Bridge Report:（2183）Linical the Second Quarter of Fiscal Year ending March 2026

Kazuhiro Hatano CEO	Linical Co., Ltd. (2183)

Company Information

Stock Information

* Stock price is as of closing on December 18, 2025. These figures were taken from the brief report on financial results in the second quarter of the fiscal year ending March 2026. Number of shares issued is the term-end figure stated in the summary of financial results excluding treasury shares.
* ROE is based on FY3/25 results.

Consolidated Earnings Trend

*Unit: Million yen.
*Estimates are those of the company.

This Bridge Report reviews on the overview of Linical Co., Ltd.’s earnings results for the second quarter of the fiscal year ending March 2026 and its forecast for the fiscal year ending March 2026.

Table of Contents

Key Points
1. Company Overview
2. Management Strategy
3. 2Q of Fiscal Year ending March 2026 Earnings Results
4. Fiscal Year ending March 2026 Earnings Forecasts
5. Conclusions
<Reference：Regarding Corporate Governance>

Key Points

• In the cumulative second quarter of the fiscal year ending March 2026, sales dropped 10.4% year on year and an operating loss of 511 million yen was posted (in the same period of the previous year, an operating loss of 192 million yen was posted). Sales grew in Japan, Europe, Taiwan and China, but declined in the U.S. and South Korea, so consolidated sales decreased. Profits were earned in Taiwan and China, but there were operating losses in Japan, the U.S., Europe, and South Korea, so a consolidated operating loss was posted.

   

• As the second quarter ended, they revised the forecast for the fiscal year ending March 2026 downwardly. The revised forecast calls for a 10.4% year-on-year decline in sales and an operating loss of 1,350 million yen (an operating loss of 583 million yen in the fiscal year ended March 2025). In Japan, while the business environment is harsh as new medicine development is slowing down and the unavailability of some medicines in Japan is worsening, they did not make new deals enough to compensate for large-scale projects where development was suspended in the previous fiscal years, so it is forecast that sales will not reach the forecast for the current fiscal year. In Europe and the U.S., they were not able to compensate for the decline in sales after the end of a large-scale project, so it is projected that sales will not reach the initial forecast. In South Korea, existing projects are delayed and they are not receiving orders for new projects as forecast. On the other hand, they have not changed the plan to pay a common dividend of 16 yen/share, unchanged from the previous fiscal year.

   

• The financial results in the first half of the fiscal year ending March 2026 were unfavorable, but there were some favorable items. In Asia, order backlog increased significantly between the end of March 2025 and November 14, 2025. This is because the Taiwanese subsidiary undertook several new projects, including global tests, conducted in Taiwan and the U.S. The biotech companies in Taiwan have been keenly interested in the U.S. market, and have been pursuing more new projects by utilizing the strengths of Linical, which has bases in the U.S. The company aims to receive orders via Australia for entering the U.S, market, which is the largest in the world or by responding to the needs of biotech companies in Japan and other Asian countries, who will start clinical trials in North America, for development, while the marketing teams in Japan, Asia, Europe, and the U.S. cooperatively promote biotech firms in Europe and the U.S. to do business in Japan and Asia. We can’t take our eyes off their strategies in Asia.

   

1. Company Overview

The company is a global contract research organization (CRO) based in Japan, which provides a comprehensive range of services ranging from the initial phase of clinical trials to post-marketing studies as a professional in development of pharmaceutical products. Linical Co., Ltd. provides contract research organization (CRO) services that support the drug development processes of pharmaceutical companies on an outsourced consignment basis, and sales and marketing functions for pharmaceutical products and post market launch clinical research and surveys on a consigned basis in the Contract Medical Affairs Business (CMA). In addition, the company offers meticulous services to meet the requests from clients and optimal solutions as a global CRO. They give full support with proposals for planning of early small-scale trials, late-stage trials, and applications for approval, which can be achieved because the scale is medium, and contribute to healthcare as a partner required for developing new treatment methods, including pharmaceutical products. In the past 5 years, they have dealt with over 600 clinical trials, the retention rate of clients exceeds 85%, and they registered cases for over 80% of trials. Then, they offer services in about 30 countries.
Linical has conducted various efforts to eradicate oncology, central nervous system and other diseases globally since its founding, and it has deployed its CRO Business in therapeutic areas where there is strong demand for new drug development. Linical is a leading company in the field of clinical trials for cancer treatment, and has a vast amount of experience in the field of central nervous system (CNS) diseases. In addition, since the inauguration of business, they have focused on immune system diseases, and have plenty of experience of Phases I to IV trials and profound knowledge of rare diseases and common diseases, and made clinical trials of clients successful. As an awarded CRO, the company possesses expertise for supporting a variety of therapeutic areas.

