OncoTherapy Science,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥431M
• Operating Income: ¥-475M
• Net Income: ¥-546M
• EPS: ¥-1.89

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

OncoTherapy Science, Inc. (4564) reported FY2026 Q2 consolidated results under JGAAP showing strong top-line momentum with revenue of ¥431.0m, up 91.9% YoY, but continued losses and cash burn consistent with a development-stage biotech profile. Cost of sales was ¥289.5m, allowing us to derive a gross profit of approximately ¥141.5m and an inferred gross margin of about 32.8%, despite gross profit being unreported in the XBRL. Operating loss remained sizable at ¥475.0m (flat YoY), implying that higher revenue did not translate into operating profit improvement due to relatively stable or rising operating expenses. Ordinary loss was ¥493.0m and net loss was ¥555.0m (also flat YoY), with EPS at -¥1.89. The DuPont decomposition indicates a deeply negative net margin (-128.8%), modest asset turnover (0.223x), and low financial leverage (1.18x), culminating in an ROE of -33.7%. The balance sheet shows total assets of ¥1,935.0m and total equity of ¥1,646.0m, implying an equity ratio near 85% based on available balances (the reported equity ratio of 0.0% is an unreported metric rather than a true zero). Liquidity appears strong with current assets of ¥1,105.7m against current liabilities of ¥327.7m, yielding a current ratio of 337% and working capital of ¥778.0m. Operating cash outflow was ¥578.8m, broadly tracking the net loss (OCF/NI ≈ 1.04), suggesting losses are substantially cash-based; investing CF is unreported, and financing CF was a sizable inflow of ¥1,149.4m, likely equity financing to fund operations. Interest expense was minimal at ¥0.5m, and the interest coverage ratio is negative given the operating loss, but solvency risk is mitigated by a low debt load (D/E ~0.26x using total liabilities). No dividends were paid, which is consistent with the company’s stage and loss profile. Several headline ratios shown as 0.0% or zero (e.g., gross profit, EBITDA, equity ratio, cash and equivalents, FCF) reflect non-disclosure rather than actual zero values and should not be interpreted as data quality issues. Revenue growth appears to be driven by episodic or milestone-like proceeds typical for drug discovery/licensing businesses rather than recurring product sales, which heightens volatility. Overall, the company remains dependent on external funding while advancing its pipeline, and while balance sheet liquidity currently looks adequate, cash runway precision is limited given unreported cash balances and investing flows.

Profitability Analysis

ROE decomposition (DuPont): Reported ROE is -33.72%, driven by a net margin of -128.77%, asset turnover of 0.223x, and financial leverage of 1.18x. The dominant driver is the deeply negative net margin, reflecting high R&D and SG&A relative to scale. Gross profitability: Using disclosed revenue (¥431.0m) and cost of sales (¥289.5m), we derive gross profit of ~¥141.5m and an inferred gross margin of ~32.8%; the reported gross profit margin of 0.0% is a non-disclosure artifact. Operating margin remains negative (operating loss ¥475.0m), and operating income did not improve YoY despite strong revenue growth, indicating limited operating leverage at current scale. Ordinary and net margins remain similarly negative, with minor interest burden (interest expense ¥0.5m). The tax line (¥1.1m) despite losses suggests non-deductible items or minimum taxes. Overall, profitability is constrained by fixed R&D intensity and the episodic nature of revenues; sustainable margin expansion will likely require material, recurring licensing income or product revenue.

Growth Assessment

Revenue growth was strong at +91.9% YoY to ¥431.0m, likely reflecting milestone/licensing or collaboration revenue rather than steady product sales. Despite the revenue surge, operating loss was flat YoY at -¥475.0m, implying increased operating costs broadly offset incremental gross profit, or that revenue recognition was not sufficient to cover fixed costs. Given the biotech model, revenue visibility is low and contingent on pipeline progress and partner milestones; quarter-to-quarter (and half-year) volatility should be expected. Profit quality remains weak with negative operating and net income; however, OCF tracked NI (OCF/NI ≈ 1.04), indicating limited accrual distortion in the period. Near-term outlook hinges on additional milestones, grants, or out-licensing events; absent these, revenue growth may not be sustainable. Medium term, step-changes are possible with successful clinical or partnering catalysts, but timing is inherently uncertain.

