Kubota Pharmaceutical Holdings FY2018 Q3 Update · Enhance our technologies by partnering with large pharmaceutical companies in and outside of Japan. Kubota Pharmaceutical Holdings

Kubota Pharmaceutical HoldingsFY2018 Q3 Update

November 14, 2018 Japan

Kubota Pharmaceutical Holdings Co., Ltd. (4596)

Cautionary Statement RegardingForward Looking Statements

page 2

This presentation contains forward-looking statements concerning our product development, our ability to successfully commercialize our product candidates, our technology, our competitors, our intellectual property, our financial condition and operating results and our plans for research and development programs and the timing thereof that involve risks, uncertainties and assumptions. Such forward-looking statements typically can be identified by the use of words such as “expect,” “estimate,” “anticipate,” “forecast,” “intend,” “project,” “target,” “plan,” “believe” and similar terms and expressions. These statements are based on the current estimates and assumptions of the management of Kubota Pharmaceutical Holdings Co., Ltd. as of the date of this presentation and are subject touncertainty and risks in circumstances, including, but not limited to the risk that our product candidates will not demonstrate the expected benefits and will not achieve regulatory approval or be successfully commercialized, the risk of delays in our ongoing or expected clinical trials, the risk that new developments in the intensely competitive ophthalmic pharmaceutical and device markets require changes in our clinical trial plans or limit the potential benefits of our product candidates, the accuracy of our estimates of the size and characteristics of the markets that may be addressed by our product candidates, the risk that our pre-clinical development efforts may not yield additional product candidates, and other risks and uncertainties inherent in the process of discovering and developing therapeutics and devices that demonstrate safety and efficacy. Given these uncertainties, you should not place undue reliance upon these forward-looking statements. Such forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause our actual results to be materially different from those reflected in such forward-looking statements.Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others, those set forth in our reports on file with the Tokyo Securities Exchange and the United States Securities and Exchange Commission. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. All statements contained in this presentation are made only as of the date of this presentation.

“Acucela,” the Acucela logo and “Kubota” are among the registered trademarks or trademarks of Kubota Pharmaceutical Holdings in various jurisdictions.

Company Overviewand Market Environment


Our History

page 4

Company Name Kubota Pharmaceutical Holdings, Co., Ltd.

Date of Establishment December 2015

Address Kasumigaseki Tokyu Building 4F,

3-7-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-0013 Japan

Representative Ryo Kubota, MD, PhD, Representative Executive Officer,

Chairman, President and Chief Executive Officer

Subsidiary Acucela Inc. (Seattle, Washington USA)

Apr 2002 Established Acucela Inc. in Seattle, Washington USA

Mar 2006 Relocated Acucela headquarters and R&D office to Bothell, Washington

Aug 2006 Opened the Tokyo Office in Shinagawa ward in Tokyo

Sep 2013 Relocated Tokyo Office to Shibuya ward in Tokyo

Feb 2014 Initial Public Offering on Tokyo Stock Exchange Mothers Board

Dec 2015 Incorporated a subsidiary, Acucela Japan KK (current Kubota Pharmaceutical Holdings Co., Ltd.) in Japan

Dec 2016 Completed triangle merger and redomicile transaction, and Acucela Inc. became a wholly owned subsidiary ofKubota Pharmaceutical Holdings. Kubota Pharmaceutical Holdings subsequently listed on the Tokyo StockExchange Mothers Board

We are committed to translating innovation into a diverse portfolio of drugs and devices to preserve and restore vision for millions of people worldwide.


Our Strength

page 5

People and Strategy

▪ Executive leadership with experience in health care management, life science administration & technology

▪ Broad-skilled employee base in R&D and operations with broad industry relationships

Business Development

▪ Quick Win – Fast Fail

▪ Translational Research –Initiate pre-clinical and clinical studies, and obtain proof of concept (POC) in human

Internal Research

▪ Continue to expand ophthalmic product pipeline through internal research and seek for in-licensing opportunities

▪ Establish a total solution in ophthalmology for drugs and devices

Partnership

▪ Partner with leading universities and research institutes for collaboration and in-licensing in the U.S. and Europe

▪ Enhance our technologies by partnering with large pharmaceutical companies in and outside of Japan


Leading Causes of Blindness

page 6

21 %

8 %

26 %

20 %

9 %

45 %

Retinitis Pigmentosa

10 %

34 %

16 %

54 %

9 %

6 %

5 %

25 %

Japan

USA

Europe

Glaucoma

AMD

Others

DR

12 %Others

DR

Glaucoma

Cataract

AMD

Others

DR

Glaucoma

AMD

33 million people blind worldwide, and 191 million people suffer from moderate and severe vision impairment (MSVI)

