HEALIOS K.K. and its wholly owned subsidiary ProcellCure Inc. are developing a treatment for patients with pneumonia induced ARDS (trial name: ONE BRIDGE) using HLCM051, a somatic stem cell regenerative medicine product. As announced on March 2, 2023, they have been preparing to conduct an additional clinical trial in Japan to reinforce the efficacy and safety data in advance of seeking approval in Japan. To promote the development of HLCM051 for ARDS, ProcellCure has submitted a clinical trial notification for this study to the Pharmaceuticals and Medical Devices Agency (PMDA).

The study will be initiated after a 14-day review period following submission of the clinical trial notification to the PMDA. Business framework for the development and marketing of HLCM051 for ARDS As announced in December 27, 2023, Healios, ProcellCure, and Nobelpharma K.K. entered into a letter of intent for a development and marketing alliance for HLCM051 for ARDS in Japan and are currently discussing detailed terms and conditions for the development and marketing of the drug in Japan. Healios will receive an upfront payment from Nobelpharma under the agreement, which will be finalized and executed in the future.

Thereafter, Healios will receive a milestone payment upon approval. After approval, Healios will supply the final manufactured product to Nobelpharma, who will in turn distribute the product to the market, and Healios anticipates that it will generate meaningful net margins from such product supply. In addition to the above, Healios expects to receive sales milestone payments of approximately 25 billion yen based on projected sales as of the date of the basic agreement, depending on accumulated sales.

In addition to marketing the product, Nobelpharma has agreed to provide support services for the development and regulatory submission of the agreed content in the future. With the support of Nobelpharma's extensive experience and capabilities in the development and marketing of orphan drugs in Japan, for which Nobelpharma has obtained 16 drug approvals, Healios will prepare for the approval of HLCM051 for the treatment of ARDS. In Japan, ARDS is an orphan disease with a limited number of patients (28,000 per year), while in the U.S. the number is estimated to be about 10 times as high (262,000 per year) and in China more than 20 times as high (670,000 per year).

Healios has acquired the rights to develop ARDS globally and is currently preparing for an overseas clinical trial, including in the U.S. Healios will accelerate the commercialization of HLCM051 and seek to generate value through multiple partnership and alliance opportunities.