chiome bioscience integrated report 2014 - 株式会社カ · pdf file ·...

http://www.chiome.co.jp/english/

Chiome Bioscience Inc.Sumitomo Fudosan Nishi-shinjuku Bldg. No.6,3-12-1 Honmachi, Shibuya-ku, Tokyo 151-0071 JapanTEL: +81-3-6383-3561 (reception)

Printed in Japan

A healthcare innovator providing remedies that are 100% effective

Chiome Bioscience Inc.Securities code: 4583

For the nine-month period ended December 31, 2014

CHIOMEBioscienceIntegrated Report2014

Integrated Report

CONTENTSA New Bridge to Innovation …………………………………………… 2-13

Intellectual Capital■　The ADLib® SystemA Proprietary Innovative Antibody Generation Technology …………… 14Differences between Antibody Drugs and Conventional Pharmaceuticals (Small Molecular Medication) ……………………… 14Differences between the ADLib® System and Existing Methods for Producing Antibodies ………………………………………………… 15Overview and Main Features of the ADLib® System ………………… 16Practical Application of the Fully Human ADLib® System…………… 17Differences between the ADLib® System and the Fully Human ADLib® System………………………………………… 18Maximizing the Value of the ADLib® System ………………………… 18Pursuing Higher Levels of Technological Innovation ………………… 18Outstanding Ability to Address Pandemic Contagious Diseases …… 18A Patent Strategy Aimed at Protecting Outstanding Proprietary Technologies ……………………………………………………………… 19Major Activities in Fiscal 2014 and Future Prospects ……………… 19■　AlliancesBasic Approach toward Alliances ……………………………………… 20Alliances with Multiple Companies and External Organizations……… 20Activities Aimed at Securing Alliances ………………………………… 22Major Activities in Fiscal 2014 and Future Prospects ……………… 22■　Human ResourcesSecuring and Developing Diverse Human Resources with the Ability to Excel …………………………………………………… 23A Company Distinguished by its Personnel, Who are Both

“Earnest” and Prepared “to Take Up a Challenge”…………………… 23Employee Action Guidelines Linked to Personnel Evaluation ……… 24Training and Development ……………………………………………… 24Work Life Balance ………………………………………………………… 25Introducing Employees …………………………………………………… 25

■　Risk ManagementVisualizing and Ascertaining Risks ……………………………………… 26Preventing, Avoiding, and Minimizing Damages due to Risks ……… 27Protecting Intellectual Property ………………………………………… 27Information Security ……………………………………………………… 27

■　Corporate GovernanceBasic Approach toward Corporate Governance ……………………… 28Strengthening Governance from Each of the Value Creation and Audit/Oversight Perspectives …………………………………………… 28Executive Directors………………………………………………………… 30Audit & Advisory Board Members ……………………………………… 30Comments from External Executives …………………………………… 31Internal Controls …………………………………………………………… 32Internal Control Reporting System Measures ………………………… 32Compliance Structure and Systems …………………………………… 32Building and Operating an Internal Reporting System………………… 32Six-Year Financial Summary……………………………………………… 33Organization Chart/Number of Employees……………………………… 34

Corporate Information/Stock Information ……………………………… 35

Statement of Integrated Reporting Framework Standards …………… 36

Top InterviewOur Resources

Risk Management

Corporate Governance

Corporate InformationStatement

Chiome Bioscience Inc. | Integrated Report 2014 |

1

Making every effort to deliver the ultimate made-to-order medicine

2023

Taking positive steps to address pandemic diseases

2018

For the Benefit ofAll HumankindA healthcare innovator providing remedies that are 100% effective

For all people around the world who are waiting for new medical treatments

● We continuously generate novel drug discovery technologies based on the diversity of genetic information.

● We generate innovative therapeutic antibodies.● We revolutionize the medical system.

Our Vision

Our Mission

Succeeded in developing a fully human ADLib® system

2014 Chiome Bioscience has successfully developed a technology to create antibodies that can be administered to people in only a few weeks

Chiome Bioscience is working to identify measures for use as a replacement for vaccines based on the fully human ADLib® system

Chiome Bioscience will ensure the timely supply of custom-made antibodies to individual patients and will deliver treatments with revolutionary therapeutic effects


37

Top Interview

Q.1The world remains plagued by a significant number of illnesses for which there are no effective treatment methods. Even where remedies exist, the techniques and drugs that are available today cannot effectively treat any and all patients all the time. The reality is that each individual patient must undergo treatment without knowing exactly how effective the treatment will be and the degree of any side effects. In theory, we know that antibody drugs selectively target and eradicate cancer cells. Success, however, is not guaran-teed for each and every patient. Using the ADLib® system to establish the necessary platform technology, we can now generate antibodies that are spe-cific to a particular patient in a matter of around 10 days. Where existing drugs are ineffective or the cancer is deemed inoperable, new drugs devel-oped using the ADLib® system can be administered to reduce the size of the cancer thus enabling surgery.

As a matter of fact, the illnesses of close family members were a major driving force behind my decision to start up the Company. My wife and father were diagnosed with cancer and my mother with hepatitis C. Despite bearing the pain and discomfort of the side effects associated with her treat-ment at that time, there was no measureable improvement in my mother’s liver inflammation. To make matters worse, I felt that mounting medical costs were an unacceptable burden that could not be justified given the lack of results and the very real risk of permanent damage. Despite my involvement in the medical field, I felt an acute sense of helplessness, which in turn fueled the need to promote a radical change in the way diseases are treated. It was then that I came across the ADLib® system and its superior speed in generat-ing a diverse array of antibodies against antigens＊1 compared with conven-tional antibody production systems. Learning of its potential to create fully human antibodies＊2, I became convinced that the ADLib® system would pro-

Q.2While it is said that we can look forward to an era of individualized medicine at some time in the future, our search for an optimal solution is today restricted to a limited number of drugs.

As a healthcare innovator, Chiome Bioscience is promoting the unique ADLib® system, which greatly reduces the time required to produce antibody drugs that best fit each individual from difficult antigens. On this basis, our overarching goal is to contribute to the health of people throughout the world by making the most of the ADLib® system’s competitive advantage to provide antibodies specific to each individual thereby facilitating the produc-tion of ultimate made-to-order medicines that are 100% effective. By supporting the well-being and development of society in this manner, we will endeavor to secure the Company’s sustainable growth.

BRIDGE TO THE INNOVATION

A NEW BRIDGE TO INNOVATIONー.

vide the catalyst for revolutionizing existing treatment methods. I strongly believed that the production of antibody drugs＊3 tailored to each individual’s needs would go a long way to alleviating any fears regarding side effects and lead to remedies that are 100% effective. Recognizing that the ability to swiftly generate specific antibodies against diseases that have no cure would enable more effective patient administration, and that success in pinpointing and attacking the focus of each disease would minimize the incidence of side effects, I became obsessed with the idea that the production of ultimate made-to-order drugs would revolutionize medicine and treatment methods. This obsession is the basis under which Chiome Bioscience was created.

Technologies that utilize toxins to increase the aggressive strength of antibodies can already be found on the market. Moving forward, we will work to identify treatments for those diseases where conventional methods have failed while actively incorporating all available advanced technologies.

Masa Fujiwara, D.V.MPresident & CEO

＊1 AntigensLarge molecules, usually proteins, on the surface of foreign substances. Antigens that enter the body provide a trigger for the generation of antibodies. Different proteins and toxic microorganisms can also become antigens.

What issues throughout society are you hoping to address through your business activities?

Please tell us about the Company’s goals.

＊3 Antibody drugsAntibody drugs are groundbreaking pharmaceuticals that use the defense mechanism of the body’s own immune system to attack marker antigens on the surface of cancer cells and pathogens including viruses with pinpoint accuracy.

＊2 AntibodiesProteins that function to identify and help remove foreign substances or targets such as viruses and bacteria that enter the body. Specific antibody molecules bind to specific antigens and through various mechanisms remove foreign substances from within the body.

Chiome Bioscience Inc. was established with the overarching goal of providing sorely needed new treatment techniques to patients and families. Using its proprietary ADLib® (Autonomously Diversifying Library) system, which has significantly reduced the time required to generate a diverse range of antibodies, the Company is helping in the development of innovative new drugs.


2


3

Top Interview

Q.4The Company’s business development activities span three broad segments. In our Drug Discovery Alliance business, the discovery of new drugs is tied to our research and development activities. In those cases where pharmaceutical and related companies have identified the causative agents of a particular type of disease, we pursue joint research as a means to generate candidate substance antibodies which are used to develop effective drugs.

In the Licensing Out Platform Technology business, Chiome Bioscience is the only company with a license to utilize the ADLib® system. We provide this system to pharmaceutical companies on an out-licensing basis to assist in their proprietary development endeavors.

In the Lead Antibody Licensing business, Chiome Bioscience markets antibodies that it has generated in its own right together with antibody drug efficacy data. Academic institutions discover a variety of candidate substances (the causes of particular diseases) as a part of their basic research. As a general rule, major pharmaceutical companies boast a wealth of experience and track record in developing drugs using these types of candidate substances. There is, however, a significant number of candidate substances for which antibodies cannot be generated using the existing technologies of these companies. Filling this gap, Chiome Bioscience generates antibodies using its proprietary technology which are then out-licensed after confirming the potential for therapeutic use.

Three Core Business Models

Strategy & Business Model

Q.3Chiome Bioscience is indeed adopting a strategic approach in order to help provide ultimate made-to-order medicine. In the first instance, we recognize the need to further enhance the performance of the ADLib® system, which is the source of our competitive advantage. Rather than work on our own, we will engage in joint research with a wide range of domestic and overseas pharmaceutical com-panies and laboratories while promoting research and development through technology out-licensing in a bid to fulfill the needs of customers. This in turn will help to expand the profile of the ADLib® system and awareness toward its efficacy. At the same time, we will combine the ADLib® system with related cutting-edge technologies and through added value endeavor to enhance the effi-ciency of lead antibody production. In this manner, we will build a drug discov-ery network＊4 that is based on the ADLib® system. Our goal therefore is to gain a foothold in the treatment of refractory＊5 and rare＊6 diseases for which there are currently no pharmaceuticals on the market and to deliver innovative drugs to as many patients as possible who are anxiously awaiting treatment.

As a strategy aimed at making the most of the unique features of the ADLib® system, it is also important that we seek a review of the existing pro-grams that dictate the way healthcare is implemented and gain the understanding of all those associated with medical treatment and the medical profession. Under the current pharmaceutical approval review system, authorization is required on an individual drug basis. Generally speaking, this review for approval requires a considerable amount of time. If the focus of approval could be shifted to the methods by which pharmaceuticals are produced then we could take full advan-tage of the peculiar aspects of the ADLib® system and facilitate the rapid gen-eration of antibodies to combat pandemic contagious diseases in emergency situations.

The co-founder of Apple Computer Inc., Steve Jobs, revolutionized the way in which music is distributed by combining iPod hardware with iTunes soft-ware. In similar fashion, we hope to bring the same wave of change to the medi-cal industry. Under current pharmaceutical legislation, clinical trials for a particular drug can only proceed after confirming safety through pre-clinical studies using animals. As a result, it takes around 10 years before a candidate drug is brought to the market. Using the Company’s fully human ADLib® system, however, the potential exists to bypass this process in its entirety and to realize an effective cure. While the merits of this system will remain dormant until changes are made to existing legislation, adjustments to medical practice may take place through groundbreaking technologies as has occurred in other industries.

