Overview of the current Japanesebiotech industry and investmentoutlook

Daiwa SMBC Capital Co.,LtdHiroki NaritaDeputy General Manager

E-mail:narita@daiwasmbc-cap.co.jp

Biotechnology Market in Japan

0400080001200016000200002400028000

2002 2003 2004 2005 2006 2007

bio related products & services

bio-products

(\ 100M)

2002200220022002 2003200320032003 2004200420042004 2005200520052005 2006200620062006 2007200720072007

biobiobiobio----productsproductsproductsproducts 10,381 11,918 12,523 12,407 12,899 17,227

bio related products & bio related products & bio related products & bio related products &

servicesservicesservicesservices

3,949 4,679 4,947 5,179 5,566 5,765

Biotechnology marketBiotechnology marketBiotechnology marketBiotechnology market 14,330 16,597 17,470 17,586 18,465 22,992

Overview of JPN biotech companies

102 116 132 150 167212

254

333

387

464

531

304

0

100

200

300

400

500

600

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Num. of Companies

Number of JPN biotech companies 1994-2005Number of JPN biotech companies 1994-2005

Business lines of JPN Biotech CompaniesBusiness lines of JPN Biotech Companies

Categories number of companies

2004 2005

Pharmaceuticals, Diagnostic equipment 160 174

Research support services 129 170

Consulting services 78 88

Personal health care (preventive medicine, health food product) 73 86

Research equipments and devices 66 78

Number of Newly Listed Companies in Japan

0

50

100

150

200

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

TSE 1st Sec.

TSE 2nd Sec.

TSE Mothers

JASDAQ

OSE Hercles

Others

TSE=Tokyo Stock Exchange OSE=Osaka Stock Exchange

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Total 86 106 204 169 124 121 175 159 188 121 49

Number of Newly Listed BioTech Companies in Japan

0

1

2

3

4

5

2000 2001 2002 2003 2004 2005 2006 2007 *2008

TSE Mothers

OSE Hercles

NSE Centrex

JQ NEO

* As of the end of December

TSE=Tokyo Stock Exchange OSE=Osaka Stock Exchange

NSE=Nagoya Stock Exchange JQ=JASDAQ

Market Cap. 2002 - 2007

Biotech

0

200

400

600

2002 2003 2004 2005 2006 2007

(￥bil.) Emerging Market

0

10,000

20,000

30,000

40,000

2002 2003 2004 2005 2006 2007

(￥bil.)

2002 2003 2004 2005 2006 2007

Biotech 92 448 338 478 305 330

Emerging Market 8,274 12,362 17,721 30,972 19,806 18,043

(￥ bil.)

Overview of Listed Biotech Companies in Japan (1)2369 MediBic Consulting & development of bioinformatics systems

2370 MEDINET Co., Ltd. Cancer immunotherapy services

2385 Soiken Inc. Development of biomarker; clinical research services for specialized health food

2397 DNA Chip Research Inc. Development & production of DNA chip

2929 Pharma Foods International Co., Ltd. Development and sales of functional foods ingredients

4563 AnGes MG, Inc. Biopharmaceutical (Gene-drug for PAD and IHD)

4564 OncoTherapy Science, Inc. Genome-based anticancer drug discovery

4565 Sosei Co. Ltd. Biopharmaceutical company focused on drug development

4566 LTT Bio‐Pharma Co., Ltd. Research & development of drug delivery system

4567 Effector Cell Institute, Inc. Development of drug discovery technology

4570 Immuno-Biological Laboratories Co., Ltd.Development & production of in-vitro diagnostic products; development of

medicines

4572 Carna Biosciences, Inc. Production & sales of kinases for biological research

4573 R-Tech Ueno, LtdResearch & development,manufacture,sales,export&import of pharmaceutical

products

4875 MediciNova, Inc Biopharmaceutical (drugs for multiple sclerosis, status asthmaticus, asthma etc.)

4974 TAKARA BIO INC.Production & sales of biological research equipments; health food and develops

gene therapies for cancer

7707 Precision System Science Co.,Ltd. Manufacturer of DNA extraction equipment and related scientif ic products

7774 Japan Tissue Engineering Co., Ltd. Development & production of tissue-engineered medical products

4571 Nano Carrier Co.,Ltd R&D and production of pharmaceuticals using micellar nanoparticles technology

2191 tella.,Inc DC Vacine therapy

Overview of Listed Biotech Companies in Japan (2)

