Oncolys BioPharma : Non-consolidated Financial Results for the Six Months Ended June 30, 2024

Published August 9, 2024 at 6:06 a.m. UTC

Source: MarketScreener

NB: this is a summary translation of the press release original drafted in Japanese for the disclosure required in compliance with the TSE regulations.

Non-consolidated Financial Results for the Six Months Ended June 30, 2024

[Japanese GAAP]

August 9, 2024

Company name: Oncolys BioPharma Inc.

Stock exchange listing: Tokyo Stock Exchange

Code number: 4588

URL: https://www.oncolys.com

Representative: Yasuo Urata, President & CEO

Contact: Kohei Hata, Executive Officer

Email: [email protected]

Scheduled date of filing semi-annual securities report: August 9, 2024

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing material on financial results: No

Schedule of financial results briefing session: Scheduled (for analysts)

(Amounts of less than one million yen are rounded down.)

1. Financial Results for the Six Months Ended June 30, 2024 (January 1, 2024 to June 30, 2024)

	(1) Operating Results			(% indicates changes from the previous corresponding period.)
		Net sales		Operating profit		Ordinary profit	Profit

	Six months ended	Million yen	%		Million yen	%			Million yen	%	Million yen	%
	June 30, 2024	31	(50.2)		(793)	-		(752)	-	(754)	-
	June 30, 2023	63	(85.2)		(900)	-		(867)	-	(868)	-

		Basic earnings		Diluted earnings
		per share		per share
	Six months ended		Yen			Yen
	June 30, 2024		(36.96)			-
	June 30, 2023		(50.16)			-
(2) Financial Position
		Total assets	Net assets	Equity ratio

			Million yen		Million yen		%
	As of June 30, 2024	1,885		1,417			74.7
	As of December 31, 2023	2,040		1,474			71.5

(Reference) Equity: As of June 30, 2024: ¥1,409 million

As of December 31, 2023: ¥1,459 million

2. Dividends

			Annual dividends
	1st quarter-end	2nd quarter-end	3rd quarter-end	Year-end	Total

Fiscal year ended	Yen	Yen	Yen	Yen	Yen
-	0.00	-	0.00	0.00
December 31, 2023

Fiscal year ending	-	0.00

December 31, 2024

Fiscal year ending
December 31, 2024			-	0.00	0.00
(Forecast)

(Note) Revision to the forecast for dividends announced most recently: No

3. Financial Results Forecast for the Fiscal Year Ending December 31, 2024 (January 1, 2024 to December 31, 2024) Financial results forecast is not disclosed due to the difficulty of making reasonable estimates. For details, please see "1. Qualitative Information on Quarterly Financial Results for the Period under Review (3) Explanation of Financial Results Forecast and Other Forward-lookingInformation" on page 2 of the supplementary material.

* Notes:

Accounting policies adopted specially for the preparation of semi-annual financial statements: No
Changes in accounting policies, changes in accounting estimates and retrospective restatement
1. Changes in accounting policies due to the revision of accounting standards: No
2. Changes in accounting policies other than 1) above: No
3. Changes in accounting estimates: No
4. Retrospective restatement: No
Total number of issued shares (common shares)
1. Total number of issued shares at the end of the period (including treasury shares):

June 30, 2024: 20,961,600 shares

December 31, 2023: 17,405,200 shares

Total number of treasury shares at the end of the period: June 30, 2024: 92,738 shares
December 31, 2023: 82,238 shares
Average number of shares during the period:

Six months ended June 30, 2024: 20,421,423 shares

Six months ended June 30, 2023: 17,318,729 shares

These semi-annual financial results are outside the scope of review by certified public accountants or an audit corporation.
Explanation of the proper use of financial results forecast and other notes

(Note regarding forward-looking statements, etc.)

