Change in the Use of Proceeds Following the Discontinuation of Argos's Development Program

「At a meeting of its Board of Directors held on 29 August 2025, the Company resolved to change the expenditure details and scheduled expenditure period set out in the "Changes to the Use of Funds and Scheduled Expenditure Period" disclosed in the 31 March 2023 disclosure titled "(Change to Disclosed Matters) Changes to the Use of Funds and Scheduled Expenditure Period Related to the Issuance of Stock Acquisition Rights Through a Third-Party Allotment."」

「We discontinued expenditures after deciding to terminate development of the regenerative medicine product in question. Of the ¥1,192 million in remaining funds, ¥632 million will be reallocated to the development of various seeds for regenerative medicine products currently being pursued, as described in (iii) above. The remaining ¥560 million will be reallocated to working capital for the head office, given the need to secure such funds, as described in (iv) above.」

「As the amount expected to be raised will decrease due to the decline in our share price, we reviewed the priority and allocated funds to the use described in (i), for which the originally planned amount and expenditure period remain unchanged.」

「We will extend the planned expenditure period because additional quality and nonclinical testing is required.」

「Delays in executing R&D expenses occurred because research activities fell behind schedule and were temporarily suspended or stalled from March 2020 onward due to the spread of COVID-19. We have evaluated safety in nonclinical safety studies and clinical research conducted under the Act on Securing Safety in Regenerative Medicine and other relevant laws, but will extend the planned expenditure period because additional quality and nonclinical testing is required.」

「Regarding the unallocated ¥322 million of the amount originally planned for expenditure on the joint development, we will change the use of proceeds to joint research toward the commercialization of a regenerative medicine product for treating chronic heart failure with Kyushu University, a national university corporation, announced on 18 November 2019, and to head-office working capital.」

「This was originally designated as a use of proceeds from the Series 18 Stock Acquisition Rights. However, as the amount raised decreased due to the decline in our share price, no funds were allocated to this use and it had not been implemented, so we will delete it.」

「For item ③, the planned amount was changed because funds not used for item ② were allocated to item ③. In addition, because demand for contract manufacturing was lower than initially expected, capacity expansion at the cell processing facility was no longer necessary during the originally scheduled expenditure period, and the planned expenditure period was changed following a review of the timing of capital investment and other factors.」

「Accordingly, at a meeting of the Board of Directors held on 17 January 2020, we resolved to change the use of funds to be raised through the Series 14 and Series 15 Stock Acquisition Rights.」

「We decided to temporarily acquire and cancel the 156,350 unexercised Series 13 Stock Acquisition Rights and reconsider the most appropriate means of raising funds.」

「Items 1 through 3 above were initially based on costs related to commercializing Argos’s AGS-003. Because Argos has now discontinued development of the product, we changed the use of funds to reflect the actual situation. Items 4 and 5 are new intended uses of funds. Item 4 will cover restructuring costs, including the consolidation and relocation of business offices and costs associated with workforce reductions. Item 5 will cover the commercialization of autologous cultured cartilage regenerative medical product MDNT01, announced on 21 December 2017, and the commercialization of the dendritic cell vaccine ATL-DC-101 for adult T-cell leukemia, announced on 22 March 2018.」