[Management philosophy]

The management philosophy is “Linical promotes the greater wellbeing of all our stakeholders—patients, clients and employees— we strive constantly to offer professional, high-quality services to support all aspects of new drug development.”

The blue color represents “Integrity&Honesty,”
the red color “Unending Enthusiasm,” and
the yellow color “Continuing Spirit of Inquiry.”
This corporate logo depicts the company’s hope of pursuing the wellbeing of patients around the world through business, and the company has the mission to “wings to new drugs.”

[Corporate History]

Linical Co., Ltd. was established in June 2005 by nine members who worked at Fujisawa Pharmaceutical Co., Ltd. (Currently known as Astellas Pharma Inc.) on the development of immunosuppressant drugs. Established with the objective of becoming the ideal drug development outsourcing (CRO) company from Osaka, Linical focused its efforts upon the realms of central nervous system diseases (CNS) and oncology since its founding, and received one of its first orders from Otsuka Pharmaceutical Company shortly after its establishment. Thereafter, the Company fortified its staffing as part of its efforts to strengthen its order taking capabilities. In addition, Linical is benefitting from the bountiful experiences of its employees in the realm of oncology pharmaceutical product development and experiences having worked at foreign pharmaceutical companies. Consequently, Linical is successfully expanding orders in the near term.
With its advance into the site management organization (SMO, clinical trial facility support organization) business, Aurora Ltd. was turned into a subsidiary in January 2006. However, all shares held in Aurora were later sold in May 2007 in order to focus management resources upon the CRO Business. In July 2008, Linical USA, Inc. was established in California, United States to provide support to Japanese pharmaceutical companies seeking to enter the United States market. Also, in October of the same year, Linical listed its shares on the Mothers Market of the Tokyo Stock Exchange, and subsequently moved its listing to the First Section of the Tokyo Stock Exchange in March 2013. In May 2013, Linical Taiwan Co., Ltd. and Linical Korea Co., Ltd. were established in Taiwan and Korea respectively. In April 2014, Linical teamed up with its Linical Korea to acquire the Korean CRO company P-pro. Korea Co., Ltd. On October 29, 2014, all of the shares of Nuvisan CDD Holding GmbH, which conducts CRO Business in Europe, were acquired and it was converted to a 100% owned subsidiary effective on December 1, 2014. In order to strengthen the collaboration within the Group, the company name of Nuvisan CDD was changed to Linical Europe GmbH. In addition, Linical U.K. Ltd. was established in March 2016, and a local subsidiary called Linical Poland SP. Z.O.O. was also established in October of the same year. Moreover, LINICAL Czech Republic s.r.o was established in September 2017. In addition, Accelovance, Inc. was acquired in April 2018 and its company name was changed to Linical Accelovance America, Inc. In addition, Linical Hungary Kft. was established in March 2019, and Linical China Co., Ltd. was established in May 2019. Furthermore, the company further strengthened their system for undertaking global joint clinical trials, through the enhancement of their business in the European region by integrating the European subsidiary of Linical Accelovance America, Inc. (LAA) into LINICAL Europe GmbH in December 2019, and the establishment of a Shanghai branch in February 2020. In April 2020, Linical Benelux BV and Linical Accelovance Europe BV were merged to form Linical Netherlands BV, and Linical China Co., Ltd. and Linical Accelovance China Ltd. are scheduled to be integrated in the fiscal year ending March 2023. The company grew steadily through overseas mergers and acquisitions, and achieved record sales consecutively in fiscal year ended March 2022 and fiscal year ended March 2023. In the fiscal year ended March 2024, profit declined due to the decrease in sales in Japan and Europe, and in the fiscal year ending March 2025, too, sales and profit declined due to the drop in sales in Japan and other Asian countries.