Retinochoroidal

Atrophy


Global Ophthalmic Drug Market Revenue Forecast

page 7

Global market forecasted to reach $38.4B in 2027, andGlobal retinal disorder drugs market at CAGR of 6.3%

US Dollars in millions

8,556 9,209 9,811 10,466 11,275 12,048 12,149 13,066 14,09315,367 16,273 17,185 18,010

7,9297,821

7,8817,973

8,0748,217 8,389

8,5998,852

9,1469,473

9,78510,102

4,2124,256

4,3484,495

4,6814,917 5,227

5,627

6,110

6,476

6,872

7,1887,196

1,6521,738

1,8401,956

2,0852,188

2,286

2,392

2,509

2,628

2,767

2,9533,134

22,349 23,02423,880

24,89026,115

27,370 28,05129,684

31,564

33,61735,385

37,11138,442

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Retinal Disorder Drugs Allergic, Inflammatory & Infective, and Dry Eye Drugs Glaucoma Drugs Other Ophthalmic Drugs

source: visiongain 2017

Research & Development Focusand Development Pipeline


Research & Development Focus

page 9

Kubota Pharma’s R&D focus is to bridge the chasm between early discovery and late confirmatory stages, namely, the translational research stage

Discovery Translational Research Confirmatory

Internal Research / Partnerships

In-House In-House / Partnered

Target DiscoveryLead

Identification

Lead optimization /

preclinical profiling

Nonclinical Development

(GxP)

Exploratory Development (POC)

Confirmatory Development

Commercialization & LCM

$30Bannual spend in the

U.S. mainly from universities and large

pharmaceutical companies

$5B

$65Bannual spend mainly from

large pharmaceutical companies

Kubota Pharma’s Focus Area


Gene Therapy IndicationsPre-

clinicalPhase 1 Phase 2 Phase 3 Target Market

Human Rhodopsin Retinitis Pigmentosa Worldwide

Development Pipeline

page 10

Small Molecule Compounds IndicationsPre-

clinicalPhase 1 Phase 2 Phase 3 Target Market

Emixustat HCI Stargardt Disease Worldwide

Emixustat HCI Proliferative Diabetic Retinopathy Worldwide

Compound - 2 Cataract, Presbyopia Worldwide

Compound - 3Diabetic Macular Edema,

Wet AMDWorldwide

Device Description Target Market

Remote Medical Monitoring DevicePBOS: Patient Based Ophthalmology Suite

Home-based miniature OCT (optical coherence tomography)

Worldwide

Design & Prototype

Clinical Trial & Product Eng.

Regulatory Approval


1st Half 2018 Accomplishments

page 11

Finance

Organization

Research & Development

Jan Gene Therapy: Secured joint development agreement for AAV viral vector with Sirion (Germany)

Jan Emixustat: Completed phase 2a clinical study for emixustat for Stargardt disease; met primary endpoint

Jan Emixustat: Completed phase 2 clinical study for emixustat for PDR; biomarker improvement shown

Mar PBOS: Clinical study initiated following IRB (Internal Review Board) approval

Jun Emixustat: A meeting was held in the U.S. to discuss Stargardt disease phase 3 clinical study design

Jun Emixustat: PDR phase 2 study data suggests improvement in macular edema

Jun Gene Therapy: Global development meeting held in Germany

Jun PBOS：Global development meeting held in Switzerland

Apr Warrant offering (approximately 2.2 billion JPY)

Jun Hiroki Maekawa joins the company as Chief Financial Officer


2nd Half 2018 Target Milestones

page 12

▪ Emixustatdevelopment

Initiate phase 3 clinical study for Stargardt disease using emixustat

▪ PBOS development

Complete clinical study initiated in March 2018

▪ Gene Therapy development

Initiate promoter enrichment process

Initiate capsid enrichment process

Initiate transgene optimization process

Completed in November

Completed in October

Stargardt Diseaseusing Emixustat Hydrochloride


Stargardt Disease

page 14

20/200

20/100

20/70

20/50

20/40

20/30

20/25

• Stargardt disease is a genetically inherited disorder of the retina afflicting 1 in 8,000 to 10,000 individuals.

• Stargardt is a serious unmet medical need, with fewer than 150,000 people estimated to be patients in the U.S., Japan and Europe, combined.

• The most common form of Stargardt disease is caused by a genetic mutation of the ABCA4 gene leading to the accumulation of toxic vitamin A byproducts (primarily A2E) in the retina, which results in the gradual deterioration of photoreceptors and vision.

