Uncertainty in New Drug Development and R&D Investment Risks

「In April this year, development of the combination therapy of Opdivo and Yervoy for perioperative adjuvant therapy for bladder cancer was discontinued because the primary endpoint was not achieved. / As a result of impairment testing, impairment losses were recognized on in-process research and development costs of ¥6,000 million in the previous consolidated fiscal year and ¥1,939 million in the current consolidated fiscal year.」

「In October this year, development of the combination therapy of Opdivo, Yervoy and chemotherapy for first-line treatment of gastric cancer was discontinued. A Phase III trial had been conducted in Japan, South Korea and Taiwan, but the primary endpoint of overall survival did not show a significant extension versus the chemotherapy arm. / In April this year, development of the MALT1 inhibitor ONO-7018 was discontinued for strategic reasons. A Phase I trial had been conducted for non-Hodgkin lymphoma and chronic lymphocytic leukemia. / In July this year, development of the Axl/Mer inhibitor ONO-7475 was discontinued for strategic reasons. A Phase I trial had been conducted in Japan for EGFR mutation-positive non-small cell lung cancer. / In September this year, development of the ULK inhibitor DCC-3116 was discontinued for strategic reasons. A Phase I/II trial had been conducted in the United States for solid tumors in combination with sotorasib. / In September this year, development of the pan-RAF inhibitor DCC-3084 was discontinued for strategic reasons. A Phase I/II trial had been conducted in the United States for malignant tumors.」

「• In June last year, development of the combination therapy of Opdivo and the PARP inhibitor rucaparib was discontinued because the primary endpoint of progression-free survival (PFS) was not achieved. Japan, South Korea and Taiwan had participated in a Pharma＆社-led international Phase III trial for maintenance therapy after first-line chemotherapy for ovarian cancer. / As a result of impairment testing, impairment losses were recognized in the previous consolidated fiscal year on marketing rights of ¥11,134 million and in-process research and development costs of ¥3,700 million, and in the current consolidated fiscal year on in-process research and development costs of ¥6,000 million.」

「In June this year, Japan, South Korea and Taiwan participated in an international Phase III trial led by Pharma＆社 of the combination therapy of Opdivo and the PARP inhibitor rucaparib for maintenance therapy after first-line chemotherapy for ovarian cancer. The primary endpoint of progression-free survival (PFS) was not achieved. • In April this year, development of the combination therapy of the TGF-β inhibitor ONO-7122 and Opdivo was discontinued for strategic reasons. Japan had participated in a Bristol Myers Squibb-led international Phase I trial for solid tumors. • In April this year, development of the combination therapy of the anti-ILT4 antibody ONO-7226 and Opdivo was discontinued for strategic reasons. Japan had participated in a Bristol Myers Squibb-led international Phase I trial for solid tumors. • In July this year, development of the Schwann-cell differentiation-promoting agent ONO-2910 for diabetic polyneuropathy was discontinued because the expected efficacy could not be confirmed. A Phase II trial had been conducted in Japan.」

「As a result of impairment testing, impairment losses were recognized on marketing rights of ¥1,000 million in the previous consolidated fiscal year, and on marketing rights, mainly for Joinkuru intra-articular injection and Parsabiv intravenous injection for dialysis, of ¥11,134 million and in-process research and development costs of ¥3,700 million in the current consolidated fiscal year.」

「※Japan, South Korea and Taiwan had participated in a Bristol Myers Squibb-led international trial of the fixed-dose combination of Opdivo and the anti-LAG-3 antibody relatlimab, ONO-7121, for colorectal cancer. The trial was stopped for futility based on an analysis by the independent data monitoring committee.」

「• In August this year, development of Opdivo for prostate cancer was discontinued because efficacy could not be confirmed in a Phase III trial conducted in Japan, South Korea and Taiwan. • In October this year, development of the combination therapy of Opdivo and the anti-TIGIT antibody ONO-4686 was discontinued for strategic reasons. Japan had participated in a Bristol Myers Squibb-led Phase I/II international trial for solid tumors. • In September this year, development of the anti-CD47 antibody ONO-7913 was discontinued after Gilead's overseas Phase III ENHANCE trial in the same patient population was stopped for futility. A Phase I trial for myelodysplastic syndromes had been conducted in Japan. • In October this year, development of the anti-CD47 antibody ONO-7913 was discontinued because efficacy could not be confirmed in a Gilead-led international Phase III trial for TP53 mutation-positive acute myeloid leukemia, in which Japan was participating. • In August this year, development of the FXIa inhibitor ONO-7684 was discontinued for strategic reasons. A Phase I trial for thrombosis had been conducted in Japan and Europe.」

