Investment Bridge Announces Investment Opinion: Bridge Report on R-Tech Ueno Issued: Strong Earnings Growth Recorded in FY3/14, Earnings Expected to Trend Sideways in FY3/15

TOKYO

Investment Bridge, one of Japan’s leading independent IR services companies, has released a “Bridge Report” on R-Tech Ueno, Ltd. (JASDAQ:4573) reviewing the results for the fiscal year March 2014 and estimates for fiscal year March 2015.

Report Highlights

• Sales and ordinary income rose by 23.4% and 65.9% year-over-year during fiscal year March 2014 due on the back of strong sales of “AMITIZA®” within Japan.
• During fiscal year March 2015, R-Tech Ueno estimates call for sales to rise by 2.6% and ordinary income to decline by 2.9% year-over-year due in part to the influence of price revisions, declines expected in sales of “Rescula®,” higher research and development expenses, and a disappearance of foreign exchange translation gains.
• The Bridge Report calls attention R-Tech Ueno’s ability to grow earnings over the longer term based upon its strong financial foundation and earnings structure, and its focus upon new drug development in the realms of unmet medical needs, orphan drugs, and anti-aging where there is little competition.

R-Tech Ueno, Ltd. is a drug discovery venture company that specializes in research and development and sales of pharmaceutical products in the fields of ophthalmology and dermatology. The Company’s business is divided into three main segments of new pharmaceutical research and development, pharmaceutical manufacture and sales, and pharmaceutical development support and consigned manufacturing business segments.

R-Tech Ueno saw strong growth in sales and ordinary income of 23.4% and 65.9% year-over-year to JPY5.618 and JPY1.477 billion respectively on the back of strong sales growth of AMITIZA® Capsules of 54.1% year-over-year which helped to offset an 18.1% year-over-year decline in sales of Rescula® Eye Drops during FY3/14. Operating, ordinary and net incomes rose by 80.9%, 65.9% and 89.1% year-over-year due to improvements in gross income margin of 1.3% points and restrained growth in sales, general and administrative expenses of 5.2%.

At the end of the current fiscal year, total assets rose by JPY1.479 billion from the end of the previous term to JPY11.399 billion. Based upon its strong financial position and despite an expansion in the breadth of its businesses, R-Tech Ueno was able to maintain a high equity ratio of 80.2%. Moreover, the Company has been able to achieve its goal of attaining return on equity of over 10% by fiscal year March 2016 two years early by achieving 12.3% ROE during the term just ended.

R-Tech Ueno’s fiscal year March 2015 estimates call for sales to rise by 2.6% year-over-year to JPY5.763 billion. This estimate of lower sales growth takes the impact of pricing revisions (-1.62%) into account, and is based upon the outlook for a decline in sales of Rescula of 14.4% to JPY1.270 billion due to a lack of orders in the United States, and relatively low growth of 8.7% year-over-year in AMITIZA sales to JPY4.342 billion. Operating income is expected to rise by 0.8% year-over-year to JPY1.431 billion due in part to a rise in development expenses of 12.6% year-over-year to JPY1.545 billion arising from phase 3 clinical trials for retinal pigmentary degeneration treatment and phase 1 and 2 clinical trial for dry eye treatment. At the same time, ordinary income is expected to decline due to the outlook for a disappearance of foreign exchange translation gains recorded in the term just ended.

The Bridge Report published by Investment Bridge highlights the two strengths of R-Tech Ueno of a strong financial foundation and earnings structure, and its focus upon new drug development in the realms of unmet medical needs, orphan drugs, and anti-aging through collaboration with academia and industry. These strengths are considered to be key conditions necessary for R-Tech Ueno to maintain growth in the future.

To view the full report, please go to the website at the URL listed below.
http://www.bridge-salon.jp/report_bridge/archives/eng/4573/20140730.html

About Bridge Report:
Bridge Report is produced by Investment Bridge Co., Ltd. and provides accurate and objective information about the earnings, business strategies, and other information of publicly traded Japanese companies. Investment Bridge was founded in August 2000 and is one of Japan’s leading independent IR support services companies. Investment Bridge specializes in providing various solutions to Japan’s publicly traded companies with the goal of expanding our clients’ shareholder base and liquidity through increased recognition and understanding of companies.