Investor Relations

In recent years, Japan's health and welfare administration has consistently promoted measures to curb total medical expenses in response to the nation's ageing society. The clinical reagent market, which comprises the lion's share of our product sales, has not escaped this belt-tightening, with revisions to medical fees occurring almost annually, thus leading to a continued decline in reagent retail prices.

MBL has committed itself fully over the past five years to the development of cancer diagnostics in order to meet these challenges and lay the foundation for a new mainstay product to carry on from our autoimmune disease reagents which effectively dominate the market. Although we have uncovered a number of important potential diagnostic agents, they have yet to reach the clinical trial and marketing stages.

In the field of research reagents, we have conducted clinical testing on our 'Anti-p53 antibody detection reagent' and succeeded in obtaining both manufacturing and NHI approval for use as a diagnostic aid in esophageal, colorectal and breast cancer.

Known as the 'MESACUP® anti-p53 Test', this reagent which detects tumor-related autoantibodies (p53) has garnered considerable interest as the first cancer diagnostic agent capable of early cancer testing using antibody detection. We plan to evolve this reagent as a major product and will also continue to pursue initiatives for the development and marketing of new diagnostic reagents which enable early cancer detection with autoantibodies.

Since our founding as an antibody maker, MBL has developed and manufactured antibodies for use as reagents in clinical diagnostics and baseline research. Antibodies play a pivotal role in the immune system, which forms the core of the body's biological defense mechanisms, and there is presently a considerable trend towards the development of antibodies as therapeutic drugs.

For five years our company carried out the 'Antibody Technology Innovation' initiative with the aim of developing antibody drugs. In our current phase, we have developed and filed a patent application for technology capable of enhancing the mechanism known as ADCC (antibody-dependent cellular cytotoxicity activity) whereby antibodies kill cancer cells. This technology has the potential to increase the cytotoxic activity of antibodies on cancer cells by up to almost 1,000 times.

Our adoption of artificial lymph node technology from RIKEN (the Institute of Physical and Chemical Research) has made possible antibody development to the point of obtaining various antibodies possessing a high degree of affinity with cancer, and other target, antigens. We are also proceeding with the practical development of our SPYMEG technology to make therapeutic antibodies from virus- and microbe-neutralizing antibody-producing cells in human blood derived from various viral and bacterial infections.

Within the context of these technologies, MBL has been collaborating with Kyoto University and Nagoya University on the development of four therapeutic antibody candidates which, when combined with those being developed within the company, form an exciting lineup of prospective therapeutic antibodies. Several antibody drug candidates are also being developed by the Institute for Antibodies, an MBL group company tasked with the development of therapeutic antibodies.

The MBL Group has therefore consolidated its technological and personnel systems to pave the way for the dynamic development of antibody drugs. We intend to actively pursue licensing opportunities for these prospective antibody drugs with major pharmaceutical companies.

Another MBL Group venture company gradually carving out new business opportunities is G&G Science (Fukushima), which has begun providing SNPs testing to identify adult onset diseases and has already been contracted by more than 130 medical institutions nationwide. Meanwhile, Chromo Research (Nagoya) has also laid the foundations for the development of new business with initiatives such as its human artificial chromosome (HAC) technology to immortalize normal cells. Joint research integrating this technology with work being done by Tokyo-based Amalgam to derive fluorescent proteins from coral is also proceeding as part of MBL's tie-ups with companies possessing special technologies.

Ribonomics is an MBL Group bioventure based in Durham, NC. U.S. responsible for developing the RIP-Chip; a unique technology which has drawn interest for its ability to refine the immense amount of information contained on conventional DNA chips and turn it into meaningful data. While several major companies have expressed interest in licensing this technology, we have opted to pursue RIP-Chip business initiatives to qualitatively restructure the operations of both Ribonomics and the entire MBL Group. Moreover, we expect these initiatives to occupy a central role in our future activities.

MBL is also collaborating with other companies in the industry on reagents and devices in an attempt to effectively utilize our company resources. Through these mutually beneficial corporate tie-ups we intend to accelerate the development of new technologies and time-to-market.

By enhancing specialization in our three business divisions of diagnostic reagents, baseline research reagents and cytology products, we have established a framework for the well-defined marketing of our products.

We now intend to boost the sales ratio of our proprietary products and deliver better corporate performance by shifting towards a structure facilitating close coordination between all aspects of R&D, production and marketing.

We will also leverage our outstanding group management to forge even stronger collaboration and realize growth throughout the entire group both on a consolidated and stand-alone basis.

I eagerly look forward to the continued support of all of our shareholders in the years ahead.

President and CEO Katsuhiko Nishida

June 2008