Taking into consideration each of the aforementioned factors, we are confident that the ADLib® system’s track record in generating antibodies is essential to overcoming this hurdle. While Fujirebio Inc. launched sales of a diagnostic kit that employs antibodies derived from the ADLib® system in 2014, Chiome Bioscience is accelerating development in the field of pan-demic contagious diseases while expanding its pipeline. Buoyed by the over-whelming response to our announcement last year and the Company’s suc-cess in generating antibodies that exhibited responsiveness to the antigens of multiple influenza viruses and the Ebola virus contagion, we received inquiries from public and other insti-tutions in Japan and overseas. Based on these inquiries, we are initiating negotiations across a broad range of possibilities. Advancements in the field of pandemic contagious diseases is a second milestone in efforts to realize our vision.

Pharmaceutical and other companies

Trading in “Lead Antibody Licensing”

Chiome BioscienceADLib® system (Drug Discovery

Platform Technology)

Universities and public

institutions

Upfront fees, milestone fees, royalties

Licensing Out Platform Technology＊(ADLib® system licensing)

[ADLib® system]

Rights to antigen and antibody

commercialization

[Antigen]

Provision of antibodies for research

[Antibody][Research]

Drug Discovery Alliance＊(Research support + antibody)

[Antibody]

[Antibody]

[Research]

Lead Antibody Licensing(Antibody)

【¥,＄,€】

Conducting as well as supporting research and development in antibody drugs

＊4 Drug discovery networkA drug discovery platform that is built around the ADLib® system in conjunction with other drug discovery technologies.

＊5 Refractory diseasesInstances of refractory diseases tend to be low in number. At the same time, the cause of the disease is generally unknown and there is no established method of treatment. The effects of refractory diseases on people’s lives are long term. (Refractory diseases are designated under research business activities by Japan’s Ministry of Health, Labour and Welfare.)

＊6 Rare diseasesDiseases that affect only a limited number of patients. Due to the limited number of patients, little progress is made regarding treatment methods and the development of therapeutic drugs. At the same time, rare diseases are also characterized by difficulties in forming patient networks. However, concepts and general ideas regarding rare diseases change depending on the era and region.

What long-term strategies are in place to achieve this vision?

Can you again elaborate on your business model?

＊ Pharmaceutical and other companies hold the antigen


4


5

Top Interview

Q.7As the antibody drug market comes increasingly under the spotlight, a growing number of pharmaceutical companies are engaging in the development of antibody drugs. In reality, however, there are only a few dozen targets that have been developed as commercial pharmaceuticals using conventional antibody generation methods. Put another way, there is a substantial number of targets for which antibodies cannot be generated using existing technologies. By creat-ing antibodies using the ADLib® system where conventional methods have failed, we are helping to create a new market that previously did not exist. Rather than focus on those diseases that other companies are targeting, we are channeling our energies toward untouched pharmaceutical fields.

Q.6Most therapeutic monoclonal antibodies now on the market were discovered by one of two conventional methods. Under the first mouse hybridoma method, antibodies are generated by injecting target antigens into mice. The antibodies produced are then converted to human antibodies. Under the second phage display method, a virus (phage) infecting escherichia coli expresses a diverse array of antibodies (only a certain portion of each antibody, however, is expressed). Quality antibodies are then selected from this portion. Despite inherent benefits, each of these methods has a number of significant problems. For example, only a limited number of antibody candidates can be discovered, antibodies take a long time to produce, and there are antigens for which it is difficult to discover antibodies. The ADLib® system, a groundbreaking proprietary platform technology, helps to resolve these pending issues. Taking into consideration the ability to deal with difficult antigens as well as the increased speed in antibody production, the ADLib® system arguably offers overwhelming competitive advantage. Naturally, the system itself also has its disadvantages. With the development of a fully human ADLib® system last year, however, we are now in the position to directly generate fully human antibodies. Moving forward, we recognize the need to continu-ously improve the system and its capabilities. As a top priority, we will work to diversify the fully human library and to enhance its quality. Thereafter, we will develop new technologies that generate high-quality antibodies, actively partner with compa-nies that possess cutting-edge related technologies in a bid to optimize the antibodies produced, and build up a solid track record of continuous technology improvement. In this manner, we will ensure that the fully fledged commercial application of our research and development activities translate into increased earnings.

Business Fields

Q.5Demand for improvements in the therapeutic efficacy of existing drugs, the delivery of effective agents against refractory and rare diseases, and enhanced safety continue to increase. Against this backdrop, rates of success in the development of new drugs are said to be waning. Under these circumstances, interest in antibody drugs that differ from conventional small-molecule drugs＊7 and enlist the human body’s innate defense system is mounting among a large number of pharmaceutical companies that are entering this field. Against a global pharmaceutical market measured at around ¥100 trillion, the antibody drug market has a scale of approximately ¥6 trillion, or 6%. Five of the top 10 pharmaceuticals sold around the world are antibody drugs with one such drug generating sales of over ¥1 trillion each year. While there are only around 50 antibody drugs sold on the market today, it is believed that between 300 to 400 drugs are currently under development. As these drugs are progressively brought to the market, growth in antibody drugs is projected to exceed the existing level of double-digit percent-age expansion annually on an ongo-ing basis.

Comparison of the ADLib® System with Existing Methods

Establishing Overwhelming Competitive Advantage by Building a Fully Human ADLib® System

＊ Difficult antigens: an antigen for which antibodies are difficult to obtain: Competitive advantage compared with other methods

Outlook for the Antibody Drug Market

Forecast Annual Growth of Approximately 10% in the Antibody Drug Market● The global antibody drug market is expected to grow at an annual rate of 10%● The scale of the market is estimated to reach around US$62.7 billion in 2015

＊ Onco: Oncology;｜&｜: Auto immune disease; Other: Other; CNS: Central nervous system; ID: Infectious disease; Musc: musculoskeletal disease; Endo: Endocrine disorder; Resp: Respiratory disorder; CV: Cardiovascular disorder

Source: “Monoclonal Antibodies Market Analysis Update 2011” published by Datamonitor

10,000

20,000

30,000

40,000

50,000

60,000

70,000

04 05 06 07 08 09 10 11 12 13 14 15 160

Sales ($

m)

■ Onco■ I&I■ Other■ CNS■ ID　■ Musc■ Endo■ Resp■ CV

＊7 Small-molecule drugsPharmaceuticals that are produced after completing a phased chemical synthesis process. Molecules with small compounds.

ADLib® System Hybridoma Phage Display

Difficult Antigens＊

Antibody generation time

Automation

Applicable Applicable to some Applicable to some

About 10 days About 6 months 2.5 to 3.5 months

Yes No Yes

Full Human Antibody Practical ▶ Fully workable Fully workable Fully workable

Facilities Normally equipped lab Requires animal facility

Diversity Potentially unlimited Limited Limited

Please tell us about the antibody drug market.

What issues are there in the field of antibody drugs and what do you see as the problems that need to be overcome?

How will Chiome Bioscience position itself within the antibody drug market?

Requires facilities for recombinant DNA experiments


6


7

Top Interview

Q.9Earnings Structure

Q.8The Company’s three core business segments are supported by a stable stream of earnings and bolstered by milestone payments. In the Drug Discovery Alliance business, this stable stream of earnings is comprised of upfront fees, which are received at the start of joint research, and R&D expenses. Meanwhile, milestone payments＊8 are linked to specific levels of success with royalties received after the results of this research gain commercial application. The vast majority of the Company’s revenues are currently generated through joint drug discovery endeavors with the Chugai Pharmaceutical Group. Looking ahead, we plan to generate antibodies using the fully human ADLib® system in the Drug Discovery Alliance business.

In the Licensing Out Platform Technology business, upfront payments and technology usage fees provide the source of stable earnings. Again, the Company receives milestone payments after attaining a certain level of progress and royalties when the results of technology out-licensing are brought to the market. For example, Chiome Bioscience currently receives royalties from Fujirebio, a technology licensee, following the release of a diagnostic kit that employs antibodies derived from the ADLib® system last year. Fujirebio has positioned sales of this diagnostic kit at the heart of its global business strategy. As a result, we are confident that the amount of royalties received will increase going forward.

In the Lead Antibody Licensing business, the Company licenses antibodies that have been developed in the discovery or pre-clinical stage. After efficacy confirmation up to this pre-clinical phase, the goal is to secure upfront payments from licensing agreements, milestone income reflecting progress in antibody development, and royalties once a drug has been brought to the market. By out-licensing at the pre-clinical stage, positive steps are being taken to minimize risks. In our antibody development pipeline, we are currently undertaking drug efficacy tests using animal models as a part of efforts to out-license our first lead antibody candidate anti-semaphorin 3A.

At this time, around 90% of the Company’s revenue is provided by the Drug Discovery Alliance business. The remaining 10% is derived from the Licensing Out Platform Technology business.

Earnings by Business Model

Strategies for implementing “Value Creating Management” by emphasizing the financial balance between profit and investment for future growth

Since last year, we have entered into negotiations with domestic and overseas companies that have shown an interest in the ADLib® system about conducting pilot studies for technological assessment as well as technological licensing schemes, while at the same time working to improve the fully human ADLib® system. We recognize that the use of the system by major pharmaceutical companies will not only go a long way to securing increased stable earnings, but also enhance the Company’s profile. Through these means, we will endeavor to accelerate the pace of business develop-ment. Under our current Mid-term Management Plan, we plan to ensure the full-fledged out-licensing of the fully human ADLib® system by fiscal 2016. On this basis, revenues in the Licensing Out Platform Technology business are projected to increase dramatically. In the period leading up to fiscal 2016, we will promote the generation of proprietary antibodies while concentrating our efforts on upgrading and expanding our pipeline＊9. Ener-gies will also be directed toward the Lead Antibody Licensing business, which is a source of considerable added value over the medium to long term. As a company that maintains drug discovery as a core pillar, we will strive to secure growth in royalty income.

For the most part, a considerable amount of time and expenditure is required to develop a drug and bring it to market. The likelihood of success tends to be low while the risks are high. While accumulating a steady stream of earnings through the Licensing Out Platform Technology and other businesses, we will also focus on out-licensing activities at the pre-clinical trial stage for the foreseeable future in order to quickly generate earnings in the Lead Antibody Licensing business. Through these means, we plan to definitively boost earnings.

Statistical analysis using clinical trial data based on a large number of patients is required to verify specific advantages when looking to improve the effect of existing clinical studies＊10 by between 30 and 40%. In addition to expenditure that can reach as high as tens-of-billions of yen, difficulties can also arise in securing the participation of a sufficient number of patients. In the future, medicine is expected to become increasingly individualized. As a result, clinical studies based on selected patients who possess a particular type of target are projected to become mainstream. Under these circum-stances, we believe there are outstanding opportunities for venture businesses such as ourselves as the burdens associated with clinical studies including registered sample size, expenditure, and processing decline.

Stable income Milestone payments

Upfront fees Joint R&D expenditure

Upfront payment

Upfront payment

Technology usage fee

Milestone payment Royalties



Licensing Out Platform Technology

Lead Antibody Licensing

Drug Discovery Alliance

＊8 Milestone paymentsRevenues received as specific milestones are achieved in line with post out-licensing drug development progress.