[International Certification]

All business establishments of the Linical Group obtained the certification of the international standard ISO/IEC 27001 regarding an information security management system (ISMS).

(Source: Linical)

Produced by Investment Bridge Co., Ltd. with reference to disclosed material.

Mainly the overseas business is growing after the overseas M&A in South Korea, Europe, and the U.S.

[Strengths]

[Business Description]

As a global CRO founded in Japan, the company operates primarily in Japan, and also in Asia, Europe and the U.S, providing a comprehensive range of services ranging from the drug discovery stage to clinical development to post-marketing drug development. The company has extensive experience and achievements in the trending areas of drug development, notably in oncology, neurology , and immunology.
A CRO is an organization that receives requests from pharmaceutical companies and others to act on their behalf and provide support for clinical trials conducted during the development phase of a pharmaceutical product. It is an organization with high expertise in clinical trials and is a professional in the field of drug development. The scope of work includes monitoring activities to ensure that clinical trials are conducted in compliance with regulatory requirements and the clinical trial protocol, including data management and medical writing activities.
Linical mainly conducts contract research organization (CRO) business, post market launches clinical trial and clinical research and marketing support activities in the Contract Medical Affairs Business, and new drug development support business. As a true partner, the company contributes to the maximization of the value of the medical drugs by helping the procedure from the non-clinical tests to clinical development and after-release surveys and clinical trial, and making it possible to shorten the time needed to start selling the drugs and prolong the life-cycle of the products. On top of that, the company supports not only pharmaceutical companies but also the bio-ventures in various ways including exit strategies.

(Source: Linical)

CRO Business (Contract Research Organization)
The CRO Business undertakes part of the clinical trial operations conducted by pharmaceutical companies, including monitoring, data management, medical writing, pharmacovigilance, statistical analysis, and quality control. The company employs highly skilled and experienced staff with the aim of supporting high-quality, highly efficient clinical trials that will lead to the rapid launch of new drugs on the market. The company has opened facilities in Asia (Korea, Taiwan, Singapore, China), Europe and the United States to be able to respond to growing demand for global studies. They offer one-stop services, including the design of clinical development plans, monitoring, data management, statistical analysis, pharmacovigilance, and support for application for approvals for pharmaceutical products and medical apparatus. Among the new drug development projects spanning from 10 to 20 years, Linical is specialized in the processes of “Phase II” and “Phase III” that require 3 to 7 years targeting patients who are particularly important in clinical trials, and it provides “monitoring” services that are the core of the clinical trials in the contract-based business style in conjunction with “quality control” and “consulting.” It collects highly reliable data and supports the rapid and reliable development of new drugs.
In addition, the company offers high-quality services in the fields of schedule management, standard procedure documents for clinical trials, compliance with GCP, the reliability of data and case reports, etc. Furthermore, the company has engaged in clinical trials in the fields where unmet medical needs are significant as many patients are waiting for the advent of new medicines, which are difficult to develop, since its establishment, and concentrates on the projects regarding cancer, immunity, and the central nervous system.

* Global jointly conducted clinical trials
“Global jointly conducted clinical trials” refers to conducting clinical trials simultaneously in multiple countries or regions in order to develop new drugs on a global scale and aim for early launch.
*GCP (Good Clinical Practice)
“GCP” is the international rule the companies are supposed to obey when they conduct the clinical trial. It is enacted by Ministry of Health, Labor and Welfare as a ministerial ordinance so that they can conduct it properly in Japan.

Contract Medical Affairs Business
In the contract medical affairs business, the company provides support for the organizational structure and construction of corporate and doctors-led clinical research, as well as planning for surveys, monitoring, and auditing services for post-release clinical trials and investigations. The Clinical Trials Act is enacted, and the environment surrounding clinical research is changing drastically. Under this circumstance, to obtain information in a timely manner and be the best partner for the medical affairs department of pharmaceutical companies, Linical provides full-service support including data management and statistical analysis with a focus on monitoring and research administration works of clinical trials. It has a policy to respond to the latest regulations and contribute to the creation of evidence in the challenging areas based on the know-how cultivated in the past development works.