「Development of Opdivo for adjuvant therapy after surgery for gastric cancer was discontinued. A Phase III trial had been conducted in Japan, South Korea, Taiwan and China, but the primary endpoint, relapse-free survival (RFS) as assessed by the independent radiology review committee (IRRC), did not show a significant extension versus the chemotherapy arm.」

「In April of this year, a domestic Phase II trial for biliary tract cancer was discontinued from the development pipeline because the Company abandoned plans to file an application for strategic reasons. · In July of this year, development of Opdivo in Japan for pancreatic cancer was discontinued while a Phase II trial was being conducted. · In July of this year, development of Opdivo and Yervoy combination therapy for virus-positive and virus-negative solid tumors in Japan, South Korea and Taiwan was discontinued for strategic reasons while a Phase I/II trial was being conducted. · In October of this year, development of the prostaglandin receptor (DP1) antagonist ONO-2909 in Japan for narcolepsy was discontinued because the expected efficacy could not be confirmed in a Phase I trial.」

「The combination therapy of Opdivo and the IDO1 inhibitor ONO-7701 had been evaluated in a Phase III trial for bladder cancer in Japan, South Korea and Taiwan, but development was discontinued for strategic reasons. / Following an impairment test, the Company recognized an impairment loss of ¥3,088 million on in-process R&D during the current consolidated fiscal year.」

「* Orencia subcutaneous injection, an inhibitor of T-cell activation, had been evaluated in a Phase III trial for polymyositis and dermatomyositis, but development was discontinued because the expected efficacy could not be confirmed.」

「Development in Japan for solid tumors (cervical cancer, endometrial cancer and soft-tissue sarcoma) was discontinued for strategic reasons. · Development in Japan for primary central nervous system lymphoma and primary testicular lymphoma was discontinued for strategic reasons. · Phase III trials of Braftovi capsules and Mektovi tablets for malignant melanoma in South Korea were discontinued for strategic reasons.」

「* Development in Japan of ONO-4483 for solid tumors was discontinued for strategic reasons. / * Development of Opdivo and Yervoy combination therapy for head and neck cancer was discontinued because the primary endpoint was not met.」

「In October of last year, the Company discontinued development in Japan for strategic reasons of a Phase III trial of Opdivo monotherapy and combination therapy with Yervoy for small cell lung cancer. / In January of this year, the Company discontinued development in Japan for glioblastoma after determining that the expected effect could not be obtained. / In January of this year, development in Japan of the FXIa inhibitor ONO-7269 for cerebral infarction was discontinued for strategic reasons.」

「* Development of Opdivo for glioblastoma was conducted, but the program was removed from the development pipeline after the Company determined that the expected effect could not be obtained. / * Development in Japan of the FXIa inhibitor ONO-7269 for cerebral infarction was discontinued for strategic reasons.」

「In October of this year, the Company discontinued for strategic reasons a Phase III trial of Opdivo monotherapy and combination therapy with Yervoy for small cell lung cancer. / In October of this year, the anti-CSF-1R antibody ONO-4687 (BMS-986227)/Cabiralizumab, which had been evaluated in a Phase II trial for pancreatic cancer, was discontinued.」

「R&D expenses decreased by ¥3.6 billion, or 22.7%, year on year to ¥12.3 billion, mainly because clinical trial costs declined as the start of subject enrollment in new clinical trials was delayed and subject enrollment in ongoing trials was suspended due to the COVID-19 pandemic.」

「In February of this year, development in Japan of the XPO1 inhibitor ONO-7705/Selinexor, licensed from Karyopharm, was discontinued for strategic reasons while a Phase I trial was being conducted for multiple myeloma and non-Hodgkin lymphoma, and the rights will be returned to Karyopharm. / Impairment losses on patents, licenses and other assets recognized during the current consolidated fiscal year were mainly attributable to the discontinuation of new drug development.」