＊9 PipelineDeveloped products (candidate drugs for medical use) that encompass the full process from research and development through approval to sale.

＊10 Clinical studiesTesting that encompasses comprehensive trials of both patients and individuals in good health. The scope of clinical trials extends beyond the development of new drugs and includes the conduct of follow-up research as well as studies into and confirmation of the other effects of existing pharmaceuticals.

Please tell us about the Company’s earnings structure?

How will the Company’s earnings structure evolve in the future?


8


9

Top Interview

Current State & Future

Q.11Chiome Bioscience has positioned 2023 as the year in which it will provide the ultimate made-to-order medicine. As a first step toward realizing this vision, the Company successfully developed a fully human ADLib® system at the end of fiscal 2013, and worked diligently to further diversify the system library throughout fiscal 2014. While this effort to improve the performance of the ADLib® system will

Q.12In addition to setting up a target-specific project, Chiome Bioscience is continuing to strengthen activities that demonstrate the ability of the ADLib® system to generate antibodies for pandemic contagious diseases. In October 2014, the Company announced that it had employed the ADLib® system to generate antibodies for multiple influenza viruses in a short period of time, and followed this with an announcement in December that it had succeeded in generating antibodies for the Ebola virus, which was devastating patients in

continue unabated, the fruits of the Company’s labors have already been applied to the Lead Antibody Licensing business. In addition to generating antibodies with a view to upgrading and expanding our pipeline, we are initiating technology licensing activities targeting candidate companies. In fiscal 2015, we will focus on the out-licensing of technologies and antibodies while shifting in earnest to a practical application phase.

Looking at the status of activities as they currently stand, our business with the Chugai Pharmaceutical Group in the Drug Discovery Alliance business is progress-ing nicely. We are also engaging in joint research as well as out-licensing activities with respect to the two anti-cancer therapeutic antibodies which LivTech, Inc. is conducting preclinical studies in partnership with Yakult Honsha Co., Ltd.

In the Lead Antibody Licensing business, the Company is conducting tests to verify the efficacy of anti-semaphorin 3A in the inflammatory diseases and cancer fields. Anti-semaphorin 3A is our first lead antibody candidate developed jointly with the Goshima Laboratory at Yokohama City University. Moreover, we commenced joint research activities with the Uemura Laboratory of Nagoya City University and the Takei Laboratory of Yokohama City University in a bid to generate new antibodies.

Turning to the Licensing Out Platform Technology business, we are work-ing to improve the fully human ADLib® system while at the same time initiating marketing activities targeting candidate companies. Marking a major milestone, we are receiving royalty payments from Fujirebio Inc. in connection with the sale of a diagnostic kit that uses antibodies generated by the ADLib® system. Fujirebio is a technology licensee of the original ADLib® system and is conducting ongoing research into the development of a new diagnostic kit. Should the company succeed in its endeavors, Chiome Bioscience can expect to receive additional royalty payments.

Touching briefly on the external environment, and as an extraordinary example of a made-to-order breakthrough in the field of regenerative medicine, Dr. Masayo Takahashi, project leader at the RIKEN Center for Developmental Biology, Laboratory for Retinal Regeneration, reprogrammed certain cells taken from a patient’s skin to produce induced pluripotent stem (iPS) retinal cells, which were then implanted back into the patient. Thanks to this development, there are indications that legislation is being renewed to accommodate made-to-order techniques in the field of regenerative medicine, and that Japan is fast becoming the center of global attention with respect to cutting-edge tailor-made medicine. As a company that is working to realize made-to-order medicine using the ADLib® system, these trends are an enormous boost to our aspirations.

parts of West Africa.Moving forward, we will look to develop previously acquired antibod-

ies into lead candidate antibodies, while at the same time continuing efforts aimed at generating new antibodies. In this manner, we will actively push ahead with the project to expand and upgrade our pipeline. Based on this positive track record, we have entered into negotiations with a variety of public and other institutions both in Japan and overseas. As a result, we are pursuing the potential for joint research. Taking into account each of these activities, we will accelerate business development particularly in the United States, which we believe holds the key to realizing our vision.

As populations increase and the scope of people’s activities continue to expand, it is not difficult to imagine a world confronted by completely unknown viruses. To make matters worse, drugs that were effective one year may have limited effect the next due to mutations in the offending virus. Using the Company’s ADLib® system, which can generate antibodies in a short period of time, the potential exists to quickly administer antibody drugs that will go a long way to benefiting society during emergency situations.

Q.10Of the six broad categories of management capital (financial, manufactured, human, intellectual, social, and natural), we place the utmost weight on two forms of intellectual capital. First and foremost, is the ADLib® system, which is the basis of the Company’s foundation. In complete contrast to conventional methods, the groundbreaking ADLib® system has enabled the rapid generation of diverse antibodies thereby opening up an entirely new pharmaceutical market. Limited to the production of avian antibodies, we overcame the big-gest weakness of the system, by developing a fully human ADLib® system last year. Currently, we are working diligently to consistently raise the level of per-formance by further diversifying and enhancing the quality of our library＊11.

Today, the basic patent rights to the ADLib® system are shared equally by the Company and RIKEN. Steps have been taken to protect these rights not only in Japan, but also across all principal global markets. Moreover, we are filing related patents inside and outside Japan in a timely manner. As a result, we have put in place a structure that allows us to develop business around the world on an exclusive basis.

The other form of intellectual capital rests on the Company’s ability to establish alliances. Unlike existing venture companies that are active in the drug discovery field, we do not focus on the development of an individual drug. By competing on the basis of a proprietary technology that concentrates on the generation of antibodies, we are able to secure income from multiple companies and to control the risk of failure. Drawing on this technology, we form alliances with a number of business partners including academic institu-tions, global pharmaceutical companies, and biotechnology ventures. A defin-ing feature of Chiome Bioscience is therefore its ability to acquire efficient target antigens as well as highly functional antibodies and to further reduce the risks associated with drug discovery.

The next most important management resource is human capital. While the Company is made up of outstanding employees with a wide range of experience and abundant skills, we have always placed a premium on per-sonnel who are both earnest and prepared to take on a challenge. For this reason, Chiome Bioscience maintains a personnel evaluation system that is based on the integrity and earnest nature of each individual as well as his or her willingness to take on a challenge. True to the spirit of our foundation, we value the desire of each employee to pioneer changes in society. For example, we encourage employees who are prone to adopt an insular approach to their particular field of research to team up with individuals who have expertise in other fields. By providing opportunities to those who seek out a challenge, we are promoting growth across every facet of our activities including technologi-cal expertise, business development, and social contribution.

For a company such as ourselves, manufactured capital is not an impor-tant management resource. Social and natural capital also have minimal impact on our activities.

＊11 LibraryA collection of DT40 cells in which each cell has an antibody with a different structure. This collection of DT40 cells is referred to as a library and can be likened to a traditional library where a wide range of information is collected and stored and provided to users with a diverse range of needs.

What are the Company’s most important management resources?

What are your thoughts on current conditions as you work toward achieving the Company’s long-term goals?

What progress has been made to achieve another milestone in the field of pandemic diseases?


10


11

In addition to setting up a target-specific project, Chiome Bioscience is continuing to strengthen activities that demonstrate the ability of the ADLib® system to generate antibodies for pandemic contagious diseases. In October 2014, the Company announced that it had employed the ADLib® system to generate antibodies for multiple influenza viruses in a short period of time, and followed this with an announcement in December that it had succeeded in generating antibodies for the Ebola virus, which was devastating patients in

parts of West Africa.Moving forward, we will look to develop previously acquired antibod-

ies into lead candidate antibodies, while at the same time continuing efforts aimed at generating new antibodies. In this manner, we will actively push ahead with the project to expand and upgrade our pipeline. Based on this positive track record, we have entered into negotiations with a variety of public and other institutions both in Japan and overseas. As a result, we are pursuing the potential for joint research. Taking into account each of these activities, we will accelerate business development particularly in the United States, which we believe holds the key to realizing our vision.

As populations increase and the scope of people’s activities continue to expand, it is not difficult to imagine a world confronted by completely unknown viruses. To make matters worse, drugs that were effective one year may have limited effect the next due to mutations in the offending virus. Using the Company’s ADLib® system, which can generate antibodies in a short period of time, the potential exists to quickly administer antibody drugs that will go a long way to benefiting society during emergency situations.

Our out-licensing activities are grounded in efforts aimed at raising the perfor-mance level of each technology. We are therefore taking steps to conclude trial contracts with multiple pharmaceutical companies while improving the fully human ADLib® system. From a quality perspective, we have put in place a structure that is capable of analyzing and optimizing the antibodies that have been generated. Through improvements in the system, we will also continue to generate antibodies that deliver high added value. Building on these endeavors, we will place considerable weight on partnering with companies that possess other cutting-edge peripheral technologies. Under an alliance with Biotecnol, Inc., which began two years ago, the Company gained access to the Tribody™ technology. Using this technology, it is possible to recognize up to three different antigens in a single molecule. This makes it possible to develop highly functional antibody drugs with the ability to recognize and attack specific cancer cells. Our goals going forward are to actively tie-up with several institutions that possess advanced technologies and to combine these technologies with the ADLib® system to increase the added-value of lead antibodies. In this manner, we hope to build a drug discovery network that maintains the ADLib® system at its core.

Last year, Fujirebio Inc. brought to the market a diagnostic kit that uses antibodies derived from the ADLib® system. This milestone has attracted considerable interest from the industry and we have received a number of inqui-ries. While working to ensure that this step forward generates robust earnings, we will redouble our efforts to position Chiome Bioscience as an essential partner in the eyes of a growing number of companies.

Top Interview

Q.13

companies in Japan and overseas in earnest. From fiscal 2016, we intend to enter a phase during which we will recoup and generate returns on previous investments. With these objectives in mind, I would like to briefly explain the assumptions that underpin our management plan.

In terms of the Company’s net sales, we expect to secure trial contracts based on the fully human ADLib® system in the Drug Discovery Alliance business and are projecting revenues from the out-licensing of anti-semaphorin 3A antibodies in fiscal 2015. Building on these positive achievements, we will out-license the fully human ADLib® system in earnest throughout fiscal 2016 and continue to pursue the out-licensing of several lead antibodies. Accounting for each of these factors, we are anticipating dramatic and substantial growth in net sales.

Chiome Bioscience has budgeted for such development expenses as preclinical studies, joint research with other companies, and drug development research aimed at improving its fully human ADLib® system and creating multiple pipelines. From a personnel perspective, the Company recognizes the importance of putting in place an underlying plan to ensure that it has the necessary human resources to expand its business going forward. On this basis, we will continue to increase the efficiency of our operations, standardize technologies, and ensure the efficacy of external resources.

Turning to capital expenditure, the Company will take all due care to analyze the costs and benefits of each proposed investment. We will continue to ensure that research and development investments are undertaken in a rational manner and are firmly linked to R&D plans. Marking another milestone, Chiome Bioscience will set up a research base in the United States this current fiscal year.

