4572.T

• Company Overview and Core Strengths

  • Carna Biosciences originated as a spin-out from the Japanese research institute of Dutch pharma company Organon (now integrated into Merck US) in 2003, went public in 2008, and currently operates two core businesses: in-house small molecule kinase inhibitor drug discovery, and drug discovery support services selling kinases and profiling services to external pharma and biotech companies.
  • The company's core competitive advantage is extremely high-quality kinase production: the company has proprietary, hard-to-replicate technology that consistently produces high-activity kinases with low batch-to-batch variation and minimal impurities. This makes it the supplier of choice for top AI drug discovery companies, which rely on accurate wet-lab data to refine their AI models, and has supported the development of multiple blockbusters including Chugai's Alecensa and Eisai's Lenvima.
  • Management emphasizes that low molecular weight drugs remain the center of modern drug discovery: over half of all FDA-approved new drugs in recent years are small molecules, and they have key advantages over biologic drugs including oral administration (less frequent hospital visits, up to 3 months of prescription at a time) and lower cost, which drives consistent market demand.

• Pipeline Status

  • The company currently has three clinical-stage pipelines:
    1. sofnobrutinib: An oral BTK inhibitor targeting immuno-inflammatory diseases. Phase 1 completed in 2003, and out-licensing discussions are ongoing. The drug has a key differentiator: it has confirmed no teratogenicity, a common issue for other BTK inhibitors in this space. Following Novartis' FDA approval of remibrutinib for chronic idiopathic urticaria in September last year, industry interest has increased sharply, with a large number of new inquiries received at BIO-Europe 2025 and the 2026 J.P. Morgan Healthcare Conference, including inquiries for additional indications and alternative partnership structures. Management is currently evaluating all options to select the partnership structure that maximizes value, and the process is progressing actively with no issues to date.
    2. docirbrutinib (AS-1763): An oral BTK inhibitor targeting cancer and malignant lymphoma, currently in Phase 1b led by Professor Nitin Jain at MD Anderson Cancer Center (the top-ranked cancer center in the US, and acceptance of the trial confirms the drug's high potential). The drug has two key advantages over existing competitors: it has much higher safety, with very few Grade 3 adverse events compared to incumbent drugs where up to 40% of patients discontinue treatment due to cardiovascular and bleeding side effects; and it is effective against BTK mutations that cause resistance to existing drugs including ibrutinib and pirtobrutinib, addressing a major unmet medical need. Compared to competing late-stage BTK inhibitors and BTK degraders (NX-5948, BGB-16673), docirbrutinib has the lowest side effect profile, and targets all known resistance mutations. The global BTK inhibitor market already reaches 2 trillion yen in annual sales, so successful approval could lead to hundreds of billions of yen in annual sales.
    3. monzosertib: An oral CDC7 inhibitor targeting solid and blood cancers, initially developed at the National Cancer Center Japan, with the program shifted to focus on blood cancer based on emerging efficacy data. Preclinical data showed synergistic efficacy when combined with existing standard-of-care treatment for acute myeloid leukemia (AML), which led MD Anderson's Dr. Abhishek Maiti to propose and initiate a physician-sponsored trial. The company and MD Anderson have signed an MOU, and are jointly preparing for an IND submission to the FDA in Q2 2026, with all IND paperwork led by the MD Anderson team to reduce Carna's resource burden.
  • Resource Allocation: While the company has three active pipeline programs, sofnobrutinib only requires business development resources for licensing activities (no clinical burden) and monzosertib is a low-cost physician-sponsored trial, so almost all internal clinical resources are focused on advancing docirbrutinib, making 2026 planned milestones achievable.

• January 2026 Financing Overview

  • The company completed a new financing structured as an initial 1.85 billion yen corporate bond issuance to secure immediate cash, with additional share warrants to be exercised over time based on stock price movement to repay the bond and maintain ongoing cash reserves. This structure avoids the common downside of pure warrant financing, where stock price often drops below the strike price during the marketing period, forcing dilution at low valuations. The financing strengthens the company's balance sheet to support ongoing clinical development.
  • The large financing size was chosen to eliminate near-term funding pressure, ensure docirbrutinib development can continue without interruption, and prepare for any unexpected outcomes, with sufficient funding secured for 2026 if current market conditions continue.

• The company targets completion of current patient recruitment for docirbrutinib Phase 1b, with initial efficacy data for Cohort 3 (pirtobrutinib-resistant patients) expected approximately 2 months after patient enrollment, and potential presentation of these data at the 2026 European Hematology Association meeting if results are positive.
  • The joint program with MD Anderson for monzosertib targets an IND submission to the FDA in Q2 2026.
  • Management confirms that all planned 2026 milestones are achievable due to focused resource allocation on the high-priority docirbrutinib program, with minimal resource burden from the other two pipelines.
  • 2026 is highlighted as a critical year for the company, with potential for significant growth and a major step forward if clinical development progresses as planned.

