| Human Metabolome Technologies (6090) |
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Company |
Human Metabolome Technologies Inc. |
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Code No. |
6090 |
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Exchange |
Mothers of Tokyo Stock Exchange |
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Industry |
Service Industry |
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President |
Ryuji Kanno |
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Address |
246-2 Mizukami, Kakuganji, Tsuruoka-city, Yamagata |
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Year-end |
End of March |
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URL |
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*Share price as of closing on the end of January 4. Number of shares outstanding is as of September 30.
ROE and BPS are based on actual results of the previous term end. |
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*Forecasts are those of the Company. From the current fiscal year, the definition for net income has been changed to net income attributable to parent company shareholders (Abbreviated as parent net income).
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| Key Points |
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| Company Overview |
 History  Metabolome analysis techniques had been used for various purposes such as fundamental biological research, development of pharmaceutical products, disease biomarkers, etc., and were expected to expand the demand in the future. Therefore, upon establishment of the CE-MS system, Human Metabolome Technologies Inc. was established in July 2003 to commercialize the method chiefly by Professor Soga, Professor Masaru Tomita, also from Keio University, and the office of Keio University. It was the first venture company originated from Keio University, with a financial support from Keio University's entrepreneurship fund. In 2008, Mr. Ryuji Kanno became the president of the Company. Before taking up this position, Mr. Kanno who was the Vice President & CEO of Agilent Technologies Japan, Ltd., a Japanese subsidiary of Agilent Technologies, a global company that develops, manufactures, sells, and support chemical analysis equipment and electric & electronic measurement equipment in the field of life science., which, had been for some time in business relationships with HMT and Keio University. President Kanno promoted research and development of the Company's core technologies and also began organizing and establishing more specific commercialization process and business models. At the same time, he began preparation for the Company to be listed on the stock market in order to accelerate its growth speed through enhancing the Company's visibility and raising funds for research and development. The Company got listed on the Mothers Section of the Tokyo Stock Exchange in December 2013, ten years after its establishment. Corporate Philosophy"To contribute to people's health and joyful lives through research and development using the up-to-date metabolome analysis technologies for children in the future."  Points to Understand the Company① Significance of Social Presence
Biomarkers are in vivo substances that are used as indicators to assess current state of specific diseases. Blood sugar" for diabetes, "γ-GPT" for liver function disorder, and "uric acid" for gout. are representative examples of well-known and widely used biomarkers.The Company discovered a biomarker for "major depressive disorder", one of current major social issues, and is developing diagnostic agents to quantify the condition of the disease. Because there is no prevailing method to objectively measure the status of depression, despite the increase in the number of patients with depression, some serious problems are emerging regarding the therapy of depression. For example, patients who would have been cured if they had properly treated are still suffering or in overprescription. If the diagnostic agents using the Company's biomarker become to be widely used, these issues are expected to be solved, and social loss will be subsequently reduced. This social significance cannot be overlooked to understand the Company. ② Excellent Technological Capacities
The Company is highly recognized thanks to the "metabolome analysis technology" which is used to examine complicated behavior of metabolites in human bodies to identify biomarkers. The biomarker for depression is just an example. With the technology, the Company is expected to identify and develop various new biomarkers in the future. ③ Stable Business Model
The Company's current core business is the "commissioned metabolome analysis business", supporting research and development activities of research institutions and pharmaceutical companies, that occupies the greater part of its sales. Sales of FY March 2016 were 703 million (up 13.4%, YoY) and operating income was 300 million (up 30.1%, YoY), showing steady income. On the other hand, the "biomarker business", which is expected to achieve significant growth in the mid- to long-term, is still operated in a small scale and experiencing losses. However, the Company has already established a balanced business model, in which the profit generated from the commissioned metabolome analysis business is invested into the biomarker business for its growth. This model is notable among many bio-venture companies that are suffering from gaining profit. Depression◎What is Depression?