Innovative Drug Development Business
Following the existing CRO Business and Contract Medical Affairs Business, Linical is cultivating the third business called Innovative Drug Development Business. In the innovative drug development business, the company provides consulting services to support entry into the Japanese market. This business is mainly operated by employees who are involved with licensing, business development, clinical trials development, development pharmacy, and marketing at major domestic pharmaceutical companies and have abundant results and experiences in determining developed products, introduction and derivation negotiation, and clinical development. In the Innovative Drug Development Business, 3 types of consulting services: a) market analysis of developed products, b) support for PMDA consultations, and c) licensing support, are provided. With these experiences as a weapon, they support pharmaceutical companies and bio technology companies inside and outside Japan in the broad therapeutic field.

[Services]

Strategy for drug development

Clinical trials

[Therapeutic Expertise]

[Global expansion]

The company is a global CRO based in Japan, with a focus on Japan, it is operating its offices around the world, including Asia, Europe and the U.S. The company currently has employees in about 20 countries/regions. The company is providing services in about 30 countries including affiliated partners. Experts in each function, who are familiar with local regulations and customs, work together globally to provide detailed services customized to each and every project.

(Source: Linical)

(Source: Linical)

In the fiscal year ended March 2025, the overseas ratio was 67% for sales and 55% for the number of employees.

[Order backlog by region]

*Produced by Investment Bridge Co., Ltd. with reference to disclosed material.

The total price of clinical trials and studies after the release of new medicines undertaken by the CRO business division of the Linical Group is determined by their difficulty levels, which depend on the number of cases and target diseases in the clinical trial period spanning 1 to 3 years. In the trial period, they conclude an outsourcing contract with a client and earn sales in accordance with the contract. Order backlog refers to the balance of the amount of orders received for undertaking of tasks for which contracts have been already concluded. It shows sales that will be earned in the next one to five years and is an indicator that serves as the basis for the corporate group's future earnings forecasts.
The order backlog as of November 14, 2025 stood at 11.9 billion yen, up 1.4% from the end of the fiscal year ended March 2025.

[Selected as the Best CRO in the U.S.]

(Source: Linical)

2. Management Strategy

[Medium and Long term Goal]

(1) To build a system with more than 1,500 employees where there will be 500 in Japan, 400 in Asia, 400 in Europe, and 400 in the U.S.
(2) To maintain and improve profitability while making growth investments (including M&A) in all main business regions
(3) The company will expand its business to about 60 countries around the world.

(Source: Linical)

[Growth strategies]

In order to expand the overseas business further, they will enhance the provision of high-quality services and the financial base.

① Corporate governance
In order to improve profitability while expanding services, they will reform and strengthen their organizational structure.

② Marketing
They will improve the capability of giving meticulous proposals to clients, to differentiate themselves from leading global CROs.

③ Investment in IT
By utilizing digital technologies, they will respond to the needs for streamlining of clinical trials and improve the efficiency of business administration.

◎ Utilization of AI in clinical trials
To discuss the adoption of tools for using AI in each phase of clinical trials.

3. Cumulative 2Q of Fiscal Year ending March 2026 Earnings Results

(1) Consolidated results

*Unit: million yen
*The figures include figures calculated by Investment Bridge Co., Ltd., and may differ from actual figures. (Abbreviated hereafter)

