Bridge Report:（7776）CellSeed the First Half of the Fiscal Year ending December 2026

Setsuko Hashimoto, President	CellSeed Inc. (7776)

Company Information

Stock Information

*Stock price as of closing on September 4, 2026. Each number is taken from the financial results for the second quarter of the Fiscal Year ending December 2026. ROE, ROA, and BPS are the results in the previous fiscal year.

Earnings Trend (non-consolidated)

* The estimates were provided by the company. Units: million yen.

This Bridge Report presents CellSeed Inc.’s earnings results for the first half of the Fiscal Year ending December 2026 and other financial details.

Table of Contents

Key Points
1. Company Overview
2. 1H of Fiscal Year ending December 2026 Earnings Results
3. Fiscal Year ending December 2026 Earnings Forecasts
4. Conclusions
<Reference: Regarding Corporate Governance>

Key Points

• In the first half of the fiscal year ending December 2026, sales decreased 16 million yen year on year to 20 million yen. The sales of the regenerative medicine support business and the cell cultureware business remained sluggish in overseas markets. An operating loss of 570 million yen was posted. This indicates a year-on-year improvement of 52 million yen. SGA, mainly R&D costs, decreased 55 million yen year on year. Sales fell below the initial forecast, as they put off the posting of revenues from business activities as a contract development and manufacturing organization (CDMO) for regenerative medicine in the regenerative medicine support business, due to the circumstances of business partners, etc. Sales declined, but all kinds of profits exceeded the forecasts, as they made company-wide efforts to reduce costs and the posting of some expenses was postponed until the third quarter or later.

   

• The earnings forecast has been left unchanged. For the fiscal year ending December 2026, sales and profit are projected to decline. Sales are forecast to decrease 12 million yen year on year to 71 million yen, while operating loss is projected to augment 178 million yen year on year to 1,225 million yen. As there is a possibility that the trend of budgets of overseas research institutes and geopolitical risks will keep affecting the research activities in the cell cultureware business for a while like in the previous year, sales are forecast conservatively. Regarding the regenerative medicine contract service business, they will concentrate on receiving new orders for manufacturing from medical institutions and enterprises, with the aim of increasing sales. Profit is forecast to drop, due to the augmentation of development costs through the progress of clinical trials for allogeneic cartilage cell sheets.

   

• In order to diversify their business portfolio, they engage in the strengthening of “the regenerative medicine contract service business” in the regenerative medicine support business. Unfortunately, in the first half of the current fiscal year, the posting of revenues has been put off due to the circumstances of business partners, etc. While the sales of the cell cultureware business remain sluggish in overseas markets, “the regenerative medicine contract service business” is expected to contribute to revenues earlier than initially planned.

   

   

1. Company Overview

[1-1 Management philosophy]

On the occasion of the 25th anniversary of establishment of the company, they set a new mission & vision. The management and employees discussed their ideal state and what are necessary, and determined the contents of their mission & vision. They aim to contribute to the further advance of regenerative medicine, which is spreading around the world.

[1-2 What is regenerative medicine?]

Regenerative medicine means a new type of healthcare in which lost, damaged or impaired organs are regenerated and cured with cells, the extracellular matrix, growth factors, etc. It is expected that the regenerative medicine market will emerge through the changes in the environment, such as the aging of the population, technological innovation, and the easing of regulations, so that diseases for which unmet medical needs are high because there have been no effective treatment methods.

“Autologous” and “allogeneic”
There are two kinds of cells used for regenerative medicine: “autologous” and “allogeneic” ones.
“Autologous” cells mean those that are collected from a patient, processed, cultured, and then administered to the patient. Since the cells are from each patient, so the body does not reject the cells, but it takes time to prepare them for administration, because cells are collected and cultured after a treatment method is determined.
“Allogeneic” cells mean those that are collected from a doner, processed, cultured, and then administered to patients. Unlike “autologous” cells, it is unnecessary to collect cells from each patient, and it is possible to store cells and produce cells of the same quality, but there is a risk that the body will reject the cells.
Concrete methods for administering regenerative medicine products include the method of injecting them into blood vessels with a syringe or drip infusion for systemic administration and the method of administering (implanting) products to the body part you want to regenerate through surgery or an endoscope. There are a variety of methods for administering regenerative medicine products.

