Japan Tissue Engineering Co., Ltd.

In the Regenerative Medicine Products Business, the target patient population is limited, resulting in a small market size, and revenue may fluctuate significantly due to new entrants or changes in patient occurrence. In the Regenerative Medicine Contract Business, there is also a risk that the scale of contracted work may shrink due to changes in the client's development policy or contract cancellations. The Company seeks to minimize the impact through close collaboration with medical institutions and information sharing with clients.

The Company uses certain irreplaceable raw materials and supplies, and if these become unobtainable, it could lead to the suspension of manufacturing of both its own products and contracted products. This risk affects all business segments (Regenerative Medicine Products Business, Regenerative Medicine Contract Business, and LabCyte Business). The Company addresses this through stable supply agreements with suppliers, investigation and selection of alternative products, and development of alternative technologies.

Because the head office and production facilities are concentrated in a single location, there is a risk that both functions could be simultaneously halted in the event of a large-scale disaster. In addition, during a pandemic, strain on the medical system could lead to the postponement of non-urgent surgeries and delays in clinical trials, potentially causing decreased revenue and delays in development schedules. The Company works to mitigate the impact by strengthening infrastructure and operational systems, maintaining close relationships with medical institutions, and securing alternative raw materials.

The risk of highly specialized employees leaving the Company is increasing due to the growing number of competitors and the spread of telework. Since replenishing and training specialized personnel takes time, employee departures may temporarily affect operations. The Company aims to improve employee satisfaction by reorganizing its work systems, enhancing its brand, and designing engaging work and compensation structures.

Unforeseeable legal amendments or changes in medical administration policy could affect the management strategy and operating results of the Regenerative Medicine Products Business and the Regenerative Medicine Contract Business. The regulatory environment in the regenerative medicine field is prone to change, requiring responsiveness to rapid environmental shifts. The Company works to minimize the impact through the accumulation of experience and know-how regarding pharmaceutical approvals and close consultation with regulatory authorities.

There is a risk of information leakage due to unintended disclosure of confidential information to third parties by employees, or cyber attacks such as computer viruses. If technical information or customer information in the regenerative medicine field were to leak, it could lead to a loss of competitive advantage and damage to the Company's reputation. The Company addresses this through thorough management of confidential information via employment regulations, confidentiality agreements, and training, as well as strengthening network security.