Based on the scenario we have outlined, we are projecting net sales of ¥3.4 billion in fiscal 2016. In fiscal 2014, our energies were directed toward improving our capabilities with a view to out-licensing our fully human ADLib® system. At the same time, we initiated marketing activities targeting companies that have expressed an interest. As a part of efforts to generate lead antibodies, we undertook tests to verify the efficacy of anti-semaphorin 3A against inflam-matory diseases and cancer. We have seen some promising results in certain instances. Moving forward, we will continue to push forward these activities in fiscal 2015. We will make every effort to secure the out-licensing of technologies and lead antibodies within the current fiscal year. Furthermore, we will aggressively channel an appropriate amount of management resources to areas of new joint research and newly introduced projects. In this manner, we will work to create a continuous pipeline.

In specific terms, we procured ¥2,004 million through an increase in capital in December last year with the aim of building several promising pipelines. In order to promote increased technological innovation in a bid to realize our vision, we recognize the critical need to engage in independent research and development while also forming alliances with companies that possess outstanding related technologies. These funds are therefore being channeled into cultivating alliance opportunities to acquire new technologies while deepening existing collaboration and to meet associated expenses. We are also applying proceeds to fund the operations and capital investments of domestic research bases as well as research and development into addressing pandemic diseases. Thanks largely to the recent capital increase, we have secured the necessary resources to meet expenses through to fiscal 2017 while maintaining a sound financial position.

As a company that was established to ensure the practical application and further growth of the ADLib® system, an extremely promising technology developed by the Company’s external executive director, Kunihiro Ohta, Chiome Bioscience will celebrate its 10th anniversary this year. Following on from the successful development of a fully human ADLib® system in fiscal 2013, we have worked diligently to improve the diversity and quality of our library, promote joint research with multiple partners, overcome pending issues, and build up a solid track record of success.

Building on this performance, we are now at an important crossroad where we will shift to a high value business. Working in unison, we will do our utmost to achieve our longstanding vision.

Chiome Bioscience has put in place a mid-term management plan that covers the three-year period from fiscal 2014 to fiscal 2016. Recognizing that fiscal 2014 was positioned as a period during which the Company would undertake anticipatory investments in a bid to secure technology improvements, Chiome Bioscience will endeavor to develop its business by further raising the perfor-mance level of its fully human ADLib® system from fiscal 2015. In the Drug Discovery Alliance and Licensing Out Platform Technology businesses, we will work to secure contracts with various candidates including pharmaceutical

Mid-term Management Plan & Results

Q.14

What steps are you taking to out-license the Company’s ADLib® and other systems as you strive to improve earnings?

What progress have you made under the mid-term management plan?


12


13

Our Resources

Differences between Antibody Drugs and Conventional Pharmaceuticals (Small Molecular Medication)

Antibody drugs are groundbreaking pharmaceuti-cals that use the defense mechanism of the body’s own immune system to attack marker antigens on the surface of cancer cells and pathogens including viruses with pinpoint accu-racy. Antibody drugs differ from conventional pharmaceuticals in that they offer high target specificity. Expectations are therefore high that

these drugs will alleviate anxieties associated with unanticipated side effects.

Considering their outstanding safety and potential to effectively treat diseases for which there are currently no reliable treatment meth-ods, antibody drugs are attracting intense inter-est within the pharmaceuticals market.

■ Antibody drugs are used chiefly for

Differences between the ADLib® System and Conventional Methods for generating Antibodies

The most common methods for generating antibodies in use today are the mouse hybridoma method, which administers antigens to laboratory animals such as mice and generates antibodies, and the phage display method, where a virus (phage) infecting escherichia coli expresses a diverse array of antibodies (only a certain portion of each antibody is expressed).

Use of the mouse hybridoma method is limited due to immunological tolerance (no indica-tion of an immune reaction to structural compo-nents within the body greatly impacting the ability to generate antibodies against antigens). As a result, it is extremely difficult to generate antibod-ies against the proteins that comprise the body. Under the phage display method, the antibody fragments (scFv: single-chain antibodies, and; Fab: antigen-binding fragments) acquired must be

converted to Immunoglobulin G (IgG) antibodies in order to develop antibody preparations. Due to the time and effort required to complete this conver-sion process, certain cases have been reported where issues have arisen regarding deterioration in bioactivity following IgG conversion.

In contrast, the ADLib® system uses the body’s own unique diversification mechanism. The system is therefore not limited by immunological tolerance, an issue under the mouse hybridoma method, and offers superior performance for all types of antigens. In addition, the DT40 cells that produce antibodies differ from the antibody fragments acquired using the phage display method. As a result, the ADLib® system facilitates acquisitions under the IgG (ADLib® IgG Chimera library and fully human ADLib® system) format.

Name of diseaseType of disease

Cancer

● rheumatoid arthritis　● crohn’s disease　● castleman’s disease　● asthma　● acute graft rejection following renal transplantation　● cancer　● colon cancer　● breast cancer　● acute myeloid leukemia

● colon cancer　● breast cancer　● acute myeloid leukemia

● controlling neonatal and pediatric infections　● age-related macular degeneration

Inflammation and autoimmune diseases

Infectious diseases, miscellaneous

The ADLib® System

Autonomously diversifying library

Need to avoid immunological tolerance

Mouse hybridoma method

Phage display method

A Proprietary Innovative Antibody Generation Technology

The ADLib® system is a groundbreaking technol-ogy that completely solves problems once regarded as intractable in antibody generation, such as diversity, speed, and difficult antigens targeting.

Put simply, the system enables the genera-tion of a variety antibodies that can then be used

in the development of therapeutic drugs to treat a greater number of diseases in one-quarter to one-sixth the time required using conventional methods. Unlike other methods, the system can also generate functional antibodies that can effectively target difficult antigens such as.

The ADLib® SystemIntellectual Capital

Competitive Advantage through Technological Diversity

Comparison with conventional antibody generation technologies (Source: Chiome Bioscience Inc.)


14


15

Our Resources

Practical Application of the Fully Human ADLib® System

As a part of ongoing efforts to further develop its ADLib® system, Chiome Bioscience succeeded in promoting DNA recombination (gene conversion) in the antibody locus of DT40 cells derived from chickens in March 2014. In May of the same year, the Company completed steps to file the appropriate patent application. With the development of a fully human ADLib® system, the potential now exists to generate human antibodies that can be introduced directly to humans over a short period of time.

Using the fully human ADLib® system, Chiome Bioscience has confirmed the ability to obtain specific antibodies that target multiple antigens. The acquired antibodies include those that target difficult antigens, which in turn could have major clinical implications going forward. After estab-lishing this technology, the Company will now engage in ongoing activities that help to enhance the functions of the system even further.

In the future, Chiome Bioscience will work diligently to improve the performance of the fully human ADLib® system. Verification of the system’s high efficacy through a battery of tests and assessments is expected to have a substantial impact on the development of therapeutic antibod-ies. In particular, plans are in place to accelerate the application of the system in the field of pandemic contagious diseases. With this in mind, the Company is looking to achieve its vision set for 2018 in advance.

Taking each of the aforementioned factors into consideration, continued improvements in the fully human ADLib® system are expected to play a major role in Chiome Bioscience becoming a healthcare innovator that provides remedies that are 100% effective. This will then allow the Com-pany to achieve the overarching vision that it has held since its foundation.

Overview and Main Features of the ADLib® System

The ADLib® system is a monoclonal antibody generating system providing a diverse array of complete antibodies in vitro, without using immunization. At Chiome Bioscience, we call this system the Autonomously Diversifying Library (ADLib®) system.

Trichostatin A (TSA) is used to control gene diversification mechanism activity in DT40 cells. The diverse cell groups (library) that are produced are then refrigerated enabling their proper use.

Cell-based diverse antibody libraryFeature 1

Magnetic beads that are available in the market and conjugate with specific target antigens are placed in the library. Separate magnets are used to harvest the DT40 cells that bind to antigens. The process up to this point takes about 30 minutes. Thereafter, DT40 cells producing the antibody that specifically reacts with the target antigen are collected. Under the original ADLib® system, the antibodies obtained are avian antibodies. As a result, these antibodies are converted to human antibodies, which can then be further developed as drug candidates.

Rapid screening of antibodies specifically bound to the targetFeature 2

The ADLib® system can generate a variety of antibodies against antigens for which antibodies are difficult to obtain using conventional methods, such as toxins, pathogens, and self-antigens.

For example, ADLib® axCELL, one of the applica-tions of the ADLib® system, is a successful method for obtaining antibodies against multiple-transmembrane proteins including the G-Protein-Coupled Receptor (GPCR). Multiple-transmembrane proteins are a promising target for drugs, yet obtaining antibodies using conven-tional methods remains difficult.

Application to difficult antigensFeature 3

TSA treatmentActivates

recombination

Antibody selection: 30 minutes

Magnetic beads

MagnetAntigen

Cultivation for 1 week

Acquisition of specific monoclonal IgM/IgG antibodies

DT40 cells

SN

Magnet

SN

Magnetic beads

Antigen-expressing cell

Antibodies that specifically recognize the target (antigen)

Multiple-transmembrane protein

http://www.chiome.co.jp/english/technology/adlib.html#axCELL

To become a healthcare innovator providing remedies that are 100% effective

2014 ● Successful development of a fully human ADLib® system● Generation of antibodies that can be administered to people in only a few weeks

2018

2023

Aspiration

■ Evolution of the ADLib® system

June, 2013Apr. 2008July, 2003 Oct. 2009 Sep. 2011 Mar. 2014

Value in technology

Established a fully human ADLib® system⇒ Shifting to the commercialization phase

Original ADLib®

ADLib®combo

ADLib®axCELL

ADLib® IgG chimera

Fully human ADLib® prototype

Fully human ADLib®

Fusion between continuous technology improvement and advanced technology

Antibody-producing chicken cell

● Development of countermeasures for pandemic diseases● Replacement of vaccines using the fully human ADLib® system

● Achievement of the ultimate made-to-order medicine● Provision of custom-made antibodies to individual patients

The role of the fully human ADLib® system in creating a roadmap that will allow the Company to achieve its business vision

Provides antibodies in a short period


16


17

Our Resources

Pursuing Higher Levels of Technological Innovation

In order to discover high-value-added lead antibod-ies, Chiome Bioscience is promoting joint technol-ogy development in alliances with companies around the world that have cutting-edge technolo-gies. For example, Chiome Bioscience’s alliance with Biotecnol, Inc. has given it access to TribodyTM technology, which contributes to the development

of antibody drugs with higher efficacy. A TribodyTM can recognize up to three different antigens in a single molecule. This makes it possible to develop next-generation antibody drugs with multiple mechanisms, such as the ability to attack cancer cells while overcoming disease resistance in some patients.

Maximizing the Value of the ADLib® System

In those areas where the Company is unable to attain sufficiently high levels of technological innovation on its own, Chiome Bioscience actively pursues alliance opportunities. In a bid to protect its position as a global pioneer, the Company has also filed patent applications for the ADLib® system. Through these means, every effort is made to maxi-mize the value of its assets.

At the same time, Chiome Bioscience

out-licenses its technologies, most notably the ADLib® system, to other companies with the aim of promoting widespread use, securing a leading industry position, and setting the global standard. This in turn helps to raise the Company’s profile and ultimately to increase profits through growth in licensing income, royalties on the sale of thera-peutic drugs, and other income.