2,9702,360118,0133527,00020,000Mar-03TSE MothersNune-96Nano Carrier Co.,Ltd4571

3,3253,43511,082,000(3.2）300310Mar-09JQ NEOJune-04Tella.Inc2191

5,2825,85153,190(9.7)99,300110,000Mar-08JQ NEOApr-03Carna Biosciences, Inc.4572

29,309 14,655 8,374 100.0 3,500,000 1,750,000 Feb-01OSE HerculesJul-85Precision System Science Co.,Ltd.7707

7,3009,12576,045(20.0)96,000120,000Dec-07JQ NEOFeb-99Japan Tissue Engineering Co., Ltd.7774

60,260 52,400 262,000 15.0 230,000 200,000 Dec-04TSE MothersApr-02TAKARA BIO INC.4974

39,400 38,913 97,282,856 1.3 405 400 Feb-05OSE HerculesSep-00MediciNova, Inc4875

4,482 7,097 18,675 (36.8)240,000 380,000 Mar-05NSE CentrexJun-99EffectorCell Institute, Inc.4567

14,644 10,703 48,650 36.8 301,000 220,000 Nov-04TSE MothersJan-03LTT Bio‐Pharma Co., Ltd.4566

48,976 48,976 61,220 0.0 800,000 800,000 Jul-04TSE MothersJun-90Sosei Co. Ltd.4565

142,728 59,470 59,470 140.0 2,400,000 1,000,000 Dec-03TSE MothersApr-01OncoTherapyScience, Inc.4564

32,804 18,042 82,009 81.8 365,000 220,000 Sep-02TSE MothersDec-99AnGes MG, Inc.4563

16,359 11,983 52,100 36.5 314,000 230,000 Jun-06TSE MothersSep-97Pharma Foods International Co., Ltd.2929

17,408 9,248 13,600 88.2 1,280,000 680,000 Mar-04TSE MothersApr-99DNA Chip Research Inc.2397

78,877 37,699 57,998 109.2 1,360,000 650,000 Dec-03TSE MothersJul-94Soiken Inc.2385

52,517 14,588 41,680 260.0 1,260,000 350,000 Oct-03TSE MothersOct-95MEDINET Co., Ltd.2370

19,203 10,009 37,072 91.9 518,000 270,000 Sep-03TSE MothersFeb-00MediBic2369

13,312 10,197 56,647,500 30.6 235 180 Dec-02TSE MothersApr-98TRANS GENIC INC.2342

5,671 6,379 70,881,831 (11.1)8090Aug-07TSE MothersNov-01GNI Ltd.2160

Market Cap. based on Initial Quotation

(¥ mil.）Market Cap. based on Offering Price

(¥ mil.）Shares

Outstanding (PostIPO)

Initial Quotation/

Offering Price（％）Initial

Quotation （¥）Offering Price（¥）IPO

DateMarketEstablishedCompany NameCode

2,9702,360118,0133527,00020,000Mar-03TSE MothersNune-96Nano Carrier Co.,Ltd4571

3,3253,43511,082,000(3.2）300310Mar-09JQ NEOJune-04Tella.Inc2191

5,2825,85153,190(9.7)99,300110,000Mar-08JQ NEOApr-03Carna Biosciences, Inc.4572

29,309 14,655 8,374 100.0 3,500,000 1,750,000 Feb-01OSE HerculesJul-85Precision System Science Co.,Ltd.7707

7,3009,12576,045(20.0)96,000120,000Dec-07JQ NEOFeb-99Japan Tissue Engineering Co., Ltd.7774

60,260 52,400 262,000 15.0 230,000 200,000 Dec-04TSE MothersApr-02TAKARA BIO INC.4974

39,400 38,913 97,282,856 1.3 405 400 Feb-05OSE HerculesSep-00MediciNova, Inc4875

4,482 7,097 18,675 (36.8)240,000 380,000 Mar-05NSE CentrexJun-99EffectorCell Institute, Inc.4567

14,644 10,703 48,650 36.8 301,000 220,000 Nov-04TSE MothersJan-03LTT Bio‐Pharma Co., Ltd.4566

48,976 48,976 61,220 0.0 800,000 800,000 Jul-04TSE MothersJun-90Sosei Co. Ltd.4565

142,728 59,470 59,470 140.0 2,400,000 1,000,000 Dec-03TSE MothersApr-01OncoTherapyScience, Inc.4564

32,804 18,042 82,009 81.8 365,000 220,000 Sep-02TSE MothersDec-99AnGes MG, Inc.4563