The earnings forecasts and other forward-looking statements herein are based on information available to the Company at the time of the release of these materials and certain assumptions deemed reasonable, and do not represent a commitment from the Company that they will be achieved. In addition, actual financial results, etc. may differ significantly due to a wide range of factors. For the assumptions used in forecasting financial results and notes regarding the use of financial forecasts, etc., please see "1. Qualitative Information on Quarterly Financial Results for the Period under Review (3) Explanation of Financial Results Forecast and Other Forward- looking Information" on page 2 of the supplementary material.

Table of Contents
1. Qualitative Information on Quarterly Financial Results for the Period under Review	2
(1)	Explanation of Business Results	2
(2)	Explanation of Financial Position	2
(3)	Explanation of Financial Results Forecast and Other Forward-looking Information	2
2. Semi-annual Financial Statements and Primary Notes	3
(1)	Semi-annual Balance Sheets	3
(2)	Semi-annual Statements of Income	5
(3)	Semi-annual Statements of Cash Flows	6
(4)	Notes to Semi-annual Financial Statements	7
	(Notes on going concern assumption)	7
	(Notes in the case of significant changes in shareholders' equity)	7
	(Segment information, etc.)	7
	(Revenue recognition)	7
	(Significant subsequent events)	7
3. Supplemental Information	10
(1)	Research and development activities	10

1. Qualitative Information on Quarterly Financial Results for the Period under Review

Explanation of Business Results

During the six months ended June 30, 2024, the Japanese economy showed signs of improvement, with a positive outlook in the Bank of Japan's Tankan survey for June 2024 on the backdrop of the progress of passing costs on prices mainly at major companies and a recovery in production of semiconductors. Meanwhile, as the yen's depreciation continues, increased raw material costs and a higher-than-expected price hike have posed the risk of undermining the effects of economic improvement through the historic wage increases in the spring of 2024. Furthermore, risk factors in the global economy have prolonged, such as Russia's invasion of Ukraine and the conflict in Israel, in addition to the political factors, such as trends in the U.S. presidential election and a breakthrough of right-wing groups in Europe. The volatile situation of the overseas economy seems likely to continue, as manifested by less consumption due to high interest rates to curb inflation and other factors.

Under these circumstances, the Company has been pursuing a vision of "Providing new options to future cancer treatments, and leaving our footprint in the history of cancer treatment through those achievements." In particular, the Company is promoting research, development, and business activities with a focus on Telomelysin (OBP-301), a virotherapy for cancer. In addition, concerning LINE-1 inhibitor OBP-601 (censavudine), Transposon Therapeutics, Inc. (hereinafter "Transposon") is conducting clinical trials at its own expense based on a license agreement and proceeding with business activities.

For details of the Company's activities, please refer to "3. Supplemental Information (1) Research and development activities."

For the six months ended June 30, 2024, the Company recorded net sales of ¥31,384 thousand (net sales of ¥63,038 thousand in the same period of the previous fiscal year), and operating loss was ¥793,371 thousand (operating loss of ¥900,989 thousand in the same period of the previous fiscal year). In addition, the Company recorded interest income of ¥1,047 thousand and foreign exchange gains of ¥48,518 thousand as non-operating income, and interest expenses of ¥2,185 thousand, amortization of restricted stock remuneration of ¥2,183 thousand, share acquisition rights issuance costs of ¥2,310 thousand, and share issuance costs of ¥2,466 thousand as non-operating expenses, resulting in ordinary loss of ¥752,997 thousand (ordinary loss of ¥867,441 thousand in the same period of the previous fiscal year). As a result, loss was ¥754,868 thousand (net loss of ¥868,762 thousand in the same period of the previous fiscal year).

(2) Explanation of Financial Position

Assets at the end of the semi-annual period of the fiscal year under review were ¥1,885,725 thousand (7.6% decrease compared with the end of the previous fiscal year), owing partly to a decrease in cash and deposits. Liabilities were ¥468,723 thousand (17.3% decrease compared with the end of the previous fiscal year), owing partly to a decrease in accounts payable ˗ other. Net assets were ¥1,417,002 thousand (3.9% decrease compared with the end of the previous fiscal year), owing partly to net loss.

