4597.T

• Company Overview and Strategic Positioning

  • Solexia Pharma is a product-development focused biotech venture founded in 2006 as a joint venture between MPM Capital and Itochu, focused on oncology (direct anti-cancer drugs and supportive care) with geographic focus on Japan and China, operating with 23 employees across three locations.
  • The company follows a risk-focused business model: it concentrates resources on post-preclinical clinical-stage projects to reduce the impact of candidate failure, which is the core risk in biotech drug development.
  • Current revenue mix: mixed product sales and licensing revenue; the company allocates 50% of resources to growing existing product sales and 50% to building regional sales routes via licensing deals, with a long-term goal to make product sales the primary revenue source.

• Commercial Product Updates

  • Sancuso: Changed China distribution partner from Lee's to MAAB Pharma due to underperformance, started local production in China to maintain price competitiveness against generic competitors.
  • Dalvias: Currently pursuing label expansion to additional indications (focused on EBV-positive cancers) with ongoing animal testing; China licensing-out activities are ongoing, shifted strategy from pure PTCL indication out-licensing to PTCL plus additional potential indications to attract new partners, with ongoing non-clinical testing for new indications.
  • Episil: Out-licensed Brazil rights to Daiichi Sankyo Brasil in the prior year; currently in licensing negotiations for Oceania, US, and greater China rights.

• Pipeline Development Updates

  • SP-04 (PledOx): A candidate for prevention/treatment of chemotherapy-induced peripheral neuropathy (CIPN), a condition with no established standard treatment. Failed Phase III for oxaliplatin-induced CIPN in 2020, now repositioned for taxane-induced CIPN, with non-clinical development completed and clinical trial restart expected in 2026 or 2027.
  • SP-05 (arfolitixorin): A folic acid candidate to boost anti-tumor efficacy of 5-FU chemotherapy for colorectal cancer, aiming to replace current standard leucovorin. Failed Phase III in 2022; post-hoc reanalysis found non-Japanese trial data met regulatory requirements, and the prior Japanese failure was caused by widespread 5-FU dose reduction in Japanese clinical practice. Current Phase Ib trial in Germany is ongoing, has reached the 3rd cohort (300mg/m² dose) with no dose-limiting toxicity observed to date; all treated patients showed tumor shrinkage (up to 50% reduction), and ~50% of inoperable RAS-mutant patients converted to surgical eligibility. Phase II is scheduled to start in the second half of the current fiscal year.

• SP-05 commercial launch is expected around 2030 to 2031, and the company targets positive free cash flow by around 2030.
• Potential large milestone/upfront payments are expected from out-licensing of SP-05 Japanese rights and SP-04 Chinese rights, conditional on positive clinical trial results.
• The company's mandatory management target is to exceed the prior public offering price of 237 yen per share to restore shareholder value.
• Phase II trial for SP-05 is confirmed to start in the second half of the current fiscal year, with SP-04 clinical trial restart expected in 2026 or 2027.
• Until SP-05 launch, the company will prioritize growing revenue from existing commercial products (SP-01 to SP-03) via partner review and indication expansion.

Solexia Pharma has five active projects, split into two business segments: 1. Commercial Products Segment (SP-01, SP-02, SP-03): This segment is the sole current source of product sales revenue, contributing 100% of current operating revenue from product sales. The three commercial products are: - Sancuso (SP-01): A transdermal anti-emetic for chemotherapy-induced nausea and vomiting, currently the only transdermal anti-emetic on the market. - Dalvias (SP-02): An organic arsenic anti-cancer drug approved for relapsed/refractory peripheral T-cell lymphoma (PTCL), sold in Japan via partner Nippon Kayaku. - Episil Oral Solution (SP-03): A medical device for managing chemotherapy/radiation-induced severe stomatitis, currently the only Japan PMDA-approved product for this indication, sold via regional partners. 2. Pipeline Development Segment (SP-04, SP-05): This segment is in active clinical/non-clinical development, with no current revenue; the company targets future licensing revenue from these projects.

• Prior Phase III trial failures for both lead development candidates (SP-04 and SP-05) have contributed to significant share price decline, and successful redevelopment of these candidates is not guaranteed.
• Existing commercial products have underperformed sales expectations, which is the primary driver of the company's current low share price and weak financial performance.
• Dalvias China out-licensing has been significantly delayed due to market changes (multiple competitors gained PTCL indication approval) and past suboptimal partner selection, and there is no set timeline for completion.
• As a product development biotech, the company requires continued large upfront R&D investment, meaning it will run annual deficits until commercialization of late-stage pipeline products.
• Early-stage pipeline projects are dependent on partner progress and have not delivered visible near-term progress, with uncertain timelines for future development.

Q: How does the company balance product sales and licensing revenue currently and in the future, and will product sales become the core revenue source with SP-05? / A: Currently, the company allocates 50% of resources to growing existing product sales and 50% to pursuing licensing deals, as existing commercial products have underperformed sales expectations. The company targets product sales as the long-term primary revenue source, which is not expected to occur until SP-05 launches around 2030-2031; until then, it will focus on growing SP-01 to SP-03 sales via partner replacement and indication expansion.

Q: What is the current status of Dalvias China out-licensing, which has been delayed for years, and how long will the company continue searching for a partner? / A: Dalvias China out-licensing is still uncompleted after 3-4 years of work, as multiple competing PTCL drugs have been approved in China that changed the market environment. The company has shifted strategy to seek partners for combined PTCL plus new potential indications, with ongoing non-clinical testing for new indications that could also benefit Japanese labeling. The company remains committed to completing the out-licensing as it believes Dalvias can benefit patients, and will continue the effort indefinitely.

Q: What is the company's plan to resolve long-term share price stagnation and what is needed to boost corporate value? / A: Management acknowledges the current share price does not reflect the value of SP-04 and SP-05, with the decline driven by delayed revenue from successful approved products and the two prior Phase III failures. The company is addressing underperformance via partner changes for existing products, and is confident that successful redevelopment of SP-05 would deliver a substantial jump in corporate value by demonstrating a high development success rate for the company.

Q: When can the company reach profitable and avoid further dilution from new share offerings? / A: Management targets positive free cash flow by around 2030, conditional on SP-05 development success. Large upfront milestone payments are possible from out-licensing SP-05 Japanese rights and SP-04 Chinese rights if clinical results are positive, which would reduce the need for additional capital raising.