PhoenixBio Co.,Ltd.

All of the company's revenue depends on the PXB Mouse Business, a single business segment. If sales in this business decline due to intensifying competition or other factors, it will directly impact overall performance. While the company aims to expand revenue scale by concentrating management resources, no risk hedging through business diversification is currently being undertaken.

In FY2026 (ending March 2026), sales to Alnylam Pharmaceuticals, Inc. accounted for approximately 38% of revenue, and sales to the U.S. market accounted for approximately 54%, indicating a high degree of dependence on specific customers and regions. Changes in that company's business policy or developments in U.S. government tariff and drug pricing policy could have a material impact on performance. While the company is promoting diversification through new customer acquisition, progress remains uncertain.

In FY2026 (ending March 2026), overseas sales accounted for approximately 70% of revenue, with foreign-currency-denominated transactions being the mainstay, creating foreign exchange risk whereby sales and profit erode during periods of yen appreciation. While the company has a policy of striving to reduce foreign exchange risk, it explicitly states that complete elimination is difficult, and the impact on performance continues to persist.

Human hepatocytes, which are indispensable for manufacturing the flagship product PXB Mouse, cannot be procured domestically and are entirely dependent on overseas imports through agents. If procurement becomes difficult due to soaring purchase prices or changes in regulations, it would directly constrain PXB Mouse production and could have a material impact on business operations and performance.

Given the nature of the business, which involves managing animals such as mice and rats in clean rooms, there is a risk that natural disasters, equipment failures, or outbreaks of infectious disease among the animals could halt production activities. Although risk mitigation measures such as diversification across multiple facilities have been implemented, an unforeseen event could have a material impact on the business.

PXB Mouse boasts a high level of technology with a human hepatocyte replacement rate of 70% or more, but technological innovation in the biotech industry is rapid, and there is a risk of technology becoming obsolete or facing price competition if alternative technologies or more price-competitive technologies are developed. Although entry barriers are high, new entrants may emerge due to expectations of market expansion, and intensifying competition could affect performance.

Given the highly specialized and unique nature of the business, technical training requires a long period of time, making rapid staff increases difficult and creating a high degree of dependence on individual engineers. A significant loss of engineers could seriously affect business operations, and this risk is further heightened by the small scale of the organization (55 employees).

The production of PXB Mouse involves handling genetically modified organisms, and the business is conducted in accordance with domestic and international laws and regulations such as the Cartagena Act. Tightening of regulations or an accidental release could affect business operations and performance, and the company strives for legal compliance through facility maintenance, risk management, and employee training.

As of March 31, 2026, the company held tax loss carryforwards of ¥1,550,623 thousand, which currently reduce the tax burden within the scope of carryforward deductions. Once the loss carryforwards are exhausted, the tax burden is expected to increase, impacting net income, requiring attention in future earnings planning.

The company group conducts joint research with Hiroshima University, a national university corporation, and depends on this collaboration for part of its R&D activities. If contract renewal becomes difficult, it could adversely affect R&D activities. While the company strives to maintain a good relationship, a risk of dependence on external institutions exists.