Briefing on FY2006 Financial Results FAQ for media representatives

Q1. How are extraordinary gain and loss in FY07?

A1. In FY07, the company expects a net loss of 5 billion yen in extraordinary gain and loss. This is an improvement of approximately 20 billion yen on FY06. There will still be several billion yen in extraordinary loss relating to the integration in FY07, including expenditures on the migration of research facilities at Shinagawa and Kasai, and the company expects some extraordinary gain relating to spin-off of non-pharmaceutical business.

Q2. We believe there will be a lump sum payment relating to the transfer of commercial rights for Panaldine. Under where will this be posted?

A2. The company plans to post this under sales.

Q3. On the balance sheet, there is some 100 billion yen of increase in securities. What is the reason for this increase?

A3. The increase in cash from business activities and profit related to the spin-off of non-pharmaceutical business were directed to securities operations.

Q4. What is the specific plan of the company on shareholder returns?

A4. The plan of the company is to raise the total return ratio to 100% by directing free cashflow to share buy-back and dividends. DOE for FY07 will depend on stocks issued at end of term, however, please assume this will be at the 4% level.

Q5. Although sales of antihyperlipidemic agent Pravastatin declined almost 50 billion yen on FY06, the decline in FY07 is held at 17 billion yen. May we understand this to indicate a bottom sentiment?

A5. With respect to Pravastatin, the dip from the US patent expiration in April 2006 had a large impact. Presently, Italy is the only primary market where our patent has not been expired, and the company expects no larger sharp dip than we had in the US.

Q6. What are the features of anti-EGFR antibody DE-766? We also hear that Phase 1 trials are currently being conducted in Japan. We wish to know the number of trial sites, number of cases, and schedule on when Phase 2 will begin.

A6. The company wishes to decline to answer questions about number of cases and trial sites. Target indications will be reviewed, taking in consideration that other products are developed targeting at glioma and nonsmall cell lung cancer. DE-766 is expected to have fewer adverse effects than other products. Phase 2 trials are scheduled to begin next year, however, it varies by cancer type.

Q7. Does the company plan to make cancer a core business?

A7. As explained in the mid-term business management plan announced in February, the company has four priority diseases in research and development (thrombosis, diabetes, cancer, autoimmune disease/rheumatoid arthritis). Although our pipeline for cancer is not quite strong now, the company is willing to reinforce the pipeline including co-operations with other organizations.

Q8. Which specific product fall under the category of biodrug? And, does the company have any plans to acquire bio ventures or form alliances, as have been done by other companies?

A8. CS-1008 in our pipeline is a monochlonal antibody for DR5. It was originally developed by the company, and is currently under Phase 1 trials in the US. Furthermore, there is anti-EGFR antibody DE-766 (Nimotuzumab) as an in-licensed product. There is a great future in antibody drugs, and the company wishes to work in this area actively going forward.
Regarding biodrugs, the company has invested in many ventures by way of funds held in the US, and has built a framework that allows the company to engage swiftly when attractive drug discovery seeds are found.

Q9. As regards M&A’s of bio corporations, M&A figures are soaring, as seen by a recent acquisition nearing 2 trillion yen by a mega pharma. Moreover, there are opinions that there no longer are any good acquisition opportunities. What is the company’s thought on this?

A9. With respect to biodrugs, mega corporations came onto the market relatively late, and they presently are competing for technologies and opportunities. The company is aware of the intensification in competition and soaring acquisition figures. If there are technologies and opportunities appealing enough for the company, we are prepared to consider them, notwithstanding their scale.