Depression is a type of mood disorder, and is a brain dysfunctional state for various reasons such as accumulated physical and mental stress. Because the brain is not functioning properly, people in the depressed mood feel negative and low-esteem. This causes a vicious cycle in which people with depression feel more stress for matters that they could otherwise handle. The "major depressive disorder" refers to the state in which depression mood continues even after the sources of stress are removed. In this regard, it is distinguished from adjustment disorders or some anxiety disorders and is considered a brain dysfunction, instead of a mere response to stress. (Note: "Major" of the major depressive disorder means "primary" and does not mean "serious" depression.) ◎Number of depression patients in World and Japan
In 2012, the World Health Organization (WHO) announced that at least 350 million people were with depression which is a mental disorder. Almost 1 million lives are lost due to suicide every year, and over half of them are assumed to be due to depression. According to the "Patient Survey" conducted by the Ministry of Health, Labor, and Welfare (MHLW) every three years targeting health facilities across the country, the total number of patients with mood disorders including depression increased from 430,000 in 1996 to 950,000 in 2011 (2.2x). The "Patient Survey" shows statistical data of the number of patients who visit health facilities. It is known that the consultation rate of patients with depression is low. Thus, according to the MHLW, it is suspected that the actual number of depression patients might be larger.  In Japan, economic losses due to depression and suicide are estimated to be about 3 trillion yen. If there were no such losses, GDP would increase about 2 trillion yen (an estimate by the Ministry of Health, Labour and Welfare, 2010). Economic losses around the world are estimated to be about 62 trillion yen in 2002 (Screening for Depression in Adults: A Summary of the Evidence. Ann Intern Med. 2002.). The current economic losses are estimated to be over 100 trillion yen. ◎Treatment of Depression
If someone is diagnosed as having depression, the common treatment is prescription of "antidepressant drugs." The antidepressant drugs can be categorized into several groups such as selective serotonin reuptake inhibitor (SSRI), serotonin-noradrenaline reuptake inhibitor (SNRI), and tricyclic antidepressant. In addition, anti-anxiety drugs or sleep inducing drugs can be used, depending on the symptom. The important thing under drug therapy is that the patients comply with the prescribed amount and frequency after they are informed the effects and side effects. However, patients with depression often reduce the amount or frequency without doctors' permission as they do not feel the symptom to be very serious, they worry side effects, etc. In these cases, the patients do not show improvement as doctors expect, and the doctors prescribe more drugs or change the types of drugs. That would often result in the delay of recovery or excessive administration of drugs, for lack of trust between doctors and patients. Therefore, it is essential to have objective assessment standards quantifying the state of depression or proving the depression has been cured. The biomarker and diagnostic agents of the depression that the Company is currently working on are extremely important for prompt and appropriate treatment of the disease. Metabolomics and Biomarker<What is metabolomics?>
Living organisms including human beings consist of some parts with various functions such as muscles, internal organs, and bones. "Metabolites" such as amino acids, fatty acids, and nucleic acids are common and major components of these organs. Metabolites play crucial roles for entire life activities. Metabolites are provided by food, and are consumed in the process of daily actions such as exercise. They move in a body and cells in accordance with their functions, and are converted into new substances through various chemical reactions, which are called "metabolism". Adjusting body temperature, breathing, moving heart, digesting and absorbing food, transforming old cells into new ones are all operated by metabolism. The "substance conversion" to a new substance is based on a certain flow called metabolic pathway. One of well-known approaches to understand the mechanisms of a human body is "genomics", analyzing genes. Now, automated sequencing and computer analysis of genetic information (DNA base sequences) is available, and nearly all the information in the human genome has already been deciphered. However, much about the relationship between the roles of genes and diseases remains unknown. Recently, more researchers lean towards investigating metabolic profiles, in addition to genetic information coming out of genome analysis, in order to understand the relationships between a human body and diseases. Consequently, research and use of "metabolomics (metabolome analysis)" targeting all metabolites is becoming increasingly popular.  <What are biomarkers?>