• There are no approved treatments for Stargardt Disease.

• There are many symptoms a person with Stargardt may experience including spots in the vision, color vision deficits, distortion, blurriness, and loss of central vision in both eyes.

• Kubota Pharma received Orphan Drug Designation from the FDA for the treatment of Stargardt disease in January 2017.


What Happens in the Eye with Stargardt Disease

page 15

retinal pigment

epithelium (RPE)rodscones

macula

retina

lipofuscin

toxic lipofuscin


The Visual Cycle (simplified)

page 16

enzyme RPE65

“vitamin A”

toxic lipofuscin

retinal pigment

epithelium

(RPE)

rod

photoreceptor

all-trans-retinalopsin

RPE rod photoreceptor

11-cis retinalprotein opsin11-cis retinal


Solution – Emixustat

page 17

less toxic lipofuscin

Emixustat

Emixustat modulates the visual cycle by inhibiting a critical enzyme of this

pathway, retinal pigment epithelium protein 65 (RPE65). Slowing the visual

cycle reduces the availability of vitamin A derivatives (11-cis- and all-trans-

retinal) to form precursors of A2E and related compounds.

RPE

11-cis retinal

enzyme RPE65

“vitamin A”

rod photoreceptor

protein opsin 11-cis retinal

opsin all-trans-retinal


Emixustat Reduces 11-cis Retinal and Prevents Light Damage

page 18

Emixustat

treated

ONL

ONL

ONL

light damage model

30 min

untreated

wild type

100

0 10 20minutes in dark following photobleach

30

200

300

400

rod

photo

recepto

rre

sponse

(uV

)

vehicle

0.8 mg/kg

Emixustat

Recovery of rod photoreceptor sensitivity measured by ERG


Emixustat Reduces Lipofuscin Accumulation

page 19

wild-type

ABCA4-/-(vehicle)

ABCA4-/-

(Emixustat 3mg/kg)Modified from: Bavik C, Henry SH, Zhang Y, Mitts K, McGinn T, Budzynski E, et al.

(2015) Visual Cycle Modulation as an Approach toward Preservation of Retinal

Integrity. PLoS ONE 10(5): e0124940. doi:10.1371/journal.pone. 0124940.

A2E／reduction of lipofuscin

vehicleT0

0.03 0.1 0.30

A2E

(pm

ole

/eye

)

1.0 3.0

Reduction of A2E Accumulationday 90

25

20

15

10

5

Emixustat (mg/kg) (*p ˂ 0.05)


Emixustat HCl Phase 2a Study for Stargardt Complete

page 20

→ Multicenter (6 clinical sites in the US), randomized, double-blind trial

22 subjects diagnosed with macular atrophy secondary to Stargardt randomly assigned to one of three treatment arms in a 1:1:1 ratio; emixustat 2.5 mg, 5 mg, and 10 mg. Subjects are orally dosed once daily in the evening for one month. Study is designed to evaluate safety, pharmacodynamics and tolerability of emixustat in subjects.

Evaluations：• Change in electrical response of the retina to a flash of

light, as measured by electroretinogram

• Percent suppression compared to baseline of rod b-wave amplitude recovery after a photobleaching light

Results：• ERG recovery after photobleaching was dose-

dependent and maximum reduction in recovery rate was more than 90% compared to baseline (see disclosure dated January 15, 2018)

• Showed safety and tolerability of emixustat with the administered doses in subjects

• Targeting initiation of Phase 3 clinical trial in 2018Q4P

erc

ent

suppre

ssio

n(%

)

Emixustat HCl

2.5 mg 5 mg 10 mg

mean

median

100

90

80

70

60

50

40

30

20

10

0

-10

-20


Emixustat HCl Phase 3 Study for Stargardt Initiated

page 21

→ Multi-center (approximately 30 sites in 10 countries worldwide), randomized, double-masked, and placebo-controlled trial

Approximately 160 subjects diagnosed with macular atrophy secondary to Stargardt disease randomly assigned to emixustat 10 mg or placebo (2:1 ratio) once daily for 24 months.

The first patient enrolled (FPFV; first patient first visit) in this clinical study on November 7, 2018.

Primary Objective：• To determine if emixustat reduces the rate of macular

atrophy progression, in comparison to placebo, in subjects with Stargardt disease

Secondary Objectives：

• To assess changes in visual function parameters such as BCVA (best-corrected visual acuity) letter score and reading speed

emixustat

PBOS: Home-Based Remote OCT Device(Optical Coherence Tomography)


Retinal Diseases Treatment Using OCT

page 23

• AMD and other neovascular retinal diseases are the leading cause of blindness and the number of patients is

increasing from aging.