(3) Explanation of Financial Results Forecast and Other Forward-looking Information

The Company still has a small stable revenue base, and our financial results fluctuate greatly depending on the presence or absence of milestone revenue payments generated from our domestic distribution partnership agreement for Telomelysin, achieving the development event of LINE-1 inhibitor OBP-601, for which we have a license agreement with Transposon, and that company's IPO, or M&A and other corporate action that generates milestone revenue payments.

For these reasons, we believe that it is difficult to calculate an appropriate and reasonable figure for the earnings forecast at this time due to the many undetermined factors that will affect our business performance, and therefore, we refrain from disclosing the forecast.

2. Semi-annual Financial Statements and Primary Notes

(1) Semi-annual Balance Sheets

		(Thousand yen)
	As of December 31, 2023	As of June 30, 2024

Assets
Current assets
Cash and deposits	1,532,844	1,117,538
Accounts receivable - trade	-	32,206
Supplies	5,342	4,278
Advance payments - other	282,602	389,727
Prepaid expenses	33,338	68,396
Accounts receivable - other	51,781	135,950
Consumption taxes receivable	49,964	21,983
Other	9	-

Total current assets	1,955,883	1,770,082
Non-current assets
Property, plant and equipment
Buildings	3,128	3,128
Accumulated depreciation	(3,128)	(3,128)
Buildings, net	-	-
Machinery and equipment	924	924
Accumulated depreciation	(924)	(924)

Machinery and equipment, net	-	-
Tools, furniture and fixtures	66,967	66,967
Accumulated depreciation	(66,967)	(66,967)
Tools, furniture and fixtures, net	-	-

Total property, plant and equipment	-	-
Investments and other assets

Shares of subsidiaries and associates	20,936	20,936
Investments in capital	100	100
Long-term loans receivable from subsidiaries	42,549	48,309
and associates
Lease and guarantee deposits	20,990	22,174

Long-term prepaid expenses	135	24,119
Other	4	4
Total investments and other assets	84,714	115,643
Total non-current assets	84,714	115,643
Total assets	2,040,598	1,885,725

			(Thousand yen)

		As of December 31, 2023	As of June 30, 2024

Liabilities
Current liabilities

Short-term loans payable	127,776	150,000
Lease obligations	7,565	5,909
Accounts payable - other	193,354	48,528
Accrued expenses	19,119	21,076
Income taxes payable	18,844	16,326
Deposits received	11,870	9,959

Total current liabilities	378,531	251,799
Non-current liabilities

Long-term loans payable	161,100	194,436
Lease obligations	18,729	15,456

Provision for retirement benefits	8,140	7,030
Total non-current liabilities	187,969	216,923
Total liabilities	566,500	468,723
Net assets
Shareholders' equity
Capital stock	3,623,165	3,975,601
Capital surplus
Legal capital surplus	1,209,590	1,561,930

Total capital surpluses	1,209,590	1,561,930
Retained earnings
Other retained earnings
Retained earnings brought forward	(3,373,199)	(4,128,068)
Total retained earnings	(3,373,199)	(4,128,068)
Treasury shares	(142)	(142)

Total shareholders' equity	1,459,413	1,409,322
Share acquisition rights	14,683	7,680

Total net assets	1,474,097	1,417,002
Total liabilities and net assets		2,040,598	1,885,725

(2) Semi-annual Statements of Income

			(Thousand yen)
		For the six months ended	For the six months ended
		June 30, 2023	June 30, 2024

Net sales	63,038	31,384
Cost of sales	32,433	-

Gross profit	30,604	31,384
Selling, general and administrative expenses	* 931,594	* 824,755
Operating loss	(900,989)	(793,371)
Non-operating income
Interest income	533	1,047
Dividend income	3	5
Foreign exchange gains	35,051	48,518
Other	177	22
Total non-operating income	35,765	49,593
Non-operating expenses

Interest expenses	1,781	2,185
Amortization of restricted stock remuneration	435	2,183

