4579.T

• 2025 Fiscal Year Core Operational Highlights

  • Achieved a new all-time high for consolidated business revenue of 3.979 billion yen, up 28.1% year-over-year, and successfully turned to net profit: operating profit of 483 million yen, ordinary profit of 437 million yen, net profit of 273 million yen, and EBITDA of 965 million yen, all beating initial plan targets.
  • Entered into a license agreement for Tenoprazan in Japan with HK inno.N, and completed two rounds of capital business alliance with HK inno.N in April and December 2025, raising a total of 2.4 billion yen to strengthen the financial base.
  • The development of TRPM8 antagonist progressed smoothly, while the development of P2X7 receptor antagonist for pain indication was discontinued. Temric was merged into RaQualia as part of group internal restructuring, completed in January 2026.
  • Won a full victory in the material patent dispute for Tenoprazan, securing exclusive sales rights until 2031. The U.S. Phase III clinical trial achieved positive results, with the approval submission filed in January 2026. Tenoprazan was added to China's national insurance reimbursement list in December 2025, expanding patient access.

• Strategic Priorities for 2026-2028

  • Alliance Strengthening: Accelerate the commercialization of Tenoprazan in Japan via HK inno.N's development experience, carry out joint research to develop new product candidates, and leverage HK inno.N's development capabilities and global network to expand out-licensing opportunities.
  • Drug Discovery Research Platform Enhancement: Maintain low-molecular-weight compounds as a core pillar, expand investment in new modalities including targeted protein degradation (TPD), mRNA-targeting low-molecules, and intracellular antibodies, to address traditionally undruggable targets. Fimecx's proprietary TPD platform RaPPIDS has competitive advantages including high-throughput productivity, ability to identify novel E3 ligase binding molecules, and oral TPD discovery capabilities.
  • R&D Portfolio Expansion: Focus on creating and out-licensing new development candidates, with no plan for standalone clinical development investment during the plan period. Prioritize neurological diseases and oncology, and expand into metabolic and endocrine diseases via joint research with HK inno.N, maintaining flexibility across disease areas.
  • Hybrid Business Model Reinforcement: Operate a unique hybrid model that combines stable royalty income from marketed products with revenue generation from the early research stage, which is distinct from pure contract discovery services or high-risk/high-return pure pipeline models. Fimecx has become the core engine driving this model, with 1.05 billion yen in revenue in 2025 marking an inflection point for the model.

• Organizational Updates

  • Nominate 3 new independent directors (including 2 nominated by HK inno.N) for election at the March 2026 annual general meeting, with one incumbent director retiring.
  • Fimecx plans to appoint current CSO Kanae Gamo as CEO effective March 1, 2026, with former CEO Uto moving to a RaQualia board role to lead group business strategy development.

• For the 2026-2028 three-year plan, the company expects cumulative consolidated business revenue of 12.8 billion yen, with stable performance in 2026 and 2027 at roughly 2025 levels, and significant growth in 2028. 2026 planned business revenue is 3.98 billion yen, with net income expected to be negative due to increased growth investment, but the company maintains a target of sustained operating profit black ink and stable positive EBITDA, which it views as the most appropriate core profit metric for drug development firms.
  • RaQualia standalone expects a temporary lull in upfront and milestone revenue in 2027 due to the current status of out-licensed pipelines, while Fimecx expects continued growth from platform expansion and FIM-001 related revenue.
  • Tenoprazan growth expectations: In China, annual sales are expected to exceed 20 billion yen, driven by Helicobacter pylori eradication indication following the 2025 insurance coverage expansion; in the U.S., launch is expected in 2027 with a minimum 50 billion yen in sales by 2030; in Japan, launch before 2028 is not expected, with long-term royalties expected in the 2030s; in Europe, the company expects to out-license to a local partner, with long-term royalties expected in the 2030s.
  • Key upcoming catalysts: TRPM8 antagonist is expected to move to Phase II clinical trial; the company targets out-licensing of ghrelin receptor agonist and IRAK-M degrader (FIM-001) in 2026; advance the joint research between Fimecx and Astellas, and pursue new partnership opportunities.
  • Total available cash for the three-year period is expected to be approximately 19 billion yen, with capital allocation prioritizing exploratory research investment. The company maintains its existing policy of prioritizing growth expansion over dividend distributions, and will consider share buybacks flexibly once sufficient retained earnings are secured, prioritizing capital gains for shareholders for the foreseeable future.
  • The 2025-2027 three-year goal review: All 2025 targets were met, including 1 new license agreement per year and 1 new joint research agreement per year at Fimecx, with development of ghrelin receptor agonist, IRAK-M degrader, and new discovery candidates still on track.