A human body puts various vital functions under high-sophisticated manipulation to minimize internal and external influences, and subsequently keeps the body condition stable. That mechanism is called "homeostasis". For example, body temperature and heartbeat may change temporarily, but return to regular ranges. Diseases lead abnormal homeostasis and metabolic status, which are different from healthy conditions. A metabolite, which concentration keenly reflects the status of a specific disease, is called a biomarker. By measuring a biomarker, the current status of a specific disease can be objectively assessed. Blood sugar as a pancreas function indicator, γ-GTP as a liver function indicator, biomarker PSA for prostatic cancer and biomarker CA19-9 for pancreatic cancer are examples of well-known biomarkers. Biomarkers have been studied for a long time in order to monitor the status of diseases. These days, with new methods to analyze multiple substances with higher sensitivity all at once, study results of various new biomarkers have been publishing one after another. Among the biomarkers that are explored through metabolomics technologies are the followings:  Business Contents and Business ModelPreviously, the company allocated the profit from the "metabolome analysis business," which is the current mainstay business, to the investment in the R&D of the promising "biomarker business," and applied the intellectual property obtained through the R&D to the development of medicines and disease diagnosis, with the goal of growing in the mid to long terms. From the term ending Mar. 2017, the company will accelerate the investment in the biomarker business by procuring funds from the outside in order to flourish in the future. Earnings structure and customers of each business are as follows.  ① Commissioned Metabolome Analysis Business
The Company receives orders from various customers, e.g., private companies such as pharmaceutical companies and food companies as well as universities and public research institutes."Sales were 703 million yen and operating income was 300 million yen for FY March 2016." The scheme of the service is as follows. A customer sends samples to the Company, and then metabolites are extracted from the samples. The extracted metabolites are measured by the CE-MS system, and the acquired data is analyzed. After all, the report is delivered to the customer. The data obtained from the service are used for various purposes; basic biological study, assessment of drug effectiveness and toxicity assessment by pharmaceutical companies, universities, and research institutions, analysis of fermentation process and functional evaluation of functional foods by food companies. The data is contributing to the progress of research and development activities of customers. ◎Deployment in the Overseas Market
In order to distribute the commissioned metabolome analysis service in Asia, the Company concluded an exclusive sales authority agreement with Young In Frontier Co., Ltd. in South Korea in June 2011. Moreover, the Company hired a sales representative in charge of Asia-Pacific area to develop Asian market including Singapore and Hong Kong, outside of South Korea. Furthermore, in order to expand its business in the North American market, it also established its sales subsidiary, Human Metabolome Technologies America, Inc., in October 2012 at Cambridge, Massachusetts, USA, home to many medical research institutions.
◎"C-SCOPE" -a service package of the commissioned metabolome analysis service for cancer study
In August 2012, the Company launched "C-SCOPE", a service package of the commissioned metabolome analysis service well organized for cancer study. C-SCOPE was developed to respond to the needs; they would like to measure concentrations of specific metabolites changing inside cancer cells with higher sensitivity and higher accuracy. Its technologies are based on unique and efficient metabolites extraction method from cancer cells and highly sensitive analytical system.Cancer is the number one cause of death in Japan since 1981 and occupies about 30% of the recent total causes of death. According to the MHLW, the costs for cancer research are increasing year by year; in 2012, ¥35.7 billion were spent. It is an urgent task for many pharmaceutical companies to develop effective new anticancer drugs. The "Warburg effect" is the phenomenon that most cancer cells have glycolytic rates of several to dozens of times to that of normal cells. Although this effect was proposed as far back as over 80 years ago, the research on the effect made little progress since there was no method to comprehensively measure metabolites back then. Thanks to the dramatic advancement in metabolomics technologies in recent years, development of anticancer drugs which act as metabolic inhibitors are underway. The Company's metabolome analysis technology based on the CE-MS system is considered as one of the effective analysis systems applicable at each stage of cancer research; from the basic study of cancer biology to clinical application in the process of anticancer drugs development. ②Biomarker Business
The Company considers the business related to biomarkers, which play an important role in occasions such as early diagnosis or monitoring treatment effects, as a driver for future growth, and is proceeding with biomarker discovery and development of clinical test drugs through collaborative research and development with universities, pharmaceutical companies, and diagnostic drugs companies. "Sales was 31 million JPY and operating loss was 60 million JPY for FY March 2016" The Company develops new diagnostic methods by using biomarkers, which were acquired through its own R&D, or biomarkers introduced from outside. Additionally, through the process of product development and clinical development, the Company produces and sells in vivo diagnostic drugs and diagnostic equipment. The sales in this business are composed of cooperation money for R&D from pharmaceutical companies in cooperative research, milestone revenues, and loyalty gained from the sales of the drugs when they are commercialized. ◎Intellectual Property Policy