Share acquisition rights issuance costs	-	2,310
Share issuance costs	-	2,466

Other	-	73
Total non-operating expenses	2,217	9,219
Ordinary loss	(867,441)	(752,997)
Extraordinary income
Gain on sale of non-current assets	136	-
Total extraordinary income	136	-
Loss before income taxes	(867,305)	(752,997)
Income taxes - current	1,457	1,871
Total income taxes	1,457	1,871
Loss		(868,762)	(754,868)

(3) Semi-annual Statements of Cash Flows

	(Thousand yen)
For the six months ended	For the six months ended
June 30, 2023	June 30, 2024

Cash flows from operating activities

Loss before income taxes

Depreciation

Amortization of restricted stock remuneration

Share-based remuneration expenses

Increase (decrease) in provision for retirement benefits Interest and dividend income

Interest expenses

Share acquisition rights issuance costs

Share issuance costs

Foreign exchange losses (gains)

Decrease (increase) in notes and accounts receivable - trade Decrease (increase) in inventories

Decrease (increase) in prepaid expenses

Decrease (increase) in accounts receivable - other Decrease (increase) in consumption taxes refund receivable Decrease (increase) in advance payments - other Increase (decrease) in accounts payable - other

Other, net

Subtotal

Interest and dividend income received

Interest expenses paid

Income taxes paid

Net cash provided by (used in) operating activities

Cash flows from investing activities

Purchase of property, plant and equipment

Proceeds from sale of property, plant and equipment Payments of leasehold and guarantee deposits Proceeds from refund of lease and guarantee deposits Net cash provided by (used in) investing activities

Cash flows from financing activities

Proceeds from long-term loans payable

Repayments of long-term loans payable

Repayments of lease obligations

Proceeds from issuance of common shares

Payments for issuance of shares

Net cash provided by (used in) financing activities

(867,305)	(752,997)
141	-
435	2,183
5,488	6,862
(153)	(1,109)
(536)	(1,052)
1,781	2,185
-	2,310
-	2,466
(34,696)	(29,522)
-	(32,206)
15,297	1,064
(1,083)	(8,607)
149,396	(82,953)
54,519	27,981
192,523	(107,125)
31,576	(147,462)
5,761	(1,406)
(446,855)	(1,119,389)

243	25
(2,017)	(1,862)
(2,923)	(2,927)
(451,552)	(1,124,153)


(951)	-
136	-
-	(1,424)
66	240
(748)	(1,184)


100,000	100,000
(52,774)	(44,440)
(1,780)	(4,929)
-	638,294
-	(2,466)
45,445	686,458

Effect of exchange rate change on cash and cash equivalents	30,994	23,573
Net increase (decrease) in cash and cash equivalents	(375,860)	(415,305)
Cash and cash equivalents at beginning of period	1,466,201	1,287,763
Cash and cash equivalents at end of period	* 1,090,340	* 872,457

Notes to Semi-annualFinancial Statements (Notes on going concern assumption)
There is no relevant information.

(Notes in the case of significant changes in shareholders' equity)

The Company received payments for the exercise of share acquisition rights during the semi-annual period of the fiscal year under review. Furthermore, the Company issued new shares as restricted stock remuneration on April 2, 2024, based on the resolution by the Board of Directors at its meeting held on March 15, 2024. As a result, capital stock increased by ¥352,436 thousand and legal capital surplus increased by ¥352,340 thousand during the six months ended June 30, 2024. At the end of the period, capital stock was ¥3,975,601 thousand and legal capital surplus was ¥1,561,930 thousand.

(Segment information, etc.)

[Segment information]

For the six months ended June 30, 2023
The information is omitted, as the Company consists of a single segment of the drug discovery business.

For the six months ended June 30, 2024
The information is omitted, as the Company consists of a single segment of the drug discovery business.

