RaQualia Pharma Inc. 2Q Earnings Preview

With tegoprazan capturing the top position in Korean outpatient prescriptions and progress in US FDA approval review, the focus turns to confirming revenue recovery and out-licensing expansion from 2Q onward

PublishedAugust 12, 2026 at 15:30 GMT+9

Summary

The key focus for the 2Q earnings release is whether the company—which posted an operating loss of JPY 160M in 1Q—can demonstrate sustainability of royalty growth alongside progress on revenue opportunities relevant to full-year performance. The flagship compound tegoprazan captured the top position in monthly outpatient prescription revenue in Korea for the first time, and the foundation for global growth has been strengthened through additional indications, commercial launches across 20 countries, and a US FDA submission (approval expected January 2027). Furthermore, the diversification of royalty and milestone revenue streams is progressing, including the out-licensing of two compounds to the Lazarus Pharmaceuticals group and Velovia Pharma's option exercise, with the contribution to business revenue from 2Q onward being a key point of interest. Balancing revenue against investment in medium- to long-term drug discovery infrastructure—including FIMECS' targeted protein degradation inducers and the joint research collaboration with RIKEN, amid rising R&D expenses (1Q: +23.9%)—is also a critical discussion point.

Key Points for Next Quarter

Key Points & Focus	Implications
Revenue RecoveryProgress toward full-year business revenue plan of JPY 3,980M on a 2Q cumulative basis	1Q achievement rate stood at a low 20.2%. The company manages performance on an annual basis, but quarterly fluctuations are significant, making it difficult to assess full-year attainability at the 2Q mark. In addition to the achievement rate, disclosure on royalty growth and revenue opportunities will be the focal point
Tegoprazan RoyaltiesYoY growth in Korean K-CAB prescription revenue and contribution from newly launched countries	1Q Korean revenue of KRW 58.5B (+13.9%), with top outpatient prescription position captured in April. In 2Q, focus is on confirming sustained growth from existing indications and incremental contribution from new countries such as Russia, as well as potential upside from the newly approved indication (NSAIDs ulcer prevention, approved in July). Confirmation of incremental contribution from new countries such as Russia
Out-Licensing / Milestone Revenue2Q booking amounts for Lazarus deal and Velovia option exercise fee	Velovia option exercise fee is expected to be booked as 2Q business revenue. Progress toward milestone conditions under the Lazarus two-compound out-licensing deal will also be monitored
R&D Investment EfficiencyR&D expense levels and impact on operating income/loss	1Q R&D expenses of JPY 477M (+23.9%), total operating expenses of JPY 962M (+10.3%). To achieve full-year operating income of JPY 165M, business revenue of JPY 3,179M is needed over the remaining three quarters—the balance between capturing revenue opportunities and R&D investment is key
US Market DevelopmentProgress of tegoprazan US FDA review	Braintree submitted its FDA application in January 2026, with approval expected in January 2027. The status of inquiry responses during review and label content outlook have direct implications for medium- to long-term valuation
Financial Base / Capital PolicyCash position and impact of capital/business alliance with HK inno.N	1Q-end cash and deposits of JPY 4,440M, equity ratio of 70.5%. Focus on progress of capital raise proceeds allocation toward R&D equipment investment and HK inno.N's preparation for late-stage clinical trials for tegoprazan in Japan
Next-Gen Drug Discovery PlatformResearch progress of FIMECS RaPPIDS™ platform	US patent granted for IRAK-M protein degradation inducer. Outcomes from joint exploration with Astellas Pharma and potential for new out-licensing pipeline expansion are key drivers of medium- to long-term corporate value

Key Issues from Previous Results (FY12/2026 1Q)

In 1Q, business revenue came in at JPY 801M (▲16.9%), with an operating loss of JPY 160M, swinging from a profit in the year-ago period to a loss. The primary drivers were uneven quarterly distribution of royalty and milestone income and aggressive R&D spending. On the other hand, medium- to long-term expansion of the revenue base continues to progress—including tegoprazan's global expansion and the deepening capital/business alliance with HK inno.N—placing the company at a juncture where the balance between near-term P&L and growth investment is being tested.

1. Recovery and Growth Sustainability of Tegoprazan Royalty Income

Previous Quarter:
1Q business revenue of JPY 801M (▲16.9%). Korean K-CAB revenue of KRW 58.5B (+13.9%) was solid, but overall revenue declined compared to the year-ago quarter, which included one-time milestone income
This Quarter's Focus:
Progress toward HK inno.N's target of KRW 3T in global annual tegoprazan sales (2030 target). Degree of entrenchment of the top outpatient prescription position in Korea, and ramp-up of royalty contributions from newly launched countries (Russia, Uzbekistan, etc.)
Key Metrics:
2Q cumulative business revenue achievement rate vs. full-year plan (1Q: 20.2%), YoY growth rate of quarterly K-CAB prescription revenue in Korea

2. Alignment of Rising R&D Expenses with Full-Year Profitability Plan

Previous Quarter:
1Q R&D expenses of JPY 477M (+23.9%), total operating expenses of JPY 962M (+10.3%). Operating loss of ▲JPY 160M
This Quarter's Focus:
To achieve the full-year operating income plan of JPY 165M (▲65.9%), JPY 325M in operating income must be secured over the remaining three quarters (our estimate). Quarterly trajectory of R&D expenses and in-year allocation of FIMECS-related costs and RIKEN joint research expenses
Key Metrics:
2Q standalone R&D expense level (vs. JPY 477M in 1Q), R&D expense ratio within total operating expenses (1Q: 49.6%)