Between 2017 and 2025, total cumulative revenue from both business segments reached 12 billion yen. 1. Drug Discovery Support Segment: Cumulative revenue from sales of kinase products and profiling services between 2017 and 2025 is not broken out separately in the provided transcript, representing one portion of the 12 billion yen total cumulative revenue for the period. 2. Drug Discovery Segment: Cumulative revenue from upfront license fees and milestone payments from out-licensed pipelines between 2017 and 2025 is not broken out separately, representing the remaining portion of the 12 billion yen total cumulative revenue for the period. Over the same 2017-2025 period, the company raised 8.5 billion yen from equity issuances, meaning self-generated revenue from the two segments exceeds equity funding, highlighting the strength of the company's business model. Total cumulative expenditures over 2017-2025 were 21 billion yen, which is balanced against total funds raised and generated.

• Drug discovery clinical development carries inherent risk that observed preclinical and early-stage safety/efficacy will not be confirmed in larger late-stage trials, which could prevent regulatory approval or commercial launch.
  • Out-licensing negotiations carry uncertainty: even at the confidential disclosure agreement (CDA) stage, there is no guarantee that negotiations will result in a finalized license agreement on terms acceptable to the company.
  • The amount of funding secured depends partially on future exercise of share warrants, which is tied to future stock price movement, so funding availability could be impacted if stock price declines significantly.

Q: What is the competitive advantage of docirbrutinib over competing BTK degraders NX-5948 and BGB-16673 that are reported to have good efficacy against resistant mutations?

A: While both competing degraders have fewer side effects than ibrutinib, BGB-16673 still has frequent adverse events, and NX-5948 has fewer side effects than BGB-16673 but still has meaningful toxicity. Additionally, new resistance mutations have already been reported for these degraders, and it remains unclear whether docirbrutinib will be effective against these new mutations — that remains a topic for future study. Most importantly, many clinicians are skeptical about the long-term safety of the novel degrader mechanism, and note that these drugs will not displace existing BTK inhibitors as first-line treatment until long-term safety data is available over 10+ years of use, which gives docirbrutinib a key advantage.

Q: What is the expected size of a large license deal for Carna's pipelines?

A: Carna has completed previous license deals of 2 billion yen, and the company is targeting larger deals than that for current pipelines. However, the company cannot disclose specific target numbers because public disclosure would impact ongoing negotiations, and disclosure would create unrealistic expectations that could lead to negative investor reactions if a deal is completed at a lower number. It can be confirmed that the company is targeting a very large deal.

Q: When and where will monzosertib Phase 1 results be presented?

A: The announcement of results is controlled by the lead investigating physician from the National Cancer Center Japan, so the company does not have information on the timing or venue of presentation at this time. The company will disclose the information promptly once it is confirmed.

Q: What gives management confidence in monzosertib's efficacy against blood cancer?

A: Preclinical testing on extracted cancer cells showed that adding monzosertib to the standard-of-care combination of azacitidine and venetoclax produces synergistic anti-cancer effects. These positive preclinical results were presented at AACR last year, which is what led Dr. Maiti from MD Anderson to propose the physician-sponsored trial, so the positive third-party interest confirms the potential of the program.

Q: How is patient recruitment progressing for docirbrutinib's Cohort 3 trial?

A: Patient recruitment is progressing very well. Cohort 1 for treatment-naive CLL (10 patients at 300mg, 10 patients at 400mg) is almost fully enrolled, and 4 patients with pirtobrutinib resistance are already actively treated in Cohort 3. The company delayed reporting this number earlier to only disclose confirmed, accurate data, and there are no issues with enrollment. Since pirtobrutinib launched 1.5 years ago, and resistance develops within 1.5 years for half of patients, eligible patients are now becoming available more quickly, which supports ongoing recruitment. Efficacy data will be available after 2 months of treatment, and could be presented at the upcoming European Hematology Association meeting if positive.

Q: Why is the size of the recent capital increase so large? Is it to avoid being pressured during out-licensing negotiations?

A: The main reason is to ensure that docirbrutinib development can progress without interruption, which is the company's top priority. While an upfront payment from a license deal could reduce funding needs, management wanted to secure a strong balance sheet to prepare for any unexpected outcome, to ensure development can continue regardless of negotiation timing. With the current financing, sufficient funding is secured for all of 2026 barring major adverse stock price movement.

Q: Why has the out-licensing process for sofnobrutinib taken so long, and how far have negotiations progressed?

A: The company has received multiple proposals including new partnership structures, so it is carefully evaluating all options to select the structure that delivers the maximum long-term value, which takes time. Currently, multiple potential partners have entered into confidential disclosure agreements (CDAs), which requires significant commitment from the partner since CDAs prevent them from developing competing programs, so this confirms that negotiations have progressed to an advanced stage. No further details can be disclosed to protect the confidentiality of ongoing negotiations.

Q: Will sofnobrutinib be out-licensed as a single global deal or split by indication/region, especially for the dermatology indication?

A: There are relatively few large pharma companies that focus exclusively on the dermatology space, so most large pharma that are interested in sofnobrutinib focus on broader autoimmune indications. If a large global pharma is not interested in the dermatology indication, the company is open to splitting the license and partnering with regional dermatology-specialized companies for that indication. The company prefers a single global out-license if possible, since that enables better global scale and higher total value, but is open to split regional/indication licensing if that maximizes total value, and is actively pursuing both approaches. Split licensing can be faster to complete but results in smaller overall deal size, so the company is balancing these tradeoffs to maximize enterprise value.

Q: Is the 2026 capital increase the last funding round before the company becomes cash flow positive?

A: This question was not answered due to sensitive commercial considerations.