 March 1, 2006

Vesting conditions


Same as at left


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Rights exercise period From June 28, 2007 to June 27, 2015 Same as at left

No. 4 Stock acquisition rights (A) No. 7 Stock acquisition rights (A)


Company employees 2


Company directors 6

Company auditors Company employees

3 24


30,000 shares

Common stock

320,000 shares

Date granted March 1, 2006 August 15, 2011

Vesting conditions



・The closing price for common stock of the company must be at or above 320 yen on the business day prior to exercise of the stock acquisition rights.


Rights exercise period From February 1, 2008 to January 31, 2016

From August 16, 2013 to August 15, 2018

No. 7 Stock acquisition rights (B) No. 7 Stock acquisition rights (C)


Company employees 1

Company employees 7


15,000 shares

Common stock

15,000 shares

Date granted May 11, 2012 May 23, 2012

Vesting conditions


・The closing price for common stock of the company must be at or above 320 yen on the business day prior to exercise of the stock acquisition rights.

Same as at left


Rights exercise period From May 12, 2014 to May 11, 2019

From May 24, 2014 to May 23, 2019



Company directors 4

Company employees 3


22,500 shares

Date granted June 10, 2013

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Vesting conditions

・Holders of stock acquisition rights may be able to exercise their rights only when Company has achieved the following conditions (as provided in the “Milestone Provision”), A, B and C below.

A 1/3 of the number of allocated shares The “Products under developments” as described in “② Pipelines" of "(1) Basic management policy," under "3. Management policy" of the Financial Results for Fiscal Year Ended in March 2013 (non-consolidated), which was disclosed on May 13, 2013, other products that have newly developed by the Company after May 24, 2013, and other products that were acquired from other parties have obtained the approval for “Manufacturing and Marketing/Sales” and also one or more of the stages in R&D among the pipelines listed in the said Financial Results above (hereinafter, “Main Pipelines”) has moved to the stage of the commencement of Phase III clinical trial.

B 1/3 of the number of allocated shares The R&D stage of "New Pipelines Under Development" (hereafter, "New Pipelines"), as described in "② Pipelines," of "(1) Basic management policy," under "3. Management policy" of the (Non-consolidated) Financial Results for Fiscal Year Ended in March 2013, which was disclosed on May 13, 2013, has already moved to the state of the commencement of Phase I clinical trial.

C 1/3 of the number of allocated shares License agreements must have been concluded for the development, sale, or manufacturing of the “main pipelines” and the “new pipelines” in Japan, Europe, or Asia (two or more of the following countries: China, India, Taiwan, Singapore, South Korea, and Hong Kong) (excluding those agreements that were concluded on or before May 24, 2013).

・In the event where the closing price of the Company’s common stock on the Tokyo Stock Exchange is below the value equivalent to 25% of the exercise price of the stock acquisition rights for 5 consecutive days, the holders of stock acquisition rights must exercise all remaining rights at a price equivalent to 70% of the exercise price by the end of exercise period, regardless of whether the conditions described above of Milestone Provision have been achieved or not.



No. 11 Stock acquisition rights No. 12 Stock acquisition rights



Company directors 5

Company auditors 3



99,500 shares

Common stock

279,500 shares

Date granted April 2, 2014 September 3, 2014

Vesting conditions

・If a recipient of stock acquisition rights is withdrawn or retired from the position of either a director, auditor, employee, or outside collaborator, this holder is deemed to have lost the right of exercise, as a general rule.

・In the event where the closing price of the Company’s common stock on the Tokyo Stock Exchange is below a value equivalent to 50% of the exercise price of stock acquisition rights for five consecutive days, the Company may acquire all those

・ For stock acquisition rights holders, in the exercise period of stock acquisition rights, in the event the closing price of the Company’s common stock on the Tokyo Stock Exchange is above a value equivalent to 200% of the exercise price (fractions less than one yen will be rounded up) of stock acquisition rights even once, the stock acquisition rights must be exercised within one year.

・In the event where the closing price of the Company’s common

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stock acquisition rights from the holders without compensation.

stock on the Tokyo Stock Exchange is below a value equivalent to 50% of the exercise price (fractions less than one yen will be rounded up) of stock acquisition rights for five consecutive trading days, the Company may acquire all those stock acquisition rights from the holders without compensation.


Rights exercise period from April 3, 2016 to April 2, 2021

from September 3, 2014 to September 2, 2019



Company employees 6


24,500 shares

Date granted September 3, 2014

Vesting conditions

・The person possessing the stock acquisition rights must occupy the position of a director, auditor or employee of our company or of a related company, even at the time the rights are exercised.

・In the event where the closing price of the Company’s common stock on the Tokyo Stock Exchange is below a value equivalent to 50% of the exercise price (fractions less than one yen will be rounded up) of stock acquisition rights for five consecutive trading days, the Company may acquire all those stock acquisition rights from the holders without compensation.


Rights exercise period from September 3, 2016 to September 2, 2021

* The number of stock options in the table above is the number of shares, as converted upon exercise of rights. However, effective on April 1, 2014, the Company implemented a stock split at a ratio of 100 shares per one share, and the number of shares converted after the stock split are listed here.

② Size of stock options and changes in vesting of rights

i. Number of stock options





Prior to vesting (shares)


Granted - - - -

Expired - - - -


Unvested - - - -

Post vesting (shares)

―45―

At end of previous fiscal year 10,000 5,000 5,000 156,000


Rights exercised - 5,000 5,000 10,000

Expired - - - -

Unvested 10,000 - - 146,000




rights No. 11 Stock


At end of previous fiscal year 15,000 15,000 22,500 -

Granted - - - 99,500

Expired - - - -

Rights vested 15,000 15,000 - -

Unvested - - 22,500 99,500 Post vesting (shares)


Rights vested 15,000 15,000 - -

Rights exercised 3,000 - - -

Expired - - - -

Unvested 12,000 15,000 - -

No. 12 Stock

acquisition rights No. 13 Stock


At end of previous fiscal year - -

Granted 279,500 24,500

Expired - -

Rights vested 279,500 -

Unvested - 24,500 Post vesting (shares)

At end of previous fiscal year - -

Rights vested 279,500 -

Rights exercised - -

Expired - -

Unvested 279,500 -

* Effective on April 1, 2014, the Company implemented a stock split at a ratio of 100 shares per one share, and the number of

shares converted after the stock split are listed here.

ii. Unit price information





Exercise price (Yen) 304.0 396.9 396.9 276 Average stock price at time of exercise (Yen) - 1,268.0 1,296.0 1,328.5

―46―

Fair unit value on the date granted (Yen) (Note) 1 (Note) 1 (Note) 1 154.4




rights No. 11 Stock

acquisition rights

Exercise price (Yen) 552 537 3,320 1,620 Average stock price at time of exercise (Yen) 1,169.0 - - -

Fair unit value on the date granted (Yen) 358.6 235.9 40 835

No. 12 Stock

acquisition rights No. 13 Stock

acquisition rights

Exercise price (Yen) 1,460 1,372 Average stock price at time of exercise (Yen) - -

Fair unit value on the date granted (Yen) 25 887

(Note) 1 Because these stock options were granted before the Companies Act was enacted, no information of fair value is provided.

2. Effective on April 1, 2014, the Company implemented a stock split at a ratio of 100 shares per one share, and the

exercise price is adjusted.

4 Estimation method of fair unit value of stock options granted during the current fiscal year

(1) Calculation method/model used

No. 11 Stock acquisition rights No. 12 Stock acquisition rights No. 13 Stock acquisition rights

Monte Carlo simulation Monte Carlo simulation Black-Scholes equation

(2) Baseline figures and estimation methods used




Stock price volatility

96.02% (Calculated based on the actual stock price for the most recent period, applied to the expected duration (4.51 years) up to the expected maturity date.

68.7% (Calculated based on the actual stock price in the most recent year)

92.4% (Calculated based on expected duration (4.5 years) up to the expected maturity date.

Projected remaining contractual term 4.51 years 5 years 4.5 years

Dividend ratio (to shareholders’ equity)

0% (based on the actual dividend payment of the Company)



Risk-free interest rate

0.171% (This is the government bond yield for the period corresponding to the projected remaining contractual term.)

0.1% (This is the interest rate converted using the continuous compounding method from the interest rate calculated from the risk-free asset yield curve generated from the zero coupon rate derived using the yen swap rate on the calculation base date, factoring in the spread over government bonds.

0.13% (This is the interest rate converted using the continuous compounding method from the interest rate calculated from the risk-free asset yield curve generated from the zero coupon rate derived using the yen swap rate on the calculation base date, factoring in the spread over government bonds.