[1-3 Regenerative medicine of CellSeed]

CellSeed focus on the administration (implantation) of “allogeneic” cells to the body part you want to regenerate through surgery or an endoscope. They operate the “cell sheet regenerative medicine business,” in which they develop products for regenerative medicine, etc. by using “cell sheets (cultured sheet-shaped cells)” produced based on the core technology of the world’s first “cell sheet engineering,” which was developed by the Professor Emeritus Teruo Okano of Tokyo Women's Medical University and transferred to CellSeed.

“Cell sheet engineering” – Basic Technologies for Regenerative Medicine

(From the company material)

In general, cells excrete adhesive proteins as tissue serving as a “foothold” or “framework” for filling the gap between cells and facilitating cellular activities, which is called the extracellular matrix, for multiplication. The extracellular matrix conveys information to cells, taking indispensable roles for forming, growing, and repairing tissue. When cells are cultured with ordinary devices, protein hydrolases are used for collecting cells adhering to the devices after multiplication, but cultured cells disintegrate due to the enzyme treatment.

To solve that issue, the Professor Emeritus Teruo Okano of Tokyo Women's Medical University developed “temperature-responsive cell cultureware” under a totally different concept from conventional technologies, and a cell culturing method based on them, cultivating a new field called “cell sheet engineering.” This is a platform technology originating in Japan and the first of its kind in the world.
If cells are cultured on the cell culture dish “UpCell®,” whose surface has been processed with a temperature-responsive polymer, which changes its molecular structure according to temperature, enzyme treatment like conventional technologies is not required for collecting cells, and just by changing culture temperature, it is possible to collect “cell sheets,” which organically integrate without disintegrating, from the culture dish, while retaining the extracellular matrix (adhesive proteins).

The collected cell sheets can be smoothly implanted in living tissue, because adhesive proteins are retained without disintegrating. As another remarkable feature, the intrinsic functions of cells are retained because they do not undergo enzyme treatment.
In addition, cell sheets can be produced from a variety of tissue and organs. It is possible to design applications in various ways, including the use of cell sheets as tissue for implantation, the combined use with those from other cells, and the layering of multiple cell sheets.
Such technology utilizing cell sheets is called “cell sheet engineering.” A total of 29 products for regenerative medicine (including conditions and approval for deadlines) have been approved in Japan as of May 2026. Four out of them are based on cell sheet engineering.

Huge Regenerative Medicine Market
The market size of regenerative medicine is expected to reach 1.1 trillion yen in Japan and 12 trillion yen worldwide in 2040, and a significant economic effect is expected (Source: Japan Agency for Medical Research and Development [AMED], “Final report on the market survey on regenerative medicine and gene therapy in FY 2019”)

[1-4 Business model of CellSeed]

Based on the outcomes of college research using cell sheets, CellSeed conducts clinical trials and merchandize them as products for regenerative medicine, and deliver them to patients.

(From the company material)

[1-5 Business Description]

The company reports on two segments – “cell sheet regenerative medicine business” and “regenerative medicine support business.” The regenerative medicine support business is constituted by the “cell cultureware business” and the “regenerative medicine contract service business.”

(From the company material)

(1) Cell sheet regenerative medicine business
Although treatments based on the fundamental technology of "cell sheet engineering" is being developed in various areas, the company is focusing on "allogeneic cartilage cell sheet" for knee cartilage, and also conducting joint research with Hokkaido University on new treatments for central nerve injury-related diseases.

(From the company material)

◎ Allogeneic cartilage cell sheet
① Overview
“Allogeneic cartilage cell sheets,” which are cell sheets based on the cells of a person other than a patient, was developed by Professor Masato Sato of Tokai University School of Medicine Department of Orthopedics. CellSeed is developing them as products for regenerative medicine, etc. after technological transfer, and currently, it is indicated for knee osteoarthritis.

