Cuorips Inc.

In March 2026, ReHeart® obtained conditional and time-limited manufacturing and marketing approval; however, in Japan, periodic drug price reductions and the promotion of generic drug use continue to advance as part of efforts to contain healthcare costs. If drug prices are significantly reduced in the future, this could reduce profitability and affect business results and financial position. While the Group is proceeding with procedures toward insurance coverage, trends in drug pricing policy represent a risk factor directly linked to the Group's revenue structure.

Although ReHeart® has obtained conditional and time-limited manufacturing and marketing approval, sales have not yet commenced, and several other pipeline products have not yet reached the stage of continuous revenue generation. If the conditional approval is revoked, full approval cannot be obtained, or development of other products is discontinued or fails to receive approval, the Group may be unable to secure all or part of its expected sales, which could have a material impact on business results and financial position. This also entails a risk of revenue dependence on specific products, making pipeline diversification a key challenge.

If securing manufacturing and sales personnel or establishing raw material logistics does not proceed as planned, this could have a material impact on business results and financial position, with the risk expected to materialize within two years. As sales of ReHeart® expand and CDMO business orders increase, the manufacturing capacity of the current commercial cell culture processing facility is expected to be insufficient to meet future demand. While the Group has established a consortium and is conducting joint research toward establishing mass production technology, delays in building this system could constrain product supply.

The Group has recorded net losses due to upfront investment in research and development, and operating cash flow has continued to be negative; the CDMO business has also not yet achieved profitability. The Group may need to raise funds, such as through capital increases, until product launch and stable revenue generation are achieved, and if it is unable to secure funding at the necessary timing, this could raise substantial doubt about its ability to continue as a going concern. While the Group currently maintains its cash flow through public and third-party allotment capital increases and receipt of joint research and development expenses, its financial vulnerability remains an ongoing risk.

Research and development in the field of regenerative medicine is progressing rapidly among domestic and overseas companies and research institutions, and the emergence of competing products could undermine the Group's technological advantage. Improvements in the safety and efficacy of competing products or the establishment of new manufacturing methods could result in sales volumes and the securing of sales channels to medical institutions falling short of plan. The Group intends to proceed with negotiations with medical institutions for products with manufacturing and marketing approval and to actively pursue sales channels for bio-raw materials and other products, but changes in the competitive environment could have a material impact on business results.

There is a risk of injunctions or damages claims arising from infringement of the Group's intellectual property rights by third parties, or infringement by the Group of third parties' intellectual property rights. If filed intellectual property rights are rejected or are obtained first by competitors, the Group may be unable to receive legal protection, which could affect its business activities. While the Group has established an investigation and management system through patent attorneys and other advisors, business activities could also be affected if licenses for the use of other companies' intellectual property rights cannot be obtained or if usage fees exceed expectations.

The Group is a small organization with 51 employees (excluding temporary staff) and is highly dependent on management, department heads, and specific research and development personnel, with the role of Professor Emeritus Yoshiki Sawa of Osaka University, the principal developer of ReHeart®, being extremely important. If the Group is unable to smoothly secure and develop personnel, or if personnel turnover occurs, this could delay research and development and manufacturing activities and disrupt business operations. While the Group strives to secure and develop excellent personnel and to pass on experience and knowledge, the vulnerability inherent in its small organizational scale remains an ongoing risk.

The Group is subject to numerous domestic and overseas laws and regulations, including the Pharmaceuticals and Medical Devices Act and the Act on the Safety of Regenerative Medicine. If licenses or registrations are revoked, this could lead to business suspension or loss of public trust. In addition, amendments or abolishment of relevant laws and regulations, or the establishment of new regulations, could make it difficult to continue operations or result in substantial additional costs. While the Group addresses this risk through information gathering and management systems developed in cooperation with industry associations and experts, changes in the regulatory environment could have a material impact on its business results and financial position.

The Group receives licenses for intellectual property and other rights based on a joint research and development agreement with Daiichi Sankyo Company, Limited, and any revision or termination of this license under unfavorable terms could delay research and development or cause sales plans to fall short of targets. In addition, if agreements with Osaka University, iPS Academia Japan, the Center for iPS Cell Research and Application (CiRA) Foundation of Kyoto University, and other institutions are revised or terminated under unfavorable terms, this could delay research and development activities and affect business results and financial position. While the Group currently maintains good relationships with each institution, its high degree of dependence on specific partners represents a structural risk.

The Group has recorded substantial fixed assets, including the commercial cell culture processing facility and the pilot-scale plant planned for installation at Nakanoshima Qross, and there is a risk of recognizing impairment losses if the business environment deteriorates due to revocation of ReHeart®'s approval, failure to obtain full approval, weak sales, drug price reductions, or other factors. The Group identifies indicators of impairment and estimates future cash flows in accordance with accounting standards for impairment of fixed assets, and currently judges that there is no issue with recoverability. However, if the business plan continues to fall short of targets, the recognition of impairment losses could affect business results and financial position.