3. Pipeline Out-Licensing Progress and Revenue Diversification

Previous Quarter:
OCT's CB2 agonist license was terminated (due to contract breach); AskAt is searching for a new partner. Preclinical studies for the ghrelin receptor agonist were completed, and business development activities are underway to secure a partner
This Quarter's Focus:
Milestone progress under the out-licensing agreements for the 5-HT4 agonist and motilin receptor agonist to the Lazarus Pharmaceuticals group. Developments in securing a new partner for the CB2 agonist. Status of out-licensing negotiations for the ghrelin receptor agonist
Key Metrics:
Number of new out-licensing agreements / presence of upfront payment bookings, 2Q revenue booking amount from Velovia option exercise fee

4. Tegoprazan US Market Entry Review Progress

Previous Quarter:
Braintree submitted its FDA application on January 9, 2026, covering EE, NERD, and maintenance therapy. US FDA approval is expected in January 2027. The US accounts for approximately 20% of the global peptic ulcer therapeutics market (~JPY 2T)
This Quarter's Focus:
FDA review progress (acceptance, inquiry response status). Tegoprazan's positioning strategy targeting the PPI non-responder patient population, which is estimated to represent approximately 40% of the US PPI market
Key Metrics:
Any FDA review-related notifications, disclosures from Braintree/Sebela regarding launch preparations

5. Deepening Alliance with HK inno.N and Japan Market Development

Previous Quarter:
Third-party allotment to HK inno.N (1,555,900 shares) completed on January 29, 2026. Proceeds of JPY 1,400M to be allocated toward R&D expenses and capex. Exclusive rights for development, manufacturing, and commercialization of tegoprazan in Japan were granted to HK inno.N
This Quarter's Focus:
Progress in preparation for late-stage clinical trials of tegoprazan in Japan. Status of proceeds allocation and specifics of investment in small molecule drug discovery technologies and next-generation drug discovery technologies
Key Metrics:
Whether a specific timeline for tegoprazan clinical development in Japan is disclosed, progress disclosure on fund allocation

Timely Disclosure & Industry Trends

2026/07/30
US patent granted for FIMECS IRAK-M protein degradation inducer — Contributes to strengthening the IP foundation for targeted protein degradation inducers. Represents progress that enhances business value in this area, including the joint research collaboration with Astellas Pharma. Notice Regarding US Patent Grant for FIMECS' IRAK-M Protein Degradation Inducer (Heterocyclic Compound)
2026/07/27
Tegoprazan receives new indication approval in Korea (NSAIDs ulcer prevention) — Korean approved indications expand to six. Capturing long-term NSAIDs users amid an aging population is expected to drive K-CAB prescription expansion and strengthen the royalty base. Notice Regarding New Indication Approval for Gastric Acid Secretion Inhibitor Tegoprazan in Korea
2026/06/12
Out-licensing agreement for two compounds to Lazarus Pharmaceuticals group — A 5-HT4 agonist and motilin receptor agonist were out-licensed under a new scheme incorporating equity consideration. The structure aims to diversify the revenue model by combining milestones and royalties with equity-based consideration. Notice Regarding Out-Licensing Agreement with Lazarus Pharmaceuticals, LLC Group Under a New Business Creation Model
2026/06/02
Joint research agreement signed with RIKEN — Aimed at developing drug discovery support technologies integrating computational chemistry and structure-generation AI. Near-term earnings impact is minimal, but expected to contribute to medium- to long-term improvements in drug discovery efficiency. Notice Regarding Joint Research Agreement with RIKEN
2026/05/20
Upfront payment received from US-based Velovia Pharma upon option exercise — Option exercise fee for one veterinary drug candidate compound to be booked as 2Q business revenue. Future development/commercial milestones and royalty income potential are also secured. Notice Regarding Upfront Payment Received Upon Option Exercise by Velovia Pharma, LLC

Previous Quarter Results (FY12/2026 1Q Actual)

RaQualia Pharma is a drug discovery venture focused on royalty and milestone revenue through an out-licensing model, built on its ion channel and GPCR drug discovery platform. The flagship compound tegoprazan (K-CAB) maintains the top market share in Korea, with global expansion progressing to commercial sales in 20 countries and business operations across 57 countries. The company is simultaneously pursuing revenue diversification and platform enhancement through its consolidated subsidiary FIMECS' targeted protein degradation inducers (RaPPIDS™) and the capital/business alliance with HK inno.N for Japan market development. In 1Q, an operating loss was recorded due to front-loaded R&D investment and timing shifts in milestone income, but the full-year guidance was maintained.

Item	Amount	YoY	vs. Company Plan	Remarks
Revenue	JPY 801M	▲16.9%	Achievement rate 20.2%	Royalties solid, but gap vs. year-ago milestone one-time income
Operating Income	▲JPY 160M	-	-	Year-ago quarter was +JPY 93M. Primarily driven by R&D expenses +23.9%
Recurring Profit	▲JPY 158M	-	-	JPY 23M FX gain booked, but insufficient to offset operating loss
Net Income	▲JPY 225M	-	-	Income taxes of JPY 66M (reflecting deferred tax asset recoverability assessment)
EPS	▲JPY 8.84	-	-	Weighted average shares of 25,532,550 (including capital increase impact)

Guidance Achievement Rate vs. Full-Year Plan: Revenue 20.2% (quarterly skew expected as the company manages performance on an annual basis)

RaQualia Pharma Inc.