Oncolys BioPharma Inc. Q4 FY2025 earnings call

• 2025 Key Milestone Achievement

  • All planned 2025 milestones for OBP-301 (Telomelysin) were achieved: completed prior consultation for breakthrough evaluation, submitted marketing approval application December 15, 2025, obtained orphan drug designation in Japan, acquired regenerative medicine product manufacturing and marketing license, and cleared 12-month stability testing. Telomelysin is positioned to be the world's first local treatment for esophageal cancer and the first oncolytic adenovirus to reach the market.
  • OBP-601, out-licensed to Transposon, had 2025 milestones unmet due to delayed financing from US market conditions, though progress has been seen in early 2026.

• Clinical Trial Results for Telomelysin (OBP-301)

  • In the Japanese Phase 2 trial combining Telomelysin with radiotherapy for esophageal cancer, more than half of patients achieved 100% tumor disappearance. Complete response rate improved from 22% (historical radiotherapy alone) to 41.7% at 24 weeks and 50% at 18 months; including partial responses, the overall response rate is ~64% at 18 months. 100% of patients who achieved complete response were still alive after 18 months, demonstrating clear benefit for elderly patients, patients with poor organ function, and patients with no other treatment options. Main side effects are mild cold-like symptoms (fever) in ~half of patients and asymptomatic lymphocyte count reduction that does not impact overall immunity.
  • In a US Phase 1 trial at Memorial Sloan Kettering Cancer Center combining Telomelysin with chemoradiotherapy for esophageal cancer, 13 out of 13 evaluated patients achieved complete local tumor disappearance, 12 out of 13 had no local recurrence, and 1-year survival for patients without local recurrence was 92%, confirming strong local efficacy. Further Phase 2 and large-scale trials are needed.
  • In a US physician-sponsored Phase 2 trial of Telomelysin plus pembrolizumab as second-line treatment for gastric cancer, 11 out of 13 target patients have been enrolled, and a key go/no-go decision on future development is expected within 2026 if efficacy signals meet expectations.

• Commercial Preparation for Telomelysin

  • Manufacturing and supply chain: Equivalence between commercial and clinical-grade drug product was confirmed, allowing on-schedule approval submission. 18-month stability has been confirmed; commercial batch 1 is ready for shipment on the same date as price listing with 18-month expiry, commercial batch 2 will be prepared in 2026 for shipment with 24-month expiry, and commercial batch 3 manufacturing will start within 2026. A full supply chain is established: manufactured by Henogen in Belgium, imported, packaged domestically, and distributed to medical institutions via FUJIFILM Toyama Chemical and wholesalers, with final system validation ongoing.
  • Sales and distribution structure: Oncolys is the marketing authorization holder, with FUJIFILM Toyama Chemical handling distribution and sales promotion. Initial launch will target ~80 high-volume esophageal cancer centers, then expand to over 300 institutions nationwide within 5 years. Post-marketing surveillance and safety monitoring will be conducted jointly, with Oncolys retaining overall safety reporting responsibility to regulators.
  • Commercial strategy: (1) Pricing: Target a high price by maximizing cost disclosure of third-party manufacturing to qualify for all available premium pricing add-ons (breakthrough, orphan drug, and clinical utility add-ons). (2) Market access: Optimized Cartagena Act compliance protocols enable outpatient administration, reducing facility burden. (3) Branding: Continue the Esophageal Cancer Local Therapy Research Society to engage with clinicians and patients, expand indications beyond the initial elderly/inoperable patient population to additional indications and other cancer types.

• Global Business Expansion

  • Initial target is Asian markets where Japan's approval can be leveraged for fast-track submission. Medigen already holds Taiwanese rights and is conducting approval pathway planning, with launch planned as soon as possible after Japanese approval. The company targets closing at least one regional partnership agreement in 2026, covering additional Asian markets (South Korea, Thailand, Malaysia, Vietnam, Singapore). In Europe, the UK offers an international recognition pathway that would allow approval based on Japanese approval, and the company is negotiating with regional partners to cover broader Europe.

• Other Pipeline Updates

  • OBP-601 (out-licensed to Transposon): Transposon's financing has made progress in early 2026, with full financing expected to close in H1 2026. This will enable initiation of Phase 3 trial for progressive supranuclear palsy (PSP) (already aligned with FDA) and Phase 2/3 trial for ALS, plus a Phase 2 trial for Alzheimer's disease funded by a grant from the Alzheimer's Drug Discovery Foundation. Positive results could lead to out-licensing to a large pharma or M&A of Transposon.
  • OBP-702 (second-generation Telomelysin): First-in-human trial for pancreatic cancer is being prepared at Okayama University, with multiple consultations completed with PMDA, and initiation of dosing expected within 2026.

• Corporate Strategic Transformation

  • The company is transitioning from a R&D-focused bioventure model to a full pharmaceutical company model covering manufacturing, logistics, global expansion, pipeline R&D, and commercial sales, under the 2026 slogan "Next Door: Opening New Paths Forward".

