Chiome Bioscience Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥369M
• Operating Income: ¥-805M
• Net Income: ¥-800M
• EPS: ¥-11.79

Income Statement

Balance Sheet

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

Chiome Bioscience (4583) reported FY2025 Q3 standalone results under JGAAP with continued operating losses despite maintaining high gross margins. Revenue was 369 million yen, down 12.5% YoY, indicating softness in project-based or milestone revenue typical of early-stage biotech business models. Gross profit was disclosed at 219.7 million yen, implying a gross margin of 59.5%, which is strong and suggests favorable pricing or a high value-add service/research mix; however, there is an inconsistency with the reported cost of sales figure, which would normally imply a lower gross profit. Operating income was a loss of 805 million yen (flat YoY), highlighting substantial operating expense intensity, likely driven by R&D and SG&A to advance pipeline and platform capabilities. Ordinary loss was 807 million yen, and net loss was 800 million yen, producing an ROE of approximately -64% via the provided DuPont metrics. Asset turnover was low at 0.238x, consistent with an R&D-centric model with limited commercialized product revenue. Financial leverage was modest at 1.24x, implying a capital structure still anchored by equity. Liquidity metrics are robust (current ratio 474%, quick ratio 464%), supported by large working capital of 1.84 billion yen, though cash and cash flow statement items were not disclosed in the XBRL feed. Balance sheet data show inconsistencies: current assets exceed total assets and the provided equity figure does not reconcile cleanly with liabilities and assets; we therefore rely on the provided ratios for interpretation. Interest expense was minimal at 2.0 million yen and interest coverage appears highly negative due to the operating loss, but debt burden remains small relative to equity. There were no dividends (DPS 0), consistent with the company’s development stage and loss profile. Cash flow quality cannot be assessed given undisclosed OCF/FCF, and OCF/NI and FCF coverage ratios shown as zero reflect non-disclosure rather than actual zero cash flows. The negative ROE results mainly from very weak margins at the operating and net levels despite reasonable gross margin. The near-term outlook hinges on revenue visibility from collaborations, milestones, or services and the pace of operating spend. Overall, the company maintains ample short-term liquidity but faces sustainability questions if losses persist without clearer revenue traction or external funding events. Data limitations (notably cash flow items, cash balance, and share count) temper the precision of this analysis.

Profitability Analysis

ROE_decomposition: DuPont provided metrics indicate Net Profit Margin -216.8%, Asset Turnover 0.238x, and Financial Leverage 1.24x, yielding a calculated ROE of -64.0%. The ROE deterioration is driven predominantly by the deeply negative net margin rather than leverage or asset efficiency. margin_quality: Gross margin is high at 59.5%, signaling solid pricing/premium service mix or platform value; however, reported cost of sales (202.98 million yen) does not reconcile to the disclosed gross profit (219.65 million yen), suggesting a classification or data mapping issue. Operating margin is sharply negative given the -805 million yen operating loss on 369 million yen revenue, implying heavy R&D/SG&A spend typical for biotech. operating_leverage: With revenue down 12.5% YoY and operating loss flat YoY at -805 million yen, fixed cost absorption remains a challenge. The scale of operating expenses (implied roughly 1.03 billion yen = gross profit 219.7 million minus operating loss -805 million) indicates high operating leverage; incremental revenue would improve losses materially, but current scale is insufficient to cover fixed costs.

Growth Assessment

revenue_sustainability: Revenue of 369 million yen declined 12.5% YoY, pointing to weaker demand or timing effects for collaboration/service income. Given the early-stage biotech profile, revenue can be lumpy and dependent on milestones; sustained growth will require a broader or deeper pipeline of partnered programs or recurring service revenue. profit_quality: Profitability is constrained by substantial operating expenditures relative to scale. High gross margin supports the potential for better operating leverage if top line expands, but current loss magnitude suggests the company is far from breakeven. outlook: Near-term growth hinges on contract wins, milestone achievements, licensing income, or expansion of service offerings. Without visibility into backlog or pipeline stage gates, the trajectory remains uncertain. Any uptick in milestone/licensing events could disproportionately improve results due to high fixed costs.

Financial Health

liquidity: Current ratio 473.8% and quick ratio 464.4% indicate strong short-term liquidity. Working capital is 1,844 million yen, providing a buffer for ongoing R&D spend. Cash and cash equivalents were not disclosed in the XBRL feed. solvency: Debt-to-equity ratio is 0.44x and interest expense is modest (2.03 million yen), suggesting manageable financial obligations. Equity base is reported at 1,250 million yen, though reconciliation with assets/liabilities shows inconsistencies; nonetheless, provided leverage metrics imply solvency headroom. capital_structure: Financial leverage at 1.24x is low-moderate for the sector, with equity financing as the primary capital source. Continued losses will erode equity unless offset by capital raises or improved profitability.

Cash Flow Quality

earnings_quality: Net losses (-800 million yen) are driven by operating expenses rather than gross margin weakness, which can be consistent with an R&D-led model. However, the absence of cash flow data prevents cross-checking accrual quality. FCF_analysis: Operating, investing, and financing cash flows were not disclosed (shown as zero due to non-reporting). Consequently, free cash flow cannot be assessed; the reported FCF metric of 0 should be treated as data unavailability, not actual zero. working_capital: Working capital of 1.84 billion yen is sizable. Inventory is modest at 46.17 million yen, consistent with a service/platform-heavy biotech. Without OCF detail, we cannot determine whether working capital movements aided or hindered cash flow.

Dividend Sustainability

payout_ratio_assessment: DPS is 0 and payout ratio is 0%, appropriate given significant net losses and reinvestment needs. FCF_coverage: FCF coverage cannot be computed due to undisclosed cash flows; reported 0.00x reflects non-disclosure, not actual coverage. policy_outlook: Given negative earnings and the development-stage profile, dividend initiation appears unlikely until sustained profitability and positive FCF are achieved.

Risk Assessment

Business Risks:

• Revenue volatility from milestone-based or project-based income
• Execution risk in advancing R&D programs to value-inflecting stages
• Commercialization timing and partner dependence
• Competitive pressures in antibody discovery/platform services
• Regulatory and clinical development uncertainties

Financial Risks:

• Sustained operating losses (operating loss of 805 million yen) driving equity erosion
• Funding risk if external capital is needed before reaching breakeven
• Potential dilution from future equity raises
• Limited visibility on cash balance and burn due to undisclosed cash flow data

Key Concerns:

• Negative ROE of -64% driven by deeply negative net margin
• Revenue down 12.5% YoY amid high fixed cost base
• Data inconsistencies (e.g., current assets exceeding total assets; gross profit vs. cost of sales) complicate precise analysis

Investment Implications

Key Takeaways:

• High gross margin (59.5%) suggests strong unit economics at the gross level
• Scale remains insufficient: operating loss of 805 million yen on 369 million yen revenue
• Liquidity appears ample (current ratio ~474%) with 1.84 billion yen working capital
• Leverage is modest (D/E 0.44x), interest burden minimal
• ROE is sharply negative (-64%), reflecting margin pressure rather than leverage
• Revenue declined 12.5% YoY, exacerbating operating leverage challenges
• Cash flow and cash balance not disclosed, limiting visibility on runway

Metrics to Watch:

• Order backlog and timing of milestones/licensing revenue
• R&D and SG&A run-rate versus revenue growth (path to breakeven)
• Cash and equivalents; quarterly operating cash burn (once disclosed)
• Equity ratio and shareholders’ equity trajectory
• Gross margin stability and revenue mix (services vs. licensing)
• New partnerships or contracts that improve revenue visibility

Relative Positioning: Within Japan’s early-stage biotech cohort, Chiome exhibits typical characteristics: high gross margins, low asset turnover, modest leverage, and persistent operating losses; liquidity appears comparatively strong, but revenue scale and visibility trail what is needed for operating breakeven.

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