Progress of business activities and global strategy for growth.

3. Implementation of company vision "VISION2030" and expansion to new medium-term management plan.

Since April 2022, the management top has been transferred from founder Kimura to Mr. Kuboshima, and we are proceeding with the consideration of a new medium-term management plan that takes into account new viewpoints and issues. Medinet <2370> has announced "VISION2030", which depicts the corporate vision (the desired state of the company in 10 years), with a formulation of a new medium-term management plan to achieve "VISION2030" using the backcasting method (a method of drawing a course from the future to the present).

Based on "VISION2030", the company has established "Management policy and business development". Firstly, under the management policy of maximizing the strengths and experiences of Medinet, the business development raises specific cell processing product manufacturing orders, strengthening the foundation of the CDMO business, accelerating the development of regenerative medicine and other products, and fostering new seas. Secondly, under the push for the promotion of change towards continued growth that responds to environmental changes, 1) improvement of profitability and productivity of the company's business, 2) promotion of synergy with the company's business, and fostering of new businesses that correspond to VISION. Thirdly, the company aims to strengthen its infrastructure by promoting the activation of human resources who can look to the future and consider one step ahead and accelerating the internal environment for realizing DX. Furthermore, it aims for the cell processing business to be in the black in September 2025, the start of verification trials for regenerative medicine and other products, and the development and profitability of new businesses in order to achieve the "Management policy and business development." Among these, we pay attention to the fact that Mr. Kuboshima emphasized again the "cell processing business's becoming in the black in September 2025". The company's core business, the cell processing business, suffered a significant impact from the coronavirus, with the operating loss expanding. They had set a profit recovery and in-the-black target for the fiscal year ending September 2023, but delayed in-the-black due to the delay in the recovery of the number of patients and the timing of providing processing orders for the new cell using. However, by reliably executing multiple sales expansion factors again in the cell processing business and achieving results, they will make every effort to ensure that they can achieve the "cell processing business's becoming in the black in September 2025." Furthermore, we want to pay attention to the "stock compensation system", which was launched as an initiative for strengthening the company's infrastructure, which was listed as the third item in the "management policy and business development." The "stock compensation system" is an incentive reward system that is awarded in conjunction with performance and stock prices, and is a system in which the right to receive company stock as compensation is granted. If the working conditions set by the company are met, after a certain period has elapsed, the stock can be received as compensation. While the chronic shortage of personnel in Japanese companies has been said for some time, the acquisition of young talented personnel (cell processing technicians, bio researchers, etc.) is an urgent management issue even in the same company, and it was introduced from the fiscal year ending September 2023 as an effective means of raising the motivation of existing employees and acquiring outstanding personnel. If the profitability of the cell processing business and the stock price are well correlated, it could be a motivating factor for employees to work with greater enthusiasm.

"Cell processing business's becoming in the black in September 2025," "beginning of verification trials for regenerative medicine and other products," and "fostering and profitability of new businesses" are set to achieve the "Management policy and business development." Among these, we pay attention to the fact that Mr. Kuboshima emphasized again the "cell processing business's becoming in the black in September 2025". The company's core business, the cell processing business, suffered a significant impact from the coronavirus, with the operating loss expanding. They had set a profit recovery and in-the-black target for the fiscal year ending September 2023, but delayed in-the-black due to the delay in the recovery of the number of patients and the timing of providing processing orders for the new cell using. However, by reliably executing multiple sales expansion factors again in the cell processing business and achieving results, they will make every effort to ensure that they can achieve the "cell processing business's becoming in the black in September 2025."

Furthermore, we want to pay attention to the "stock compensation system," which was launched as an initiative for strengthening the company's infrastructure, which was listed as the third item in the "management policy and business development." The "stock compensation system" is an incentive reward system that is awarded in conjunction with performance and stock prices, and is a system in which the right to receive company stock as compensation is granted. If the working conditions set by the company are met, after a certain period has elapsed, the stock can be received as compensation. While the chronic shortage of personnel in Japanese companies has been said for some time, the acquisition of young talented personnel (cell processing technicians, bio researchers, etc.) is an urgent management issue even in the same company, and it was introduced from the fiscal year ending September 2023 as an effective means of raising the motivation of existing employees and acquiring outstanding personnel. If the profitability of the cell processing business and the stock price are well correlated, it could be a motivating factor for employees to work with greater enthusiasm.

When Kuboshima assumed the presidency in April 2022, he emphasized the "cell processing business's becoming in the black in September 2025," but it seems difficult to achieve the goal based on current performance. Although the "delay in the target for becoming in the black" is unavoidable, an action plan that mobilizes "all measures for early black", is expected to be executed in the new medium-term management plan that is under consideration.

4. Progress of Business Development in the Second Quarter of the Fiscal Year Ending September 2024.

Regarding the concrete business development in the second quarter of the fiscal year ending in September 2024, which is listed as the first management policy, "Maximizing the strengths and experiences of Medinet to achieve growth," the progress is as follows:

(1) Expansion of specific cell processing product manufacturing orders

Progress of initiatives utilizing new processing technologies is as follows:

-Stable orders for "NKT cell-activated dendritic cells"

-Start of processing orders for "fat-derived mesenchymal stem cells (ASC)" (scheduled to start in October 2024)

-Promotion of joint development with Cellaxia on "new bone regeneration treatment in the dental field"

(2) Strengthening the foundation of CDMO business

Expansion of the production orders for Yanssen Pharma's clinical trial product "Cubcikti(R) Intravenous Drops." They are working towards the commercial manufacture order of the same clinical trial product.

(3) Acceleration of development of regenerative medicine, etc. products and fostering of new seas.

The physician-led phase IIb trial targeting chronic heart failure patients for the joint research (α-GalCer/DC) with Kyushu University was completed with case registration at the end of September 2023. We are currently analyzing the trial data.

(Author: Keiji Shimizu, FISCO Guest Analyst)