Knee osteoarthritis is slowly progressing, intractable degeneration of articular cartilage with no fundamental treatment. The number of potential patients in Japan is estimated to be about 30 million, of which about 10 million patients are thought to have subjective symptoms. Furthermore, population aging in Japan is expected to raise the number of patients diagnosed with the illness, making it a disease that needs to be dealt with immediately from the perspective of citizens’ healthy life expectancy and costs of long-term care and medical services. As of now, there are no methods to cure the injury completely, but the “allogeneic cartilage cell sheet” is aimed at regenerating the cartilage surface radically. The cartilage of the knee is called hyaline cartilage, which is hard and excellent in cushioning and abrasion resistance properties, differing from the cartilages of the ear, nose, etc., and it is difficult to regenerate. However, it was confirmed in clinical research in the Tokai University that the “allogeneic cartilage regeneration sheet” can regenerate the cartilage of the knee as hyaline cartilage.

(From the company material)

② Progress of development
Professor Masato Sato performed the world's first implant surgery in 2017, and 10 patients underwent implant surgery in the three years from 2017 to 2019. The treatment with allogeneic cartilage sheets has been adopted in the project for developing evaluation methods, etc. for the industrialization of regenerative medicine (support for acceleration of development of regenerative medicine seeds) of AMED (project period: Oct. 2018 to Mar. 2021).

Since extra fingers or toes of patients with polydactyly who have six fingers are used as raw materials for developing cartilage cell sheets with allogeneic cells, it is necessary to discuss it from an ethical viewpoint to a sufficient degree, but in December 2020, the company obtained approval for the provision of cartilage tissue collected from patients with polydactyly from Ethical Committee of National Center for Child Health and Development. Then, they established a system for stably supplying cells in Japan.
In July 2021, a research and development project proposed by CellSeed was selected by the Japan Agency for Medical Research and Development (AMED) for the "Development of Basic Technologies for the Industrialization of Regenerative Medicine and Gene Therapy (Project to Promote the Industrialization of Regenerative/Cell Medicine and Gene Therapy)," which is a subsidy project (project period: August 2021－March 2023).
In August 2022, the company reached an agreement with the center on the basic terms of a contract to establish a system for continuous provision of resected tissue during polydactyly surgery and commercialization for industrial use. Thus, it will be possible to continuously receive human tissue supply for clinical trials to manufacture and sell allogeneic cartilage cell sheets.
In April 2022, a patent was granted and registered in Japan for a "tissue regeneration cultured cell sheet, its manufacturing method, and how to use it."
In January 2023, a research group led by Professor Masato Sato of Tokai University confirmed the safety and efficacy of allogeneic cartilage cell sheets implanted into cartilage defects in the knee joints one year after surgery in all 10 patients in a clinical study of knee osteoarthritis that had been conducted since 2017. Their findings were published in the online journal npj Regenerative Medicine, a sister publication of Nature.
In addition, in March 2023, the company presented the results of the above-mentioned AMED project "Development of Basic Technologies for the Industrialization of Regenerative Medicine and Gene Therapy (Project to Promote the Industrialization of Regenerative/Cell Medicine and Gene Therapy)" at the Conference of the Japanese Society for Regenerative Medicine and is accumulating evidence of its effectiveness.

Meanwhile, before the start of clinical trials, the company is working to establish a system to ensure quality, by confirming safety as well as efficacy and establishing quality control and transportation methods for the cell sheets.
For cell banks made from tissues, a total of 20 tests, including cell count, viable cell rate, sterility test, endotoxin test, mycoplasma negative test, virus negative test, and other tests have been conducted to confirm its safety, and regarding cell sheets, 10 tests have been conducted including cell morphology, sheet properties, protein expression, virus negative test, and confirmation of the presence of chromosomal abnormalities.

Based on these results, the company submitted a notification of a clinical trial to the Pharmaceuticals and Medical Devices Agency (PMDA) on September 2023. Then, PMDA finished the 30-day examination for the clinical trial. Negotiations with Tokai University concerning the amounts of future milestone payments based on the progress of clinical trials took time, but an agreement was reached in March 2025. They concluded contracts with facilities where clinical trials will be conducted, developing a system for performing surgery, and the first case was registered in October 2025, and clinical trials are underway as planned in each facility.

