Nanocarrier / 4571

NanoCarrier / 4571 COVERAGE INITIATED ON: 2009.09.07 LAST UPDATE: 2020.02.14 Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will always present opinions from company management as such. Our views are ours where stated. We do not try to convince or influence, only inform. We appreciate your suggestions and feedback. Write to us at [email protected] or find us on Bloomberg. Research Coverage Report by Shared Research Inc. NanoCarrier / 4571 RCoverage LAST UPDATE: 2020.02.14 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp INDEX How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent earnings. First-time readers should start at the business section later in the report. Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 3 Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 4 Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------ 4 Trends and outlook ----------------------------------------------------------------------------------------------------------------------------------- 5 Quarterly trends and results ----------------------------------------------------------------------------------------------------------------------------------- 5 Business ------------------------------------------------------------------------------------------------------------------------------------------------ 12 Business description -------------------------------------------------------------------------------------------------------------------------------------------- 12 Product pipeline ------------------------------------------------------------------------------------------------------------------------------------------------- 15 New development pipeline and expansion of applications --------------------------------------------------------------------------------------- 24 Business model --------------------------------------------------------------------------------------------------------------------------------------------------- 29 Strengths and weaknesses ------------------------------------------------------------------------------------------------------------------------------------ 31 Market and value chain---------------------------------------------------------------------------------------------------------------------------- 32 Market overview ------------------------------------------------------------------------------------------------------------------------------------------------- 32 Historical financial statements ------------------------------------------------------------------------------------------------------------------ 36 Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 48 Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 49 Cash flow statement -------------------------------------------------------------------------------------------------------------------------------------------- 51 Other information ---------------------------------------------------------------------------------------------------------------------------------- 52 History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 52 News and topics ------------------------------------------------------------------------------------------------------------------------------------------------- 53 Top management ----------------------------------------------------------------------------------------------------------------------------------------------- 60 Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 60 Major shareholders --------------------------------------------------------------------------------------------------------------------------------------------- 60 Dividends and shareholder benefits ---------------------------------------------------------------------------------------------------------------------- 60 Other ---------------------------------------------------------------------------------------------------------------------------------------------------------------- 61 Company profile ------------------------------------------------------------------------------------------------------------------------------------------------- 66 02/67 NanoCarrier / 4571 RCoverage LAST UPDATE: 2020.02.14 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Key financial data Income statement FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 (JPYmn) Est. Sales 118 84 346 374 472 676 243 219 259 497 581 YoY -66.7% -28.4% 310.7% 7.9% 26.3% 43.1% -64.0% -10.1% 18.5% 91.7% 17.0% Gross profit 47 33 221 101 290 464 212 158 191 417 YoY -55.9% -29.2% 566.4% -54.4% 187.2% 60.0% -54.4% -25.5% 21.3% 118.0% GPM 39.8% 39.4% 63.9% 27.0% 61.4% 68.7% 87.0% 72.1% 73.8% 83.9% Operating profit -493 -520 -334 -527 -1,123 -1,108 -2,083 -2,712 -5,351 -1,802 -1,520 YoY ----------- OPM ----------- Recurring profit -492 -550 -366 -432 -1,095 -171 -2,381 -2,619 -5,304 -1,774 -1,536 YoY ----------- RPM ----------- Net income -495 -555 -398 -484 -1,114 -207 -2,537 -2,676 -5,417 -1,809 -1,450 YoY ----------- Net margin ----------- Per share data (split-adjusted; JPY) Shares issued (year-end; '000) 12,858 22,089 23,494 32,531 40,265 42,607 42,629 43,179 43,237 49,403 EPS -38.7 -36.0 -17.4 -18.9 -30.4 -5.1 -59.5 -62.1 -125.4 -39.1 -28.5 Dividend per share 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Book value per share 78.7 83.6 77.8 135.3 336.9 338.4 278.8 227.8 103.4 117.2 Balance sheet (JPYmn) Cash and cash equivalents 1,006 1,872 2,981 5,155 7,247 13,772 13,760 11,769 6,408 6,567 Accounts receivable 6615272371016591192 Inventories 22 60 99 181 203 51 150 276 152 33 Total current assets 1,066 1,981 3,112 5,473 7,589 14,209 14,317 12,442 6,841 6,986 Total assets 1,135 2,038 3,663 5,606 14,341 14,704 15,386 12,939 7,627 8,568 Accounts payable 112 550401714261313 Interest-bearing debt 001,7001,04054000000 Total liabilities 121 189 1,804 1,205 744 202 3,258 2,872 2,965 2,689 Shareholders' equity 1,012 1,848 1,829 4,353 13,563 14,407 11,882 9,827 4,443 6,122 Net debt -1,006 -1,872 -1,281 -4,115 -6,707 -13,772 -13,760 -11,769 -6,408 -6,567 Working capital 17 65 95 136 190 271 237 315 230 212 Cash flow statement (JPYmn) Cash flows from operating activities -452 -578 -293 -635 -1,098 -1,121 -1,971 -2,526 -4,928 -2,037 Cash flows from investing activities -8 -5 -1,721 -121 -7,059 -2,562 7,385 -597 215 -992 Cash flows from financing activities 97 1,449 1,924 2,327 9,581 505 3,101 88 24 3,385 Financial ratios ROA (RP-based) -37.0% -34.6% -12.8% -9.3% -11.0% -1.2% -15.8% -18.5% -51.6% -21.9% ROE -40.0% -38.8% -21.5% -15.6% -12.4% -1.5% -19.3% -24.7% -75.8% -34.9% Equity ratio 89.4% 90.7% 50.7% 78.5% 94.8% 98.6% 78.8% 77.8% 61.1% 68.6% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. 03/67 NanoCarrier / 4571 RCoverage LAST UPDATE: 2020.02.14 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Recent updates Highlights On February 14, 2020, NanoCarrier Co., Ltd. announced earnings results for Q3 FY03/20; see the results section for details. On December 27, 2019, the company issued an update on its NC-6004 phase III clinical study for pancreatic cancer. The company decided not to submit a new drug application based on the phase III clinical study of NC-6004 (cisplatin micelle) targeting pancreatic cancer (one of its development programs). The company added that it would continue looking at potential domestic development of NC-6004 in the future, as domestic data suggests that combination therapy with NC-6004 leads to longer survival periods. NanoCarrier has been conducting phase III clinical trials of a combination therapy of NC-6004 and Gemcitabine for pancreatic cancer since 2014. Standard regimens in the treatment of pancreatic cancer have recently changed, however, and Gemcitabine is no longer the usual drug of choice for first-line treatment. With this change, the company recognized that a new drug application would require an additional study to demonstrate the usefulness of NC-6004 in treating pancreatic cancer. Plans for the new study call for Orient Europharma Co., Ltd. (its Taiwanese development partner and licensee) to carry out database lock and detailed statistical analysis. With regard to the ongoing phase II clinical trials of the combination therapy of NC-6004 and an immune checkpoint inhibitor for treating head and neck cancer, the company indicated that it

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