• Financing and Capital Structure

  • A proposed articles of incorporation amendment will be submitted to the March 2026 shareholder meeting to increase authorized shares from 30 million to 100 million, to enable future stock splits for improved liquidity and TOPIX index inclusion, and increase flexibility for capital business alliances with other companies.
  • A 440 million yen unsecured, unguaranteed, covenant-free loan from Mizuho Bank is expected to close in February 2026, with repayment sourced from future Telomelysin revenue. There are no current plans for MS warrant financing in 2026, and the company is expanding financing options beyond equity warrant reliance.

Oncolys BioPharma is a clinical-stage biotech company focused on oncology gene therapy development, with no commercial product revenue recognized in fiscal 2025 outside of milestone and advance payments. Total fiscal 2025 revenue is 28 million yen, consisting of 110 million yen in advance payment received from FUJIFILM Toyama Chemical. Operating loss is 2.024 billion yen, net loss is 2.058 billion yen, and research and development expense increased by more than 380 million yen year-over-year due to active development of Telomelysin. As of end-December 2025, cash and deposits total 3.674 billion yen, an increase of 1.263 billion yen from end-December 2024 driven by oversubscribed 2025 financing; net assets increased 1.247 billion yen year-over-year, resulting in improved financial position. Operating cash flow is negative 1.94 billion yen, an improvement from fiscal 2024, while financing cash flow is positive 3.221 billion yen, leading to ending cash and cash equivalents of 3.429 billion yen.

• Full 2026 fiscal year earnings guidance is not disclosed due to high uncertainty around approval timing, pricing, and initial sales, though the company expects to recognize Telomelysin revenue and potential milestone revenue from Telomelysin and OBP-601 following approval.
  • Marketing approval for Telomelysin is expected in mid-2026, with price listing expected by early fall 2026, and commercial launch within 2026. The company is targeting full (non-conditional) approval from PMDA.
  • 2026 key priorities and milestones: (1) Secure marketing approval for Telomelysin; (2) Complete national health insurance price listing; (3) Achieve smooth commercial launch and accelerate facility expansion; (4) Clear 24-month stability testing (expected to pass); (5) Initiate indication expansion trials focusing on anal cancer, lower rectal cancer, recurrent esophageal cancer, expanded dosing and earlier-stage esophageal cancer; (6) Initiate Phase 3 trial for OBP-601 in PSP and receive associated milestone revenue; (7) Initiate Phase 2 trial for OBP-601 in Alzheimer's disease; (8) Initiate first-in-human trial for OBP-702 in pancreatic cancer at Okayama University within 2026; (9) Close at least one regional partnership agreement for Telomelysin overseas in 2026.
  • Research and development expenditure for 2026 is expected to be lower than 2025's level of ~1.47 billion yen, as manufacturing process development at Henogen has been completed.

• OBP-601 development is dependent on Transposon's successful financing, which has been delayed previously and remains dependent on external market conditions in the US.
  • Approval timing and final pricing for Telomelysin are uncertain; while the company targets full approval and maximum premium pricing, there is no guarantee these outcomes will be achieved.
  • Expansion of adoption to over 300 treatment centers depends on acceptance of the Cartagena Act compliance protocols by medical institutions, and the impact of recent regulatory changes to the Cartagena Act on adoption is still being evaluated.
  • Global expansion and partnership closing are subject to negotiation risk and regulatory uncertainty, particularly for pan-European approval.
  • While 18-month stability has been confirmed, 24-month and longer-term stability data is still pending, though the company expects successful results.

Q: Will Daiichi Sankyo's Deltiact be used as a reference for Telomelysin pricing, or will pricing be completely different given the different virus type and indication?

A: Deltiact is an oncolytic herpesvirus for brain cancer, approved via conditional approval with no novelty or utility pricing premiums applied, so it will not be used as a direct reference. We are working to maximize cost disclosure from our manufacturer Henogen (which has agreed to support full disclosure) to qualify for breakthrough, orphan drug, and utility premiums to achieve a cost-based price as high as possible.

Q: If Telomelysin receives full unconditional approval rather than conditional approval, how will the funds previously reserved for post-approval clinical trials be reallocated?

A: We previously reserved 400 million to 500 million yen for post-approval mandatory trials that would not be required under full approval. These funds will be reallocated to fund broader indication expansion for Telomelysin, and to support OBP-702 development: beyond the physician-sponsored pancreatic cancer trial at Okayama University, we plan to add company-sponsored trials for OBP-702 in additional indications.

Q: Will the December 2025 amendment to the Cartagena Act lead to higher-than-expected adoption of Telomelysin in outpatient settings?

A: This is still under investigation, so we cannot confirm adoption will increase sharply at this stage. However, the Cartagena handling protocol we have developed for Telomelysin is already designed for outpatient use and has been formally approved by regulators, with simplified handling requirements that are widely accessible. The protocol is already highly acceptable to institutions, so it creates a good foundation for future adoption growth.