Sales declined 10.4% year on year, and an operating loss of 511 million yen was recorded.
In the cumulative second quarter of the fiscal year ending March 2026, sales dropped 10.4% year on year to 4,859 million yen and an operating loss of 511 million yen was posted (in the same period of the previous year, an operating loss of 192 million yen was posted). Sales grew in Japan, Europe, Taiwan and China, but declined in the U.S. and South Korea, so consolidated sales decreased. Profits were earned in Taiwan and China, but there were operating losses in Japan, the U.S., Europe, and South Korea, so a consolidated operating loss was posted.
In Japan, sales increased and operating loss shrank, as they undertook several new projects from pharmaceutical companies inside and outside Japan, earning sales. In the U.S., sales declined and an operating loss was posted, as they failed to make up for the drop in sales due to the end of large-scale projects. They received informal orders for large-scale international joint clinical trials, but FDA’s examination of clinical trial plans was delayed, affecting sales. In Europe, sales grew thanks to the extension of the periods of existing projects and the revision to contracts for adding more man-hours, but operating loss augmented due to the augmentation of outsourcing expenses, etc.
Gross profit margin was 22.1%, down 2.1 points year on year. SG&A expenses increased 5.0% year on year. Ordinary loss amounted to 543 million yen, exceeding operating loss, as they posted an exchange loss of 68 million yen. In addition, considering the current business environment, future business trends, etc. and carefully studying the collectability of deferred tax assets, they decreased deferred tax assets by 408 million yen in the first half of the current fiscal year, posting them in the section of income taxes-deferred, so interim net loss attributable to shareholders of the parent company amounted to 927 million yen (in the same period of the previous year, they posted an interim net loss attributable to shareholders of the parent company of 280 million yen).

Changes in Segments to be Reported
The corporate group had previously reported two segments: CRO and contract medical affairs business. However, in the first quarter of this year, they switched to a single-segment reporting structure with the CRO business. This change was made following an organizational restructuring implemented in April 2025 and the results of a review of the segments from the perspectives of management resource allocation by the Board of Directors and performance evaluation. It was determined that adopting a single CRO segment would more appropriately reflect the corporate group's decision-making process.

*Produced by Investment Bridge Co., Ltd. with reference to disclosed material.

(2) Performance trend in each region

*Unit: million yen
*Amortization of goodwill is recorded as an adjustment. “Sales” means the value before exclusion of internal transactions.

[Japan]
In Japan, sales decreased significantly in the previous fiscal year due to the impact on the cancellation and contract revisions involving shortened durations of several large-scale existing projects. The company has received orders for multiple large-scale projects from domestic and international pharmaceutical companies in Japan, with order intake showing signs of recovery, resulting in a year-on-year sales growth, while operating loss has narrowed. Although Japan continues to face a challenging market environment due to the serious social issue of unavailability of some medicines in Japan, the company is securing orders by maintaining domestic and international sales activities in collaboration with its European, American, and Asian business sections. It will continue striving to improve performance by implementing measures to enhance employee utilization rates and strictly managing expenses.

[Korea]
In South Korea, sales decreased year on year due to the impact of the medical strike that occurred in the previous fiscal year on the progress of existing projects and the undertaking of new projects, as well as interruptions in several existing projects due to customers’ reasons. However, operating loss was reduced by controlling incurred costs. The company will continue working with its sections in Japan and Asia to advance sales activities aimed at securing orders from domestic and international companies.

[China]
Sales increased year on year in China, resulting in an operating profit. With growing interest from medium-sized Japanese pharmaceutical companies in the Chinese market, the company will continue its sales activities.

[Taiwan]
In Taiwan, sales increased year on year due to the acquisition of orders for new projects, and the business achieved an operating profit. The company has secured multiple new projects from Taiwan biotech and other companies that are developing domestically and internationally and expects further contribution to sales.

[United States]
Their business in the United States has secured preliminary agreements for multiple large-scale international joint clinical trials, including those in the U.S., Europe, and Australia, and is proceeding with contract finalization procedures. While some completed contracts have been reflected in order backlog and contributed to sales, a drop in sales after the completion of major projects could not be compensated, resulting in a significant year-on-year decreases in both sales and profits. The company will continue to focus on expanding transactions with existing customers in the promising U.S. market and securing new projects from promising biotech companies to achieve sustainable growth.

[Europe]
In Europe, although sales increased year on year, operating loss expanded due to higher outsourcing costs. The company will continue to focus on sales activities in collaboration with other locations, including the United States, to expand orders, while striving to improve profitability by increasing capacity utilization rates.

[Goodwill balance and remaining amortization period (at the end of FY 3/25)]

*Unit: million yen
*1 Goodwill generated by the acquisition of Linical Accelovance America, Inc., has been apportioned pro rata to its European subsidiary.
*2 Intangible assets other than goodwill recognized by purchase price allocation.
*3 Figures have been converted at the exchange rate as of the end of the fiscal year ended March 2025.