(Revenue recognition)

Disaggregation of revenue from contracts with customers

		(Thousand yen)
	For the six months ended	For the six months ended
	June 30, 2023	June 30, 2024
Goods / Services transferred at a point in time	63,038	31,384
Goods / Services transferred over time	-	-

Revenue from contracts with customers	63,038	31,384
Revenue from other sources	-	-
Net sales to outside customers	63,038	31,384

(Significant subsequent events)

1. Issuance of 20th series share acquisition rights (with exercise price adjustment clause and exercise suspension clause) through third-party allotment

The Company resolved, at the Board of Directors meeting held on June 14, 2024, to issue share acquisition rights (with exercise price adjustment clause and exercise suspension clause) (hereinafter, the "Share Acquisition Rights") through third-party allotment by designating EVO FUND as a scheduled allottee, and confirmed the completion of the payment of the total issue price on July 1, 2024.

Outline of the 20th series share acquisition rights (with exercise price adjustment clause and exercise suspension clause) through third-party allotment

Date of allotment	July 1, 2024

Number of share acquisition	40,000 units
rights issued

Class and number of shares to be
issued upon exercise of stock	100 shares of the Company's common stock per share acquisition right
acquisition rights
Issue price	55 yen per Share Acquisition Right (Total amount: 2,200,000 yen)

	7

	Number of potential shares: 4,000,000 shares
Number of potential shares	There is no upper limit of exercise price.
resulting from the issuance	While the lower limit of exercise price is 349 yen, the number of potential
	shares even at the lower limit of exercise price is 4,000,000 shares.
Amount of funds to be procured	2,786,200,000 yen (estimated net proceeds) (Note)

	Initial exercise price: 698 yen
	The exercise price is adjusted, on the effective date of each exercise request of
Exercise price and conditions for	the Share Acquisition Rights, to the amount equivalent to 100% of the closing
adjustment of exercise price	price of the Company's common stock in regular trading on the Tokyo Stock
	Exchange, Inc. on the trading date immediately preceding the said effective
	date.

	Where shares of common stock are issued upon the exercise of the Share
Capital stock and legal capital	Acquisition Rights, the amount of capital stock to be increased shall be one half
of the maximum increase amount of capital stock, as calculated in accordance
surplus to be increased where
with the provisions of Article 17 of the Regulations on Corporate Accounting,
shares are issued upon the
with any fraction less than one yen resulting from the calculation being rounded
exercise of share acquisition
up to the nearest one yen. The amount of legal capital surplus to be increased is
rights
the amount obtained by subtracting the said amount of capital stock to be

	increased from the maximum amount of increase of capital stock.
Method of offering or allotment	Third-party allotment

Allottee	EVO FUND

Exercisable period	From July 2, 2024 to March 3, 2025


		Specific use	Amount
		(million yen)

		(i) Costs for manufacture, sale and distribution of		1,066
		Telomelysin
Use of funds
	(ii) Working capital mainly for establishing
		manufacturing and sales system for Telomelysin		1,512
		and its maintenance
		(iii) Costs for joint development system of		208
		Telomelysin with MSD


		Total		2,786


	The Company executed an agreement on purchase of the Share Acquisition Rights
	with the scheduled allottee to mainly stipulate an exercise commitment clause,
Other	exercise suspension clause, and that approval by resolution of the	Board of
	Directors of the Company is required in the case where the scheduled allottee
	transfers the Share Acquisition Rights.

(Note) The amount of funds to be procured is the sum of the amount to be paid in for the Share Acquisition Rights plus the total amount of property to be contributed upon exercise of the Share Acquisition Rights, less an estimated amount of expenses related to the issuance of the Share Acquisition Rights. If the exercise price is revised or adjusted, the amount of funds procured may increase or decrease. Furthermore, the amount of funds procured will decrease if the Share Acquisition Rights are not exercised within their exercisable period and if the Company cancels the Share Acquisition Rights it acquired. The amount of property to be contributed upon exercise of the Share Acquisition Rights used for the calculation of the above-mentioned amount of the funds to be procured is the amount assuming that all the Share Acquisition Rights are exercised with the initial exercise price, and therefore the actual procurement amount may change depending on the market environment at the time of exercising the Shared Acquisition Rights.