1. Human Pharmaceutical Segment (Tenoprazan): Total royalty revenue from all marketed products was 2.242 billion yen (56.3% of total consolidated business revenue), with Tenoprazan (sold as K-CAB in South Korea) contributing the majority of this. In South Korea, 2025 prescription-based sales reached approximately 24 billion yen, up 10.6% year-over-year, holding the #1 market share. Tenoprazan is currently sold in 19 countries globally, with new launches in India and Thailand in 2025. 2. Veterinary Pharmaceutical Segment: Three marketed products (GALLIPRANT, ENTYCE, ELURA) contribute stable recurring royalty revenue, with growing demand driven by pet population aging, and continued gradual expansion of sales countries. 3. Drug Discovery Platform Segment (Fimecx): Fimecx, the consolidated subsidiary focused on targeted protein degradation (TPD) research, generated 1.052 billion yen in business revenue (26.4% of total consolidated business revenue) in 2025, including a 600 million yen upfront payment, expanding its contribution to group consolidated results.

• Out-licensing upfront and milestone revenues have high uncertainty around timing and magnitude, so the company uses conservative forecasting, and actual results may differ materially from current projections. Clinical development success is not guaranteed, and progress of partnered programs depends on the partner's priorities and resources, which the company cannot directly control.
  • There is a large timing lag between in-market sales of partnered products and RaQualia's revenue recognition, so near-term sales growth in markets like China will not be immediately reflected in the company's results.
  • Pricing pressure exists in key markets including South Korea and Europe, which could impact long-term royalty revenue. Generic competition from the off-patent competitor vonoprazan is not expected to have a material impact on Tenoprazan sales, as vonoprazan has limited sales in China and is not sold in South Korea.
  • Future new equity issuances for partnership deals could result in share dilution that impacts existing shareholder value, though the company does not have a preset requirement to use new equity issuances for every new partnership.

Q: You set a target of 1 new license agreement per year in the 2026-2028 plan. Is there a third candidate after ghrelin receptor agonist and IRAK-M degrader, and which of the two is targeted for out-licensing in 2026?

A: We cannot disclose specific program details, but yes, there are additional pipeline candidates that can serve as third, fourth opportunities. Undisclosed exploratory stage programs are included in the target, and out-licensing activities are also ongoing for disclosed preclinical candidates. We aim to advance out-licensing as quickly as possible, and we aim to complete as many deals as possible in 2026. We do not incorporate aggressive assumptions about deal timing or value into our formal business plan given the counterparty-dependent nature of licensing deals.

Q: It looks like out-licensing upfront payments are not included in the mid-term plan. If IRAK-M degrader is out-licensed, would a large upfront be expected, and do you include any such expectation in the plan?

A: We do not fully exclude upfront payments from the plan, but as noted earlier, new licensing has high variability around value and timing, so we do not include ambitious target numbers directly into our formal plan projections.

Q: Does the joint research with HK inno.N include ongoing research collaboration payments, and are those included in the upfront from HK inno.N?

A: The current joint research collaboration focused on metabolic/endocrine diseases does not have a structure that generates an upfront payment at this stage. We will adjust the contract structure to fit each specific deal going forward, so this may not always be the case.

Q: Will future new deals with HK inno.N require additional capital increases, and how do you address concerns about shareholder value dilution?

A: I will not comment on future deal structures, but there is no requirement that every new deal with HK inno.N must be paired with a capital increase. We believe the alliance with HK inno.N increases our corporate value and thus benefits shareholder value, but we acknowledge that new share issuance does create dilution that impacts existing shareholders, which is a valid concern. Rumors that HK inno.N plans to sell its allocated shares on the open market are not true.

Q: Fimecx's Q4 research collaboration payment appears to be zero. Is this income irregular, and does it increase when new targets are added?

