CanBas Co., Ltd.

The Company has not recorded business revenue from product sales since its founding, and in the 26th fiscal year (fiscal year ended June 2025) recorded an operating loss of ¥1,109,563 million (approximately ¥1,110 million when converted from thousand-yen units), giving rise to a situation that raises material doubt about the going-concern assumption. At present, the Company has no partnership relationships with pharmaceutical companies or others, and amid uncertainty regarding the development progress of CBP501 and CBS9106 (felezonexor), securing financing and strategic partnerships is essential. If funds cannot be secured at the necessary timing, there is a possibility that material concerns regarding the continuation of the Company's business will arise.

Since the dissolution of the co-development agreement with Takeda Pharmaceutical Company Limited in June 2010, the Company has continued clinical development without a partner, and fundraising from capital markets or securing a new partner is a prerequisite for business continuity. Fundraising from capital markets involves uncertainty, and partnership negotiations do not guarantee conclusion; if securing development funds is significantly delayed, delays in the clinical trial schedule and material effects on business strategy and financial condition will occur. The Company has adopted a policy of pursuing fundraising and early alliance acquisition activities in parallel.

Pharmaceutical development requires long periods and substantial costs, and decisions to discontinue or delay development are not uncommon at any stage, with the probability of commercialization being low. The Company holds CBP501 (in the preparation stage for the next-phase clinical trial targeting pancreatic cancer) and CBS9106 (felezonexor) (having completed Phase 1 clinical trials and in the next-phase planning stage); if efficacy is not confirmed in future pivotal trials, or if significant safety concerns arise, changes to or discontinuation of development plans could have a material impact on financial condition and operating results. Although the Company holds multiple candidate compounds and backup compounds to diversify risk, the loss of a single candidate would have an extremely significant impact on a small company.

The Company currently has no sales revenue from product sales, and business revenue consists only of past contracted research fees and revenue based on partnership agreements. Bringing a product to market requires a considerable period of time, and there is no guarantee that it will be launched, so the Company may not obtain sufficient revenue to secure profitability. If judgments regarding the selection of target indications or marketing methods prove incorrect, or if the assumed market environment changes, this could have a significant impact on financial condition and operating results.

The Company's competitors span a wide range, including major pharmaceutical companies, biotech-related companies, and universities and research institutions, many of which have superior technological capabilities, marketing power, and financial strength compared to the Company. Even if marketing approval is obtained, if competitors efficiently produce and sell more effective products, this could affect the Company's planned operating results. There is also an ever-present risk that the Company's patents could be circumvented or rendered ineffective by superior development capabilities of other companies.

The Company's business plan is premised on the current legal regulations, healthcare insurance system, and pharmaceutical pricing trends, among others, but these could change significantly during the considerable period before product launch. If significant changes occur in regulations, systems, or pricing trends, this could affect the Company's planned operating results. The Company has not specified concrete measures to address these change risks.

Takumi Kawabe, the founding scientist and Representative Director and President, plays a broad and central role across the entire business, including basic research and R&D, and it is expected that dependence on him will remain high for the time being. If, for some reason, Mr. Kawabe becomes unable to perform his duties, this could have a material impact on business strategy and operating results. The Company is working to resolve excessive dependence by strengthening its management organization, but a high degree of dependence continues at present.

The Company's basic strategy is to expand its pipeline by acquiring or creating new pharmaceutical candidate compounds following CBP501 and CBS9106 (felezonexor), and it currently holds development candidate compounds including CBT005. However, there is no guarantee that the Company's proprietary drug discovery approach and screening methods will be able to identify or create new candidate compounds, and if difficulties arise in acquiring or creating new candidate compounds, the Company may be forced to change its basic R&D strategy. The Company continues efforts to improve its chances through refinement of screening methods, but the outcome remains uncertain.

All patents related to the Company's R&D are owned by the Company itself, and key patents related to CBP501, CBS9106 (felezonexor), CBT005, and others have been granted in the United States, Europe, Japan, and elsewhere; however, if pending patent applications are not granted, the Company will be unable to enforce patent rights against competing products. There is also an ever-present risk that the Company's patents could be circumvented or rendered ineffective by superior development capabilities of other companies, and patent maintenance costs may become a future financial burden. If intellectual property infringement litigation occurs, resolution could require significant time and expense, potentially having a material impact on business strategy, operating results, and financial condition.

To maintain a small-scale organization, the Company relies on external outsourcing for major portions of its R&D, including compound optimization, GMP-compliant drug substance manufacturing, and clinical trial coordination (CRO). If unfavorable changes to the terms of these contracts occur, or if the contracts are terminated, this could impede the advancement of R&D and affect financial condition and operating results. The Company's securities report evaluates the likelihood of this risk materializing at present as relatively low.