5 Estimation method of the number of stock options vested

It is basically difficult to produce a reasonable estimate of the number that will expire in the future, so a method that

―47―

reflects only the actual number expired has been used.

(Asset retirement obligations)


Asset retirement obligations reported on the balance sheet

(1) Summary of the asset retirement obligations

The obligations are that the Company is obliged to restore the original conditions under the real estate lease agreement

covering the Company’s main office building and research facilities, as well as its Tokyo office building, when the Company

vacates those offices/facilities.

(2) Calculation method for the amount of the asset retirement obligations

The amount is calculated by estimating the remaining period of use of properties/facilities up to the scheduled date of

relocation, based on which, the amount of obligations was calculated.

(3) Change in the total amount of the asset retirement obligation

Current fiscal year

(From April 1, 2013 to March 31, 2014) (Thousands of Yen)

Beginning balance 15,806 Adjustment for time elapsed 15 Ending balance 15,822


Asset retirement obligations reported on the balance sheet

(1) Summary of the asset retirement obligations

In this business year, our company closed its former Kashiwa headquarters and its former Tokyo office, transferring and

consolidating them into its new Kashiwa headquarters in June 2014, and also opened a new Tokyo office in March 2015.

Along with this, the asset retirement obligations were discharged for the former Kashiwa headquarters and the former Tokyo

office, and for both the new Kashiwa headquarters and the new Tokyo office, asset retirement obligations were recorded for

the restoration of the original conditions based on the real estate lease agreements.

(2) Calculation method for the amount of the asset retirement obligations

For the estimate of the asset retirement obligations, the remaining period of use was 11 years and 13 years respectively,

and the removal expense after the relevant period of use is estimated, discounted by the zero risk discount rate at the time of

establishment. The discount rate applied is 0.5% and 0.8% respectively.

(3) Change in the total amount of the asset retirement obligation

Current fiscal year

(From April 1, 2014 to March 31, 2015) (Thousands of Yen)

Beginning balance 15,822 Increase from purchase of property, plant and equipment 23,193

Adjustment for time elapsed 179 Decrease in asset retirement obligations -15,822 Ending balance 23,372

(Segment information, etc.)

Segment information

Segment information is omitted because the business of this company is in a single segment: the research, development,

manufacture, and marketing of pharmaceutical and related products, and incidental businesses in connection with these.

―48―

(Equity in earnings of affiliates, etc.)

Nothing to report, because there is no affiliated or related company.

(Per share information)




To March 31, 2015)

Net assets per share 336.86 yen 338.35 yen

Net loss per share for the current fiscal year 30.44 yen 5.12 yen

(Note) 1 Effective on April 1, 2014, the Company implemented a stock split, pursuant to the resolution made at the meeting of the Board of Directors convened on February 12, 2014, at a ratio of 100 shares per one common share. As a result, both figures above, net assets per share and net loss per share, and the average number of shares for the period, are calculated on the assumption that the said stock split was implemented at the beginning of the previous fiscal year.

2. Although there were no residual shares, the fully-diluted (adjusted) net income per share for the current fiscal year is not shown in the above table, because a net loss per share was recorded for the current period.

3. The basis of calculations of net loss per share for the current fiscal year is as follows:




To March 31, 2015)

Net loss (Thousands of Yen) 1,113,687 207,156

Amount not attributable to shareholders of common stock (Thousands of Yen) - -

Net loss attributable to common stock (Thousands of Yen) 1,113,687 207,156

Average number of shares outstanding during the period (Shares) 36,581,297 40,455,531

Description of potentially dilutive common stock, which were not included in the computation of fully-diluted net loss per share because of their anti-dilutive effect.

- -

(Significant subsequent events)

None

―49―

6. Other (1) Changes in officers ① Changes in representatives

None

② Other changes in officers

Resignation of director Title and position at time of

resignation Name of officer(s) Date of resignation

Director and CSO Yasuki Kato December 31, 2014

Director (CFO and Manager of President's Office) Takuma Nakatsuka December 31, 2014

―50―

Documents

Financial Results for the Fiscal Year ended March 31, 2015 ...pdf.irpocket.com/C4571/Q8aV/FN51/cE5I.pdf · Scheduled date of submission of securities report June 25, 2015 . Supplementary