「* The growth hormone secretion inhibitor ONO-5788 had been evaluated in a Phase I trial for acromegaly, but the trial was discontinued for strategic reasons.」

「The combination therapy of the IDO1 inhibitor ONO-7701 and Opdivo had been evaluated in a Phase III trial for malignant melanoma, but was discontinued following a review of the development plan based on the results of combination trials of similar IDO1 inhibitors and anti-PD-1 antibodies. The anti-CD137 antibody ONO-4481 had been evaluated in a Phase I trial of combination therapy with Opdivo for solid tumors, but development was discontinued for strategic reasons.」

「* Opdivo intravenous infusion had been evaluated in a Phase II trial for multiple myeloma, but development was discontinued for strategic reasons. * Orencia intravenous infusion had been evaluated in a Phase III trial for lupus nephritis, but development was discontinued for strategic reasons. * Opdivo intravenous infusion had been evaluated in a Phase I trial for hepatitis C and sepsis, but development was discontinued for strategic reasons.」

「In August of this year, development of Opdivo in combination with the anti-CCR4 antibody mogamulizumab was discontinued because the Phase I trial in solid tumors failed to demonstrate the expected efficacy.」

「* ONO-7579, which inhibits tropomyosin receptor kinase (Trk), had been evaluated in a Phase I/II trial for solid tumors, but the trial was discontinued for strategic reasons. / * The prostaglandin receptor (EP2/EP3) agonist ONO-8055 had been evaluated in a Phase I trial for underactive bladder, but development was discontinued for strategic reasons.」

「There is no guarantee that the long-term and substantial allocation of management resources will lead to the launch of an innovative new drug, and it is possible that development will have to be abandoned partway through.」

「* ONO-8577, which has a bladder smooth muscle-relaxing effect, had been evaluated in a Phase II trial for overactive bladder, but development was discontinued because the expected efficacy could not be confirmed. / * The Trk inhibitor ONO-4474 had been evaluated in a Phase II trial for osteoarthritis, but development was discontinued for strategic reasons.」

「In August of this year, the peptide vaccines ONO-7268MX1 and ONO-7268MX2 were being evaluated in a Phase I trial for hepatocellular carcinoma, but development was discontinued for strategic reasons. / In August of this year, the levodopa prodrug ONO-2160/CD was being evaluated in a Phase I trial for Parkinson's disease, but development was discontinued because the expected efficacy could not be confirmed.」

「ONO-7268MX1 and ONO-7268MX2 had been evaluated in Phase I trials for hepatocellular carcinoma, but development was discontinued for strategic reasons. / The levodopa prodrug ONO-2160/CD had been evaluated in a Phase I trial for Parkinson's disease, but development was discontinued because the expected efficacy could not be confirmed.」

「Development of the TSPO (translocator protein) antagonist ONO-2952 for irritable bowel syndrome had been pursued, but was discontinued for strategic reasons after comprehensive consideration of differentiation from existing and competing products under development. / Development of the prostaglandin receptor (EP4) agonist ONO-4232 for acute heart failure had been pursued, but was discontinued for strategic reasons after comprehensive consideration of the expected development period and costs.」

「In August of this year, Bristol-Myers Squibb announced that Opdivo monotherapy failed to meet the primary endpoint in the CheckMate-026 international clinical trial evaluating treatment of previously untreated advanced non-small cell lung cancer with PD-L1 expression of at least 5%. / In September of this year, Amgen announced that Kyprolis failed to meet the primary endpoint in the topline results of the Phase III CLARION trial in patients newly diagnosed with multiple myeloma.」

「The leukotriene receptor antagonist ONO-6950 was being evaluated in a Phase II trial for bronchial asthma, but development was discontinued because the expected efficacy could not be confirmed. / *Development of the S1P receptor antagonist ONO-1266 for portal hypertension had been pursued, but was discontinued for strategic reasons due to changes in the external environment.」

「The environment remains challenging, with the probability of success in new drug discovery declining year by year, R&D costs increasing, and various healthcare cost-containment policies advancing as a result of healthcare system reforms. / There is no guarantee that the long-term and substantial allocation of management resources will lead to the launch of an innovative new drug, and it is possible that development will have to be abandoned partway through.」