(Outline of the third-phase clinical trial)
* Test design: collaboration with multiple facilities, single-blinded, randomized, parallel-group trial
* Subject patients: those who have knee osteoarthritis and are subject to proximal tibial osteotomy
* Target number of cases: 96 (48 cases of proximal tibial osteotomy and 48 cases of proximal tibial osteotomy plus implantation of cell sheets)
* Major evaluation items: reports from patients (Patients evaluate their symptoms and QOL by themselves without help from medical doctors or others.)
* Facilities for conducting the test: a total of 6 facilities; Tokai University Hospital, Yokohama Sekishinkai Hospital, Ebina General Hospital, Juntendo University Hospital, Yokohama City University Medical Center, and Yokohama Minami Kyosai Hospital
Registered patients underwent implantation after examination, etc. and were discharged from a hospital in about 1 month. One year after surgery, fixators are removed. The one year from implantation to the removal of fixators is a follow-up period.

The company is also promoting the patent strategy. The U.S. patent application on “tissue regeneration culture cell sheets, manufacturing methods, and utilization methods thereof” related allogeneic cartilage cell sheets was accepted, and the patent will be granted. This is the outcome of joint research on allogeneic cartilage cell sheets carried out with Tokai University.
As the commercial distribution for business, two types are assumed – cases where the company itself takes care of manufacturing and sale, and cases where partners sell products manufactured by the company.

(2) Regenerative medicine support business
The regenerative medicine support business consists of the commissioned regenerative medicine business, which conducts the development of manufacturing methods, contract manufacturing, facility management, application support, and consulting for cell sheet products, and the cell cultureware business, which develops, manufactures, and sells cell cultureware such as UpCell®, RepCell®, and HydroCell®.

① Regenerative medicine contract service business
Regarding regenerative medicine, in accordance with the law for promotion of regenerative medicine, the government enforced “the act for securing the safety of regenerative medicine, etc.,” which facilitates the R&D in academia with clinical research, advanced medicine, and medical treatments at patients’ own expense, and “the act for pharmaceutical products and medical devices, etc.,” which specifies the procedures for acquiring the approval for manufacturing and sale after non-clinical tests and clinical trials. In reality, there exists a significant gap between the R&D in academia and the approval for manufacturing and sale.
Through the service of undertaking projects for regenerative medicine, they aim to solve issues and close gaps in academia as a Contract Development and Manufacturing Organization (CDMO) for regenerative medicine, and serve as a bridge for offering regenerative medicine to patients.

The company is mainly engaged in contract development and manufacturing of cell sheets for pharmaceutical companies and research institutions. The company employs several clinical culturists certified by the Japanese Society for Regenerative Medicine, and its staff with extensive culture experience develop manufacturing methods for regenerative medicine and other products and manufacture them at its cell culture center, which is licensed to manufacture specified cell processed products and regenerative medicine products.
The company obtained the permit for manufacturing specific processed cells (facility numbe FA3160008) in March 2017 and the permit for manufacturing products for regenerative medicine, etc. in October 2018.
In addition, the company provides support for preparing applications for regulatory approval, obtaining manufacturing and marketing licenses, and training engineers for all stages, from product development to manufacturing and marketing.

Major commissioned projects so far
* Autologous cartilage cell sheets
Autologous cartilage cell sheets were approved in January 2019 as Advanced Medical Treatment B under the Law for Ensuring Regenerative Medicine Safety. Tokai University started Advanced Medical Treatment B in 2020. CellSeed started undertaking the production of autologous cartilage cell sheets, and had continuously undertaken it until 2024.

