Otsuka Pharmaceutical Co., Ltd.

January 27, 2022

Otsuka Enters Agreement with Jolly Good for Co-Development and Sales Rights in Japan
for a Social Skills Training Platform Using Virtual Reality in the Psychiatric Field

- First step is to use VR to help schizophrenic patients engage more fully in society -

Otsuka Pharmaceutical Co., Ltd. (Otsuka) announces that it has entered into an agreement with Jolly Good Inc. (Jolly Good) for co-development and exclusive sales in Japan for a social skills training (SST) system utilizing virtual reality (VR) with the aim to build a regional collaboration platform for mental health. Otsuka will pay an upfront payment of 300 millon yen to Jolly Good. The agreement may potentially generate payments from Otsuka to Jolly Good of up to 5 billion yen, covering an upfront payment, development costs and sales royalties.

In patients with schzophrenia, it has been reported that SSTs combined with medication and psychotherapy can reduce the relapse rate* and SSTs using immersive VR are anticipated to make patients more focused and effective. Dr. Ayako Kanie, a psychiatrist and senior medical advisor of Jolly Good, will be in charge of content production for this VR project. * Hogarty GE et al.: Arch Gen Psychiatry 43: 633-642, 1986)

With the signing of this agreement, Jolly Good, which has advanced VR imaging technology, and Otsuka, which has extensive knowledge, experience and networks in the psychiatric field, will collaborate to develop SST using VR for various psychiatric disorders and build a new platform in the future.

In addition, Jolly Good has a track record of introducing SST VR in the field of developmental disorders at more than 200 hospitals, clinics, and welfare support facilities in Japan. In this project, Jolly Good will prepare the VR headset and tablet necessary for viewing, and will produce SST VR content for various situations in collaboration with Otsuka. Otsuka will record compensation, including royalties, for sales promotion activities to its customers, such as medical facilities, and will also pay Jolly Good royalties based on sales. Jolly Good will be Otsuka's first business alliance in Japan in the area of mental health using VR, and the two companies will work together to create the largest VR business in Japan in the area of healthcare for mental illness.

Makoto Inoue, president and representative director of Otsuka, commented, "Otsuka Pharmaceutical continues to develop our global pharmaceutical business in psychiatric and neurological disorders as core therapeutic areas. Advances in technology have made it important to provide support in everyday life, from prevention to nursing care, in addition to therapeutic drugs. Together with Jolly Good and its cutting-edge VR imaging technology, including the application of digital technology to create a new business model, we will build a platform to help patients with mental and neurological disorders re-integrate into society."