SymBio Pharmaceuticals Limited

In the 21st fiscal year (FY2025, ending December 2025), the Company recorded an operating loss of ¥4,440,687 thousand (approximately ¥4,441 million) and an ordinary loss of ¥4,647,882 thousand, and it is explicitly stated that events exist that raise material uncertainty regarding the going concern assumption due to losses recorded for three consecutive fiscal periods. The continued decline in sales of the mainstay product Treakisym® (net sales of ¥1,307,648 thousand in the 21st fiscal year) due to drug price revisions and generic penetration, combined with upfront investment in BCV development, has strained cash flow. Countermeasures include equity finance, collaboration and business alliances with other companies, monetization through licensing out, and thorough cost management, but it is explicitly stated that none of these are guaranteed to be realized.

The probability of a new drug candidate reaching approval is extremely low, at approximately 1 in 20,000 to 1 in 25,000, and discontinuation or delay can occur at any stage of development. For a small pharmaceutical venture such as the Group, the loss of a single pipeline product could have a material impact on financial position, operating results, and cash flow. In response, the Group focuses primarily on late-stage clinical candidates for which proof of concept (POC) has been established in humans, and has established a system to narrow down candidate products through rigorous evaluation by its Scientific Advisory Board (SAB).

While aiming to transform into a global specialty pharma, research and development expenses remained at a high level of ¥3,297,362 thousand in the 21st fiscal year, and if the business plan does not progress as planned, a funding shortfall may occur. It is explicitly stated that if funds cannot be secured at the necessary timing, material concerns regarding the continuation of the business will arise. In response, the total number of authorized shares has been expanded from 115 million shares to 235 million shares, enabling flexible capital policy execution, although this also entails dilution risk.

It is explicitly stated that generic drugs were approved and launched against the Group's products in 2022, actually causing a decline in sales, and this trend may continue. Competitors, including major international corporations, hold advantages in technological capability, marketing power, and financial strength, and the emergence of new life science technologies (such as cell therapy) adds to the risk that the environment surrounding the Group's products could change beyond expectations. In response, the Group specializes in rare disease areas with high entry barriers, such as cancer, hematology, and viral infections, and seeks to leverage market exclusivity protections through patents and re-examination periods.

Research, development, manufacturing, and sales of pharmaceuticals are strongly regulated by each country's pharmaceutical affairs laws, healthcare insurance systems, and drug pricing trends, and significant changes to these prior to product launch could have a major impact on financial position, operating results, and cash flow. Drug pricing system reforms, including annual drug price revisions, have already materialized as a factor in the sales decline of the mainstay product Treakisym®. In response, the Group implements wholesale price and rebate revisions in line with drug pricing system reforms and distribution improvement guidelines, seeks sales expansion centered on products eligible for the new drug creation premium and priority products, and continuously monitors administrative trends both domestically and overseas.

In the global expansion of the antiviral drug Brincidofovir (BCV), there is a risk that deterioration in the business condition of overseas licensees or co-development partners, or changes in regulatory and competitive environments in various countries, could result in milestone or royalty income not being received as planned. It is also explicitly stated that a licensor's bankruptcy or third-party transfer of a license could make continued development and sales difficult. In response, the Group conducts careful due diligence in selecting partner companies, performs regular monitoring after out-licensing, and has appointed personnel responsible for risk management of overseas licensees.

If unexpected serious adverse events occur from the clinical trial stage through the post-marketing stage, there is a risk of liability claims, clinical trial delays, discontinuation of development, or revocation of approval, which could have a material impact on financial position, operating results, and cash flow. It is explicitly stated that the possibility cannot be ruled out that the amount of damages could exceed the coverage limits of liability insurance. In response, the Group collects and evaluates domestic and international safety management information and provides it to medical institutions, conducts safety management training for employees, and performs strict inspections upon import of products from licensors.

It is explicitly stated that the intellectual property rights used by the Group are basically licensed from pharmaceutical companies and biotech ventures, and it is difficult to completely avoid the risk that a licensor's pending patent application may not be registered, or that a third party may create superior intellectual property rights. In addition, the Group's development candidates are not necessarily protected by patents, which could give rise to a risk of generic drug entry. In response, the Group conducts patent investigations through attorneys and patent firms, and has established a system for handling disputes in cooperation with licensors.

Representative Director and President Fuminori Yoshida has been the central driving force behind overall management since the Company's founding, and if his ability to perform his duties becomes constrained for any reason, this could have a material impact on business operations. In addition, the Group operates with a relatively small workforce and relies on outsourcing to CROs, so termination of relationships with CROs or an inability to secure personnel as planned could also disrupt business activities. In response, the Group plans to formulate a next-generation CEO development program, and is promoting the recruitment of personnel with diverse backgrounds and appropriate placement of talent.

To meet ongoing funding needs, the Company has conducted multiple third-party allotments of stock acquisition rights, and future additional share issuances or exercises of stock acquisition rights may dilute the value per share. It is also explicitly stated that if venture capital firms or investment partnerships sell their held shares, this could affect the market price. In response, the Company has expanded its total number of authorized shares to 235 million shares to enable flexible capital policy, while pursuing a policy of increasing stable shareholders, including institutional investors.