(3) Change in order backlog

*Unit: million yen

As of November 14, 2025, order backlog was 11.9 billion yen, up 1.4% from the end of the fiscal year ended March 2025.
In Japan, despite the continued challenging business environment due to unavailability of some medicines in Japan and other factors, order backlog has increased from the end of the fiscal year in March 2025 as a result of the undertaking of multiple new projects and contract revisions. Furthermore, the establishment of the base in Australia is beginning to show results, such as securing orders from Japanese pharmaceutical companies for trials in Australia and Asia managed by the company's base in Japan.
In Asia, order backlog increased significantly from the end of the fiscal year ended March 2025, as the Taiwanese subsidiary secured multiple new projects, including global trials conducted in Taiwan and the United States. Taiwanese biotech companies have shown strong interest in the U.S. market from the beginning, leveraging the strengths of their U.S.-based operations to pursue new projects. In South Korea, order backlog increased from the end of the fiscal year ended March 2025 due to the acquisition of new domestic orders and the signing of multiple new contracts for data management and statistical analysis services conducted through group companies. The sales teams in Asia and Japan and those in Europe and the U.S. will collaborate to attract Western biotech companies to Japan and Asia and to secure orders by also addressing the development needs of Japanese and Asian biotech companies by initiating clinical trials via Australia or directly in North America, targeting the world's largest market in the United States.
In the United States, the company received preliminary approval for multiple large-scale international joint clinical trials across the U.S., Europe, and Australia, and contracts for some of these trials were completed, but order backlog decreased from the end of the fiscal year ended March 2025 due to delays in the start of other trials preventing contract completion and the postponement of trials for which preliminary approval had been obtained. Please note that, as mentioned above, multiple projects among the received orders that are still pending contract conclusion are not included in the above order backlog. These will be added to the order backlog once the contracts are completed. Additionally, the company has received numerous inquiries for projects, including global ones centered on biotech, and is focusing its sales efforts on building up its order backlog.
In Europe, while order backlog increased due to contract modifications such as the extension of periods of existing projects and additional man-hours, as well as the recognition of the European portion of the large-scale international joint clinical trials secured by the U.S. mentioned above, order backlog decreased from the end of the fiscal year ended March 2025. This resulted from existing projects progressing smoothly and generating revenue, while the securing of new projects did not proceed, due to the postponement of trials for which preliminary approval had been obtained. On the other hand, among the large-scale international joint clinical trials mentioned above, there are projects that are in the process of concluding contracts and are not included in the above order backlog. By further strengthening global synergies, primarily in the U.S. business, the company aims to expand the acquisition of orders for new projects, including those in Europe.

(4) Variation in performance in the second quarter (July to September)

Unfortunately, the trend of decrease in revenue and profit continued in the second quarter (July to September) of the fiscal year ending March 2026.

(5) Financial Conditions and Cash Flow（CF）

Financial Conditions

* Unit: million yen
* Interest-bearing liabilities＝Borrowings + Lease Obligations

*Produced by Investment Bridge Co., Ltd. with reference to disclosed material.

Total assets as of the end of September 2025 stood at 14,420 million yen, down 2,354 million yen from the end of the previous fiscal year. Major factors increasing assets are advances paid and investment securities, while factors in decreasing assets include cash and deposits, goodwill, and deferred tax assets. Major factors in increasing liabilities and net assets are liabilities for retirement benefits and exchange conversion adjustment accounts, while factors in decreasing liabilities and net assets include advances paid, deposits payable, long-term debts, and retained earnings. The equity ratio as of the end of September 2025 was 41.9%, down 1.3 percentage points from the end of the previous fiscal year.

* Unit: million yen

*Produced by Investment Bridge Co., Ltd. with reference to disclosed material.

Regarding cash flows, a cash outflow from operating activities was posted due to the augmentation of interim net loss before taxes and other adjustments, the rise in advances paid, decreases in advances received and deposits received, etc. On the other hand, a cash inflow from investment activities was posted due to the increase in revenues through the profit allocated by investment funds, but free cash flow turned negative. The cash outflow from financial activities shrank, due to a decrease in the repayment of long-term debts. As a result, the cash position as of the end of September 2025 was down 25.1% year on year.

