Veritas In Silico Inc.

Revenue sources such as joint research support funds, contract upfront payments, and milestone income differ by project, and the timing and amount of occurrence are irregular, making it difficult to level out revenue. There is a risk that the conclusion timing of new contracts may be delayed due to changes in the counterparty's business environment, which could result in significant deviations from plan. As countermeasures, the company is working to raise the proportion of recurring revenue, diversify partner candidates geographically, and create its own pipeline, but recognizes that complete avoidance is difficult.

Drug discovery research has a lower success probability compared to other industries, and research may be extended or discontinued if useful compounds are not found or safety concerns arise. Due to the nature of the platform-based business, there is an additional uncertainty in that research progress is influenced by the policies and decisions of partner companies. The company diversifies risk across multiple pharmaceutical companies and projects, but if this risk materializes, it could lead to prolongation or discontinuation of research activities.

The company has no track record in creating datasets for license-out or in the development process, and there is uncertainty in the monetization process. The current medium-term management plan (FY2025–FY2027) does not incorporate revenue from pipeline out-licensing, so the short-term financial impact is said to be limited; however, if candidate licensee companies change their intentions or significant delays occur, this could have a material impact on future business and financial condition. The company seeks to reduce this risk through prior research on candidate licensees.

The company's mRNA-targeted drug discovery platform has obtained patents in Japan, the US, and Europe, serving as a source of competitive advantage, but there is a risk that this relative advantage could be lost due to the commercialization of new technologies by competitors or the rise of competing platforms. If changes occur in the external environment, this could affect inquiries from pharmaceutical companies and contract continuity, potentially having a material impact on business and operating results. The company intends to maintain its competitive advantage by continuing to strengthen its technological capabilities and create its own pipeline.

There is a possibility that pending patent applications may be preceded by third-party filings, or that rights may not be granted as desired. Even after rights are granted, there is a risk that part or all of the rights could be invalidated through opposition or invalidation trials. The company monitors its intellectual property status in collaboration with specialized patent attorneys and lawyers, but if it is unable to obtain necessary patent rights or if such rights are invalidated, this could have a material impact on the business, financial condition, and operating results.

The company holds a wide range of confidential information, including internal confidential information, customer confidential information, and joint research experimental data, and there is a risk of leakage due to intentional acts or negligence, as well as unauthorized external intrusion. The company has implemented measures such as limiting access privileges, information security education, and leak-prevention software, but if an information leak occurs, it could have a material impact on financial condition and operating results due to response costs, time required, loss of trust, and other factors.

As a pharmaceutical research company, the organization is small in scale, and the scope of duties and responsibilities of officers and employees is extensive. If hiring does not proceed as planned or if a large number of personnel leave, there is a risk that business operations could be hindered. The company plans to proceed with planned hiring and internal training as the business expands, but if difficulties in securing personnel materialize, this could have a material impact on financial condition and operating results.

Business operations are dependent on specific individuals, including Representative Director and President Shingo Nakamura, and there is a risk that a material impact on business, financial condition, and operating results could arise if such individuals become unable to continue their duties. The company is working to strengthen its organizational management structure to avoid excessive dependence, but due to its small organizational scale, there remains an aspect where finding replacements is not easy.

If human or physical damage occurs due to natural disasters or other events, this could result in restoration costs, time required, and obstacles to resuming business operations. The company has prepared by establishing disaster prevention manuals for each location, formulating a BCP (Business Continuity Plan), and conducting regular drills, but in the event of a large-scale disaster, this could have a material impact on financial condition and operating results.