RaQualia Pharma Inc.

Business Details

The RaQualia Pharma Group is responsible for the stages from discovery research through early-phase clinical trials, and generates upfront contract payments, milestone payments, and royalty income by out-licensing the intellectual property rights of the development compounds it creates to pharmaceutical companies and others. Its main revenue sources are royalty and milestone income from Tegoprazan (a gastric acid secretion inhibitor) via HK inno.N, royalty income from companion animal drugs licensed to Elanco, and joint research income from the targeted protein degrader collaboration with Astellas Pharma. The company operates in a single segment.

Recent Overview

1Q business revenue fell 16.9% year-on-year to ¥801 million, turning to an operating loss of ¥160 million due to increased R&D expenses

In the first quarter of FY2026 (ending December 2026), business revenue was ¥801 million (down 16.9% year-on-year), and the company recorded an operating loss of ¥160 million (compared to operating income of ¥93 million in the same period a year earlier). Business expenses totaled ¥962 million (up 10.3% year-on-year), with R&D expenses increasing significantly to ¥477 million (up 23.9% year-on-year). On the other hand, following the completion of a third-party allotment of new shares from HK inno.N (¥1,400 million), net assets rose to ¥8,086 million (up 17.3% from the end of the prior fiscal year), and the equity ratio improved to 70.5%. For Tegoprazan, an approval application was submitted to the U.S. FDA on January 9, 2026, with approval expected in January 2027. In addition, Temuriku Co., Ltd. was absorbed via merger effective January 1, 2026, and removed from the scope of consolidation. There is no change to the full-year earnings forecast, which remains at business revenue of ¥3,980 million and operating income of ¥165 million.

Key Products

Growth Drivers

• Expansion of countries where Tegoprazan is sold (sold in 20 countries as of end-1Q, with business activities in 57 countries) and submission of a U.S. FDA approval application (approval expected in January 2027), raising expectations for future entry into the U.S. market
• Expansion of the capital and business alliance with HK inno.N (grant of exclusive development, manufacturing, and sales rights for Japan), leading to future accumulation of milestone and royalty income
• Progress in the joint research on targeted protein degraders (RaPPIDS™) with Astellas Pharma
• Continued strong sales of K-CAB® in South Korea (1Q prescription data of 58.5 billion won, up 13.9% year-on-year, maintaining No.1 market share of 15%)
• Long-term growth in royalty income linked to HK inno.N's target of 3 trillion won in global annual sales of Tegoprazan by 2030
• Expanded capacity for R&D investment following the completion of a third-party allotment of new shares from HK inno.N (¥1,400 million)

Risks

• High uncertainty and volatility in revenue, as business revenue is significantly affected by the success of out-licensing negotiations and the progress of development
• Risk of concentration in a specific customer and product due to increasing dependence on Tegoprazan
• With R&D expenses continuing an upward trend (¥477 million cumulative in 1Q, up 23.9% year-on-year) and a full-year net loss of ¥63 million forecast, revenue stabilization is expected to take time
• Risk of termination of partnerships or discontinuation of development for already out-licensed programs, as seen in the termination of the OCT license agreement for the CB2 agonist
• Foreign exchange risk (given that royalty income denominated in Korean won and U.S. dollars is a major revenue source) and changes in the pharmaceutical market environment due to drug pricing system reforms
• Risk of delay or non-approval in the U.S. FDA approval review process, and risk of competition from rival products (such as PPIs) after Tegoprazan's entry into the U.S. market