Ajinomoto's Pharma-Related Business Employing Leading-Edge

Ajinomoto’s Pharma-related Business employing Leading-Edge Bioscience and Fine Chemical Technologies

June 8, 2017 Hiroshi Fukushi

Member of the Board & Corporate Senior Vice President General Manager, AminoScience Division

Genuine Global Specialty Company

The Ajinomoto Group Creating Shared Value (ASV)

Food Products AminoScience Japan Food Life Support (Highly Functional Materials, Products Integrated Animal Nutrition) Intl. Food Food Solutions Healthcare Healthcare segment Products (Advanced Biopharma, etc.) FY2016 sales: Sustainable Value Chain ¥89.5 billion. Open & Linked Innovation

Intangible strengths (customer oriented value creation)

Leading-edge bioscience and fine chemical technologies

Advanced Bio: Biomaterials, such as amino acids, peptides and proteins, and the application of their manufacturing technology; areas in which we have expertise

Pharma-related business: Production of pharmaceuticals, material development and utilization

□ Small molecule drugs Conventional Markets in which Ajinomoto Medicine Co. can contribute using □ Vaccines amino acid, nucleic acid and protein-related technology

□ Biopharmaceuticals Peptide and oligonucleotide 1) Antibody drugs/ADCs (antibody-drug manufacturing technology conjugates)

2) Oligonucleotide therapeutics Cell culture medium manufacturing technology

Protein (such as growth □ Regenerative medicine factors) manufacturing Advanced (iPS and ES cells, etc.) Medicine technology (Corynex®)

Provision of high value-added Expansion into the field of contract manufacturing and 2. Regenerative regenerative medicine, including 1. Biopharmaceuticals services using leading-edge medicine the field of cell therapy bioscience and fine chemical technologies Cell culture medium ADCs for regenerative medicine Cell culture medium- Oligonucleotides related materials (such as growth factors) Proteins and antibodies Cell culture medium for animal cells (ASF medium) Ajinomoto Althea, Inc. (2013) Ajinomoto GeneDesign, Inc. Genexine Co., Ltd. (2016) (2012) Corynex® Amino acid cell AJIPHASE® culture medium technology Bioscience and Fine Chemical Technologies Healthcare Field

1. The entire biopharmaceutical and pharmaceutical market 2. Regenerative medicine-related market

1. Biopharmaceuticals Growth rate of ≥ 10% per year ($ billion) (¥ billion)（億円） 1,300 160,00016,000 * 1,000 (approx. ¥130 trillion ) 140,00014,000 (approx. ¥100 trillion*) 890 Biopharma- 120,00012,000 (approx. ¥89 trillion*) ceuticals 100,00010,000

80,0008,000

60,0006,000 Small 40,0004,000 molecule drugs 20,0002,000

0 20122012 年 2020 2020年 2030 2030 年 2040 2040 年 20502050 年 (year)

(Ajinomoto Co. estimation) 創薬市場Drug development market Calculated at $1 = ¥100 細胞・組織製造市場Cell and tissue manufacturing market Materials (cell culture medium, 材料（培地・試薬・器具等）市場reagents, devices, etc.) market 装置市場Equipment market (Source: Seed Planning, Inc. data)

Outsourcing in Major Pharmaceutical Companies in Japan by Process

Packaging, With increased sophistication in etc. development and manufacturing Formulation technology of intermediates, API and formulation, etc., the pharmaceutical industry is moving towards API specialization in these areas.

Outsourcing Outsourcing rate (%) Intermediate

0% 20% 40% 60% 80% 100% Value chain of new drug development (Source: Seed Planning, Inc. data, 2010) Pharmaceutical company New drug development steps Discovery research Pre-clinical studies Clinical trials Approval application Launch

In the past: Development with all functions within the company

Process development to Manufacturing establishment of manufacturing Manufacture of drug for Commercial production clinical trials Cost reduction flow (Small to large quantities)

Outsourcing in Major Pharmaceutical Companies in Japan by Process

Outsourcing Outsourcing rate (%) Intermediate

Recent years: Modular type Reliance on outside companies for process development and manufacturing

Manufacturing Process development to Manufacture of drug for Commercial production flow establishment of manufacturing clinical trials Cost reduction (Small to large quantities) Increase in the presence of highly specialized contract manufacturing organizations with sophistication of manufacturing technology.