(From the company material)

In May 2023, the company contracted with Ikegami General Hospital to manufacture cell sheets for implantation of autologous cartilage cell sheets for knee joint cartilage damage. As part of its regenerative medicine and other new medical treatment initiatives, Ikegami General Hospital will provide regenerative medicine to patients with damaged knee osteoarthritis due to trauma or osteoarthritis by culturing their cartilage cells in sheet form and applying them to damaged cartilages in the knee joints to improve pain and joint function. Regenerative medicine treatment is provided at the expense of patients who are not eligible for the advanced medical treatment (cartilage regeneration therapy using autologous cell sheets) provided by Tokai University Hospital, as well as patients from overseas.
Ikegami General Hospital has submitted the provision plan necessary for the implementation of regenerative medicine to the Ministry of Health, Labour and Welfare, which has been accepted, and it is now preparing the patient acceptance system. CellSeed also expects to expand its contract manufacturing business by undertaking the manufacturing of cell sheets to be used in self-funded medical treatments.

* Pediatric autologous epithelial cell sheet
They undertake the manufacturing of autologous epithelial cell sheets for regenerative medicine targeted at children who have undergone surgery for congenital esophageal atresia.

* Periodontal ligament cell sheets
This is the first case of contract manufacturing of cell sheets for use in investigator-initiated clinical trials.

* Epithelial cell sheets for esophageal regeneration
Regarding cell sheets used to cure esophageal stenosis following the treatment of esophageal cancer at Tokyo Metropolitan Tama-Hokubu Medical Center of Tokyo Metropolitan Hospital Organization, CellSeed has supported procedures at relevant authorities which are necessary for launching self-funded medical treatments. CellSeed is scheduled to be entrusted by the center with the manufacturing of cell sheets to be used in the self-funded medical treatments of esophageal stenosis based on epithelial cell sheets for esophageal regeneration.
Epithelial cell sheets for esophageal regeneration are used for treating patients who have just undergone endoscopic submucosal dissection (ESD) and intractable stenosis after ESD.

Other services
In the regenerative medicine contract service business, the company also concentrate on the education of engineers in cell culture. In Aomi Cell Culture Innovation Center, they hold training for users of UpCell®, giving lectures on how to produce cell sheets and exfoliate cells.

② Cell cultureware business
The temperature-responsive cell cultureware invented by Professor Emeritus Okano of Tokyo Women's Medical University in 1989 can detach cells simply by lowering the temperature, making it possible to collect intact cell sheets for the first time in the world.
Temperature-responsive cell cultureware is sold worldwide, and research and development of treatment methods using cell sheets are being actively pursued by many researchers.

Until now, the company has developed and supplied various equipment products according to user needs such as universities, research institutes, and pharmaceutical companies, and in September 2022, the company starts to sell new products, UpCell® flasks. In 2025, they manufactured the product for selling it outside Japan, and posted overseas sales.
UpCell® is a device that can collect intact cells in a sheet without using enzymes that damage cells by fixing a temperature-responsive polymer to the surface of the device. The company also plans to sell a product with a larger culture area than the conventional UpCell® dish, enabling the collection of larger amounts of undamaged cells, which will be optimal in research related to immunology and cell therapy. It is possible to recover cell sheets that maintain a higher level of biological functions through cell culturing that is close to the biological environment, such as co-culturing using the UpCell® 6-well cell culture inserts.
The company expects to meet new demand for the mass cultivation of cells for research purposes to develop preventive and therapeutic methods for various infectious diseases and cancer diseases and anticipates medium/long-term business growth.

In December 2022, the temperature-responsive cell culture device product "UpCell® ADVANCE" was registered in the Master Files for Devices (MAF) of the U.S. Food and Drug Administration (FDA).
MAF is a system under which a supply manufacturer registers its corporate information, manufacturing know-how, and other trade secrets and various data as MAF with the FDA in advance. This enables drug and medical device manufacturers to apply for marketing approval from the FDA simply by quoting the MAF number.
Although the completion of MAF registration does not necessarily mean that the FDA has finished confirming or evaluating the quality and safety of the product, the MAF registration is expected to contribute to the promotion of "UpCell® ADVANCE" because it will no longer be necessary for drug and medical device manufacturers to request from CellSeed to submit confidential information when they file applications with the FDA for products using "UpCell® ADVANCE."

