TRANS GENIC INC.

Business Details

The company operates drug discovery support services centered on contract production of genetically modified mice, contract antibody production/glycan analysis/synthesis, contract non-clinical testing such as pharmacological efficacy studies and safety studies, and contract clinical trial services. It seamlessly covers every stage of drug discovery from exploratory basic research through clinical trials. Its main customers are pharmaceutical companies and academic researchers. Transgenic Inc. serves as the core operating company, and efforts to streamline operations and strengthen competitiveness are underway.

Recent Overview

Net sales rose 19.1% and operating loss narrowed substantially from ¥488 million to ¥164 million. Decision made to close the Kobe Research Laboratory.

In the Drug Discovery Support Business for FY2026 (ending March 2026), the on-schedule completion of tests carried over from the prior period, a focus on securing new orders, and cost reductions through business operation streamlining resulted in net sales of ¥2,259 million (up 19.1% year on year) and an operating loss of ¥164 million (substantially narrowed from a loss of ¥488 million in the prior period). Additionally, with the aim of improving profitability and capital efficiency, in March 2026 the company decided to relocate and consolidate operations at the Kobe Research Laboratory to other locations by around December 2026 and to close the facility. Regarding the test data misconduct issue at the Iwata Research Laboratory, an investigation by external experts determined that it was the act of a single employee acting alone, and recurrence prevention measures are being formulated and implemented.

Key Products

Growth Drivers

• Expansion of orders for high-value-added new services such as short-term carcinogenicity testing, medium-term skin carcinogenicity testing using rasH2 mice, and medium-term colorectal carcinogenicity testing using rats
• Improved profitability through fixed cost reductions and concentrated management resources resulting from the closure and consolidation of functions at the Kobe Research Laboratory
• Building an integrated safety and efficacy evaluation service combining animal and cell testing data through the business alliance with Acel Inc.
• Building an integrated support structure covering synthesis through clinical trials for nucleic acid drug development through the business alliance with Hokkaido System Science Co., Ltd.
• Continued sales expansion through completion of tests carried over from the prior period and a focus on securing new orders

Risks

• A revenue recognition structure in which many projects span completion into the following fiscal period, making it difficult for order increases to directly translate into current-period sales
• Damage to customer trust and impact on order intake stemming from the test data misconduct issue at the Iwata Research Laboratory (recurrence prevention measures currently being implemented)
• Business restructuring losses associated with the closure of the Kobe Research Laboratory (¥143 million recorded in the current period) and business continuity risks during the relocation/consolidation process
• Risk of additional expenses related to the misconduct issue, such as loss compensation payments (¥275 million recorded in the current period)
• Risk of demand decline in contract production of genetically modified mice for academia due to the trend of shrinking national budgets
• Deterioration of the overall industry order environment stemming from reduced R&D budgets at pharmaceutical companies and patent expiration issues
• Risk that, given the high fixed-cost ratio of the business structure, insufficient orders for core services could directly expand operating losses