The personnel in charge of intellectual property and contracts works on patent application and requests for examination of all projects, and are in close collaboration with the patent attorneys of the Company and its collaborative research institution. They are also responsible for negotiation concerning collaboration research agreements and development of agreement documents. The Company attempts to maximize its rights when obtaining a patent of newly discovered biomarkers. Since the scope of the rights differs depending on the marker, the Company generates patent application documents in a way that would cover a wide scope of the rights such as chemical structure of the biomarker, usage for diagnostics and drug development, detection method and measurement equipment. Furthermore, the Company makes it a principle to file international patent applications in accordance with the Patent Cooperation Treaty, in anticipation for the future license agreement and market based on the information of clinical test drugs, test equipment companies and pharmaceutical companies of various countries. ◎Example of Biomarker Business: Depression Biomarker
The Company especially focuses its research and development on a) the central nervous system disorder such as depression (e.g. mood disorder and mental disorder) for which there are few objective diagnosis methods b) diseases that have become social problems such as metabolic syndrome, including hepatitis and diabetes, and their related diseases. Its current focus is the biomarker for depression. Diagnosis of major depressive disorder is conducted using the diagnostic standards provided by the American Psychiatric Association or the standards of the World Health Organization (WHO). However, both of them largely reflect the subjective view of the doctor or patient, and unlike other diseases, no diagnostic method has been established on the basis of objective indicators. The Company conducted collaborative research with the National Center of Neurology and Psychiatry, and discovered a blood biomarker of major depressive disorder. Blood samples were collected from approximately 30 patients and 30 healthy people, and the blood components were compared through metabolome analysis using the CE-MS system. As a result, the patients with major depressive disorder showed lower concentration of phosphoric ethanolamine (PEA) in their serum. Through further analysis, it was found that a) PEA is a specific biomarker for major depressive disorder, and b) PEA level will return to the healthy standard range when MDD is treated.  *Companion diagnostics: Refers to clinical tests to predict effects and side effects of pharmaceutical products before administration. By checking the responses of individual patient towards a drug before treatment, more effective drug administration can be provided.
Subsequently, the Company developed a technology to measure extremely low-concentrated PEA in the blood, which was not possible to detect with the conventional enzyme method. Based on this technology, the Company developed the "PEA test kit using the enzyme method" (β-version) in 2016. The development of this kit made it possible for the Company to supply PEA tests across the world and explore the specific markets, product specifications, sales outlets establishment, and business scales. It is of extreme significance that the Company succeeded in the development of a "depression biomarker test kit" (β-version). In relation to the depression biomarker, in Japan, the following patents have been established: the "Biomarker for depression, and measuring method, computer program and recording medium for depression" in September 2013, and the "Measuring method of ethanolamine phosphate" in January 2015. Overseas, in February 2015, the "Biomarker of depression, measuring method, computer program and recording medium of depression biomarker" was established in the US. ◎Identification of Disease Biomarkers
The Company uses the following three connections and systems for identifying biomarkers in order to expand biomarker development pipelines.
<Connection with the Customers for Commissioned Analysis or Collaborative Development>
The Company accepts requests from universities and companies for the tests for finding biomarkers. The Company also receives proposals for collaborative development before or after the tests. Currently, a collaborative development project for diabetic nephropathy biomarkers is ongoing.
<Direct Proposal to Researchers and Physicians>
The Company's researchers directly propose research plans for the development of disease biomarkers to researchers or physicians, and establish collaborative study agreement with the institution based on approvals from the collaborative researchers or physicians. The target diseases are chosen according to the number of patients, compatibility to the analysis technologies of the Company, degree of social contribution, and necessity of biomarkers. In addition to major depressive disorder, the Company is working on the development of biomarkers for non-alcoholic steatohepatitis and fibromyalgia.
<HMT Research Grant for Young Leaders in Metabolomics>
The Company offers a grant (HMT Research Grant for Young Leaders in Metabolomics) to graduate students to disseminate the usefulness of metabolomics in the society and nurture young researchers. From the research themes submitted from graduate students across the world, the Company chooses excellent proposals, and supports their research by awarding metabolome analysis service without a fee. Fourteen students have been awarded in the last 4 years. Some of these study results actually led to the identification of biomarkers and evolved to collaborative study with the Company, for example, infectious disease-related encephalopathy biomarker.
