FY2027-H1: The focus is the loss trajectory and progress against the full-year forecast

Revenue in the first quarter of the fiscal year ending March 2027 was ¥0 million according to the earnings report, while the operating loss was ¥547 million, the ordinary loss was ¥545 million and the net loss for the quarter was ¥530 million. The operating loss widened by ¥302 million from the ¥245 million loss in the same period of the previous year. With virtually no revenue generated, it is necessary to determine whether the cost-front-loaded structure characteristic of a drug discovery company that continues its R&D activities remains in place in the first-half results.

The operating loss for the full fiscal year ended March 2026 was ¥1,295 million, while the full-year operating loss forecast for the fiscal year ending March 2027 is ¥1,965 million. The planned loss therefore widens by ¥670 million, or approximately 51.7%. The net loss forecast is also ¥1,949 million, indicating a significant deterioration from the ¥1,304 million net loss in the previous fiscal year. At the next results announcement, we will examine not only whether the forecast is left unchanged, but also how much of the full-year forecast the cumulative first-half operating loss represents and whether additional R&D or clinical trial-related costs are expected in the second half.

Because the full-year revenue forecast itself is ¥0 million, the usual progress rate calculated as first-half actual revenue divided by the full-year forecast is not meaningful. Accordingly, in the first half, the key issue is not the amount of revenue but what types of revenue were recognized, such as upfront license payments, development milestones or contract R&D revenue. Revenue in the fiscal year ended March 2026 was also close to ¥0 million, and the first quarter of the fiscal year ending March 2027 was in the same position. If no revenue is generated in the first-half results, earnings improvement cannot be driven by revenue growth.

The first-quarter earnings report explains that R&D was advanced toward the creation of novel cancer immunotherapies, but it does not provide a breakdown of the ¥302 million year-on-year increase in the ¥547 million operating loss into personnel expenses, outsourced R&D costs, clinical trial expenses, manufacturing-related costs and other items. In the first-half results, we will examine total R&D expenses, the breakdown of SG&A expenses, and whether prepaid amounts were transferred to expenses or any one-time costs were incurred, to determine whether the widening loss reflects ongoing development investment or one-time expenses related to specific projects.

The company operates in a single segment consisting solely of its pharmaceutical development business and does not disclose revenue or profit by segment. Accordingly, in FY2027-H1, it will be important to determine whether the company can disclose progress and cost allocation by development project, including preparations for the U.S. clinical trial of BP2202, the clinical development of BP2301 and preclinical trials of antibody drug candidates. Even if the full-year forecast is not revised, we will also check whether the first-half loss has exceeded expectations and whether development schedules have been delayed.