Happy New Year
As the new year begins, I have as of today returned to the joint post of company president and chairman. We have also rebranded ourselves as Sosei Heptares as we work together to further develop our global business.
Looking from a broad perspective on the situation around the globe, we can see that there is extremely deep confusion due to uncertainty over where truth and justice lie. I think that many people are looking for standards they can rely on as a reference point when deciding what they should believe in and how to make valued judgments. My personal opinion is that we can only trust those who have achieved results over time and emerged as winners through the judgment of history.
Our company, founded in 1990, is one of the oldest companies in Japan’s bio-pharma business. We have accumulated a wealth of valuable experience that can only be acquired over a long period of time. We followed a difficult and winding path, relying on our own resources, to win approval for the manufacturing and marketing of products such as NorLevo®, an oral contraceptive, as well as ORAVI®, a treatment for oropharyngeal candidiasis. Both treatments were introduced back when the company lacked funds and were sold on a relatively limited scale, but their success laid the foundations for us to achieve the in-house development and subsequent marketing of more widely-selling products in Japan.
Of the eight products in our pipeline when the company went public in 2004, it was only Norlevo® that reached the market. There were eight more separate products in the pipeline in 2005 at the time that we acquired Arakis, but the only one of those candidates to successfully reach the market was Seebri® a COPD treatment that we licensed to Novartis. Novartis then went on to successfully launch a treatment that combined Seebri® with a separate product that they developed in-house. Sales of the Ultibro®, the combined product, together with sales of Seebri® have provided us with a steady royalty stream.
In the bio-pharmaceutical industry, it takes more than 10 years to take a product from the research stage to the achievement of the desired result the regulatory approval of the product. In the early stages of research and development, we all dream about the future success of a product but the undeniable truth, as evidenced by history, is that as we proceed to the latter stages of development the majority of these projects are suspended or result in failure. It is therefore important for pharmaceutical companies to have multiple candidates in the pipeline and to unceasingly take on challenges while making skillful use of financial resources.
As those shareholders and investors that have been with us since the initial public offering of the company will know, the total market capitalization of our company, which had been ¥50 billion at that time, dropped to around only ¥1 billion in around 2008 following the repeated failure of pipeline developments. Until the success of our COPD treatment, we simply had to bear the difficulties, waiting for future success to arrive. However, following the news of our acquisition of Heptares and various business partnerships in 2015 and 2016, total market capitalization at the time I stepped back to the post of Chairman had risen dramatically to around 300 times its lowest level. Since then, we have made bold commitments to invest heavily in research and development in the same manner as US-based bio-pharmaceutical companies, but this approach has struggled to win the support of shareholders and investors in Japan and therefore we are now aiming to change direction, rebuild, and rapidly improve our profitability structures under new leadership.
There are many examples of new technologies that rode a wave at a particular time and were touted to become the next big thing, but which then disappeared before achieving results. In some cases, as with genome analysis, a new iteration of these technologies may later to return to favor. However, we must always remember the undeniable truth that no matter how innovative technology may be, history shows us such technology will inevitably disappear. As such, we will be seeking to maximize the potential of StaR® technology and ensure that it is monetized. We will also continue to seek synergies with other drug discovery technology, doing all we can to harness these synergies to maintain a drug discovery engine that meets the highest global standards.
However, no matter how hard we try to explain our goals and ambitions, it is meaningless if we do not achieve results. As Sosei Heptares, we must ensure that our whole company comes together to take responsibility for our results. In 2019, let us continue to encourage and inspire each other. We are grateful for your ongoing support.
January 1, 2019
Chairman of the Board,
Representative Executive Officer, Chairman,
President and Chief Executive Officer