A: We did receive research collaboration payment in Q4. This payment is not fixed on a per-month or per-target basis, and the timing and amount vary based on contract terms, so we cannot disclose further details.

Q: What is the probability of successfully out-licensing ghrelin receptor agonist and IRAK-M degrader?

A: We cannot disclose specific probabilities or percentages for out-licensing success, so we ask for your understanding on this point.

Q: What does "clinical development preparation" for IRAK-M degrader mean—do you plan to conduct clinical development in-house?

A: This does not mean in-house development. It refers to preparations to enable seamless, rapid clinical development after out-licensing to a partner.

Q: You previously noted that multiple parties have expressed interest in ghrelin receptor agonist. Why has a deal not closed yet, and do you expect a deal in H1 or H2 2026?

A: Potential licensees conduct comprehensive, multi-factor due diligence including scientific validity, medical need, corporate strategy, and available capital, and the timeline for internal decision-making varies widely between companies. Disclosing a specific timing for this deal would harm our negotiating position and our relationship with the counterparty, so we cannot answer this question.

Q: Is there any planned collaboration with Sikonia BioVentures related to the new director nominee from the firm?

A: We cannot share any specific details at this point, but we have had an ongoing dialogue with Sikonia for some time, so there is potential for future collaboration.

Q: Is an annual business revenue target of over 10 billion yen in the 2030s a reasonable long-term goal for the company?

A: I will not comment on targets beyond the current three-year plan period, but our first goal is to exceed 5 billion yen in annual revenue by hitting current three-year targets. 10 billion yen is a longer-term goal we can aim for, as it would require large up-front payments from late-stage out-licensing that we do not currently count on, and it would be difficult to reach 10 billion yen from royalty revenue alone.

Q: Your target of over 20 billion yen in annual Tenoprazan sales in China looks conservative given that sales already reached ~5 billion yen in H1 2025 with 140% year-over-year growth, plus new insurance coverage starting in 2026. Is 20 billion yen a floor target?

A: We agree the Chinese market is showing very strong early growth, and we expect this growth to continue. However, we only build our business plan based on officially confirmed information provided by our partner, and do not incorporate third-party analyst forecasts or market expectations into our formal projections. This conservative forecasting approach is our standard policy, and we agree there is potential for sales to meaningfully exceed 20 billion yen. We will provide updated guidance once we have accumulated sufficient actual sales data.

Q: What is the expected timeline for Tenoprazan clinical development and approval submission in Japan?

A: HK inno.N is still in the process of finalizing development plans, so we cannot share a specific timeline at this point. We do not expect approval submission to be completed before 2028.

Q: Can you explain the breakdown of royalty revenue?

A: We only disclose figures based on what our partners have publicly released. HK inno.N publishes detailed South Korean sales data, which is why we can share that information clearly. We cannot disclose non-public data from other partners. We do expect a time lag between U.S. launch and revenue recognition, so even if launch happens in 2027, sales will not immediately flow through to our results in the same period.

Q: What impact will genericization of vonoprazan have on Tenoprazan?

A: Vonoprazan is not sold in South Korea, so there is no generic impact in that market. In China, vonoprazan has low existing sales, so we do not expect meaningful generic substitution impact.

Q: Why is there a difference between the sales potential numbers cited by your partners (HK inno.N, Sebela) and your internal plan projections?

A: The difference is intentional due to our conservative forecasting approach. We will provide an update on how 2025 H2 Chinese sales are reflected in our revenue at a later date, and we will revise our plan if actual results differ from current projections.

Q: Do you expect K-CAB's drug price to remain stable in South Korea?

A: South Korea has similar pricing pressure to Japan, so we cannot guarantee drug prices will remain at current levels. But we note that HK inno.N continues to grow sales volume despite pricing pressure, and the company has generated new clinical data for an additional indication (prevention and treatment of NSAID-induced gastric ulcers) that will serve as a new growth driver.

Q: Competitor vonoprazan development is not progressing in Europe with partner Fatom. Can Tenoprazan successfully enter the European market, given the strict regulatory and pricing environment?

A: It is true that European development is behind the U.S., and we do not know Fatom's strategic priorities for vonoprazan. Europe has a strict pricing environment similar to Japan, so delays are not unexpected, but we expect positive spillover from U.S. approval and clinical data that will support European partnership and development, so we remain optimistic.