Oncolys BioPharma Inc. Q2 FY2025 earnings call

• Core Pipeline Progress (OBP-301/Telomerase):

  • OBP-301 for esophageal cancer under Japan's priority review (Sakigake) pathway is progressing toward approval, with all regulatory consultations proceeding on schedule. PMDA has acknowledged the clinical trial data showing OBP-301 plus radiation therapy significantly outperforms radiation alone.
  • A new formulation of OBP-301 with a minor additive has achieved 12 months of confirmed stability, up from the previous 6-9 months, and this new formulation will be submitted for approval. The company holds exclusive Japanese patent rights for endoscopic administration of oncolytic adenoviruses for esophageal cancer, blocking competitor entry into this indication.
  • Clinical results confirm a 41.7% complete local response rate (versus 22% for radiation alone from real-world data), rising to ~50% after 1.5 years of follow-up. Overall 1-year survival is 71% (versus 57% for historical radiation alone data), and 1.5-year survival is 53% (versus 40% for historical data); patients with complete response had 100% 1.5-year survival. The most common side effects are flu-like symptoms (51%) and reduced lymphocyte counts (48.6%), the latter of which is also observed with radiation alone.
  • The company has organized a Key Opinion Leader network for esophageal cancer, and will hold the first Esophageal Cancer Local Therapy Research Conference in October 2025 to drive clinical adoption and plan for indication expansion.

• Capital Structure and Capital Allocation:

  • A 5 billion yen capital reduction was completed in May 2025, following a 14.5 billion yen reduction in 2022 for a cumulative total of 19.5 billion yen. This is expected to reduce annual external standard tax payments by approximately 0.1 billion yen, with savings allocated to growth activities. Prepaid payments to Henogen fell from 480 million yen to 154 million yen as development milestones are met, with the reduction reflected in increased R&D expense.

• Pipeline Expansion (Other Candidates):

  • OBP-601 for progressive supranuclear palsy (PSP) has fully completed Phase 3 preparation; the company's partner Transposon is pursuing financing to initiate the pivotal study by the end of 2025. An Alzheimer's disease Phase 2 trial for OBP-601, funded by a $5 million grant from the Alzheimer's Drug Discovery Foundation, is expected to start by the end of 2025, supported by preclinical data showing efficacy against tau and TDP-43 pathology. A trial for OBP-601 in ALS via the Healey ALS Platform is currently in scheduling.

• Post-Approval Commercial Strategy:

  • Management's core priority is building the "Telomerisin" brand as the first-line treatment for esophageal cancer, focused on the key value proposition of curative treatment without surgery. The company expects to qualify for all available drug price premium add-ons (innovative, utility, and orphan drug), and is working to secure full manufacturing data disclosure from Henogen to support this high-price strategy. Long-term targets: cumulative sales of at least 5 billion yen (potentially over 13 billion yen) after launch, with annual sales exceeding 10 billion yen following indication expansion, to build a stable profitable base by 2035.

Oncolys Biopharma is a clinical-stage biotech company that is pre-revenue for core product candidates, with revenue dependent on future milestone payments from partnerships. Reported financial results for the first half of fiscal 2025: Total revenue decreased by 3 million yen (0.03 billion yen) year-over-year due to foreign exchange impacts, with no material underlying change to business activity. Research and development expenses increased by 0.5 billion yen year-over-year, driven by advancement of OBP-301 development and reclassification of prepaid manufacturing payments to Henogen. Selling, general and administrative expenses also increased alongside R&D, leading to a 0.5 billion yen wider operating loss year-over-year. Operating cash flow negative improved from negative 1.124 billion yen in the prior year period to negative 1.037 billion yen, a 87 million yen improvement. Net cash outflow for the period was negative 1 billion yen, resulting in an ending cash and cash equivalents balance of 1.1 billion yen. There are no separate revenue-generating product segments at this stage of development.

• The company does not provide full-year earnings guidance due to high uncertainty around the timing and amount of milestone and partnership revenue, which is the company's only current source of non-operating income.
• OBP-301 approval application and Japanese orphan drug designation application are on track to be submitted by the end of 2025.
• If regulatory review proceeds as expected, OBP-301 approval is projected for mid-2026, with national health insurance price listing and launch in Q3 2026. First commercial revenue is expected in 2026 following hospital and regulatory procedural steps.
• A 30-patient pilot study for OBP-301 in anal/lower rectal cancer is expected to start by the end of 2025, with a 50-patient full trial to follow in 2026, targeting approval by 2030. All OBP-601 pivotal trials are targeted to start by the end of 2025, which would bring the company's 2025 milestone achievement rate to 100%.
• The new financing announced in July 2025 is sufficient to fund all planned OBP-301 development, approval, commercial preparedness, and pipeline activities through launch.

• There is uncertainty around the required scope of post-approval clinical trials if OBP-301 receives conditional approval, which would increase required development spending and could delay full commercial uptake.
• Successful application for premium drug pricing depends on the ability to fully disclose detailed manufacturing data from Belgian manufacturer Henogen to Japanese regulators, which is outside the company's full control.
• Stable supply of OBP-301 depends on successful temperature-controlled logistics from Henogen's Belgian facility to Japan, which requires ongoing process development and has not yet been fully validated for commercial-scale distribution.
• The timing and funding of OBP-601 clinical development depends on partner Transposon's ability to secure external financing and strategic partnerships, which is outside Oncolys' direct control.

Q: What is the expected size of the OBP-301 market after full indication expansion? / A: The company cannot give a precise forecast until final drug pricing is confirmed. Using comparable pricing to similar oncology gene therapies, the company targets cumulative sales of at least 5 billion yen, with a stretch target of over 13 billion yen before indication expansion. After expanding into esophageal cancer chemoradiation and anal/lower rectal cancer, annual sales are expected to exceed 10 billion yen by 2035. The anal/lower rectal cancer indication alone serves ~2,000 patients annually in Japan, a larger potential market than the initial esophageal cancer indication.\n\nQ: What are the three core uses of proceeds from the company's recent financing round? / A: First, proceeds will fund required post-approval studies: an estimated 25-28 patient confirmatory post-approval trial (if required by PMDA) plus a 100-patient all-case surveillance study to confirm safety and efficacy. Second, funds will support indication expansion for OBP-301, including trials for concurrent use with chemoradiation in esophageal cancer and new indication development for anal/lower rectal cancer. Third, proceeds will fund buildout of manufacturing, cold chain logistics, and distribution capabilities, including production of 10 lots of drug substance and product over the first three years post-launch to ensure uninterrupted supply for patients.\n\nQ: What progress has been made on improving OBP-301 manufacturing stability? / A: The company achieved 12 months of confirmed stability for the new OBP-301 formulation by adding a common food-grade additive, with no other major changes to the manufacturing process. This extended stability meets regulatory requirements for commercial distribution, and the new formulation will be used for the approval submission.\n\nQ: What is the status of OBP-601 for PSP financing and trial initiation? / A: All preparations for the Phase 3 pivotal trial are complete. The trial cannot initiate until partner Transposon secures required financing, which Transposon is currently pursuing alongside potential strategic partnering deals. Management expects the financing to be completed and the trial to start by the end of 2025.