[Earnings Deep Dive] De.U.Therapeutics, Inc. (4576): Q2 FY2026 Financial Results and the Full Picture of Pipeline Growth Strategy

De.U.Therapeutics, Inc. (hereinafter "DWTI") has released its financial results for the second quarter of the fiscal year ending December 2026 . For a drug discovery biotech venture, it is crucial to look beyond mere transitional financial figures and comprehensively grasp the progress of ongoing pipeline development and the achievement of milestones toward future commercialization.

This report selects 10 key topics from the disclosed financial materials, providing a comprehensive summary ranging from the background of the company's performance to the development status of major pipelines and the medium-to-long-term growth roadmap.

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1. Performance Highlights and Financial Position (Q2 FY2026)

The consolidated financial results for the first half of the fiscal year ending December 2026 (January 1, 2026 – June 30, 2026) are as follows:

• Net Sales : 33 million JPY ( 80.9% decrease year-on-year)
• Selling, General and Administrative (SG&A) Expenses : 346 million JPY ( 118 million JPY decrease year-on-year)
  • Of which R&D Expenses : 217 million JPY ( 31.7% decrease , 101 million JPY decrease year-on-year)
• Operating Loss : -312 million JPY (compared to -309 million JPY in the same period last year)
• Ordinary Loss : -322 million JPY (compared to -316 million JPY in the same period last year)
• Net Loss for the Quarter : -323 million JPY (compared to -316 million JPY in the same period last year)

Although an operating loss has been recorded due to the decline in net sales, the profit and loss status is generally progressing in line with the plan , thanks to the execution of R&D expenses as scheduled and the containment of SG&A expenses.

Regarding the financial base, as of the end of June 2026, cash and deposits stood at 1,581 million JPY , and net assets were 1,409 million JPY (equity ratio of 82.3% ), ensuring sufficient liquidity to promote the development of major pipelines. Additionally, approximately 49 million JPY in funding was completed during the first half through the exercise of the 13th series of stock acquisition rights (90.9% progress rate).

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2. Breakdown of Net Sales and Analysis of the Revenue Structure in a Transitional Period

The primary factor behind the significant year-on-year decline in net sales is the decrease in royalties from existing marketed products (such as DW-1002) .

As shown in the chart "Breakdown and Trends of Net Sales" above, royalty income from Europe has ceased following the patent expiration of DW-1002 (Europe) , which had supported revenue for the past several years. Furthermore, in the U.S. market where the patent remains in effect, negotiations for contract extension are currently underway. The fact that U.S. royalties for the January–June 2026 period are scheduled to be recorded collectively upon the conclusion of the contract is a factor contributing to the revenue decline.

On the other hand, while royalties for "Glanatec" (ripasudil) in Japan and overseas are gradually ending between 2024 and 2025, sales of " Glaalpha " are growing steadily in Japan and Asian markets (Thailand, Malaysia, Singapore, etc.).

The company characterizes 2026 and 2027 as a " transitional period for revenue " due to the cycle of existing product royalties. By launching DW-5LBT in Q4 2026 and introducing new products such as the DW-1002 combination drug from 2027 onwards, the company plans to rapidly scale up sales to exceed the 2025 level by 2027 .

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3. Progress of Major Development Pipelines

The key topics regarding the development pipelines, which are the core of DWTI's corporate value, are as follows:

① Neuropathic Pain Treatment "DW-5LBT" (Bondlido)

" DW-5LBT ," targeted at postherpetic neuralgia, is the company's most immediate revenue driver. It has received approval in the U.S., and in May 2026, the company signed a basic agreement for a sales partnership with Terrain, Inc. (USA) .

As shown in the slide above, the U.S. lidocaine patch market targeted by DW-5LBT boasts a scale of approximately 295 million USD (2025 forecast) , with generics of the former blockbuster drug Lidoderm accounting for about 90% in volume terms. Since the projected sales volume for DW-5LBT is expected to exceed initial assumptions, the company is proceeding with a revision to more favorable contract terms (official contract scheduled for August 2026) and aims for a launch in Q4 2026 . Following the launch, the company expects to receive profit distributions from its co-development partner, MedRx Co., Ltd., which is expected to secure a stable revenue base .