• Anti-VEGF drugs delivering to eye through a very slender needle are current available treatment for retinal disease,

but:

➢ High cost (about 150,000 yen per injection)

➢ Repeated injection is necessary

➢ Timing of injection is different for each patient

➢ Real-time monitoring for each patient is a key for an optimal treatment

• OCT (optical coherence tomography) device is used to detect nascent disease progression, but:

➢ High cost (over 10 millions yen)

➢ Technical knowledge is required for reading

Low cost, home-based, ophthalmic self-monitoring OCT device, designed to monitor disease progression to support effective treatment regimen.


Miniature OCT Device Solution: PBOS

page 24

Low cost, home-based, ophthalmic self-monitoring OCT device (optical coherence tomography)

Optical Coherence Tomography(OCT)Images

In its first iteration, the PBOS aims to improve treatment outcome in patients diagnosed and treated for DME, wet AMD, and other neovascular retinal diseases.

The PBOS is being designed to detect nascent disease progression and support patient re-treatment prior to irreversible vision loss due to disease progression.

• Small handheld OCT device for self monitoring by patients

• Real-time monitoring of eye disease therapy progression

• Addresses increase in demand for mobile Health applications (mHealth) in home care and remote medical care field


Standard of Care and Unmet Needs in Neovascular Retinal Diseases

page 25

8.0

ETDRS

Letter Score

for treating

patients

4.0

ETDRS

Letter score

for treating

patients

12 Months

Fixed Monthly Injections

7.7

Number of injections per year

5.2

Number of injections per year

12 Months

Standard of Care


Miniature OCT Device Solution: PBOS

page 26

No disease progressionDetect nascent disease

progression

PBOS

PatientSelf-Check

PatientSelf-Check

Physician

PBOSApp

PBOSApp Healthcare

Institution Access

PBOS

Using the internet, PBOS is a low-cost home-based patient self-monitoring device, designed to monitor disease progression to support effective treatment regimen.


Example of Test Data

page 27


PBOS Clinical Study Completed

page 28

→ Single-center study in the U.S.

12 subjects with normal macular thickness and 20 subjects with center-involving macular edema were evaluated to measure the quality and resolution of retinal thickness assessments using PBOS.

Clinical trial initiated on March 23, 2018 (FPFV, First Patient First Visit) and completed on October 8, 2018 (LPLV, Last Patient Last Visit).

Evaluations and Results：

Between normal subjects and subjects with macular edema:

• Demonstrate reproducibility and repeatability of retinal thickness measurements

• Demonstrate ability to measure retinal thickness changes

• Demonstrate correlation of retinal thickness measurements of PBOS vs a hospital-grade OCT unit

Acucela has completed a successful clinical study that demonstrated all of the above evaluation points.

2018

Q1 Q2 Q3 Q4

Clinical Trial


Miniature OCT Device Solution: PBOS Development Plan

page 29

▪Anticipated clinical trial completion, product engineering, and specification finalization

▪Anticipated production model build and final evaluation, and, regulatory approval (510(k))

▪Targeting commercial manufacturing readiness

Retinitis Pigmentosa using Gene Therapy (Optogenetics)


Retinitis Pigmentosa is a Blinding Disease

page 31

• Earliest and most frequent symptom is night blindness, decreased vision or tunnel vision

• Affects roughly 1 in 5,000 people in Japan

• To date, no pharmacological treatment is available

• Progressive loss of vision in childhood leads generally to blindness by age 40

• The cause of RP is complex, with over 100 different gene mutations identified

NORMAL VISION

DECREASED VISION

TUNNEL VISION

BLINDNESS

Affects roughly 1 in 4,000 people, both in the United States and worldwide and approximately 1.5 million people worldwide are affected by the disease


Gene Therapy Technology - Optogenetics

page 32

• This genetic mutation-independent therapy will utilize a

viral vector to transduce the ON-bipolar cells of the retina

with human rhodopsin

• Rhodopsin’s biological mechanism imparts a relatively high

level of light sensitivity for this type of therapy and as a

human protein, may minimize any immunological impact

• Recombinant adeno associated virus vectors are

considered the best and most promising gene delivery

system for therapeutic applications

• This technology has been shown to be effective at

restoring vision in blind rd-/- mice with human rhodopsin



page 33

Technology allows expression of human rhodopsin in ON bipolar cells using a viral vector in retinitis pigementosa patients

• Retinitis pigmentosa patients most commonly first experience a loss of rod photoreceptor, but the other retinal cell layers remain intact

• By activating the ON-bipoloar cells with human rhodopsin, it produces a light induced visual signal in the absence of photoreceptors