Outstanding Ability to Address Pandemic Contagious Diseases

The ADLib® system boasts a variety of strengths. In addition to its “diversity” and “speed”―the ability to generate antibodies for a diverse range of antigens over a shorter period than conven-tional methods―the system is distinguished by its contributions to the production of safe antibody drugs and the ability to selectively attack specific targets. By making the most of these inherent strengths, the ADLib® system can play a significant

role in developing effective treatment methods for infectious diseases. In fact, Chiome Bioscience has succeeded in generating antibodies for multiple influenza as well as ebola viruses over a short period of time. In the future, the Company will engage in development activities in this domain while at the same time pushing forward a new antibody generation project.

A Patent Strategy Aimed at Protecting Outstanding Proprietary Technologies

Needless to say, a patent is one of the most important assets for a pharmaceutical company to manage. Development of medical supplies is a risky endeavor requiring high expenditures and an extended devel-opment period from the initial investigation and early research stages through the clinical testing stage to actual release into the market. Therefore the significance of patents in the pharmaceutical industry as compared with other industries cannot be overestimated. Chiome Bioscience, which puts emphasis on research and development, also

recognizes the critical importance of patents and takes an aggressive approach to filing strategic patents applications.

In the primary markets of the world such as the U.S., Europe, and China, as well as in Japan, the Company has already completed registration of basic patents for the ADLib® system, is filing related patents inside and outside of Japan on a timely basis, and establishing and maintaining a system for exclusively developing the business in the future.

Major Activities in Fiscal 2014 and Future Prospects

In the fiscal year under review, Chiome Bioscience worked diligently to improve its library’s diversity in a bid to raise the performance of the ADLib® system to a level that would meet the expectations of licensing candidate companies. From fiscal 2015 and beyond, the Company will continue to diversify and improve the quality of its library. Moving forward, Chiome Bioscience will endeavor

to out-license its technologies in earnest.In addition to promoting an antibody genera-

tion project with the aim of expanding the pipeline that has already been introduced to the Lead Antibody Licensing business, the Company is vigor-ously commencing out-licensing activities to candi-date companies and taking a first step toward stable commercialization.

Differences between the ADLib® System and the Fully Human ADLib® System

Previously, the ADLib® system obtained human antibodies from avian antibodies generated from chicken cells. The newly developed fully human ADLib® system, however, is able to produce human

antibodies usable by people, by replacing genes that create antibodies in chicken cells with artificial genes that create human antibodies, and then running the ADLib® system.

■ Opening moves in achieving our vision from the fully human ADLib® system

Fully human ADLib® system Strategic antibodies to achieve our vision (Active Sonar)＊12

Shifting to the commercialization phase and formulation of strategic antibodies

● Lead Antibody Licensing business

● Practical introduction of the ADLib® system to generate antibodies for expanding the sales pipeline

● Licensing Out Platform Technology business

● Improvement in diversity; start of out-licensing activities

● Countermeasures for pandemic diseases

● Achievement of the ultimate made-to-order medicine

＊12 Active Sonar： Refers to the lead antibodies that drive our business and are helpful in realizing our vision.

Start to generate strategic antibodies for use against the candidate emerging infectious disease target

Start to consider strategic antibodies for use against the candidate rare intractable disease target


18


19

Intellectual Capital

Our Resources

Alliances with drug discovery companies1

Alliances with academia, etc.2

Chiome Bioscience is collaborating with universi-ties and research institutions in a bid to acquire target antigens and technological innovations. In this manner, the Company is working to expand its business. As a part of these endeavors, we are collecting information on specific antigen genes held by each of the aforementioned universities and research institutions. This infor-

mation is then used to generate antibodies.In those instances where efficacy against

certain diseases can be confirmed through alliances with academic institutions and joint research, applications for the right to pursue practical application are filed on a joint basis. By adopting this measure, Chiome Bioscience is working to expand its intellectual resources.

Alliance related to technological development3

In a bid to effectively and efficiently solve challenges, Chiome Bioscience partners with companies and academic institutions that specialize in fields requiring fundamental and

advanced expertise, such as clarifying the diversification mechanism of the ADLib® system and analyzing the level of antibody diversification.

● The Chugai Pharmaceutical Group (from 2013)Antibody drug discovery joint research

● Fujirebio Inc. (from 2010)Licensing as well as research and development in connection with the ADLib® system

● Yakult Honsha Co., Ltd. (from 2011)Joint research into anti-cancer therapeutic antibodies

Current major alliances

● Yokohama City University, Goshima LabOngoing work to discover high-value-added antibodies and further expand indication domains for anti-semaphorin 3A antibodies.

● The University of Tokyo, Takahashi LabEngaging in the production of antibodies for medical treatment of first-in-class membrane protein targets.

● Biotecnol Ltd.Continuing the development of antibodies that are candidates for next-generation lead antibodies by combining the TribodyTM technology and the ADLib® system.

Current major alliances

● Glaxo Group Limited (2012-2013)PILOT-STUDY AND OPTION AGREEMENT

Past major alliances

Basic Approach toward Alliances

Chiome Bioscience has positioned the concept of “chiasma & global exchange” at the heart of its management strategy. Based on this concept, the Company is collaborating with other companies and institutions while pursuing alliances in order to efficiently develop its business. Despite acquiring patent rights to the groundbreaking innovative ADLib® system technology in most major countries throughout the world, we recognize the difficulty in maintaining exclusivity. Working beyond the

confines of a single company, we are actively promoting alliances as well as the sharing of issues and ideas with a diverse range of partners. In this manner, Chiome Bioscience is building a unique global scale business structure that truly reflects the Company’s status and flavor. More-over, alliances allow us to acquire external tech-nologies and know-how. Looking ahead, we will move aggressively to upgrade and expand our intellectual capital.

Alliances with Multiple Companies and External Organizations

Centered on the ADLib® system, Chiome Bioscience is forming alliances with multiple partners including academic institutions (universities and research laboratories), global pharmaceutical companies, and biotechnology companies to acquire effective target antigens as well as highly functional antibodies. By forming these all iances, the Company is also endeavoring to reduce the considerable amount of

time required for drug discovery, related expenditure, and associated risks. This in turn is helping to ensure the development of antibody drugs. Leveraging the close-knit relationships with academic and other institutions, we are channeling our energies toward building several promising pipelines and generating high-value-added antibodies. At the same time, we are actively working to create new pipelines.

● Provision of antigens and antigen-expressing cells (antigen genes)

● Compensation● Required testing materials

● Views on the development of next-generation ADLib® systems

● Services in each antibody business

● Rights to commercialization of antibodies

● Provision of antibodies for research

● Patent strategy support

● Joint research expenses● Consultancy fees

Development of antibody drugs and diagnostic medicines

Pharmaceutical companies, etc.

Acquisition of targets (antigens)

Academia, etc.

Technological innovation Academia, etc.

AlliancesOur alliances based on the ADLib® system support drug discovery as well as the creation of antibody drugs with partner companies using their own R&D. As a win-win situation for both the Company and its partners, alliances deliver a host of mutual merits. In addition to the generation of antibodies to antigens that cannot be captured by conven-

tional antibody generation technologies, alliances help to generate antibodies with different antigen recognition sites than those obtained by conven-tional methods. Working through alliances, we are accelerating the pace of antibody drug devel-opment thereby meeting the expectations of society.


20


21

Securing and Developing Diverse Human Resources with the Ability to Excel

Ensuring that its human resources are distin-guished by their “diversity” is essential for Chiome Bioscience in its efforts to become a healthcare innovator that provides remedies that are 100% effective. The existence of personnel with finely tuned skills will be of limited value if all of the employees think and act with a single thought. Only with diverse input and contributions can we hope to provide made-to-order medicines that address the symptoms and anxieties of individual patients.

In order to confront unknown viruses and

the rapid spread of pandemic diseases head-on, and to develop new antibody drugs that show less than flattering rates of success, it is absolutely vital to bring together human resources, who can make the most of their disparate attributes and personalities, and who can put forward ideas regarding technologies from a wide variety of perspectives. It is here where Chiome Bioscience excels. The Company takes great pride in its diverse and outstanding human resources, who represent its ideal image of forthright earnestness and the spirit to take on each challenge.

A Company Distinguished by Its Personnel, Who Are Both “Earnest” and Prepared “to Take Up a Challenge”

In his position as president, Masa Fujiwara, has long held the desire to establish a company that is both earnest and willing to take on a challenge. With this desire, every effort has been made to nurture a strong corporate culture throughout the entire organization. Discussions, for example, are undertaken in an earnest manner with each and every employee free to express their opinion irrespective of status and title. Based on mutual trust and respect, every member of the organiza-tion actively pursues the common goal of maximiz-ing each individual’s potential. This underlying

culture is deeply rooted within the Company.Technology represents the products and

services that Chiome Bioscience offers as it strives to improve people’s health and lives. Engaging earnestly in discussions is therefore vital if the Company is to further hone its core technologies. It is equally important that we find pleasure in taking up a challenge. In this regard, we recognize that flexibility as well as the ability to assess other individual’s views as interesting are precious attributes.

Human Resources

Major Activities in Fiscal 2014 and Future Prospects

In 2014, Chiome Bioscience commenced steps to conclude trial contracts with multiple pharmaceu-tical and other companies while continuing to improve the fully human ADLib® system. Moreover, the Company is engaging in a wide range of sales and marketing activities. This includes participation in BIO and other conference lectures as well as one-on-one meetings. Entering fiscal 2015, we are further pursuing these activities subject to confi-dentiality agreements.

As a part of its research and development endeavors and efforts to realize its vision by providing effective countermeasures for pandemic diseases, Chiome Bioscience succeeded in generating antibodies against certain proteins of each of the influenza and Ebola viruses over a short period of time. The Company believes that the ADLib® system offers considerable competitive advantage by also rapidly generating antibodies against mutations that threaten people’s health through viral infections.

The focus of the Company’s existing business activities centers around research and development agreements mainly with Chugai Pharmaceutical and that company’s overseas subsidiary Chugai Pharmabody Research. At the same time, Fujirebio

Inc. a major player in the diagnostic agent field, continues to engage in the sale of a diagnostic kit that employs a specific antibody obtained using the Company’s ADLib® system. As a result, Chiome Bioscience records revenues from the royalties derived from the sale of this kit.

In February 2015, the Company resolved to establish a new research facility within the Innovation Center of Nanomedicine (iCONM) at KING SKYGATE, Tonomachi, Kawasaki City. While consolidating Group resources at this research facility, Chiome Bioscience will undertake a full range of activities from the establishment of antibodies to efficacy testing. At the same time, the Company is looking to bolster its drug discovery capabilities through open innovation with other institutions.

From fiscal 2015, Chiome Bioscience will build on the success of its fully human ADLib® system. Energies will be channeled toward upgrading and expanding alliances while bolstering new markets by aggressively putting forward proposals to potential customers that showcase the competitive advantages of the system against such pressing global issues as pandemic contagious diseases.

Activities Aimed at Securing Alliances

In order to enter into effective alliances, Chiome Bioscience recognizes the need to ensure that the ADLib® system remains fresh and appealing to potential business partners. To this end, the Com-pany makes every effort to improve and develop the system on a continuous basis. Rather than rest on our laurels after securing practical application of the fully human ADLib® system in March 2014, we are therefore taking positive steps toward enhancing the performance of the ADLib® system through ongoing research and to better address

the expectations of alliance candidates.In addition, we are strengthening activities

aimed at verifying the efficacy of the ADLib® system against pandemic contagious diseases. This includes the successful generation of antibodies that are effective against those infectious diseases that can cause pandemics such as the ebola and multiple influenza viruses. In this manner, we are aggres-sively promoting the appeal and efficacy of the ADLib® system against immediate dangers and crises.