② Glaucoma Treatment "H-1337"

For the novel ROCK inhibitor " H-1337 ," favorable intraocular pressure-lowering effects (6–7 mmHg) and safety (43.4% hyperemia) were confirmed in the U.S. Phase 2b study. In March 2026, the company signed an option agreement with Senju Pharmaceutical Co., Ltd. for Japan and Asia , shifting its development strategy to "prioritize development in Japan." Currently, the company is preparing for non-clinical studies, investigational drug manufacturing, and PMDA face-to-face consultations to initiate Phase 3 trials in Japan.

③ Regenerative Medicine Cell Product "DWR-2206" (Bullous Keratopathy)

" DWR-2206 ," co-developed with ActualEyes, is a regenerative medicine product for corneal endothelial disorders. In the domestic Phase 2 study, the primary endpoint (safety) was achieved , and trends toward improved visual acuity and corneal thickness were observed. In 2026, the project entered the preparation stage for Phase 3 trials, advancing protocol reviews and PMDA consultations. Notably, the contract structure ensures that the company will not bear development costs from Phase 3 onwards , a feature that minimizes financial risk.

④ Fuchs' Endothelial Corneal Dystrophy Treatment "K-321"

For " K-321 " (expanded indication for ripasudil), which has been out-licensed to Kowa Company, Ltd., the observation periods for both global Phase 3 studies were completed by March 2026. Data analysis and application preparations are currently underway. This is a market with significant unmet medical needs, with millions of patients in the U.S. and Europe, and large-scale growth is highly anticipated following application and approval .

⑤ Ophthalmic Surgical Aid "DW-1002" (BBG)

" DW-1002 ," which has been out-licensed to Wakamoto Pharmaceutical (Japan) and DORC (U.S./Europe), is currently being prepared for manufacturing and marketing approval applications in Japan and the U.S. In the U.S., a small-scale study is being conducted based on FDA instructions, and the company is steadily taking steps toward application.

⑥ Immune-Mediated Keratoconjunctival Disease Treatment "H-1129"

Regarding the proprietary Rho-kinase inhibitor " H-1129 ," the company signed a license agreement (exclusive license for co-owned patents) with Keio University in April 2026. The company has begun preparations for in-house clinical trials and is proceeding with investigational drug manufacturing and PMDA consultations.

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4. Full-Year Earnings Forecast and "One Product Launch Per Year" Roadmap

The company's consolidated earnings forecast for the fiscal year ending December 2026 and its future pipeline deployment plan are as follows:

FY2026 Full-Year Earnings Forecast

• Net Sales : 300 million JPY (-87 million JPY year-on-year)
• Operating Loss : -780 million JPY (-161 million JPY year-on-year)
• R&D Expenses : 780 million JPY (+111 million JPY year-on-year)

R&D expenses are planned to increase due to higher costs for safety studies and investigational drug manufacturing for clinical trials of "H-1337" and "H-1129," but this indicates an active "growth investment" phase aimed at future monetization.

As shown in the pipeline progress plan slide above, DWTI has set a clear medium-to-long-term growth strategy of "launching one product every year."

• 2026 : Launch of DW-5LBT (Postherpetic neuralgia / U.S.)
• 2027 : Application, approval, and launch of DW-1002 (Ophthalmic surgical aid / Japan & U.S.)
• 2028 : Launch of K-321 (Fuchs' endothelial corneal dystrophy / U.S., etc.)

In this way, the company is painting a picture of overcoming the revenue decline period caused by the expiration of existing product royalties and transitioning to a phase of rebuilding the base revenue and recovering toward profitability by bringing new commercial products to market every year from 2026 onwards.

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5. Summary and Future Focus

De.U.Therapeutics' Q2 FY2026 financial results symbolize a transitional period in the revenue structure due to the patent expiration of existing products. However, behind the scenes, both in-house and out-licensed pipelines are showing very steady progress.

Key points for investors and the market to watch in the future include the following:

1. Conclusion of the official contract for DW-5LBT (scheduled for August 2026) and achievement of the Q4 launch.
2. Successful conclusion of negotiations for the extension of the DW-1002 U.S. contract and the concentrated recording of royalties.
3. Disclosure of global Phase 3 data analysis results and application schedule for K-321.
4. Concrete progress with Senju Pharmaceutical toward the start of the domestic Phase 3 trial for H-1337.
5. Development funding using the 13th series of stock acquisition rights and business promotion toward the market capitalization target of 10 billion JPY.

Whether the company can steadily execute its "one product launch per year" roadmap will be the most important indicator for enhancing corporate value over the medium to long term.