Kringle Pharma, Inc.

The approval application for the main pipeline (KP-100 (Acute Spinal Cord Injury)) was postponed in July 2025 due to a decision to conduct an additional clinical trial. Amid continuing operating losses and negative operating cash flow, financial flexibility has declined, and the Company itself has determined that material doubt about the going concern assumption exists. As countermeasures, the Board of Directors resolved on July 16, 2025 to issue the 16th series of stock acquisition rights through a third-party allotment, with the allotment implemented on August 1, 2025, and the Company is also pursuing cost reductions through pipeline review and utilization of subsidies. At present, the Company has determined that no material uncertainty exists, but if exercise of the stock acquisition rights does not proceed as planned, significant concern regarding business continuity may arise.

For KP-100 (Acute Spinal Cord Injury) (KP-100IT), after obtaining preliminary results from the Phase III trial and following discussions with the PMDA, a decision was made in July 2025 to conduct an additional clinical trial, significantly delaying the expected timing of approval. KP-100 (Vocal Fold Scarring) (VFS) is undergoing a Phase III trial at 8 institutions, and KP-100 (ALS) is undergoing continued biomarker analysis following completion of a Phase II trial. In all cases, there is a risk that clinical trials may not yield the expected results, or that trials may be discontinued due to serious adverse events. If development is delayed or discontinued, there is a possibility that revenue itself cannot be recognized.

The Company operates a research and development-focused business model, and research and development expenses for the 24th fiscal year reached ¥681,359 thousand (69.4% of selling, general and administrative expenses), with continuing net losses recorded each period. Business funds until full-scale sales of KP-100IT begin are planned to be covered by funds raised through past capital increases and stock offerings, but there is a possibility that funds could become strained due to development delays. If additional financing cannot be secured at an appropriate time, significant concern regarding business continuity may arise, and dilution of per-share value may occur if a capital increase is implemented.

The Company aims to obtain a Type 1 Pharmaceutical Manufacturing and Marketing Business License and marketing approval under the Pharmaceuticals and Medical Devices Act, but the license could be revoked in the event of violations of the Act or inadequate response to legal amendments. In addition, if the PMDA does not recognize the quality, efficacy, or safety of the recombinant human HGF protein product, marketing approval may not be obtained. There is also risk of administrative disposition due to violation of laws other than the Pharmaceuticals and Medical Devices Act, and if such events occur, they would affect the very foundation of the business.

The Company has obtained a license from Neurogen Co., Ltd. to use the master cell bank that serves as the starting point for manufacturing recombinant human HGF protein, which is a prerequisite for the Company's principal business activities. At present, no factors impeding continued use have arisen, but if the license agreement is terminated for any reason, it could have a material impact on the Pharmaceutical Development Business (Single Segment). The Company seeks to reduce this risk by properly storing the master cell bank in compliance with GMP standards and maintaining a good relationship with Neurogen.

The Company outsources the manufacturing of drug substances and formulations and relies on a small number of suppliers for specialized raw materials and consumables. If a supply stoppage occurs due to circumstances on the supplier side, or if the manufacturing contractor becomes unable to manufacture, this could significantly disrupt the stable supply of pharmaceutical products. Furthermore, since the Company adopts a strategy of retaining manufacturing-related technology and know-how as trade secrets rather than filing patents, there is a risk that manufacturing advantages could be lost if such know-how leaks despite confidentiality agreements and other measures. The Company is considering second suppliers and maintaining certain inventory levels, but states that complete avoidance of this risk is difficult.

For domestic sales of the treatment for KP-100 (Acute Spinal Cord Injury), the Company has entered into agreements with Maruishi Pharmaceutical Co., Ltd. (exclusive sales rights) and Toho Holdings Co., Ltd. (exclusive wholesale distribution rights); however, if sales and supply fail to materialize due to deterioration in the partners' business environment or changes in their policies, revenue may fall short of plan. In addition, regarding the drug substance supply agreement with Claris Biotherapeutics in the United States, there is a risk that HGF drug substance sales could decline if Claris's development progress stalls. For VFS, ALS, and overseas KP-100 (Acute Spinal Cord Injury), partnerships with pharmaceutical companies and others remain undetermined at present, presenting a risk of delay in business development.

The Company uses various intellectual property rights in the course of its business operations and conducts ongoing investigations and reviews to avoid infringing third-party intellectual property rights, but it is difficult to completely eliminate the possibility of disputes arising. While there have been no lawsuits with third parties to date, the Company states that this risk increases as business activities progress, and if an intellectual property dispute were to arise, it could have a material impact on business results and financial condition. For its main pipeline, the Company has established patent rights in Japan, Europe, the United States, China, and other regions, and has built a system for protecting its own intellectual property.

The Company is a small organization consisting of 7 directors, 3 auditors, and 17 employees, with the Pharmaceutical Development Department and Quality Assurance Department comprising 2 directors and 13 employees. Representative Director and President Kiichi Adachi plays a critical role in determining management policy and overseeing overall business activities, and there is strong dependence on specific employees in research and development as well. If personnel recruitment does not proceed as planned, or if there is turnover of key personnel, delays in research and development activities or deficiencies in the internal control system may occur.

The Company has adopted a stock option system, and as of the end of the current fiscal year, the number of potential shares from stock acquisition rights stood at 340,000 shares, representing 4.6% of the total of issued shares and potential shares. In addition, to resolve the material doubt regarding the going concern assumption, the Company issued the 16th series of stock acquisition rights through a third-party allotment on August 1, 2025, and there remains a possibility of further issuance of stock acquisition rights for fundraising purposes in the future. If exercise of the stock acquisition rights proceeds, the increase in total issued shares may dilute the per-share value.