Our Resources

Intelectual Capital


22


23

Our Resources

Work Life BalanceEmployee Action Guidelines Linked to Personnel Evaluation

Chiome Bioscience has adopted a corporate policy that is based on the three core concepts of “ethics & transpar-ency,” “evolution & creation,” and “chiasma & global exchange.” Quite naturally, this policy is extremely significant to a company that strives to generate innova-tion within the medical industry. This policy is also closely linked to efforts aimed at nurturing a corporate culture that enables each and every employee to fully express their individuality and talents. But these words are not merely empty slogans. They are interwoven into the action agenda of the Company, the Chiome Ten Commandments. This action agenda is also a major component of the Company’s personnel evaluation system. Employees are evaluated under eight broad category items focusing mainly on the earnest manner in which they carry out their duties and their willingness and ability to take up a challenge. In this manner, Chiome Bioscience is keen to build a framework under which employees can consis-tently go about their work spurred by a strong spirit of challenge.

As the world undergoes significant changes, we also need to be an organization capable of evolving at all times, seeing change as an opportunity. This is why we are currently conducting a revision of the personal rating system and action agenda to enable further growth.

Training and Development

Chiome Bioscience recognizes that its ability to secure outstanding human resources and to package together a diverse range of individuals while still drawing out each employee’s maximum potential is critical to advancing its business endeavors. In addition, the Company is paying particular attention to training and development in order to enhance each employee’s motivation from the perspective of individual career plans.

Our training is defined by its focus on practical-ity. Rather than concentrate on the classroom, we incorporate actual case studies so that the fruits of our training can be applied immediately to daily operations and the frontline.

In fiscal 2014, we invited external experts to lecture on the theme of organizational development. This was a part of our project management training activities. Conducted on five separate occasions, participants engaged in discussions that extended well beyond the boundaries of status and department. In addition to identi-fying the optimal approach toward project management

with the goal of creating value, this training covered a wide range of topics including the communication skills (mutual understanding) required for team building, the ideal organization to which we should all aspire, and each individual’s mission. As a measure of our success in implementing this initiative, certain areas that were acknowledged as a challenge to be addressed have become specific activity targets. Moreover, we have adopted three research themes as Company projects and management issues that require resolution. In this manner, we are nurturing a virtuous training and development cycle that continues to breed fresh results by encourag-ing employees to take ownership of management issues and to enhance motivation while promoting accountability.

Chiome Bioscience strongly believes that promoting the growth of each individual employee while drawing out the passion to take up any and all challenges is a key source in securing its ongoing development. Looking ahead, the Company will continue to actively invest in its people.

Pledges of a Chiome Employee:the Chiome Ten Commandments

1. I will hold clear and appropriate goals2. I will inquire into the essence of every endeavor3. I will continue to aim for new challenges4. I will cultivate skills by accumulating achievements5. I will tackle each and every endeavor as my own6. I will recognize discussion as an opportunity for growth7. I will make active contributions to the whole8. I will strive to become a mature working member of society9. I will strive to interact and exchange on a global scale10. I will act on the basis of ethics and transparency

Introducing Employees

Chiome Bioscience actively recruits employees who take the initiative in realizing the Company’s vision irrespective of age and gender. Here, we would like to introduce two employees from our many staff

who boast diverse specialized skills. Each of these employees is taking the lead in our research activi-ties which provide the source of our corporate value.

When I first learned about my pregnancy, many thoughts rushed through my mind. Amid all the happiness, I also knew that I would eventually return to work! While the Company had several female employees with children, there was no one, at that time, who had

returned to work after taking maternity and childcare leave. I therefore felt that I would lay a path for others to follow. After actually returning to work, each day flew by in the blink of the eye. Naturally, there are times when I worry how best to balance work with my family life. On the bright side, I have learned how to better use my time. When deeply involved in experiments, it is not uncommon to return home late at night. While the time I can spend with my child becomes limited, I am able to spend quality time at night and on the weekends. On a positive note, this helps to lift my spirits toward work. Wherever possible I use the Company’s flextime system to take my child to and from the nursery school. This little time I can communicate with him is a source of immense joy. I also seek the advice of a colleague, who has many more years of experience as a parent. Looking ahead, I will continue to learn all that I can as a member of the basic research team. My goal is to contribute to efforts aimed at producing the ultimate made-to-order medicine.

Aki Takaiwa［Technology Development Department］

As a member of the information Systems Section, my role is to serve as a support desk covering the Company’s in-house IT and other systems. Making the most of the Company’s flextime system, I arrive at work in the early hours

of the morning. I try to finish my daily allotted tasks early before other employees arrive. This allows me to address any troubles that arise during the day with plenty of time to spare. Currently, I feel a strong sense of satisfaction in my work. This is because I am involved in introducing systems that are essential to the Company’s timely decision-making as well as such operations as the efficient sharing of research data. I can achieve all of this while at the same time balancing the needs of both work and family life. Looking to the future, I would like to continue working behind the scenes while helping in the discovery of new drugs.

Saori Nakamura［Corporate Planning Department］

Currently, I am undertaking research that will increase the performance and diversity of our antibody library. In order to realize the ultimate made-to-order medicine, it is becom-ing increasingly important that we

expand the Company’s platform, further diversify the library, and boost the speed of every facet of our processes from screening to production. Amid a workplace environment in which a diverse range of human resources go about their daily research activities, I am feeling more and more confident that my many years of academic experience in tumor immunology and cellular biology are proving useful.

Yukoh Nakazaki［Senior Researcher, Technology Development Department］

I am mainly responsible for animal testing assessment as a part of a group that undertakes the pharmacology testing to drug candidate antibodies produced using the ADLib® system. My goal is to help create innovative

drugs that draw out the full potential of antibodies while also conducting tests to confirm the efficacy of drug candidate antibodies. As a manager of this group, I try to put in place a workplace environment that allows my colleagues, who possess a diverse range of specialized skills, to work in a lively and energetic manner. My motivation is therefore to develop a place where everyone can focus on the task at hand and engage in research activities that allow the Company to achieve its goals in the shortest amount of time.

Toshio Hani［Manager, Pharmacology Research Department］

Chiome Bioscience recognizes the diversity of its human resources as a major strength. On this basis, we acknowledge that the loss of an outstanding employee at a particular stage of his of her life can cause consider-able damage. Accordingly, Chiome Bioscience works diligently to respect the need for a balanced work life. While taking into consideration the personal circum-

stances of each individual, the Company is endeavoring to put in place a structure and systems that allow employees to continue their work even when confronted with changes in lifestyles associated with a major life event. Moving forward, we are helping in the design of employees’ careers and the development of a workplace environment that better balances work and family needs.


24


25

Risk Management

Risk Management

Visualizing and Ascertaining Risks

In working to realize its vision by advancing various business strategies, Chiome Bioscience objectively identifies any and all inherent risks in order to address those issues that may significantly impact the Company’s management and its stakeholders. In this context, the Company has identified three broad categories of risk: business environment risks; business content risks and; other risks.

The risks that may have a significant impact on investors’ decisions, within the context of its business and accounting conditions, are presented as follows. Moreover, and with respect to those risks that the Company is currently unable to identify,

Chiome Bioscience is working diligently to disclose any and all data on a timely basis as and when it is deemed important to investors’ decision-making process. The content of this section does not encom-pass all of the possible risks pertaining to investment in Chiome Bioscience.

Aware of the possibility that new risks will emerge, Chiome Bioscience’s policy is to avoid risks and to respond swiftly if a risk materializes. Decision on whether to invest in Chiome Bioscience’s stock should be made with due consideration paid to the risks outlined as follows as well as matters not described herein.

＊ Matters of a forward-looking nature described in this section are based on management’s judgment as of the publication date of this report.

● Risks relating to antibody drug market growth

● Risks relating to the obsolescence of the Company’s technology amid technological innovation

● Risks relating to competition with other companies

● Risks relating to the impact of laws and regulations

● Risks relating to phase 0 implementation in the development of antibody drugs

● Risks relating to laws and regulations, trading practices, and foreign exchange currency markets with respect to overseas transactions

Business Environment Risks

● Risks relating to business management structure

● Risks relating to any conflicts of interest of our outside executive director Kunihiro Ohta

● Risks relating to past operating results

● Risks relating to dilution of share value through the issuance of new shares

● Risks relating to leakage of confidential information

● Risks relating to the incidence of natural disasters

Other Risks

● Risks relating to patent rights● Risks relating to reliance on specific technologies

● Risks relating to dependence on specific customers

● Risks relating to relationships with multiple pharmaceuticals companies

● Risks relating to the impact from business partners

● Risks relating to the recognition of earnings

● Risks relating to major assumptions regarding business plans

Business Content Risks

Preventing, Avoiding, and Minimizing Damages due to Risks

Chiome Bioscience has put in place an in-house management framework in order to properly manage risk. For those risks that have been identified, our focus is on preventing any possibility of loss or damage while also working to avoid and/or minimize any subsequent negative impact as and when required.

In those instances where our ability to properly address the impact of changes in market trends, technological innovation, contractual obligations, alliances, laws and regulations, is brought into question, we work diligently to build the necessary framework that will allow us to prevent any damage if and when each of these risks materialize. In specific terms, we make every effort to foster a corporate culture that constantly pursues new value in order to address those risks related to market fluctuations and technological innovation. We also strive to prevent any loss or

damages by promoting strict awareness toward compli-ance issues. This is particularly the case for those risks associated with laws, regulations, and fair trading. Moving forward, we look to ensure effective and robust monitoring through the Audit & Supervisory Board as a part of efforts to engage in the management of risk across entire businesses.

Meanwhile, every effort is being made to minimize the negative impact on the Company’s management and stakeholders of natural disasters including major earthquakes, marked fluctuations in foreign currency exchange rates, and other risks of a sudden and dramatic nature that companies find difficult to avoid. In this regard, we are placing particular emphasis on putting in place the necessary systems as well as response manuals.

■ Framework to prevent any loss attributable to material risks and to minimize adverse impacts

Chiome Bioscience has put in place specific crisis management rules to ensure that it adequately addresses sudden difficulties. Under these rules, the Company takes immediate steps to establish a task force when confronted by a major financial crisis. In addition, Chiome Bioscience has formulated manage-ment rules in response to business and operating risks. These risks cover a wide range of areas including compliance, the Company’s reputation, operations, and disasters. Chaired by the senior director of the Company’s Corporate Division, business strategy meetings are held as required to deliberate on and consider various issues. These business strategy meet-

ings are attended by standing executive directors, Audit & Supervisory Board members, and the directors of each department. They are also a forum through which senior management reports on Group-wide risk management matters on a comprehensive basis and facilitate the consideration of appropriate countermea-sures. Each director oversees the management of operating activity risks for the department over which he or she is responsible. In the event of an unforeseen circumstance, reports are submitted to the Chief Executive Officer. Matters requiring consideration on a Group-wide basis are tabled at each business strategy meeting for deliberation.

Protecting Intellectual Property

Intellectual property forms the Company’s most important resource. The degree to which Chiome Bioscience is able to pursue its business endeavors freely and to secure technological competitive advantage rests on its intellectual property and the ability to generate research and development results. With this in mind, intellectual property plays an impor-tant role in mitigating a host of business risks.