Ajinomoto Group

Business category Initiative Organization FY17 FY18 FY19

1. Biopharmaceuticals Enter ADC contract Profit Prior investment manufacturing business contribution Ajinomoto Antibodies, Althea, Inc. recombinant proteins, Strengthen Fill & Finish Steady growth (revenue base) ADCs business

Oligonucleotides Enhance pipeline GeneDesign, Make GeneDesign, Inc. a consolidated subsidiary Inc. Ajinomoto Co., Establish production Inc. Establish production framework Aim for global No. 2 framework

Global rollout of cell culture Roll out to Europe, Accelerate overseas rollout medium for regenerative in addition to N. (make contribute to profits) medicine America & S. Korea

2. Regenerative Cell cultures for regenerative Ajinomoto Expand varieties for growth and differentiation Medicine medicine Co., Inc.

Cell culture ingredients Continue R&D (scaffold proteins, growth Launch new products in stages from FY17 factors, etc.)

Business category Initiative Organization FY17 FY18 FY19

Global rollout of cell culture Roll out to Europe, Accelerate overseas rollout medium for regenerative in addition to N. (make contribute to profits) medicine America & S. Korea

2. Regenerative Cell cultures for regenerative Ajinomoto Expand varieties for growth and differentiation Medicine medicine Co., Inc.

Cell culture ingredients Continue R&D (scaffold proteins, growth Launch new products in stages from FY17 factors, etc.)

Althea Technologies Inc. (Currently Ajinomoto Althea, Inc.) acquired

in April 2013 Acquisition price (approx. ¥16 billion)

Main businesses • Contract aseptic filling and packaging of biopharmaceuticals (Fill & Finish) San Diego • Contract manufacturing and process development of biopharmaceuticals

Manufacturing process of Filling process Process Development Formulation process API for biopharmaceuticals (Fill & Finish)

Covers the value chain in biopharmaceutical manufacturing

Future business focus • Contract manufacturing of ADCs (antibody-drug conjugates)

ADC: Antibody Drug Conjugate Antibody: A molecule that specifically recognizes and binds to a specific protein, etc. Some antibodies recognize cancer cells.

Drug: A compound that exhibits a pharmacological action Advantages Disadvantages

Antibody drug Exerts its effect when it reaches the High manufacturing cost target (cells) ⇒ Relatively minor side effects Drug (small molecule Low cost compared to antibody Low selectivity towards target, exerts drug) drugs effect on normal cells Strong pharmacological action ⇒ Serious side effects

An ADC is a drug that aims to utilize the high target selectivity of antibodies to deliver a pharmacological agent to target cells where it exerts its effect. ⇒ There are expectations for them to be “the next generation of antibody drugs,” capable of increasing the striking power towards target cells while reducing side effects. They are the focus of development in major pharmaceutical companies at home and abroad.

Antibody manufacturing process Image of the Antibody-drug Filling process Formulation manufacturing conjugate process Fill & Finish process Drug manufacturing process

Sector contracted to Ajinomoto Althea, Inc.

Provision of contract manufacturing and services began with the only base in the United States which was able to provide one-stop service from antibody drug conjugation to formulation and on to fill & finish

Introduction of process development and analysis laboratory equipment completed ⇒ Services commenced in January 2016 Support the early development stage of ADCs in pharmaceutical companies

Expected to contribute to profits in FY2019

What is Fill & Finish?

Process at the final stage of biopharmaceutical manufacture in which the product is filled aseptically into vials and syringes to become the final product.

Flexible facilities allowing production of a wide variety of products and switchover production. Facilities comply with the pharmaceutical regulations in various countries responding quickly to the needs of pharmaceutical companies.

