Tokyo, Japan –11 November 2016: Sosei Group Corporation (“Sosei”; TSE Mothers Index: 4565) today announced that it will invest 1 billion yen in its currently consolidated subsidiary Jitsubo Co Ltd, (hereafter, Jitsubo), which is increasing its capital base by 2.5billion yen through third-party allocation of new shares, as summarized below. Through this capital raise, Sosei’s ownership of Jitsubo will reduce from 53.8% to 43.4% and consequently, from an accounting perspective, Jitsubo will change from being treated as a consolidated subsidiary to become an affiliate company accounted for by the equity method.
Reasons for the change
Sosei acquired Jitsubo in December 2014 to participate in the growing global market for peptide-based drugs. Jitsubo owns proprietary platform technologies that have the potential to improve the costs and quality of peptide manufacturing (Molecular Hiving™ 1) and also to enhance the pharmacological and stability characteristics of novel peptide drug candidates (Peptune™ 2). In the past 2 years Jitsubo has made significant advances with both platform technologies including, in August 2016, formalizing the joint development of veterinary drug candidates with DS Pharma Animal Health Co., Ltd. Additionally, and as announced yesterday, November 10, Sosei’s subsidiary Heptares Therapeutics Ltd., will collaborate with Jitsubo on a research project to develop novel GPCR-targeting peptide candidates for severe gastro-intestinal disorders. By integrating Jitsubo’ peptide structural optimization technology and Heptares’ structure-based drug design for drug discovery targeting G protein-coupled receptors (GPCRs), we anticipate that breakthrough approaches to accommodate unmet medical needs will become feasible.
In order to capitalize on the technology advances achieved and to expand and accelerate future growth opportunities, Jitsubo management had proposed to raise new capital through Third Party allocation to Venture Capital funds. Sosei Group supported this proposal and elected to participate in the fund raise by further investing 1billion yen.
Sosei looks forward to continuing to support Jitsubo both as its largest shareholder, and through participation on Jitsubo’s Board, and to seeing Jitsubo fulfil its potential in value creation and growth in the global peptide market.