By securing intellectual property rights over proprietary research and technologies in a timely and decisive manner, we offset the risk of unauthorized

use by other companies. At the same time, intellectual property rights enable us to maximize our competitive advantage and to further expand our business.

In the context of the intellectual resources of other companies, it is imperative that we respect their rights. Moving forward, we will ensure that we do not infringe on the intellectual property rights of other parties, thereby preventing any damage to our reputation and brand from each of the fair trading and compliance perspectives.

Information Security

Chiome Bioscience holds a wide range of confidential and personal information in connection with its technologies, business operations, business partners, and employees. In order to ensure that this informa-tion is not leaked to unauthorized parties or applied in a manner that is contrary to its intended use, Chiome Bioscience has put in place a privacy policy which is

publicly posted on the Company’s website. At the same time, our management practices place the utmost care on ensuring the security of confidential information. We take great pains to maintain and enhance the level of our security in a bid to keep pace with advances in IT-related technology.


26


27



Basic Approach toward Corporate Governance

For the people around the world who are waiting for new medical treatments, Chiome Bioscience’s corpo-rate mission is to continuously generate novel drug discovery technologies based on diversity of genetic information, to generate innovative therapeutic antibodies, and to revolutionize the medical system. Chiome Bioscience aims to be a company that is

trusted by all of its stakeholders, including share-holders, customers, suppliers, local communities and employees. Our basic approach to corporate gover-nance is the maintenance of a structure that enables rapid, ethical, and transparent decision-making, while making concerted efforts to strengthen compliance and other internal controls.

Strengthening Governance from Each of the Value Creation and Audit/Oversight Perspectives

Chiome Bioscience’s corporate governance structure is primarily made up of a Board of Directors, which oversees the Company’s directors in the execution of their duties and is responsible for generating corpo-rate value, and the Audit & Supervisory Board, which is responsible for the audit function. Highly profes-sional individuals, who are well versed in each field, are appointed as appropriate, to ensure that each board is capable of fully carrying out its role.

The Company’s Board of Directors includes outside executive directors, who facilitate the objec-tive and rational evaluation of the Company’s opera-

tions, which include the management of proprietary technologies and business of a specialist nature, while also incorporating social concerns. Meanwhile, the three-member Audit & Supervisory Board is comprised entirely of outside officers. In order to ensure the validity of the Company’s operations as well as thoroughgoing legal compliance, individuals appointed to the Audit & Supervisory Board have abundant experience in the audit function and come from diverse backgrounds including finance, accounting, and pharmaceutical company management.

■ Management Structure

The Board of Directors meets once a month and also holds extraordinary meetings as necessary, for an agile and efficient business oversight framework. The Audit & Supervisory Board holds periodic meet-ings, and Audit & Supervisory Board members have

seats on the Board of Directors, for a nimble and open auditor system. In addition, Chiome Bioscience has adopted an executive officer system. With this initiative, the Company has taken steps to clarify responsibilities with respect to the execution of duties.

General meeting of shareholders

Each department

Chief ExecutiveOfficer

Board of Directors(5 members, of whom 2 are outside executive directors)

Internal Audit Office

Audit & Supervisory Board(3 outside audit & supervisory

board members)Accounting auditors

Appoints and dismissesAppoints and dismissesAppoints and dismisses

Selects and dismisses

Issues instructions and guidance toInternal audit Reports to

Reports to

Issues instructions to

Liaise with

Liaise with

Audit

Audit

Liaise with

【Corporate Governance Organization Chart】

a. Board of DirectorsChiome Bioscience maintains five executive directors, two of whom are outside executive directors, for a total of five members. The Board of Directors is responsible for making business decisions and overseeing the executive directors as they execute their duties. The outside executive directors comprise Kunihiro Ohta, one of the inventors of the ADLib® system, and Tsutomu Kawaguchi, who has extensive experience in the development of antibody drugs at a major drug maker. Under this framework, a broader spectrum of opinions is reflected in decision making, and operations can be overseen from external perspectives.

b. Audit & Supervisory BoardThe Audit & Supervisory Board comprises three members (all of whom are outside members). Audit & Supervisory Board members audit the business activities of the Company as a whole, which includes the execution by executive directors of their duties, from a position that is independent to the operating and executive functions.

In specific terms, Audit & Supervisory Board members participate in general meetings of shareholders and meetings of the Board of Directors, and exercise their legal rights to receive reports from executive directors, employees, and accounting auditors. Full-time Audit & Supervisory Board members attend key manage-ment meetings and visit research laboratories and other work sites to monitor their effectiveness.

c. Management CommitteeThe Management Committee consists of senior direc-tors and executive directors in charge of each business division as well as the head of the research laboratory, who convene meetings on a regular basis to discuss management policies and business plans, keep abreast of business conditions and manage progress, as well as examine and analyze important matters.

d. Method of Determining Compensation Paid to Executive Directors and Audit & Supervisory Board Members

With regard to decisions about executive director and Audit & Supervisory Board member compensation, the general meeting of shareholders approves resolutions for the total amount of their compensation. The amount of compensation for each executive director is decided by the Board of Directors and for each Audit & Supervi-sory Board member by the Audit & Supervisory Board.


28


29


Executive Directors

Audit & Supervisory Board Members

Outside Audit & Supervisory Board MemberKenichiro OkamuraRecently, Japanese accounting standards have taken on an increasingly international flavor. A growing number of companies are voluntarily adopting Interna-tional Financial Reporting Standards. Under these circumstances, I would like to offer my advice on how best to disclose information and to ensure that the Company’s financial reporting properly reflects its operating results and financial position. I strongly believe that a company is better placed to take the appropriate action when based on a sound framework for transparent financial reporting.

Outside Audit & Supervisory Board MemberYoshiaki AsahiI look at the Company from a neutral and objective perspective as befits my position as an independent executive and member of the Audit & Supervisory Board. Making the most of the knowledge and experi-ence gained in capital markets as well as corporate law, together with the know-how acquired through consulta-tions with many companies, my goal is to enhance the Company’s corporate value. In addition to fulfilling my role as a member of the Audit & Supervisory Board, I am keen to actively support the Company in its ongoing growth and development.

Full-Time Outside Audit & Supervisory Board MemberYasuhiro TsujiMy goal is to ensure that audits send out a clear message of the importance of both sound and long-term growth on a Group-wide basis. In this regard, it is vital that the audit process takes into account the expectations of multiple stakeholders including shareholders, responsible govern-ment authorities, and employees, and is geared toward enhancing compliance. I am also aware of the need to fully establish the validity of audits, and an audit posture that is supportive of management risk taking while at the same time enhancing the efficiency of business execution by directors. My aspiration is to serve as a bridge that connects investors with management by maintaining direct dialog with executive officers across a wide range of areas that include the strict evaluation of management performance and construction of an effective management structure.

Outside Executive DirectorKunihiro OhtaAs someone who was involved in the development of the ADLib® system, I make every effort to pass on advice across a variety of areas including research and development as well as management policy. I also endeavor to put forward technology proposals and ideas while also imparting in straightforward terms my understanding of the latest technological and academic trends. Any comments that I may provide are based on the sincere desire to enhance the Company’s corporate value. In addition to actively exchanging opinions with Mr. Fujiwara, Chief Executive Officer, as well as execu-tive directors, Mr. Sawada, Mr. Kobayashi, Mr. Kawagu-chi, and Audit & Supervisory Board member, Mr. Tsuji, I make every effort to provide the best possible advice to the Board of Directors through the sharing of informa-tion with other external executives.

Outside Executive DirectorTsutomu KawaguchiAs an outside executive director, I feel that my role is to make the most of my 40-plus years of experience in research and development as well as corporate manage-ment in the pharmaceuticals field. Having participated in the Company’s affairs since 2008, it is also important that I bring to the table an intimate knowledge of both internal and external conditions. In the field of biotech-nology, a single decision can have the most serious of ramifications. As one of many involved in the Company’s undertakings, it is my heartfelt desire that Chiome Bioscience will be recognized as a shining example of success. Accordingly, I will coordinate closely with other executives, work to grasp current conditions, and provide comments, opinions, and advice.

Comments from External Executives

Audit & Supervisory Board members, Yoshiaki Asahi and Kenichiro Okamura, each maintain business and engage in work with other companies. Both gentlemen also hold concurrent positions as corporate auditors of other companies. There are, however, no vested interests between these companies and Chiome Biosci-ence. Both Mr. Asahi and Mr. Okamura maintain a high degree of independence. Mr. Kawaguchi, Mr. Asahi, and Mr. Okamura have submitted notifications of their independent officer status as stipulated by exchange regulations issued by the Tokyo Stock Exchange.

Relationships between Members of the Audit & Supervisory Board and the Company

Kunihiro Ohta Tsutomu Kawaguchi Yoshiaki AsahiYasuhiro Tsuji Kenichiro Okamura

President & CEOMasa Fujiwara, M. Agr., D.V.M.Masa Fujiwara, D.V.M. has served as the Chief ExecutiveOfficer of Chiome Bioscience Inc. since February 2005.He has previously worked at Chugai Pharmaceutical Co.,Ltd., PricewaterhouseCoopers Consultants Co., Ltd.(currently IBM Japan, Ltd.) and Quintiles TransnationalJapan K.K., where he served as the Director of the DataManagement Department.

Executive Director & CFOKeiichi Kiyota, M.B.A.(Executive Director of Corporate)Keiichi Kiyota has previously worked at SANDOZPharmaceutical Co., Ltd. (currently Novartis Pharma K.K.). He has also served as the CEO at Genetic Nosan Co., Ltd. and Nimura Genetic Solutions Co., Ltd.

Executive Director & COO・CTOShigeru Kobayashi, M.E. (Executive Director of Research & Development, Business Development)Shigeru Kobayashi has previously worked at Kyowa HakkoKogyo Co., Ltd. (currently Kyowa Hakko Kirin Co., Ltd.). He has also served as the President at Kyowa Hakko UK Ltd. and Kyowa Pharmaceutical, Inc. (currently Kyowa Hakko Kirin Pharma, Inc.).

Outside Executive DirectorKunihiro Ohta, Ph.D. Dr. Kunihiro Ohta has previously served as the Associate ChiefScientist at the Ohta Genetic System Control Laboratory atRIKEN. He is currently a professor of the Graduate School ofArts and Sciences at the University of Tokyo. Inventor of the ADLib® system.

Outside Executive DirectorTsutomu Kawaguchi, Ph.D.Tsutomu Kawaguchi has previously served as Directorof the Research & Coordination Division, Director of thePharmaceutical Research Division and Senior Director of thePharmaceutical Business Division (Board Member) of ChugaiPharmaceutical Co., Ltd. He has also served as a Lecturer atthe Harvard Medical School, an Auditor at Y’s TherapeuticsCo., Ltd., a member of the board at Summit GlycoresearchCorporation and Audit & Supervisory Board Member atChiome Bioscience Inc.

Outside Audit & SupervisoryBoard Member (Full time)Yasuhiro Tsuji, Ph.D.Yasuhiro Tsuji has previously worked at The Japan Societyfor the Promotion of Science, and at The Research Instituteof Electrical Communication Tohoku University. He has alsoserved as Corporate Vice President and Department Managerof the Product Strategy Department of Chugai PharmaceuticalCo., Ltd. In addition, he served as President at Chugai ClinicalResearch Center Co., Ltd. and as a member of the Audit andSupervisory Board of Chugai Pharmaceutical Co., Ltd.

