Seikagaku Announces Acquisition (Incorporation As A Subsidiary) Of Dalton Chemical Laboratories, Inc. Of Canada

Seikagaku Corporation (Tokyo, Japan; “Seikagaku”) announces that it has resolved at a Board of Directors meeting on February 21, 2020, through use of a special purpose acquisition company, to make a cash acquisition of all shares outstanding of Dalton Chemicals Laboratories, Inc., (Toronto, Canada; "Dalton") an unlisted company in Canada. Seikagaku and the shareholders of Dalton have concluded an agreement for this purpose, as described below.

1. Reason for the share acquisition

Dalton provides high-value-added, one-stop contract manufacturing services (CDMO)¹, including the manufacturing of chemosynthesis products and active pharmaceutical ingredients (API) and API process development for pharmaceutical companies.

In its new mid-term management plan (fiscal 2019 to fiscal 2021), Seikagaku endeavors to solidify its profit foundation by focusing on efforts such as accelerating new drug discovery to become the pillar of new profits and productivity improvement reforms for pharmaceutical companies.

By incorporating Dalton as a subsidiary, Seikagaku will obtain the chemosynthesis technology that Dalton has cultivated until now and its know-how related to the development of drug manufacturing processes, in addition to a GMP² -certified overseas drug manufacturing base. In the future, by utilizing the technology and know-how held by Dalton in its own drug discovery, Seikagaku will move to in-house manufacturing by Dalton of chemosynthesis products used for research and other purposes and which Seikagaku has produced by outsourced contract manufacturing. It will also proceed with the transfer to Dalton of the manufacturing of investigational drugs and some of Seikagaku's pharmaceutical products. These actions will enable Seikagaku to accelerate drug discovery and to lower its costs as a result of production optimization and efficiency improvements. In addition, Dalton will be able to expand its CDMO business.

Notes:

1. CDMO: Contract Development and Manufacturing Organization. A business that supplies comprehensive services in drug development and manufacturing to pharmaceutical companies, including contract drug manufacturing, pharmaceutical formulation planning at the development stage, manufacturing of investigational drugs, and optimization of manufacturing conditions.
2. GMP: Good Manufacturing Practice. Production control and quality control standards required by the pharmaceutical manufacturing industry and manufacturer-distributors.

2. Overview of Dalton Chemical Laboratories, Inc.

＊Dalton Chemical Laboratories, Inc. （URL: https://www.dalton.com/）

3. Outline of the counterparties to the share acquisition

Details of the counterparties to the share acquisition are omitted because they are individuals. There is no capital relationship, personnel relationship or business relationship that should be described between the counterparties and our company.

4. Number of shares to be acquired, acquisition price, and status of shares held before and after the acquisition

5. Schedule

6. Effect on forecasts of consolidated financial results

Financial results forecasts for the fiscal year ending March 31, 2020 remain unchanged as the impact of this matter on the consolidated results for the fiscal year ending March 31, 2020 is not significant.