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| 1H of Fiscal Year March 2017 Earnings Results |
 Continued loss due to increased investment for growth
Sales were 273 million yen, down 8.6% YoY. Although the metabolome analysis business remained healthy, sales decreased due to the termination of the worker dispatch business in the previous term. The order backlog steadily grew to 250 million yen, up 41.8% YoY. The metabolome analysis business is turning a consistent profit, but the investment in commercializing depression biomarkers increased. As a result, operating loss was 143 million yen, an increase of 27 million yen from the same term last year.
 Sales and the number of orders in North America are steadily growing.  (3) Topics
◎ The Company's technology and biomarker  The Company's metabolome analysis business is highly recognized both in Japan and overseas. The Company conducted 3,376 commissioned tests by the end of FY ended March 2016. The common tests are for the institutions in the fields of medicine, food, and pharmaceuticals. The common specimens are cultured cells, animal tissues, and microorganisms. The Company offers high-level technologies. For example, its biomarker search technology is based on the metabolome analysis technology with an excellent capacity to identify abnormal homeostasis status in blood and urine. The CE-MS technology can provide reliable data by its separation capacity that is better than the other methods. The Company also has a protocol to achieve reliable search results. The great network with innovative doctors and researchers is also the Company's advantage.The major biomarkers and biomarker candidates that have been identified by the Company's technologies cover a wide range of diseases such as diabetic nephropathy, fibromyalgia, pancreatic cancer, and infectious disease-related encephalopathy.Currently, the Company is focusing its biomarkers development on the major diseases that many people are suffering from.  ◎ Alliance with M3, Inc.
The Company has decided to collaboratively work with M3, Inc. for market research in the medical field for the metabolome analysis business, improvement of awareness to the diagnostic marker for depression (e-PUSH), and sales support of the depression diagnostic kit for research. As part of these efforts, the Company concluded a business alliance agreement with "G-TAC", a subsidiary of M3, Inc. under which HMT provides the depression biomarker to G-TAC, and G-TAC's roles are: popularization of the biomarker, searching medical institutions that introduce the biomarker, and sales expansion. One of G-TAC's major businesses is genome/personal medical related tests such as testing blood composition (other than genome), and they decided to add risk evaluation of depression to their business through the collaborative business with the Company.
  The negative amount of investing CF during the first half of this term shrank because there was no acquisition of investments in securities. Financing CF turned positive, as the income from the issuance of shares through the exercise of share options increased. The cash position rose. |
| Fiscal Year March 2017 Earnings Estimates |
 No change in earnings forecast. Slight increase in sales. Loss will grow due to increase in up-front investment.
The full-year earnings forecast has not been changed. The estimated sales are 810 million yen, up 3.8% YoY. The sales increase will be minimum because of the drop of sales due to the termination of the worker dispatch business, even though the metabolome analysis business is expected to grow in double digits. The loss is expected to increase as a result of business model change and more investment in the biomarker business, which is almost ready for commercialization.    |
| Development of in-vitro diagnostic agents and clinical test equipment for the depression biomarker and business prospects |
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The Company has developed the research-use test kit as well as test cartridge and POCT test equipment, and supposes the following two ways of usages of the series of products.   Business Contents and Business Model, it is of extreme significance that the Company succeeded in the development of a "depression test kit" (β-version) as it opens up the door to supply PEA tests to 350 million patients in the world. Also, as described earlier, if 350 million patients with depression in the world would receive a test for the initial diagnosis and then 4 other tests for observation during the treatment course per person, the sales target of the Company for FY 2029 will be as follows (The test unit price is assumed to be 600 yen (target sales price of the Company) and test penetration rate is assumed to be 10% in 2029).   Summary Development of the PEA test kit (β-version) gives a technological prospect to the Company to provide tests to 350 million depression patients in the world. Taking approaches and setting up the foundation to expand the business in the test field other than depression expanded the possibilities of increasing demand.By accelerating commercialization of the kits through aggressive investment, the Company aims at obtaining approval for in-vitro diagnostic agents and expanding the sales scale. In the future, the Company will enter into the business development phase including examination of the target market size, establishment of sales channels, and setting appropriate sales price. |
| Conclusions |
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Disclaimer
This report is intended solely for information purposes, and is not intended as a solicitation for investment. The information and opinions contained within this report are made by our company based on data made publicly available, and the information within this report comes from sources that we judge to be reliable. However we cannot wholly guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness or validity of said information and opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co., Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should be made only after proper consideration.Copyright(C) 2017 Investment Bridge Co., Ltd. All Rights Reserved. |
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