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In the global Phase 3 clinical trial of Nanvuranlat (JPH203) for second-line treatment of biliary tract cancer, which commenced in FY2026 (ending March 2026), there is a possibility that results may differ from expectations due to racial differences, changes in first-line treatment drugs, and other factors. If the primary endpoint is not achieved, this could lead to increased time and cost from conducting additional trials, or a decision to discontinue development, and is positioned as the most critical risk directly tied to business value. As countermeasures, the company is advancing the design of trials based on scientific insight and diversifying its pipeline.

Manufacturing of investigational drugs and other products is outsourced to CMOs in Japan and overseas, and if manufacturing were to stop due to a contractor's non-compliance with laws and regulations, the impact on the business would be significant. Parallel outsourcing to a backup CMO is not currently realistic given the financial burden under the company's present financial condition, so the company is limited to selecting alternative CMO candidates and maintaining good relationships. Note that formulations for use in clinical trials currently ongoing or in preparation have already been manufactured.

Venture capital and other investment funds that invested prior to the listing hold a certain number of the total issued shares, and there is a possibility that they may sell shares on the market after the lock-up period expires or when certain conditions are met. If large-scale sales occur, the supply-demand balance in the market could temporarily be disrupted, creating a risk that the market price of the company's shares could decline. As countermeasures, the company is working to promote understanding of its business through constructive dialogue with shareholders and investors, and to provide timely and appropriate information disclosure.

There is a risk that completion of clinical trials may be prolonged beyond schedule due to delays in patient enrollment and other factors. If trials are prolonged, the timeline for regulatory approval applications will be pushed back, affecting the overall business plan. As countermeasures, the company is collaborating with CROs experienced in biliary tract cancer trials, building cooperative channels with patient advocacy groups, and promoting enrollment by setting an appropriate number of trial sites.

As a drug discovery venture, the company continues to experience a long period of upfront investment prior to product launch, and continuing operating losses and negative operating cash flow are expected. External fundraising may continue to be necessary to finance substantial R&D investment going forward, creating risks of shareholder equity dilution through new share issuance, and of difficulty raising funds at the desired timing or terms depending on market conditions and share price trends. In the case of debt financing, financial covenants could also constrain business activities.

Progression of drug candidates to the next phase and obtaining approval ultimately depend on the judgment of regulatory authorities in each country, and there is a possibility that approval may not be obtained with the intended content or on the intended schedule. Since pharmaceutical laws and related regulations in each country are periodically revised, there is also a risk that additional trials or plan changes may become necessary. As countermeasures, the company conducts ongoing pre-consultations with the FDA and PMDA and formulates strategic development plans in collaboration with regulatory affairs experts.

For regions other than those licensed to Ohara Pharmaceutical Co., Ltd., the company plans to license out to pharmaceutical companies after advancing development to a certain stage, but there is a possibility that concluding alliance agreements may take longer than planned. Delays in contracting directly translate into delays in milestone income under the business plan, affecting financial planning. As countermeasures, the company is building a system to approach multiple candidate companies with the involvement of outside experts, and is advancing the preparation of clinical and non-clinical data and strengthening patents necessary for licensing out.

The crystal structure of the complex between Nanvuranlat and LAT1 has been published, raising the possibility that other companies may enter or strengthen development of novel LAT1-selective inhibitors. If a competing LAT1 inhibitor advances development in the same disease area as the company, this could affect business results and business development. As countermeasures, in central inflammatory diseases such as multiple sclerosis, the company has obtained an exclusive ordinary license from Georgetown University for a comprehensive use patent covering LAT1 inhibitors as a whole, and is pursuing differentiation through diversification of its disease portfolio.

For Nanvuranlat, use patents for cancer treatment have been established in major countries including Japan, the US, and Europe, and exclusive rights are planned through 2040 and beyond, but the possibility that claims of invalidity or litigation may be brought against owned or licensed patents in the future cannot be completely ruled out. If such claims were upheld, this could result in loss of competitive advantage and impediments to R&D activities, affecting business results. As countermeasures, the company is filing additional use patent applications, conducting drug discovery research on the next-generation LAT1 inhibitor (Best-in-Class), and regularly verifying and managing patents in collaboration with external specialized institutions.

In Japan, sales, marketing, and operations following the regulatory application and approval of Nanvuranlat depend on Ohara Pharmaceutical Co., Ltd., and there is a possibility that sales capability could be affected if the priority given to Nanvuranlat within that company were to decline. While the company provides development support, direct control over sales activities is difficult. As countermeasures, the company plans to strengthen its relationship with Ohara Pharmaceutical and provide post-launch marketing support through coordination with its global partners.