4. Fiscal Year ending March 2026 Earnings Forecasts

(1) Consolidated results

*Unit: million yen

A 10.4% decrease in revenue from the previous fiscal year, with an operating loss of 1,350 million yen.
As the second quarter ended, they revised the forecast for the fiscal year ending March 2026 downwardly. The revised forecast calls for a 10.4% year-on-year decline in sales and an operating loss of 1,350 million yen (an operating loss of 583 million yen in the fiscal year ended March 2025).
In Japan, while the business environment is harsh as new medicine development is slowing down and the unavailability of some medicines in Japan is worsening, they did not make new deals enough to compensate for large-scale projects where development was suspended in the previous fiscal years, so it is forecast that sales will not reach the forecast for the current fiscal year. In Europe and the U.S., they were not able to compensate for the decline in sales after the end of a large-scale project, so it is projected that sales will not reach the initial forecast.
On the other hand, they have not changed the plan to pay a common dividend of 16 yen/share, unchanged from the previous fiscal year.

Revision to the forecast

*Unit: million yen

In Japan, they have received several orders for large-scale projects in Japan from pharmaceutical companies inside and outside Japan, the number of orders received is recovering, and sales are expected to grow year on year, but in the harsh business environment where new medicine development is slowing down and the unavailability of some medicines is worsening, they did not make new deals enough to compensate for large-scale projects where development was suspended in the previous fiscal years, so it is forecast that sales will not reach the forecast for the current fiscal year. In Europe and the U.S., they were not able to compensate for the decline in sales after the end of a large-scale project, so it is projected that sales will not reach the initial forecast, although they are proceeding with the procedures for concluding contracts for large-scale international joint clinical trials in the U.S., Europe, Australia, etc. and some concluded contracts are contributing to sales. In South Korea, existing projects are delayed and they are not receiving orders for new projects as forecast. As they have received multiple business inquiries in Europe, the U.S., and South Korea and the number of orders received in Japan is recovering, they will take every possible measure for improving their business performance.
Considering the current business environment, future business trends, etc. and carefully studying the collectability of deferred tax assets, they decreased deferred tax assets by 408 million yen in the interim period of the current fiscal year, posting them in the section of income taxes-deferred.

(2) Earnings forecast for the second half of the fiscal year

*Produced by Investment Bridge Co., Ltd. with reference to disclosed material.

Unfortunately, sales and profit are declining in the second half of the fiscal year.

(3) Efforts in New Fields

◎ Case 1: Existing Customers: Regenerative Medicine (iPS Cell-Derived)
Heartseed is a biotech venture founded by Professor Emeritus Keiichi Fukuda of Keio University. It is developing HS-001 with the aim of treating patients with severe heart failure by establishing “cardiac regenerative medicine,” a treatment involving the transplantation of microtissues (cardiomyocytes) derived from allogeneic iPS cells into the heart. The company provides comprehensive support as a CRO for domestic Phase I/II clinical trials, undertaking duties for regulatory affairs (including PMDA, consultation and protocol preparation), monitoring, data management/statistical analysis, safety management, auditing, and vendor management (clinical trial product transportation, external testing, and diagnostic imaging).

(Source: Linical)

◎ Case 2: Potential Customers: Gene Delivery Pharmaceuticals
An increasing number of overseas biotech startups are using viral vector systems as gene delivery platforms and designing and manufacturing HSV-based vectors. A vector is a DNA or RNA molecule used to artificially transport foreign genetic material into other cells.
<Characteristics of HSV Vectors>
◆ Its application as a gene therapy vector is rapidly advancing, and it is regarded as a promising carrier for a gene therapy delivery vehicle for various diseases.
◆ It has a high transduction efficiency across a wide range of cell types, including dividing and non-dividing cells.
◆ Because the viral genome is extremely large (~150 kb), a single vector can carry multiple large therapeutic genes.
◆ It is used for a variety of applications, including gene delivery to the nervous system, oncolytic agents, and the development of vaccines against cancer, HSV, and other infectious diseases.