Financial Health

Liquidity: Current assets of ¥1,105.7m versus current liabilities of ¥327.7m yield a current ratio of ~337% and working capital of ~¥778.0m, indicating ample near-term liquidity. Quick ratio equals current ratio given no reported inventories. Solvency: Total liabilities of ¥426.1m against equity of ¥1,646.0m imply low leverage (D/E ~0.26x using total liabilities/equity). Based on balances, the equity ratio is approximately 85% (¥1,646.0m/¥1,935.0m), despite a reported 0.0% (non-disclosure). Interest expense is minimal (¥0.5m), reducing financial risk from debt service. Capital structure: The large financing cash inflow (¥1,149.4m) suggests reliance on external equity funding to support operations. Overall solvency appears sound at present, but sustainability depends on continued access to capital markets until operations turn cash-neutral.

Cash Flow Quality

Earnings quality: OCF of -¥578.8m versus NI of -¥555.0m yields an OCF/NI ratio of ~1.04, indicating the loss largely reflects cash outflows rather than accruals; limited evidence of earnings management. Free cash flow: Investing CF is unreported (shown as 0 due to non-disclosure), so FCF cannot be reliably computed from the provided data; the displayed FCF of 0 should not be interpreted as true zero. Working capital: With current assets substantially above current liabilities, the company has liquidity headroom; however, the composition of current assets (cash vs. receivables/other) is undisclosed, and cash & equivalents are unreported, limiting runway analysis. Financing flows: Positive financing CF of ¥1,149.4m likely represents equity issuance or warrant exercises, bridging the OCF deficit and extending liquidity. Overall cash conversion mirrors the development-stage profile with persistent cash burn tied to R&D.

Dividend Sustainability

No dividend was paid (DPS ¥0.00), and payout ratio is shown as 0% due to net loss. Given negative earnings and operating cash outflows, dividends are not currently sustainable or strategically aligned with an R&D-centric model. FCF coverage cannot be assessed as FCF is not disclosed; however, based on negative OCF, coverage would be inadequate even if capex were minimal. Policy outlook: The company is likely to prioritize R&D investment and liquidity preservation over shareholder distributions until achieving recurring, profitable revenue streams.

Risk Assessment

Business Risks:

• Clinical and regulatory risk inherent in drug discovery and development timelines.
• Revenue concentration and volatility from milestone/licensing deals and collaborations.
• Execution risk in advancing pipeline to value-inflecting milestones.
• Partner dependency risk for development, commercialization, and payments.
• Competitive pressures from other biotechs and pharma in targeted indications.

Financial Risks:

• Ongoing negative operating cash flow (-¥578.8m in H1) necessitating continued external financing.
• Equity dilution risk associated with recurrent capital raises (financing CF +¥1,149.4m).
• Limited visibility on cash & equivalents and investing cash flows due to non-disclosure.
• Potential mismatch between revenue timing and fixed R&D cost base, sustaining losses.
• Currency and funding market conditions impacting capital access and terms.

Key Concerns:

• Sustained operating losses (-¥475.0m) despite strong revenue growth, implying limited operating leverage.
• Dependence on milestone-like revenues with inherently low predictability.
• Unreported cash and investing flows constrain precise liquidity runway assessment.

Investment Implications

Key Takeaways:

• Top-line up 91.9% YoY to ¥431.0m, but operating loss unchanged at -¥475.0m, indicating insufficient scale to absorb fixed costs.
• Balance sheet is equity-heavy (equity ~85% of assets) with strong current ratio (~337%), mitigating near-term solvency concerns.
• Cash burn remains material (OCF -¥578.8m), funded by sizeable financing inflows (+¥1,149.4m), implying continued reliance on capital markets.
• Gross margin inferred around 32.8% from disclosed revenue and COGS, though margin durability is uncertain given revenue mix.
• ROE is deeply negative (-33.7%), driven by negative net margin; asset turnover and leverage have limited impact.

Metrics to Watch:

• Cash and equivalents balance and monthly cash burn (not disclosed in the provided data).
• New/expanded licensing agreements and milestone receipts to support revenue visibility.
• R&D expense trajectory and operating expense discipline to improve operating leverage.
• Pipeline clinical progress and regulatory milestones that can unlock value and partnerships.
• Share issuance/dilution and financing terms affecting per-share value.

Relative Positioning: Within Japan’s small/mid-cap biotech cohort, the company exhibits a typical profile of strong dependence on external financing, volatile revenue tied to milestones, and negative ROE. Its liquidity position appears better than peers with tighter balance sheets, but profitability and cash burn remain in line with development-stage norms. Competitive standing will hinge on pipeline quality and partnering.

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