16,359 11,983 52,100 36.5 314,000 230,000 Jun-06TSE MothersSep-97Pharma Foods International Co., Ltd.2929

17,408 9,248 13,600 88.2 1,280,000 680,000 Mar-04TSE MothersApr-99DNA Chip Research Inc.2397

78,877 37,699 57,998 109.2 1,360,000 650,000 Dec-03TSE MothersJul-94Soiken Inc.2385

52,517 14,588 41,680 260.0 1,260,000 350,000 Oct-03TSE MothersOct-95MEDINET Co., Ltd.2370

19,203 10,009 37,072 91.9 518,000 270,000 Sep-03TSE MothersFeb-00MediBic2369

13,312 10,197 56,647,500 30.6 235 180 Dec-02TSE MothersApr-98TRANS GENIC INC.2342

5,671 6,379 70,881,831 (11.1)8090Aug-07TSE MothersNov-01GNI Ltd.2160

Market Cap. based on Initial Quotation

(¥ mil.）Market Cap. based on Offering Price

(¥ mil.）Shares

Outstanding (PostIPO)

Initial Quotation/

Offering Price（％）Initial

Quotation （¥）Offering Price（¥）IPO

DateMarketEstablishedCompany NameCode

Overview of Listed Biotech Companies in Japan (3)

Code Company NameListingDate

Market Founded Fiscal Year Revenue （\mil） Operating

Profit （\mil）2160 GNI Ltd. Aug-07 TSE Mothers Mar-00 Mar-09 204 (949)

2342 TRANS GENIC INC. Feb-02 TSE Mothers Apr-98 Mar-09 324 (624)

2369 MediBic Sep-03 TSE Mothers Feb-00 Dec-08 402 (377)

2370 MEDINET Co., Ltd. Oct-03 TSE Mothers Oct-95 Sep-08 1,838 (667)

2385 Soiken Inc. Dec-03 TSE Mothers Jul-94 Jun-08 2,547 (20)

2397 DNA Chip Research Inc. Mar-04 TSE Mothers Apr-99 Mar-09 872 (288)

2929 Pharma Foods International Co., Ltd. Jun-06 TSE Mothers Sep-97 Jul-08 810 (452)

4563 AnGes MG, Inc. Sep-02 TSE Mothers Dec-99 Dec-08 951 (2,684)

4564 OncoTherapy Science, Inc. Dec-03 TSE Mothers Apr-01 Mar-09 3,327 27

4565 Sosei Co. Ltd. Jul-04 TSE Mothers Jun-90 Mar-09 152 (3,667)

4566 LTT Bio‐Pharma Co., Ltd. Nov-04 TSE Mothers Jan-03 Mar-09 1,261 (907)

4567 Effector Cell Institute, Inc. Mar-05 NSE Centrex Jun-99 May-09 310 (1,279)

4570 Immuno-Biological Laboratories Co., Ltd. Mar-07 OSE Hercules Sep-82 Mar-09 1,036 (382)

4572 Carna Biosciences, Inc. Mar-08 JASDAQ Apr-03 Dec-08 499 (296)

4875 MediciNova, Inc Feb-05 OSE Hercules Sep-00 Dec-08 0 (2,260)

7707 Precision System Science Co.,Ltd. Feb-01 OSE Hercles Jul-85 Jun-08 3,397 (141)

4571 Nano Carrier Co.,Ltd Mar-08 TSE Mothers Jun-96 Mar-09 353 (531)

2191 Tella.Inc Mar-09 JQ NEO Jun-04 Dec-08 546 109

7774 Japan Tissue Engineering Co., Ltd. Dec-07 JQ NEO Feb-99 Mar-09 114 (1,102)

Overview of Listed Biotech Companies in Japan (4)

* share price, shares outstanding and market Cap.: closing price of 2009/8/6

Code Company Name

Current

Share

Price* (\)

Current Shares

Outstanding*

(Shares mil.)

Current

Market

Cap.*

(\ mil.)

Market Cap.based on Current Share Price//Market Cap

. based onOffering Price （％） Market Cap.

based on Current SharePrice//Market Cap.

based onInitial Quotation （％）

2160 GNI Ltd. 31 74,068 2,222 34.8 39.2

2342 TRANS GENIC INC. 19,000 0.109 2,086 20.5 15.7

2369 MediBic 9,050 0.176 1,621 16.2 8.4

2370 MEDINET Co., Ltd. 19,300 0.602 11,600 79.5 22.1

2385 Soiken Inc. 31,650 0.260 8,073 21.4 10.2

2397 DNA Chip Research Inc. 57,500 0.034 2,000 21.6 11.5

2929 Pharma Foods International Co., Ltd. 28,320 0.059 1,597 13.3 9.8

4563 AnGes MG, Inc. 183,000 0.117 20,618 114.3 62.9

4564 OncoTherapy Science, Inc. 205,500 0.202 43,584 73.3 30.5

4565 Sosei Co. Ltd. 154,900 0.118 17,660 36.1 36.1

4566 LTT Bio�Pharma Co., Ltd. 34,550 0.132 4,167 38.9 28.5

4567 Effector Cell Institute, Inc. 36,950 0.196 7,183 101.2 160.3

4570 Immuno-Biological Laboratories Co., Ltd. 1,770 0.616 1,073 15.9 17.4

4572 Carna Biosciences, Inc. 76,400 0.053 4,102 70.1 77.7

4875 MediciNova, Inc 548 12,072 6,615 17.0 16.8

4974 TAKARA BIO INC. 234,500 0.282 65,229 124.5 108.2

7707 Precision System Science Co.,Ltd. 114,500 0.043 4,824 32.9 16.5

4571 Nano Carrier Co.,Ltd 19,780 0.127 2,463 104.4 82.9

2191 Tella.,Inc 1,760 11,732 19,886 578.9 598.1

7774 Japan Tissue Engineering Co., Ltd. 82,200 0.104 8,151 89.3 111.7

Partner Compound Stage

Partnering with Pharmaceutical ＆＆＆＆Biotech Companies

１5

Astellas(Japan)

Comany

Takeda（Japan)

ZERIA（Japan)

TM411(treatment for cancer)

Kaken (Japan)

αααα9 integrin antibody(treatment for autoimmune, cancer etc)

Phase Ⅰ/ⅡCBP501(treatment for cancer, selectively

abrogating the G2 checkpoint )

Pre-clinical

Research

Boehringer(German)

Fully-human therapeutic antibody programs (platform technology)

Research

Shionogi（Japan)

Peptide vaccine(treatment for cancer) Pre-clinical

Phase Ⅰ/Ⅱ

New vaccine Technology

Partnering with Pharmaceutical ＆＆＆＆Biotech Companies

Why only with Japanese big pharma ?

１6

Company Partner Compound

Maruho(Japan)

Eisai(Japan)

Stage

Phase Ⅰ/ⅡHGF(treatment for cutaneous ulcer,

growth factor)

SA4503(treatment for stroke and depression, targeting sigma-1 receptors）

PhaseⅡ

Taiho(Japan)

ARH-1029(treatment for gastric ulcer,

PPI inhibitor)

Pre-clinical

Chugai(Japan)

Antibody programs with its owndiversified chicken cell libraries (platform technology)

Research

Topics in Lifescience Sector

DS Capital and Kyoto University set up a new firm to manage patents for iPS cells with Daiwa Securities Group and Sumitomo Mitsui Banking Corporation.

Press release on the 16th of May 2008

１8

Press release on the 7th of July 2008

DS Capital and Coller Capital Invested in RaQualia Pharma, carved out by Pfizer in 2008.

DS Capital and U.K.-based Coller Capital have taken a combined majority

position in RaQualia Pharma Inc., a former research laboratory of Pfizer Inc.

(Japan)

１9

Topics in Lifescience Sector

Daiwa SMBC CapitalDaiwa SMBC CapitalDaiwa SMBC CapitalDaiwa SMBC Capital

Coller CapitalColler CapitalColler CapitalColler Capital

PfizerPfizerPfizerPfizer

32323232

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24%24%24%24%

19%19%19%19%

20

Topics in Lifescience Sector

METI(Ministry of Economy,Trade&Industry) Minister Nikai attended the opening ceremony of Innovative Network Corporation of Japan on 28 July, 2009

The Innovation Network Corporation of Japan(INCJ) will invest in innovative business

in areas such as advanced materials, electronics, energy,environment, life sciences, and

machinery.

This July, INCJ launched with a capital of 90.5 bil JPY(82bil JPY by Japanese govermment+

8.5bil JPY by 16 private companies). INCJ obtains Japanese government’s guarantee support

of 800bil JPY,which gives INCJ an investment capability of 900bil JPY in total.

They will be investing JPN innovative tech-oriented start-ups for a period of 15 years.