(Source: Linical)

(4) Dividend Policy

The company is also actively working to strengthen its financial base. In order to secure the financial resources necessary for investments to expand overseas operations, the company will ensure sustainable growth in earnings per share by increasing revenue through its growth strategy, maintaining high operating rates, and thoroughly managing costs. At the same time, the company aims to increase its current ratio and equity ratio, enable flexible financing, and strive to balance shareholder returns and securing funds for growth.

5. Conclusions

As the second quarter ended, they revised the forecast for the fiscal year ending March 2026 downwardly. The revised forecast calls for a 10.4% year-on-year decline in sales and an operating loss of 1,350 million yen (an operating loss of 583 million yen in the fiscal year ended March 2025). In Japan, they have received several orders for large-scale projects in Japan from pharmaceutical companies inside and outside Japan, the number of orders received is recovering, and sales are expected to grow year on year, but in the harsh business environment where new medicine development is slowing down and the unavailability of some medicines is worsening, they did not make new deals enough to compensate for large-scale projects where development was suspended in the previous fiscal years, so it is forecast that sales will not reach the forecast for the current fiscal year. In Europe and the U.S., they were not able to compensate for the decline in sales after the end of a large-scale project, so it is projected that sales will not reach the initial forecast, although they are proceeding with the procedures for concluding contracts for large-scale international joint clinical trials in the U.S., Europe, Australia, etc. and some concluded contracts are contributing to sales. In South Korea, existing projects are delayed and they are not receiving orders for new projects as forecast.
Amid such harsh business environment, order backlog increased significantly between the end of March 2025 and November 14, 2025 in Asia, showing a favorable trend. This is because the Taiwanese subsidiary undertook several new projects, including global tests, conducted in Taiwan and the U.S. The biotech companies in Taiwan have been keenly interested in the U.S. market, and have been pursuing more new projects by utilizing the strengths of Linical, which has bases in the U.S. They also received new orders in South Korea, and concluded contracts for several new projects, including data management and statistical analysis, via group companies. The company aims to receive orders via Australia for entering the U.S, market, which is the largest in the world or by responding to the needs of biotech companies in Japan and other Asian countries, who will start clinical trials in North America, for development, while the marketing teams in Japan, Asia, Europe, and the U.S. cooperatively promote biotech firms in Europe and the U.S. to do business in Japan and Asia. It is noteworthy whether they can receive more orders steadily in Asia.
In addition, they plan to proactively use AI in clinical trials. They will discuss the adoption of tools for utilizing AI in each phase of a clinical trial, including the design of the trial, the registration of cases, data analysis, risk monitoring, and regulatory affairs. From now on, it will be indispensable to use AI in clinical trials, and the effect of use of AI would influence the growth potential of their business. In the medium/long term, we would like to pay attention to the progress of utilization of AI in clinical trials with expectations.

<Reference: Regarding Corporate Governance>

◎ Organization type, and the composition of directors and auditors

◎ Corporate Governance Report
Last updated on June 30, 2025
<Basic Policy>
(1) Management Philosophy
Our management philosophy is “To promote the greater wellbeing of all our stakeholders — patients, business partners, shareholders, and employees — we strive constantly to offer professional, high-quality services to support all aspects of new drug development.” We aim to contribute to the development, evolution and diffusion of new therapeutic technologies including new pharmaceuticals, and ultimately to the healthy lives of human beings, by continuously developing and maintaining the knowledge and experience of our executives and employees, as well as the know-how and systems of our organization.
(2) Basic Approach on Corporate Governance
Based on the above management philosophy, our company will contribute to the birth and growth of new disease prevention and therapeutic technologies, including new pharmaceuticals, with our know-how and technologies in pharmaceutical development. As a partner of healthcare companies and medical institutions, including domestic and foreign bio-venture firms, pharmaceutical companies, and medical device manufacturers, our company will contribute to the development of healthcare and meet the expectations of patients and the entire society.
Since our business activities impact people's lives, our executives and employees are required to have high ethical standards as well as expertise. Thus, we thoroughly comply with the Corporate Code of Conduct, including strict compliance with laws. In addition, we strive to improve corporate value and business development by enhancing internal control and ensuring the soundness and transparency of management.

Major principles for not implementing and the reasons

<Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)>