Today, on April 27, 2018, we have announced the results for the first three month of fiscal year 2018. Regarding the details of financial results, we hope that you can see the financial report disclosure while R&D expenses and general & administrative expenses are in line with our budget.
As disclosed on October 31, 2017, we have entered into a capital and business alliance (hereinafter referred to as “capital and business alliance”) with Shionogi & Co., LTD (hereinafter referred to as “Shionogi”), and we have been promoting business to create “next generation logical vaccine” by integrating peripheral technology such as adjuvant, formulation and devices, in next-generation biopharmaceutical in-house development business as our business policy.
We would like to explain the progress of our next-generation biopharmaceutical development business in the first quarter of FY2018. We had arranged existing partnership, and as newly self-developed pipelines, have set recombinant seasonal influenza HA vaccine (UMN-101), recombinant H1N1 influenza HA vaccine (UMN-102), recombinant Rotavirus single vaccine (UMN-103), recombinant Norovirus single vaccine (UMN-104), fundamental core technology (UMN-001) and search for new seeds (UMN-002), and have pushing forward development of them. In terms of fundamental core technology (UMN-001), based on this capital and business alliance, we have been developing to introduce the new basic technology related to drag discovery including vaccine to prevent human infections, which is expected to be possible to expand sales worldwide. Although we cannot still disclose details about specific of the fundamental core technology, we have made progress as almost planned. In addition, UMN-101, 102, 103 and 104 are in the basic research stage on development candidates based on this capital and business alliance.
Based on the alliance, the milestones have been set semi-annually. Since the development of fundamental core technology is almost in line with the original plan, we have calculated that the first milestone is about to be achieved. We will disclose immediately the status of the achievement for the milestone as soon as possible.
In terms of the creation of next generation logical vaccine by integrating peripheral technology such as adjuvant, formulation and devices, in the joint research regarding new adjuvant with National Institute of Biomedical Innovation, Health and Nutrition, as announced on June 26 and on December 1, 2017; in order to a broader search for cutting-edge-biopharmaceuticals including new vaccine, we have been enlarging the object range of the vaccine candidate antigens for evaluation. We believe that we can contribute to fundamental research on development candidates based on capital and business alliance by acquiring new adjuvant and formulation technology and by accumulating development know-how of the next generation logical vaccine. In addition, we assume that they will become subjects of development candidates based on this capital and business alliance, since the development process has been progressing among contracted projects and has been growing to be shifted possibly to in-house development.
With respect to the progress of contract manufacturing business such as biopharmaceuticals, two cases we acquired in the previous fiscal year have been accepted by a domestic research institute, and posted as net sales during this first quarter. In the future, in contract manufacturing business for biopharmaceuticals, we will accept orders mainly for consignment work that contribute to partnership with Shionogi.
As disclosed on March 30, 2018, on the financial aspect, the net asset value at the end of the fiscal year ended December 2017 amounted to 357 million yen and excess debt was avoided. At the result, the stock exchange with the grace period of delisting by the Tokyo Stock Exchange was canceled.
Finally, our medium-to long-term scenario mainly on this capital and business alliance is as follows.
From 2018 to 2019 is the period of the 1st phase under this capital and business alliance, and we will advance the establishment of novel fundamental core technology related to drug discovery, including worldwide deployable vaccine for prevention against human infection. As a fundamental research of development candidates, based on established new fundamental core technology, for the purpose of development, application and launch of next-generation logical vaccine, by optimally combining adjuvant, formulation, and drug delivery technology, for each infection, we will progress fundamental research for development candidates added a new pipeline in selected several pipelines from each pipeline in our next-generation biopharmaceutical in-house development business, and will decide items for actually proceeding development during 2019.
We will advance to the second phase of this capital and business alliances, when judging that certain results have been obtained for fundamental core technology, and we are assuming that the stage will be during 2019. In the second phase, we will cooperatively promote development, application, and launch, after the GLP examination, as development pipelines from actually determined items by basic research.
When shifting to the second phase, in advancing to the development, both companies will make a new collaborative contract regarding exclusive license agreement and other forms related to development and launch of pipelines. We will receive revenue by the forms of milestone under this contract. On the other hand, it is difficult to make a medium-term management plan as a numerical target at the moment, since the timing of transition to the second phase and the collaborative content of new exclusive license agreement or other forms will be discussed in the future. However, we would like you to understand that we will disclose a medium-term management plan as a numerical target when we will move to the second phase after completing the discussion described above.
We will progress our business, making this capital and business alliance as planned and shifting to the second phase as soon as possible as top priority of the Company’s management task, such as expanding the necessary R&D human resources and organizing manufacturing and development facilities.
We appreciate your continued support and understanding in the future.
April 27, 2018
Chairman and CEO