◎ Main facilities and equipment
* Cell Processing Center (CPC)
The cell sheets used for advanced medicine are cultivated at the cell culture center of CellSeed on commission.
With a floor space of about 763 square meters, the Cell Culture Center is equipped with an automated monitoring system that controls the cleanliness, room pressure, temperature and humidity, and operational status of equipment (such as incubators and reagent stockers), and a surveillance camera system throughout the entire facility. Besides, the facility is only twenty-minute drive from Haneda International Airport, making it possible and easy to transport products by air.

(From the company material)

* Aomi Cell Culture Innovation Center
The full-scale operation started in September 2021. The company develops and manufactures cell culture equipment, including laboratory flask products, etc.

[1-6 Growth Strategy for the Regenerative Medicine Support Business]

The company's two main growth strategies are “Business expansion of cell culture equipment” and “Promotion of business cooperation for global development.”

(1) Business expansion of cell culture equipment
In 1989, Professor Emeritus Okano of Tokyo Women's Medical University invented temperature-responsive cell culture equipment that can exfoliate cells simply by lowering temperature as described above, making it possible to recover intact cell sheets for the first time, leading to the advancement of research and development of treatment methods using the cell sheet by many researchers.
While the sales of products for the R&D phase, which are intended for the application to regenerative medicine, are growing steadily, the sales of products for the new purpose of culturing a large number of cells for research are increasing rapidly, mainly overseas. In 2020, the company’s equipment business exceeded 100 million yen in sales for the first time. Currently, overseas sales account for approximately 80% of overall sales.
For further growth, they are concentrating on the development of products for offering solutions for meeting the needs in new markets, including the construction of facilities for developing and manufacturing cell cultureware, in addition to the handling of products in the conventional regenerative medicine market.
In September 2021, the company established a new development and manufacturing facility exclusively for cell culture equipment products. In December 2022, the temperature-responsive cell cultureware product "UpCell® ADVANCE" was registered in the Master Files (MAF) for Devices of Food and Drug Administration (FDA). In addition, “UpCell Flask,” a product suited for the culture and collection of a large number of cells released in Japan in 2022, was released outside Japan in 2026.

In recent years, many efforts have been made to manufacture biopharmaceuticals using cells cultured in large quantities, perform immunotherapy using the cells themselves, and solve food and environmental problems.
However, with proteolytic enzymes, that is, a commonly used cell recovery technique, cells are recovered in a damaged state, and it is difficult to completely maintain the original functions and components of the cells. On the other hand, by adopting this product, it is possible to recover cells without damage, and it is expected to greatly contribute to improvement of industrial efficiency and effectiveness in the new market, because all functions and components of cells are maintained.

(From the company material)

In this situation, the sales of the cell cultureware business grew 3.5 times between 2016 and 2024, hitting a record high in the fiscal year ended December 2024. In the fiscal year ended December 2025, overseas sales slowed down due to the rapid changes in the research environment, such as the significant reduction of budgets at research institutes in the U.S., and the lingering geopolitical turmoil in Europe, the Middle East, etc. In the fiscal year ending December 2026, it is unlikely that the business environment will improve, but they will continue efforts in this domain, where they can use their competitive advantages.

(2) Promotion of business cooperation for global development
Overseas sales account for about 80% of sales in this business. The company is also strengthening the sales structure to further expand the overseas sales channels. The company has extended the sales contract with Thermo Fisher Scientific, the alliance partner for expanding sales of equipment products overseas, to further strengthen collaboration, provide consistent quality and service, and further enhance customer satisfaction. In order to achieve this goal, the company has built a quality management system and obtained ISO9001:2015 certification, an international standard, in January 2020.
In addition, aiming for global expansion, the company has been promoting business alliances by participating in exhibitions held not only in Japan but also in other Asian countries and Europe, such as a presentation at “Translate! 2021 – Metrics and Milestones of Success” held in Berlin in January 2021. The company aims to find business partners by participating in exhibitions held in various regions.

2. 1H of Fiscal Year ending December 2026 Earnings Results

[2-1 Non-Consolidated Earnings]

* Unit: million yen.