With Fill & Finish as its revenue base, Ajinomoto Althea, Inc. aims for steady growth and development

Business category Initiative Organization FY17 FY18 FY19

Global rollout of cell culture Roll out to Europe, Accelerate overseas rollout medium for regenerative in addition to N. (make contribute to profits) medicine America & S. Korea

2. Regenerative Cell cultures for regenerative Ajinomoto Expand varieties for growth and differentiation Medicine medicine Co., Inc.

Cell culture ingredients Continue R&D (scaffold proteins, growth Launch new products in stages from FY17 factors, etc.)

Main Target Diseases Characteristics Structure Our Strengths

Oligonucleotides Applicable to a wide range Their targets and A chain of several to A field in which we can fully of diseases including cancer, mechanisms of over a hundred utilize our wealth of cardiovascular diseases, action are clear and nucleic acids technology and know-how infectious diseases, and highly specific relating to nucleic acids, autoimmune diseases which are the raw materials. (rheumatism, etc.) and rare diseases such as muscular We developed a unique dystrophy manufacturing technology

Size of Contract Manufacturing Market (¥ billion)（億円） The number of products in development entering 60060 clinical trials has increased substantially over recent 40040 years, and the market will grow rapidly 20020 ⇒ Increased opportunities for contract manufacturing 00 2010年2010 2015年 2015 2020年 2020 (Source: Seed Planning, Inc., data) Competitive Technology Competitors

Solid Phase  All oligonucleotides are Synthesis manufactured by a solid phase  Oligopoly of two companies, ® synthesis (other than AJIPHASE ) Avecia and Agilent  The increase of needs for technology capable of mass production Copyright © 2017 Ajinomoto Co., Inc. All rights reserved. 14 What is AJIPHASE® Technology?

Solid phase synthesis

Dedicated oligonucleotide General chemical synthesis equipment required equipment can be used

Manufacturing equipment

Manufacturing Several kg/lot Several hundred kg/lot scale Development period Quick Longer than solid phase synthesis

Establish AJIPHASE technology as the only practical manufacturing method capable of mass production with new drug candidates anticipated future demand of several hundreds kg to several tons.

Ajinomoto Group GeneDesign, Inc. (AJIPHASE®) Solid Phase Synthesis  Speedily provides high-mix, low-  The only practical technology capable volume items of mass production  Flexibly handles provision of items to  Handles large-scale provision of items multiple pipelines for early-stage for large trials and after launch development

Early-stage development Late-stage development and after launch Small scale Large scale

Establish the system that makes possible a contract development and manufacturing business for oligonucleotides from early-stage development to late-stage development and after launch. ⇒ Aim global No. 2 through establishing the production framework

Business category Initiative Organization FY17 FY18 FY19

Global rollout of cell culture Roll out to Europe, Accelerate overseas rollout medium for regenerative in addition to N. (make contribute to profits) medicine America & S. Korea

2. Regenerative Cell cultures for regenerative Ajinomoto Expand varieties for growth and differentiation Medicine medicine Co., Inc.

Cell culture ingredients Continue R&D (scaffold proteins, growth Launch new products in stages from FY17 factors, etc.)

A stem cell culture medium contains a well-balanced mix of amino acids, sugars, lipids, vitamins, minerals and growth factors* necessary for stem cells.

Absorb nutrients

Grow Human body Maintain healthy life

Absorb nutrients from food

Minerals

Amino acids Vitamins Stem cell culture Growth factors Increase the number

Lipids Sugars of stem cells Differentiate of cells

Stem cells utilize nutrients from the medium

iPS cells utilize the necessary nutrients from the medium, proliferate, and transform into tissue for transplantation

＊Growth factors: “Signaling” proteins that are abundantly present in our body and which are necessary for proliferation of stem cells, such as iPS cells, and for the transformation of these into tissue or other types of cells.

Issues for development of stem cell culture medium for regenerative medicine

1. Performance → There are no high-performance culture media that can be used in regenerative medicine! 2. Safety → The majority of existing medium use components extracted from animals or human (high risk) 3. Cost → Existing medium are too expensive to use in the current process

Ajinomoto Co. can supply and use highly Minerals purified amino acid , growth factors to make Amino acids Vitamins the most superior medium for the clinical Growth factors studies.