Outside Audit & SupervisoryBoard MemberYoshiaki AsahiYoshiaki Asahi has previously worked at Tokyo StockExchange, Inc. and Japan Associated Finance Co., Ltd.(currently JAFCO Co., Ltd.). He currently serves as the CEOat GPC, Inc.

Outside Audit & Supervisory Board MemberKenichiro Okamura(Certified Public Accountant)Representative director of Kaede Accounting Advisory Inc.; Representative director of Tokyo-IAS, Inc.; Senior partner of Kaede Tax Corporation


30


31

Internal Controls

The Board of Directors puts in place a structure that identifies the Company’s basic approach toward internal controls while also strengthening the oversight function. The Board is not only responsible for maintaining this internal control function, but also to assess and review its efficacy. At the same time, the Audit & Supervisory Board takes steps to monitor this internal control struc-ture to ensure that it functions properly.

Building and Operating an Internal Reporting System

Chiome Bioscience is putting in place an internal reporting system in order to collect and collate information relating to non-compliance, to prevent improper misconduct, and to establish timely coun-termeasures. In addition to a system that facili-tates direct reporting to management, the Com-pany is also contemplating steps to contract the reporting system function to external sources. After initiating operations under the internal reporting system, Chiome Bioscience will work to protect each individual’s privacy and to take all appropriate steps to ensure that individuals avail-ing themselves of the internal reporting system do not incur unfavorable treatment.

Internal Control Reporting System Measures

In fiscal 2013, the Board of Directors passed a resolu-tion to establish a structure that would ensure the integrity and efficacy of the Company’s operations. This was in response to the need for an internal control reporting system as stipulated under Japan’s Financial Instruments and Exchange Act that came into force from fiscal 2008.

In specific terms, deliberations were under-taken across 11 fields including compliance, risk management, the efficacy and efficiency of business operations, and the reliability of financial reporting. Matters for resolution were then documented as appropriate.

Details of each resolution are disclosed to investors in the Company’s Corporate Governance Report and fiscal 2014 Notice of Convocation of the 11th Annual General Meeting of Shareholders, which can be downloaded from our website.

Compliance Structure and Systems

Chiome Bioscience has identified that 3. the execu-tive director in charge of corporate management is responsible for ensuring thorough compliance with laws, regulations, and the Articles of Incorporation by all employees. Under this authority, the execu-tive director creates compliance rules and main-tains an internal reporting system that employees can use to report the discovery of any violations of laws, regulations, or the Articles of Incorporation. In this manner, every effort is being made to clarify the Company’s posture toward building a system that will maintain compliance.

Six-Year Financial Summary(Thousands of U.S. Dollars)

(Thousands of Yen)

Mar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 Dec. 2014(Nine Months)

Net sales

Operating loss

Ordinary loss

Net loss

Capital stock

Net assets

Total assets

Equity ratio (%)

¥380,815

420,227

209,752

（201,504）

（202,660）

（164,400）

554,500

323,211

865,735

4,006

（264,687）

269,617

（15.71）

（70.49）

55.1

37.3

¥463,184

495,570

245,407

（231,213）

（237,470）

（180,233）

779,500

592,978

876,017

（195,289）

（85,664）

383,420

（15.85）

（71.32）

53.0

67.7

¥633,197

427,035

177,981

（7,266）

（42,904）

（44,417）

1,027,996

1,045,552

1,265,866

（48,867）

（3,813）

419,269

（3.03）

63.26

28.1

82.6

¥324,127

617,874

309,437

（413,160）

（424,813）

（426,890）

1,213,090

1,037,894

1,296,734

（373,258）

（114,786）

463,473

（25.48）

57.09

95.5

76.3

¥434,962

969,814

442,591

（708,815）

（706,340）

（757,554）

3,348,737

4,559,143

5,012,804

（552,425）

（189,296）

4,102,996

（39.62）

223.17

101.8

89.8

¥277,759

1,054,317

574,529

（865,583）

（883,352）

（863,269）

4,434,685

5,839,466

6,257,267

（789,326）

（618,833）

2,130,818

（42.36）

264.79

206.8

92.9

＄2,304

8,746

4,766

（7,180）

（7,328）

（7,161）

36,787

48,440

51,906

（6,548）

（5,133）

17,676

（0.35）

2.20

ー

ー

Ratio of R&D expenses to net sales (%)

Cash flows from financing activities

Cash flows from investing activities

Cash flows from operating activities

Including research and development expenses

Selling, general and administrativeexpenses

Net loss per share (Yen)

Net assets per share (Yen)

Notes:1. Chiome Bioscience began preparing consolidated financial statements from the fiscal year ended March 31, 2014.2. In line with the change in account settlement date, the fiscal period ended December 31, 2014 is the nine-month period from April 1, 2014 to December 31, 2014.

3. The Company conducted a 2-for-1 stock split of its common stock effective July 1, 2013. While the Company also conducted a 2-for-1 stock split of its common stock effective April 1, 2014, “Net loss per share” and “Net assets per share” data has been calculated as if this stock split had been conducted as of the beginning of the sixth fiscal period ended March 31, 2010.

4. Figures in U.S. dollars are calculated, for convenience only, at the exchange rate of ¥120.55=US$1.00.

Dec. 2014(Nine Months)


32


33

Organization Chart／Number of Employees

(As of May 1, 2015)

Shareholders’ Meeting

Board of Auditors

Internal Audit Office

Board of Directors

President & CEOMasa Fujiwara

(Notes)1. The number of employees refers to the number of full-time employees.

2. The bracket next to the number of employees indicates the annual average number of temporary employees (including temporary employees dispatched by staffing agencies and following conversion to standard 8-hour workdays).

3. Since businesses in the Company are closely interconnected, the same employee engages in several businesses.

4. Employees classified as corporate (joint) staff are those attached to business development and administrative departments, including General Affairs and Accounting.

Segment

Drug Discovery Alliance

Lead Antibody Licensing

Licensing Out Platform Technology

Corporate (joint)

Total

No. of Employees

30［26］

16［8］

46［34］

(As of December 31, 2014)

■ Organization Chart

■ Number of Employees (Consolidated)

Corporate Information／Stock Information

■ Corporate Information (As of December 31, 2014)

■ Our Website

Top Pagehttp://www.chiome.co.jp/english/

IR Top Pagehttp://www.chiome.co.jp/english/ir/

Head of Reseach CenterKoji Murakami

Head of R&D DivisionExecutive Director & COO・CTO

Shigeru Kobayashi

Head of Corporate DivisionExecutive Director & CFOKeiichi Kiyota, MBA

Head of Bisiness Development DivisionSenior Director & CBOMakoto Seki, Ph.D.

CEO Masa FujiwaraCFO Keiichi KiyotaCOO・CTO Shigeru KobayashiCBO Makoto Seki

Name…………………… Chiome Bioscience Inc.

Date of establishment… February 8, 2005

Number of employees… 46

Capital ………………… 4,434,685 thousand yen

Headquarters, …………

Business ………………

History …………………

Research and development centered on the ADLib® system, our proprietary drug discovery platform technology.

research laboratoriesSumitomo Fudosan Nishi-shinjuku Bldg. No. 6, 3-12-1 Honmachi, Shibuya-ku, Tokyo 151-0071 JapanTEL: +81-3-6383-3561 (reception)

Shortly after its founding in February 2005, Chiome Bioscience Inc. concluded a collaboration agreement with RIKEN to commercialize its leading technology, the ADLib® system. After launching research activities, Chiome Bioscience Inc. concluded a collaboration agreement with Chugai Pharmaceutical Co., Ltd., which led to new business projects, including research support services for antibody drugs based on the ADLib® system.

Stock listing……………

Securities code ………4583

Fiscal period …………December 31

Annual shareholders’…March

Share registrar…………

■ Stock Information

Chiome Bioscience accepts inquiries by phone,fax, or e-mail form on our website.

InquiriesTEL: +81-3-6383-3561FAX: +81-3-5302-1311http://www.chiome.co.jp/english/contact/

■ Contact Information

meeting

Tokyo Stock Exchange, Mothers Listed on December 20, 2011

Sumitomo Mitsui Trust Bank, Limited 1-4-1, Marunouchi, Chiyoda-ku, Tokyo

President Executive Director Executive Director Outside Executive DirectorOutside Executive DirectorOutside Audit Supervisory Board MemberOutside Audit Supervisory Board MemberOutside Audit Supervisory Board Member

Masa FujiwaraKeiichi KiyotaShigeru KobayashiKunihiro OhtaTsutomu Kawaguchi

Yasuhiro Tsuji

Yoshiaki Asahi

Kenichiro Okamura

HumanResourcesDepartment

CorporatePlanningDepartment

Legal &General AffairsDepartment

Finance &AccountingDepartment

BusinessDevelopmentDepartment

AntibodyBusinessDepartment

TechnologyDevelopmentDepartment

PharmacologyResearchDepartment

TherapeuticAntibodyDepartment

R&DPlanning Office

Frontier ResearchPromotion Office


34


35

Statement of Integrated Reporting Framework Standards

● This report takes a cross-sectional look at the business activities of Chiome Bioscience Inc. and its Group companies. Every effort has been made to report faithfully and honestly on important matters that reflect the Group’s ability to create long-term value.

● In producing this report, matters that are considered important have been determined by the Chief Executive Officer and prepared by the responsible executive director.

May 1, 2015

Masa FujiwaraPresident & CEOChiome Bioscience Inc.

As the Chief Executive Officer of Chiome Bioscience Inc., I hereby confirm that this integrated report was prepared after taking into account wherever possible the “Integrated Reporting Framework Standards” issued by the International Integrated Reporting Council in December 2013. Moreover, I am pleased to advise that the report was prepared from the following perspectives.


36

Making every effort to deliver the ultimate made-to-order medicine

2023

Taking positive steps to address pandemic diseases

2018

For the Benefit ofAll HumankindA healthcare innovator providing remedies that are 100% effective

For all people around the world who are waiting for new medical treatments

● We continuously generate novel drug discovery technologies based on the diversity of genetic information.

● We generate innovative therapeutic antibodies.● We revolutionize the medical system.

Our Vision

Our Mission

Succeeded in developing a fully human ADLib® system

2014 Chiome Bioscience has successfully developed a technology to create antibodies that can be administered to people in only a few weeks

Chiome Bioscience is working to identify measures for use as a replacement for vaccines based on the fully human ADLib® system

Chiome Bioscience will ensure the timely supply of custom-made antibodies to individual patients and will deliver treatments with revolutionary therapeutic effects


37

http://www.chiome.co.jp/english/

Chiome Bioscience Inc.Sumitomo Fudosan Nishi-shinjuku Bldg. No.6,3-12-1 Honmachi, Shibuya-ku, Tokyo 151-0071 JapanTEL: +81-3-6383-3561 (reception)

Printed in Japan

A healthcare innovator providing remedies that are 100% effective

Chiome Bioscience Inc.Securities code: 4583

For the nine-month period ended December 31, 2014

CHIOMEBioscienceIntegrated Report2014

Integrated Report

chiome bioscience integrated report 2014 - 株式会社カ · pdf file ·...

Documents