Sales decreased 16 million yen year on year to 20 million yen. The sales of the regenerative medicine support business and the cell cultureware business remained sluggish in overseas markets. An operating loss of 570 million yen was posted. This indicates a year-on-year improvement of 52 million yen. SGA, mainly R&D costs, decreased 55 million yen year on year. Sales fell below the initial forecast, as they put off the posting of revenues from business activities as a contract development and manufacturing organization (CDMO) for regenerative medicine in the regenerative medicine support business, due to the circumstances of business partners, etc. Sales declined, but all kinds of profits exceeded the forecasts, as they made company-wide efforts to reduce costs and the posting of some expenses was postponed until the third quarter or later.

[2-2 Segment trends]

* Unit: million yen.

Regenerative medicine support business
Sales were 16 million yen, and operating loss was 72 million yen (Sales were 35 million yen, and operating loss was 59 million yen in the previous fiscal year).

◎ Cell cultureware business
As a measure for promoting devices in the Japanese market, they set up an exhibition booth at “Regenerative Medicine EXPO Tokyo 2026,” which was held in May 2026, and introduced their devices and apps for them to a broad range of visitors. In addition, they analyzed the purchase trend of Japanese users and application information collected via major distributors, continued the development of products reflecting new market needs and marketing activities, and concentrated on the preparations for more effective promotional campaigns and the execution of them, which would replace the conventional advertisements, direct mails, etc.

In the overseas market, where they sell products via Thermo Fisher Scientific Inc., they proceeded with preparations for displaying their products at a booth and the presentation of research conducted by the Cell Sheet CMC Development Section at “ISSCR 2026 (International Society for Stem Cell Research),” which was held in Montreal, Canada in July 2026, with the aim of recovering from the sluggish sales due to the prolonged political and geopolitical turmoil and expanding sales further.

◎ Regenerative medicine contract service business
At “Regenerative Medicine EXPO Tokyo 2026,” they actively introduced their business activities as a CDMO for regenerative medicine while displaying their devices, and carried out a meaningful exchange of opinions with visitors for creating business opportunities and realizing projects.

Cell sheet regenerative medicine business
Sales were 4 million yen, and operating loss was 364 million yen (Sales were 1 million yen, and operating loss was 448 million yen in the previous fiscal year).
The third-phase clinical trial for allogeneic cartilage cell sheets is underway as planned.
For the purposes of developing this product, maintaining a stable manufacturing system, and securing quality, they conducted regular maintenance of Cell Processing Center (CPC). Regarding the fortification of their intellectual property base, the Japanese patents for “cultured cells, methods for evaluating and manufacturing cultured cells, and markers for evaluating the characteristics of formation of cartilage-like tissue” were registered, and they received a notice of allowance for the application of patents in Japan regarding “cell sheet fragments, a syringe containing the cell sheet fragments, and methods for producing and using the cell sheet fragments.” Regarding business alliances, they continue active measures for forming alliances and concluding joint research contracts with multiple enterprises, in order to accelerate monetization and the establishment of a system for selling allogeneic cartilage cell sheets.

[2-3 Financial Condition]

◎ Summary of BS

Total assets increased 428 million yen from the end of the previous fiscal year to 2,084 million yen, mainly due to the increase of cash and deposit.
Total liabilities decreased 76 million yen from the end of the previous fiscal year to 310 million yen due to the decrease in accounts payable, etc.
Net assets increased 505 million yen from the end of the previous fiscal year to 1,773 million yen due to the increase in capital stock and capital reserve.
The capital adequacy ratio increased 8.5 percentage points from the end of the previous fiscal year to 84.5%.

3. Fiscal Year ending December 2026 Earnings Forecasts

[3-1 Earnings forecasts]

* Unit: million yen

The earnings forecast has been left unchanged. Sales and profit are projected to decline.
Sales are forecast to decrease 12 million yen year on year to 71 million yen, while operating loss is projected to augment 178 million yen year on year to 1,225 million yen.
As there is a possibility that the trend of budgets of overseas research institutes and geopolitical risks will keep affecting the research activities in the cell cultureware business for a while like in the previous year, sales are forecast conservatively.
Regarding the regenerative medicine contract service business, they will concentrate on receiving new orders for manufacturing from medical institutions and enterprises, with the aim of increasing sales.
Profit is forecast to drop, due to the augmentation of development costs through the progress of clinical trials for allogeneic cartilage cell sheets.