Lipids Sugars

By the determination of the nutrient consumption and the application research of the growth factors, Ajinomoto developed very novel stem cell culture for iPS and ES cell. This medium will promote the human study of iPS and ES cells.

Treatment for age-related macular Differentiation into degeneration, etc. retinal cells iPS cells

Differentiation into Establishment Propagate cardiomyocytes Treatment for of iPS cells iPS cells heart failure, etc.

Differentiation into neurons

Treatment for Growth factors spinal cord injuries, etc. The key is to provide the various growth factors intimately involved in propagation and differentiation. Develop products of stem cell culture media for Turning growth factors into products using biotechnology ⇒ various differentiations Provision of growth factors themselves

Ajinomoto Co., Inc. Center for iPS Cell Research and • Research on amino acid nutrition and metabolism Application, Kyoto University (CiRA) • Analysis technology Amino acid analysis technology: Amino Index® • Novel research relating to iPS cells • Formulating technology, nutritient development Technological development relating to iPS cell and manufacturing technology establishment, propagation, undifferentiated potency Enteral nutrition formula ELENTAL®, serum-free cell culture media preservation, storage and cell differentiation, etc., • Biotechnology evaluation techniques and analytical research of Growth factor (protein) production technology CORYNEX® mechanisms

Fusion of technological capabilities

Swift discovery of optimal composition

Succeeded in producing the high performance cell culture medium StemFit®

Results announced in the Scientific Reports (Nakagawa et al., 2014)

For clinical research  Confirmed by the PMDA* for clinical StemFit® AK03N research purposes  Direct sales commenced in December 2015 by Ajinomoto Healthy Supply Co., Inc.

*PMDA: Pharmaceuticals and Medical Devices Agency For basic research  Product for use in basic research ® StemFit AK02N launched in October 2015 by Takara Bio Inc. and ReproCELL Inc.

Global product

 Sales in the US commenced in September 2016 StemFit® Basic02  Sales in South Korea commenced in March 2017  Plan to commence sales in Europe in FY2017

"Genuine Global Specialty Company" To become a global top 10 class company that grows sustainably through ASV Integrated Value Corporate Brand Enhance brand value through creating social/economic value, which leads to further value creation FY20 brand value target1) = 1,500 mil.USD or more FY20 Integrated Targets

Financial targets in IFRS Non-financial targets2) S : Social E : Environmental (economic value) (social value) G : Governance S Meats and vegetables Meats: Vegetables: Business profit ¥137.0 bil. or more consumption3) 8.6 mil. tons/yr; 5.5 mil. tons/yr; 4) 19% (9.7kg/person/yr) 8% (6.2 kg/person/yr) (Japan, Five Stars) vs FY15 +3% (+2.0kg) vs FY15 +2% (+1.6kg)

Contribution to S Business profit margin 10% eating together 70 times / households / year (Japan, Five Stars)4) vs FY15 +20 times

Spare time created S 38 mil. hrs / yr ROE 10% or higher (Japan)5) (6 hrs / yr / households) vs FY15 +7 mil. hrs Contribution to comfortable S 22 mil. people lifestyles (AminoScience) vs FY15 +4 mil. people EPS growth rate Double-digit annual growth Resolution of E Contribution to the global environment through initiatives ahead of std. intl. targets environmental issues e.g. GHG6): 50% reduction by FY307) Intl. sales growth rate (consumer foods) Double-digit annual growth G Employees with 80% (local currency basis) high engagement 1. Measured by Interbrand; 2. Refer to Reference Materials (p.36-40) for definitions of non-financial targets and calculation assumptions; 3. Annual total and % of annual consumption per person; 4. Calculation based on certain products in Japan and Five Stars; 5. Calculated using certain Japan Frozen Foods and Soup products.; 6. GHG = Greenhouse gases; 7. Compared to FY05 Note: std. = standard, intl. = international Copyright © 2017 Ajinomoto Co., Inc. All rights reserved. 2324 Copyright © 2017 Ajinomoto Co., Inc. All rights reserved. 24