PRISM BioLab Co.,LTD FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥677M
• Operating Income: ¥-774M
• Net Income: ¥-833M
• EPS: ¥-22.82

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: Strong top-line growth but continued heavy losses and cash burn; liquidity is ample near term, yet the path to profitability remains unclear. Revenue rose 121.6% YoY to 6.77, driven by step-ups likely tied to milestone/license or collaboration activity, but absolute scale remains small. Gross profit of 1.61 implies a 23.7% gross margin, while operating loss widened to -7.74 as SG&A of 9.43 far exceeded gross profit. Net loss was -8.33 (EPS -22.82 JPY), translating to a -123.0% net margin. On a DuPont basis, ROE printed at -30.8%, with negative net margin as the dominant drag, modest asset turnover (0.219), and low financial leverage (1.14x). Operating margin compressed deeply to roughly -114% (our calculation), highlighting insufficient operating leverage despite revenue growth; note the reported operating margin (-1.1%) appears inconsistent with the presented income statement. Cash flow from operations was -14.68 (worse than net income in absolute terms), and free cash flow was -15.37, underscoring continued burn. Liquidity is strong with cash and deposits of 43.92 against current liabilities of 10.20, yielding a current ratio of 439.6% and D/E of 0.38x. Working capital is ample (34.63), limiting short-term refinancing risk. However, revenue concentration and milestone lumpiness likely remain high, making quarterly volatility a structural feature. Multiple XBRL inconsistencies are evident (e.g., cost of sales vs gross profit, current assets and cash exceeding total assets), so some line items may be misclassified; we rely on internally consistent metrics (revenue, gross profit margin, operating income, net income, cash, liabilities) for analysis. Earnings quality is mixed: OCF/NI is 1.76x (formally good) but both are negative, and burn is significant. With cash of 43.92 and FCF of -15.37, the base-case cash runway looks roughly 2.5–3.0 years absent step-ups in revenue or financing. Forward-looking, sustaining the heightened revenue level and improving gross margin while controlling SG&A are key to narrowing losses. Until recurring revenue/cash inflows (e.g., milestone cadence or royalties) improve visibility, guidance credibility hinges on partner pipeline execution and cost discipline.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (-123.0%) × 0.219 × 1.14 ≈ -30.8%. The component that changed the most (implied vs a steady-state) is the net profit margin, driven by large operating losses from SG&A outpacing gross profit. Business drivers: revenue growth was strong, but gross margin (23.7%) and absolute gross profit (1.61) were insufficient to cover SG&A (9.43), leading to operating loss of -7.74 and ordinary loss of -7.48; non-operating items were minor and did not offset the deficit. Asset turnover at 0.219 is typical for a cash-rich, early-stage R&D platform with limited tangible assets in use; financial leverage is low at 1.14x, so leverage does not amplify returns. Sustainability: the negative margin is likely to persist near term unless (1) higher-margin royalty or milestone income scales, (2) recurring service/license revenue grows, and/or (3) SG&A growth is curtailed. Concerning trend: SG&A (9.43) vastly exceeded gross profit (1.61), signalling weak operating leverage; without a clear revenue mix shift or cost controls, losses will remain sizable.

Growth Assessment

Revenue grew 121.6% YoY to 6.77, indicating successful deal execution or milestone recognition; however, scale remains small and likely lumpy. Gross margin at 23.7% suggests limited pricing power or a cost-heavy revenue mix, constraining operating leverage. Operating income of -7.74 underscores that growth did not translate into profitability. Ordinary income (-7.48) and net income (-8.33) show limited contribution from non-operating items. Given the business model (biotech/platform), quarter-to-quarter volatility is expected; sustainability hinges on pipeline progress, new/expanded collaborations, and potential royalty streams. Near-term outlook: focus on converting partnerships into higher-margin downstream economics and tempering SG&A growth. Without a step change in recurring revenue or material milestone inflows, FY26 profitability is unlikely.

Financial Health

Liquidity is strong: current ratio 439.6% and quick ratio 439.6% both well above benchmarks, supported by cash/deposits of 43.92 vs current liabilities of 10.20. Solvency is conservative with D/E of 0.38x and total liabilities of 10.26 vs equity of 27.08. No warning triggers: Current Ratio >> 1.0; D/E well below 2.0. Maturity mismatch risk appears low given high cash relative to short-term liabilities. Interest-bearing debt is unreported; interest coverage is not calculable. Note data inconsistencies (current assets and cash exceeding total assets) likely due to XBRL misclassification; we anchor on cash and liability figures for liquidity assessment. No off-balance sheet obligations were disclosed in the data provided.

Cash Flow Quality

OCF/Net Income is 1.76x, which would nominally indicate acceptable earnings-to-cash conversion, but both OCF (-14.68) and NI (-8.33) are negative; the company is in burn mode. Free cash flow of -15.37 indicates cash outflows beyond operations (including capex of -2.06); with cash of 43.92, the runway is roughly 2.5–3.0 years at the current burn rate, absent new funding or material inflows. There is no clear evidence of working capital manipulation in the disclosed figures; however, limited line-item detail restricts assessment. Dividend and buyback outflows are unreported, suggesting no distributions. Sustainability: current FCF does not cover ongoing operations and capex; external financing or improved milestone/royalty receipts will be required over time.

Dividend Sustainability

No dividends are reported and would be imprudent given negative net income and FCF. Payout ratio is not calculable but effectively not applicable. With FCF at -15.37 and ongoing cash burn, distributions are unlikely until the company achieves sustained positive OCF or recurring high-margin inflows.

Risk Assessment

Business Risks:

• Revenue concentration and lumpiness tied to milestones/licensing typical of biotech/platform models
• Execution risk on partnerships and pipeline progression to unlock downstream royalties
• Gross margin pressure at 23.7% limiting operating leverage
• Talent retention and SG&A discipline given losses

Financial Risks:

• Sustained cash burn (OCF -14.68; FCF -15.37) leading to eventual funding needs
• Potential equity dilution if capital markets financing is required
• Reported data inconsistencies may mask underlying balance sheet dynamics

Key Concerns:

• Operating loss (-7.74) and net margin (-123.0%) indicate no near-term path to profitability without revenue mix shift or cost cuts
• High SG&A (9.43) versus gross profit (1.61) suggests weak operating leverage
• Dependence on partner performance and external events for milestone recognition

Investment Implications

Key Takeaways:

• Top-line grew 121.6% YoY to 6.77 but scale remains modest
• Gross margin 23.7% and high SG&A drove an operating loss of -7.74
• Net margin -123.0% and ROE -30.8% highlight profitability challenges
• Liquidity is strong (cash 43.92; current ratio 439.6%) with D/E 0.38x
• FCF -15.37 implies a 2.5–3.0 year cash runway at current burn
• Reported line-item inconsistencies suggest caution when interpreting certain sub-totals

Metrics to Watch:

• Quarterly revenue mix (upfront/milestone vs recurring/royalty)
• Gross margin trajectory
• SG&A growth versus revenue growth
• OCF and FCF burn rate; cash runway
• New collaboration signings and milestone cadence

Relative Positioning: Compared with early-stage platform biotechs on the TSE, the company exhibits stronger liquidity and low leverage, but profitability is weaker than peers with established royalty streams; visibility on sustainable revenue remains limited.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis