SanBio Company Limited FY2026 Q3 Earnings Report

Financial Highlights

• Operating Income: ¥-2.67B
• Net Income: ¥-2.15B
• EPS: ¥-37.75

Income Statement

Balance Sheet

Profitability Ratios

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: Weak quarter with substantial operating losses, partially cushioned by non-operating gains, while liquidity remains ample but leverage elevated. Operating income was a loss of -26.73 (hundred million JPY), highlighting continued negative core profitability. Ordinary income came in at -31.59, and profit before tax improved to -19.97, implying material extraordinary or below-the-line gains not detailed in the disclosure. Net income was -27.13, translating to basic EPS of -37.75 JPY on 71.9 million average shares. Non-operating income totaled 5.04 with interest income of 0.02 and non-operating expenses of 0.21; interest expense was modest at 0.06. The effective tax rate is -7.8% (tax expense 1.55 against negative PBT), consistent with valuation allowance dynamics or non-deductible items in loss-making periods. Liquidity is strong: current assets of 33.36 versus current liabilities of 7.32 yields a current ratio of 455.6% and quick ratio of 455.6%. Cash and deposits of 29.21 exceed total current liabilities by ~21.9, providing a cushion against near-term burn. Leverage is high with a D/E ratio of 3.42x and financial leverage of 4.89x, and interest coverage is deeply negative at -418.7x, flagging dependence on equity or partnership funding rather than debt. Book value per share is low at 6.83 JPY, reflecting accumulated losses (retained earnings -6.99). Several core P&L items (revenue, gross profit, SG&A, R&D) were not reported, preventing margin trend analysis; thus, operating margin expansion/compression in basis points is not measurable this quarter. Earnings quality cannot be validated due to unreported operating cash flow; the OCF/NI ratio is not calculable. Balance sheet figures show anomalies (e.g., current assets and cash exceeding reported total assets), indicating possible classification or period aggregation differences; conclusions should be treated cautiously. Forward-looking, the company’s cash position likely funds operations in the near term, but sustained losses necessitate clear catalysts (licensing revenue, milestone income, or equity issuance). Overall, near-term execution hinges on funding runway, R&D progress, and partnership monetization to offset ongoing operating losses.

Profitability Analysis

ROE decomposition under DuPont: ROE = Net Profit Margin × Asset Turnover × Financial Leverage. Net Profit Margin is not calculable (revenue unreported, net loss). Asset Turnover is not calculable (revenue unreported). Financial Leverage is 4.89x, indicating high balance sheet gearing amplifying any profit or loss. The most notable change driver this quarter is negative core operating profitability (operating loss -26.73), while non-operating income of 5.04 partially mitigated losses; without revenue data, we cannot attribute mix or pricing effects. Business reason: as a biotech with limited commercialized products, expenses (notably R&D and SG&A, unreported) likely outpace any collaboration or licensing income, resulting in losses; improving PBT vs ordinary income suggests one-off or extraordinary gains. Sustainability: reliance on non-operating or extraordinary items is not a durable profit driver; absent recurring revenue, the operating loss pattern is likely to persist near term. Concerning trend flags: interest coverage is deeply negative, and although SG&A growth cannot be benchmarked versus revenue (both unreported), the magnitude of operating losses indicates operating deleverage.

Growth Assessment

With revenue and gross profit unreported, top-line growth cannot be assessed. Profit trajectory remains negative: operating income -26.73, ordinary income -31.59, net income -27.13. The gap between ordinary income and PBT (-31.59 to -19.97) implies ~11.62 of extraordinary gains, which are not detailed; such gains are non-recurring by nature and do not signal sustainable growth. Non-operating income of 5.04 provides temporary support, likely from financial income or partnership-related items, but interest income is only 0.02, so the bulk is from other unspecified sources. Without R&D and SG&A disclosure, we cannot evaluate operating efficiency improvements. Outlook hinges on clinical and regulatory milestones, potential licensing or milestone payments, and disciplined cash management. In the absence of disclosed revenue progression, we consider near-term growth visibility low and dependent on event-driven catalysts rather than steady commercial expansion.