Q: What is the activity status of the Esophageal Cancer Local Therapy Research Society, and what are the plans for expanding Telomelysin's esophageal cancer indication labeling?

A: The research society held its first meeting last fall and has broad clinician participation from centers that participated in Telomelysin's clinical trial. We will hold a lunch seminar at the June 2026 Esophageal Society meeting in Koriyama, Fukushima, and we plan to invite patient representatives to participate to gather input on unmet needs. We will hold at least one meeting annually to build clinical acceptance and establish Telomelysin as a standard of care for esophageal cancer.

Q: Is there a plan to develop Telomelysin as a first-line alternative to surgery for esophageal cancer, given patient issues with post-surgical scarring and swallowing problems?

A: We do aim to pursue first-line indication expansion eventually, but we need to first build clinician awareness of Telomelysin's efficacy and safety after launch. We will work with the Esophageal Cancer Local Therapy Research Society to collaborate with clinicians on trial design for a first-line indication trial after launch, so no immediate initiation is planned.

Q: What is the clinical trial timeline for lower rectal cancer indication expansion?

A: We are currently finalizing the trial protocol based on input from lead investigators, with a core goal of reducing the need for permanent colostomies. We plan to hold a research workshop in H1 2026, submit the clinical trial notification, and initiate the first patient dosing within 2026, with formal public disclosure to follow once finalized.

Q: What is the current status of Transposon's financing for OBP-601, and how do you monitor progress?

A: We understand Transposon's financing is now nearly finalized, and I am scheduled to meet with Transposon's management next month to get full details. It is possible that pharmaceutical companies are participating in the financing. The trial is fully prepared, with FDA consultations already completed, so it is ready to start immediately once financing closes.

Q: What is the development strategy for OBP-702: will Oncolys develop it all the way to approval, or out-license it earlier?

A: We are starting first-in-human testing in pancreatic cancer. If we see strong efficacy, we would consider out-licensing, but our corporate strategy is to build a fully integrated pharmaceutical company, so we plan to prioritize developing OBP-702 internally where possible, focusing on orphan indications where development costs are manageable, while keeping out-licensing as an option.

Q: Why is outpatient treatment allowed for Telomelysin under the Cartagena Act despite being a first-class genetically modified organism use? Is the reasoning based on the low virus dose and lack of environmental impact?

A: That understanding is broadly correct. We conducted detailed testing of virus distribution and shedding during clinical trials: virus is only shed for a very short period in saliva/sputum, so masking for a short period after administration is sufficient to control risk. Virus appears in blood for 24-48 hours, and simple disposal protocols for bandages (disinfection with chlorine bleach before disposal) are sufficient. The amount of virus that escapes into the environment is extremely low, and adenovirus is not highly pathogenic. Virus shed in feces is fully removed by modern sewage treatment, so there is no material environmental risk. We have documented all these control measures clearly, which allowed for approval of simplified outpatient handling.

Q: Will 2026 research and development expenditure increase, particularly in H2 due to indication expansion trials?

A: 2025 R&D expenditure was ~1.47 billion yen, with ~1 billion yen in H1 driven by Henogen manufacturing development. Since manufacturing development is now complete, we expect 2026 full-year R&D expenditure to be lower than 2025's level.

Q: Will you submit 18-month and 24-month stability data to regulators as an update to the approval application?

A: We just submitted 18-month stability data to PMDA, and we will submit 24-month data to PMDA and the Ministry of Health, Labour and Welfare once it is available, with ongoing reporting after that. Barring any unexpected issues, this will not impact commercial launch approval.

Q: What is the timeline for expanding to over 300 treatment facilities?

A: 300 facilities covers most major esophageal cancer treatment centers in Japan. We target expanding access to 300 facilities within 5 years of launch, prioritizing institutions where patients are already requesting to add Telomelysin to their radiotherapy treatment, and we aim to accelerate this timeline as much as possible.

Q: Are you planning to develop Telomelysin for non-muscle invasive bladder cancer, given that another company is already developing an oncolytic adenovirus for this indication?

A: Bladder cancer is a potential indication for our oncolytic adenovirus platform, but we intend to focus on indications where we have a competitive advantage, and we already obtained a key patent for endoscopic local injection of oncolytic adenovirus that blocks competitors from entering esophageal and gastric cancer (which require endoscopic administration). We expect some natural segmentation of the market, and we are not currently pursuing bladder cancer development.

Q: Is the goal to close one overseas partnership agreement for Telomelysin in 2026, and what is the current status of negotiations in Asia and Europe?

A: That understanding is correct. We cannot share detailed negotiation updates, but we expect that Japanese approval of Telomelysin (expected in mid-2026) will significantly increase partnership interest, and we are targeting closing one agreement in 2026.