• This gene therapy utilizes a viral vector to transduce the ON-bipolar cells of the retina with human rhodopsin and restore visual response

• Expression of human rhodopsin in the ON bipolar cells is expected to restore some level of light sensitivity to the patient

• Rhodopsin’s biological mechanism imparts a relatively high level of light sensitivity for this type of therapy and as a human protein, may minimize

any immunological impact

• Genetic mutation-independent therapy

Light Sensitive ON Bipolar Cells

DEAD PHOTORECEPTORS

HUMAN RHODOPSIN VIRAL VECTOR



page 34

Wild type Treated Blind

• Restoration of vision in blind rd-/- mice with human rhodopsin

• Treated mice respond to video of a swooping owl like wild type control animals

Blind

distance (cm) 0 50 100 150

Wild type

Treated

source: Cehajic-Kapetanovic et al. 2015, Current Biology 25, 2111-2122

Gray screen

Owel video

p<0.01

**

**

**


Retinitis Pigmentosa：Optogenetics Development Plan

page 35

▪Anticipated initiation of promoter and capsid enrichment, and transgene optimization programs

▪Anticipated initiation of CMC process development and pre-IND nonclinical studies

▪Targeting IND filing to initiate clinical study for patients with Retinitis Pigmentosa

FY2018 Q3 Financial Results


Overview of FY2018 Q3: P/L (IFRS)

page 37

￥ Millions9 months ended September 30

Inc/Dec Reasons for change2017 2018

Operating revenue

ーーー

Expenses 2,922 2,341 △ 581

R&D 1,895 1,761 △ 135

• Increased efficiencies realized from prior yearcost savings measures

• Decreased share-based compensation expense• The completion of Phase 2 PDR study and

Phase 2a Stargardt study.

G&A 1,027 581 △ 446

• Lower personnel expenses due to cost savingsmeasures -￥237M

• Completion of the IFRS project and theRedomicile Transaction：¥ -137M

Loss from operations（△） △ 2,922 △ 2,341 ＋ 581

Net loss（△） △ 2,794 △ 2,183 ＋ 611


Overview of FY2018 Q3: B/S (IFRS)

page 38

￥ Millions Dec 31, 2017 Sep 30, 2018 Inc/Dec Reasons for change

Current assets 11,673 10,229 △ 1,444

Cash and cash equivalents, and Other financial assets

11,197 9,911 △ 1,285 （※）

Non-current assets 1,724 1,610 △ 113

Other financial assets 1,566 1,462 △ 104 （※）

Total assets 13,396 11,840 △ 1,557

Current liabilities 327 400 ＋ 74Increase in Accrued liabilities and Trade payables

Non-current liabilities 103 95 △ 8

Equity 12,967 11,344 △ 1,623• Decrease due to Net loss• Increase due to the Warrant exercise

Liabilities and Equity 13,396 11,840 △ 1,557

（※）Total Cash and cash equivalents, and Other financial assets

12,763 11,373 △ 1,390• Operating CF: ¥ -2,028M• Warrant exercise of 1.2M shares:

\ +449M


Financial Outlook for FY2018

page 39

￥ MillionsOperating revenue

Loss from operation

Loss before income tax

Net loss

FY2018 (Forecast) － △3,500 △3,370 △3,370

FY2017 (Actual) － △3,620 △3,445 △3,445

※１ Exchange rate for the forecast: 1 US Dollar = 110 Japanese Yen※２ There are no changes to the earnings projections for FY2018 released on February 13, 2018.

Outlook for Operating revenue

➢ We are pursuing various partnering efforts and expects to generate revenue in the future through collaboration withstrategic partners.

Outlook for Loss from operations

➢ R&D cost will increase due to Phase 3 for Stargardt and continued development of PBOS and our other programs.

➢ G&A costs, including personnel and overhead expenses, will be lower than 2017 due to cost savings measures.

Warrant Financing

➢ The 21st SARs with Moving-strike was issued in April 2018.

➢ Estimated total proceeds is ￥2.2 billion (Estimated amount is calculated based on the initial exercise price).

Forward-looking financial information and estimates contained in this presentation were previously disclosed by the Company in the Company’s Kessan Tanshin dated November 14, 2018. Such forward-looking financial information and estimates speak only as of the dates of initial disclosure and this presentation is neither updating nor confirming the previously provided forward-looking financial information, guidance and estimates.

Thank you

Documents

Kubota Pharmaceutical Holdings FY2018 Q3 Update · Enhance our technologies by partnering with large pharmaceutical companies in and outside of Japan. Kubota Pharmaceutical Holdings