Financial Health

Liquidity is strong: current ratio 455.6% and quick ratio 455.6% (current assets 33.36 vs current liabilities 7.32), and cash and deposits of 29.21 comfortably exceed short-term obligations. Solvency is more stretched: D/E ratio is 3.42x (warning threshold >2.0), and financial leverage is 4.89x, while total equity is low at 4.92 due to accumulated losses. Long-term loans are modest at 1.29, so leverage likely reflects other liabilities (e.g., leases, payables, deferred items). Maturity mismatch risk appears limited in the near term as cash substantially covers current liabilities. However, persistent losses will erode equity further, raising the risk of future dilutive financing. Balance sheet data show anomalies (e.g., total assets 24.06 vs current assets 33.36 and cash 29.21), so absolute ratios should be interpreted cautiously. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

Operating cash flow was not reported; OCF/Net Income cannot be calculated, preventing a direct assessment of earnings quality. Free cash flow is unreported, so coverage of capex and potential dividends cannot be measured. Given the operating loss (-26.73), underlying OCF is likely negative absent large non-cash charges. Working capital movements cannot be assessed (AR, inventory, AP unreported), so we cannot identify timing effects or potential manipulation. Liquidity buffer: cash of 29.21 exceeds current liabilities by ~21.9, offering near-term runway, but sustainability depends on external funding or milestone receipts. With interest expense minimal (0.06), debt service burden is light, but negative operating leverage remains the key cash drain.

Dividend Sustainability

Dividend data are unreported; given the net loss (-27.13) and low equity base, distributions are unlikely. Payout ratios and FCF coverage are not calculable. With probable negative FCF and a need to prioritize R&D funding and runway preservation, dividend capacity is effectively constrained. Policy outlook: expect a focus on reinvestment and financing flexibility rather than shareholder returns until profitability or steady milestone revenue is established.

Risk Assessment

Business Risks:

• Clinical and regulatory risk typical of biotech development pipelines (trial outcomes, approval timing).
• Commercialization risk due to limited disclosed revenue base.
• Dependence on non-operating and extraordinary items to narrow losses, which are non-recurring.
• Partner concentration risk if milestone/licensing income is from few counterparties (not disclosed).

Financial Risks:

• High leverage: D/E 3.42x with low absolute equity (4.92).
• Negative interest coverage (-418.7x) reflecting operating losses.
• Potential equity dilution to fund ongoing losses and R&D.
• Balance sheet data anomalies may mask true leverage/liquidity levels.

Key Concerns:

• Sustained operating losses (-26.73) with unreported revenue and cost structure.
• Limited visibility into OCF and FCF; cash burn likely ongoing.
• Data gaps in SG&A, R&D, and revenue prevent margin and efficiency analysis.
• Reliance on event-driven income to support PBT (implied extraordinary gains ~11.62).

Investment Implications

Key Takeaways:

• Core operations remain loss-making with operating income -26.73 and net income -27.13.
• Non-operating income of 5.04 and implied extraordinary gains narrowed PBT to -19.97, not a sustainable driver.
• Liquidity is ample (current ratio 455.6%, cash 29.21) but leverage is high (D/E 3.42x) on a thin equity base.
• Interest burden is low (interest expense 0.06), but operating deleverage dominates.
• Significant disclosure gaps and balance sheet inconsistencies limit precision of analysis.

Metrics to Watch:

• Operating cash flow and quarterly cash burn rate.
• Disclosure of revenue, SG&A, and R&D to gauge operating leverage.
• Milestone/licensing income timing and magnitude.
• Equity financing events and dilution, cash balance trajectory.
• Regulatory/clinical milestones that could unlock partnering revenue.

Relative Positioning: Relative to Japanese biotech peers, the company appears typical of pre-revenue or early-commercial stage profiles: high operating losses, reliance on external funding, and event-driven income potential, but with a comparatively strong near-term liquidity position and elevated leverage on a small equity base.

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