(Initiatives) *The previous report has been inserted.
*Regenerative medicine support business
The business environment is uncertain, but they aim to expand overseas sales further by actively conducting sales promotion in order to popularize their devices among overseas researchers.
They will accelerate the overseas marketing for UpCell Flask, which is suited for culturing and collecting a large number of cells, for which demand is growing globally.
Through the commissioned manufacturing of specific processed cell products and related consulting services, they aim to increase clients and secure recurring revenues in the self-funded medical treatment field. They will concentrate on the undertaking of new projects through active marketing activities as a CDMO.

*Cell sheet regenerative medicine business
Regarding allogeneic cartilage cell sheets, they will closely cooperate with medical institutions and add new facilities if necessary, in order to incorporate cases as planned.
They will keep producing a master cell bank and a working cell bank to stably supply products after release and engage in automation and systematization with the aim of streamlining the manufacturing process after release. They will develop an in-house system for obtaining approval for manufacturing and sale.
They will seek new pipelines, and discuss concrete plans for development.
In preparation for sale of allogeneic cartilage cell sheets, they will actively promote the business alliances with multiple enterprises and activities for signing joint research contracts.

*Common items in the company
They plan to procure necessary funds for future business, by allocating cash on hand and utilizing a variety of financial methods.
In February 2024, MetaTech (AP) Inc. filed a lawsuit against CellSeed. They will appropriately deal with that. It is expected that the performance in FY 12/2026 will not be affected by that lawsuit, but if there emerges any item that should be disclosed, they will announce it immediately.

[3-2 Significant Events Related to Going Concern]

Due to the fund procurement through the exercise of the 25th share acquisition right issued in December 2025 and other measures, the cash and deposits as of the end of June 2026 stood at 1,792 million yen, indicating that their financial base is stable. In detail, they procured 1,320 million yen during a period from the start of exercise in December 2025 to the end of June 2026. By the end of June 2026, 54.10% of the share acquisition rights had been exercised, so it is considered that there will be no trouble in their cash management for the foreseeable future.
In terms of business, they have proceeded to the third-phase trial, for early commercialization of the first product for cell sheet-based regenerative medicine, which is an important matter in the cell sheet regenerative medicine business, but they still have no concrete prospects for obtaining approval for the product and commercializing it.
Accordingly, they consider that there was a situation that would raise significant doubt over the going concern assumption as of the end of June 2026. In order to improve such situation, they plan to make continuous efforts to commercialize the first product for cell sheet-based regenerative medicine early and seize earning opportunities by promoting business alliances.

4. Conclusions

In order to diversify their business portfolio, they engage in the strengthening of “the regenerative medicine contract service business” in the regenerative medicine support business. Unfortunately, in the first half of the current fiscal year, the posting of revenues has been put off due to the circumstances of business partners, etc. While the sales of the cell cultureware business remain sluggish in overseas markets, “the regenerative medicine contract service business” is expected to contribute to revenues earlier than initially planned.

<Reference: Regarding Corporate Governance>

◎ Organization type, and the composition of executive directors and auditors

◎ Corporate Governance Report (Latest Update：April 10, 2026）

Basic Policy
With the missions to introduce technological innovations, to exert creativity and to contribute to people’s health and welfare by providing high-quality products and services, we are enhancing corporate governance to raise quality in all of our corporate activities. We will implement timely and appropriate information disclosure to ensure the transparency of decision-making and to enhance accountability. We will also improve our business management and auditing systems and strengthen our management checking functions.

<Reasons for Non-compliance with the Principles of the Corporate Governance Code (Excerpts)>
CellSeed has stated, “Our company implements all the basic principles stipulated in the Corporate Governance Code as a TES Growth listed company.”

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