FY2027 plan assumes lower expenses; Q1 broadly on plan

Business expenses were ¥1,605 million in FY2026, while the FY2027 plan is ¥1,330 million, incorporating a reduction of ¥275 million, or approximately 17.1%. Business expenses in the first quarter of FY2027 were ¥420 million, representing 32% of the full-year plan. Operating loss was ¥420 million and ordinary loss was ¥422 million, but the company assessed the first-quarter results overall as broadly in line with expectations.

By expense category, first-quarter R&D expenses were ¥365 million, up ¥80 million year on year, while general and administrative expenses were ¥54 million, down ¥19 million year on year. Total business expenses increased by ¥62 million year on year, with the company citing higher R&D expenses related to DFP-10917 and costs associated with increased patient enrollment for DFP-14323 and DFP-17729 as the drivers. However, the amounts allocated to R&D for each of these 3 pipelines have not been disclosed, so it is not yet possible to determine whether the increase reflects a temporary concentration of trial activity or an ongoing burden from subsequent trials.

For the full year, the company plans R&D expenses of ¥1,070 million and general and administrative expenses of ¥260 million, with first-quarter progress rates of 34% and 21%, respectively. With R&D spending progressing faster than general and administrative expenses, the scope for reducing the full-year plan will narrow if patient enrollment and trial-related spending are concentrated in the first half. Conversely, if certain clinical trials are completed as planned and R&D expenses decline in the second half, it will be easier to justify maintaining the ¥1,330 million operating loss forecast.

At FY2027-H1, we will look to confirm whether cumulative business expenses exceed the simple half-year benchmark of ¥665 million and whether R&D expenses exceed ¥535 million. As the company operates a single pharmaceutical segment and does not disclose segment earnings, it will be important to see whether it can provide additional disclosure on pipeline-specific patient enrollment, trial completion timing and the presence or absence of clinical-trial drug manufacturing costs, in addition to total company expenses.