Overview of Financial Results for the six months ended September 30, 2019
I would like to express our sincere appreciation for the continuous support and understanding of our stockholders and investors.
Facing the last year of the three-year Takara Bio’s Medium-Term Management PlanFY2020 started in FY2018, we made the efforts toward the overall policy to enhance our presence as a global enterprise and regenerative medical product company, and achieve prodigious growth.
As a result, overall net sales for the six months ended September 30, 2019 decreased 5.3% year on year to ¥16,450 million, due to a decrease in sales of scientific instruments and influence of business transfers related to functional food and mushroom in the AgriBio Business Unit in the previous fiscal year despite contributions from sales for research reagents and contracted services exceeding those of the same period of the previous fiscal year. Cost of sales decreased 13.2% year on year to ¥6,121 million due to a decrease of cost percentage from change of sales composition by item and others, and gross profit increased 0.1% year on year to ¥10,329 million. Selling, general and administrative (SG&A) expenses decreased 5.2% year on year to ¥7,293 million due to the decrease in R&D expenses, and we recorded operating income up 15.7% year on year to ¥3,035 million.
Accompanied with the increase in operating income, ordinary income increased 10.9% to ¥2,961 million, income before income taxes and others increased 21.1% year on year to ¥2,950 million, and net income attributable to owners of the parent increased 20.6% year on year to ¥2,075 million.
Progress Status of Medium-Term Management Plan 2020
In the Bioindustry business as a core business, sales of scientific instrument decreased year on year, but sales of research reagents and contracted service such as CDMO service increased year on year for the six months ended September, 2019. In order to accommodate rapidly expanding demand in CDMO business, we have built new research and manufacturing facilities for regenerative medicine products at our headquarters region of Kusatsu, Shiga Prefecture in September 2019, and scheduled for start operation in January 2020. With this operation, we are aiming to improve our R&D capacity and manufacturing capacity for regenerative medicine products and gene therapy vector and QC.
We engage in each clinical development of gene therapies for target diseases such as cancer, etc. with the aim of commercialization through Gene Therapy business. We have decided to implement a strategic change in the development plan of C-REV which is being developed as a regenerative medicine product for the treatment of melanoma and pancreatic cancer. The new drug application for marketing approval in Japan was submitted in March 2019, but we retracted the application for melanoma on September 27, 2019 based on the progress at the meeting with PMDA during the review. Further, the Phase I of C-REV in patients with unresectable pancreatic cancer is being conducted. The clinical data reported so far was quite encouraging. Considering the new mechanism action of C-REV and the unmet medical needs, we will focus on further development for pancreatic cancer in order to maximize the value of C-REV. As for genetically engineered T cells therapy project under clinical trial, we strive to make best effort on each project and meet the unmet medical needs.
In fiscal 2020, the last year of the revised Medium-Term Management Plan, we engage in business targeted at ¥6.2 billion in operating income with the aim of fulfilling “selection and concentration” of management resources through business transfer of functional food and mushroom.
Under the circunstances, we forecast net sales of ¥33,900 million, operating income of ¥6,200 million, ordinary income of ¥6,350 million and net income attributable to owners of the parent of ¥4,250 million. Also, we forecast a ¥8.00 per share annual dividend for fiscal 2021.
We will strive to further enhance corporate value to meet your expectations and trust. We sincerely appreciate your continued guidance and encouragement.