Sosei Acquires Jitsubo, a Leading Japanese Peptide Technology Company

TOKYO–(BUSINESS WIRE)–

Sosei Group Corporation (“The Group”)(TOKYO:4565) is pleased to announce
that at the meeting of the Board of Directors held today, it resolved to
acquire existing shares and underwrite a third party allocation of new
shares of Jitsubo Co., Ltd. (“Jitsubo”). Upon completion of these
transactions, Jitsubo will become a consolidated subsidiary of the Group.

1. Reasons for the acquisition
The Group has successfully secured a
steady revenue stream from milestones and royalty payments from COPD
products licensed to Novartis (Seebri® Breezhaler®
and Ultibro® Breezhaler®)*. However, in order to
further enhance its corporate value, the Group has been looking for new
pipeline candidates that could augment the revenue inflow from the two
marketed Novartis products.

As a result, the Group has identified and resolved to acquire Jitsubo, a
company with a cutting-edge peptide technology. Together with APNT (the
nanoparticle technology of the Group’s subsidiary, Activus Pharma),
Jitsubo’s technology is expected to play an important role in achieving
the mid-long term strategic goals of the Group.

Jitsubo was established in April 2005 by Professor Kazuhiro Chiba of the
United Graduate School of Agricultural Science, Tokyo University of
Agriculture and Technology, with the aim of bringing a commercial focus
to his scientific findings. The company is focused on development of
peptide generic products and identification of new drug candidates based
on the novel peptide synthesis technology, Molecular HivingTM 1,
and the molecule modification technology, PeptuneTM 2.
Together, these technologies enable efficient synthesis and isolation of
peptide analogue compounds.

Expected benefits of the acquisition:

  • Acquiring a new platform technology will enable the Group to enter
    the peptide market

    Considerable expectation is placed on
    peptides as the next generation of drugs, as their smaller molecular
    weight compared to proteins facilitates organic synthesis.
    Additionally, due to higher mass and molecular diversity of peptides
    compared with small molecular weight compounds, it is anticipated that
    they may enable access to therapeutic targets that are difficult to
    control with small molecule treatments. There are currently over 50
    marketed peptide products, and the peptide market is expected to reach
    $23 billion by 2020. Through the acquisition of Jitsubo the Group
    acquires a state-of-the-art technology that has a potential to become
    a generator of future revenue and growth.
  • Replenishing the existing pipeline with new peptide products will
    further enhance corporate value

    The two Jitsubo peptide
    generic products, as well as other drug candidates that are expected
    to follow in the future, will help replenish the Group’s existing
    pipeline and further enhance corporate value.

2. Share transaction
Based on the Investment agreement signed with
Jitsubo, the Group will underwrite a third-party allocation for 68,871
new “Class D” shares that are to be issued by Jitsubo on 26 December. In
addition, The Group will acquire 69,490 of the issued outstanding shares
from the existing shareholders. As a result, the Group will own 52.4% of
Jitsubo issued shares, making Jitsubo a consolidated subsidiary.

As 1 outstanding share holds 1 voting right, and 1 “Class D” share holds
3 voting rights, Sosei will hold 276, 103 voting rights of the total of
401,632. This equals to 68.7% of voting rights holding ratio.

 

3.  Overview of Jitsubo

1)   Company Name   Jitsubo Co., Ltd
2)   Address 2-24-16 Naka-cho, Koganei-shi, Tokyo
3)   Representative’s name and title Yusuke KOHNO, Executive Director CEO
4)   Business description Development of peptide drugs, licensing of peptide API manufacturing
technology, research related to discovery of peptide drug candidates
5)   Capital 10 million yen
6)   Founded April 8, 2005
7)   Major shareholders

MSIVC CAMPUS NO.3 VENTURE CAPITAL INVESTMENT, L.P. : 18.3%
JMSEED
BIO INCUBATION NO.1 VENTURE CAPITAL INVESTMENT, L.P. :10.9%
9
individual shareholders:70.8%

8)

 

Conflict of interest

Capital   None
Personnel None
  Transactions None

9)

  Jitsubo’s earnings results and financial position for the past three
financial years
Financial Year FY2011   FY2012   FY2013
(Million Yen)
  Net assets (46) (94) (58)
  Total assets 22 19 40
(Yen)
  Net assets per share – diluted (532.87) (1,091.35) (429.23)
(Million Yen)
  Revenue 23 20 24
  Operating income/(loss) (60) (62) (40)
  Ordinary income /(loss) (34) (48) (38)
  Net income /(loss) (34) (48) (38)
(Yen)
  Net income per share – diluted (396.99) (558.48) (388.08)
  Dividends per share      
 

4. Existing shareholders from whom the shares will be acquired
The
Group has reached agreement with 8 individual shareholders whose names
and addresses were being withheld, as per their request for privacy.
There are no conflicts of interest in terms of capital, personnel and
business transactions that require disclosure.

 

5. Number of shares to be acquired, acquisition price and state of
share ownership before and after acquisition

1)  

Number of shares held before transfer

  0 shares  
(Number of voting rights: 0)
  (Voting rights holding ratio: 0)      
2)

Number of shares to be acquired

Shares to be acquired from existing shareholders:

69,490 shares

Shares to be acquired through
third-party allocation of new
shares:

68,871 shares (Class D)

 

(Number of voting rights: 206,613)

     
3) Acquisition price (Million Yen)

Acquisition of existing shares: 

211

Acquisition of new shares through

 

210

third-party allocation:

Advisory Expenses (Quote)

 

10

 

Total

 

431

 
4)

Number of shares held after transfer

138,361 shares
(Number of voting rights: 276,103)
    (Voting rights holding ratio: 68.7%)      
 

7. Future prospects
The potential impact of the acquisition on
future earnings is difficult to estimate at present. The Group will
inform investors of any important matter arising from the transaction,
in a timely and appropriate manner.

* Seebri®, Ultibro® and
Breezhaler
® are registered trademarks of
Novartis AG.

References:
1 Molecular Hiving™: Molecular
HivingTM technology is Jitsubo’s patented technology for a
novel liquid-phase peptide synthesis. Currently, two types of peptide
synthesis technologies are widely used: solid-phase peptide synthesis
(SPPS) and liquid-phase peptide synthesis (LPPS). SPPS is a high cost
technology often applied for the small scale manufacturing, whereas LPPS
is often applied for larger scale manufacturing, but cannot be used for
long-chain peptide synthesis. Molecular HivingTM technology
combines the benefits of both SPPS and LPPS, and provides the solution
for efficient peptide synthesis at low costs. Moreover, since the
monitoring of peptide synthesis process that was not possible with SPPS
was enabled with this technology, high-quality peptide can be
manufactured more easily than with the currently existing methods.
For
more details please visit www.jitsubo.com.

2 Peptune™: PeptuneTM is a novel
technology that enables arbitrary alteration of molecular configuration,
without changing the amino acid sequence within the peptide. Compared to
the existing similar technologies, it has a high structural diversity,
which makes possible for pharmacological function and stability to be
improved based on the molecular configuration of peptide. In addition,
introducing a new functional molecule to a cross-linkage is also
possible, and this new scientific approach enables the production of
novel functional peptide.
For more details please visit www.jitsubo.com.

Source Article from http://finance.yahoo.com/news/sosei-acquires-jitsubo-leading-japanese-045100956.html
Sosei Acquires Jitsubo, a Leading Japanese Peptide Technology Company
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