Oncolys BioPharma : Non-consolidated Financial Results for the Nine Months Ended September 30, 2022

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 Nine Months Ended September 30, 2022 [Japanese GAAP]

November 4, 2022

Company name: Oncolys BioPharma Inc.

Stock exchange listing: Tokyo Stock Exchange

Code number: 4588

URL: http://www.oncolys.com

Representative: Yasuo Urata, President & CEO

Contact: Keiji Yoshimura, Vice President

Email: [e-mail]

Scheduled date of filing quarterly securities report: November 4, 2022

Scheduled date of commencing dividend payments: ―

Availability of supplementary briefing material on quarterly financial results: No

Schedule of quarterly financial results briefing session: No

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

1. Financial Results for the Nine Months Ended September 30, 2022 (January 1, 2022 to September 30, 2022)

(1) Operating Results			(% indicates changes from the previous corresponding period.)
	Net sales		Operating profit			Ordinary profit		Profit
Nine months ended	Million yen	%	Million yen	%		Million yen	%	Million yen	%
September 30, 2022	784	-	(937)	-	(854)	-	(835)	-
September 30, 2021	318	53.3	(963)	-	(976)	-	(979)	-
	Basic earnings	Diluted earnings
	per share		per share
Nine months ended		Yen	Yen
September 30, 2022		(48.20)		-
September 30, 2021		(58.42)		-

(Note) The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the three months ended March 31, 2022. As the application of the accounting standard, etc. has a significant effect on net sales, the Company does not present the percentage of change in net sales for the nine months ended September 30, 2022 from the previous corresponding period.

(2) Financial Position

	Total assets	Net assets	Equity ratio
	Million yen	Million yen	%
As of September 30, 2022	3,455	2,472	71.3
As of December 31, 2021	4,291	3,593	83.6

(Reference) Equity: As of September 30, 2022: ¥2,465 million As of December 31, 2021: ¥3,586 million

2. Dividends

			Annual dividends
	1st	2nd	3rd	Year-end	Total
	quarter-end	quarter-end	quarter-end
Fiscal year ended	Yen	Yen	Yen	Yen	Yen
-	0.00	-	0.00	0.00
December 31, 2021
Fiscal year ending	-	0.00	-
December 31, 2022
Fiscal year ending
December 31, 2022				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, 2022 (January 1, 2022 to December 31, 2022)

		(% indicates changes from the previous corresponding period for the full year.)
	Net sales		Operating profit	Ordinary profit	Profit		Basic earnings
			per share
Full year	Million yen		%	Million yen	%	Million yen	%	Million yen		%	Yen
1,000		-	(1,600)	-	(1,600)	-	(1,600)		-	(94.59)

(Note) Revision to the financial results forecast announced most recently: No

The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the three months ended March 31, 2022. As the figures of the financial results forecast above are the figures calculated after the application of the accounting standard, etc., the Company does not present the percentage of change from the previous corresponding period.

* Notes:

1. Accounting policies adopted specially for the preparation of quarterly financial statements: No
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No

(Note) For details, please see "2. Quarterly Financial Statements and Primary Notes (3) Notes to Quarterly Financial Statements (Changes in accounting policies)" on page 7 of the supplementary material.

1. Total number of issued shares (common shares)
2. 1. Total number of issued shares at the end of the period (including treasury shares): September 30, 2022: 17,405,200 shares
      December 31, 2021: 17,405,200 shares
   2. Total number of treasury shares at the end of the period:

September 30, 2022: 80,538 shares

December 31, 2021: 68,494 shares

3) Average number of shares during the period:

Nine months ended September 30, 2022: 17,328,525 shares

Nine months ended September 30, 2021: 16,770,384 shares

• These quarterly financial results are outside the scope of quarterly 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. Quarterly Financial Statements and Primary Notes .........................................................................................	4
(1)	Quarterly Balance Sheets .............................................................................................................................	4
(2)	Quarterly Statements of Income ..................................................................................................................	6
	Nine Months Ended September 30 ................................................................................................................	6
(3)	Notes to Quarterly Financial Statements ......................................................................................................	7
	(Notes on going concern assumption) ..........................................................................................................	7
	(Notes in the case of significant changes in shareholders' equity) ...............................................................	7
	(Changes in accounting policies) .................................................................................................................	7
	(Segment information, etc.) .........................................................................................................................	9
	(Revenue recognition) ..................................................................................................................................	9
	(Significant subsequent events) ...................................................................................................................	9
3. Supplemental Information ..............................................................................................................................	10
(1)	Research and development activities ..........................................................................................................	10

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

(1) Explanation of Business Results

The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020; hereinafter "Revenue Recognition Standard"), etc. from the beginning of the three months ended March 31, 2022. Therefore, the net sales in the following explanation of business results are explained without showing the amount of increase or decrease and year-on-year comparison (%).

During the nine months ended September 30, 2022, the Japanese economy remained sluggish owing to the rapid depreciation of the yen that resulted from interest rate differences between Japan and other countries, as well as continuing rising prices. The global economy, on the other hand, looks rather uncertain on the back of accelerating inflation, despite tightening money policies by major countries excluding Japan, and the impact of Russia's invasion of Ukraine, making it difficult to have a clear future outlook.

Amid these circumstances, the Company has been pursuing a vision of "Dedicating power to future cancer treatments, and Leaving our footprint in the history of cancer treatment through those achievements," thus striving to increase managerial efficiency and actively expand research, development, and licensing activities.

In particular, the Company is promoting such activities with the aim of "virus drug discovery" within the business fields of "virotherapy for cancer" and "drugs for the treatment of serious viral infectious diseases." With regards to OBP-601 (Censavudine), a nucleoside reverse transcriptase inhibitor, its licensee Transposon Therapeutics, Inc. (hereinafter "Transposon") is conducting multiple clinical trials in Europe and the U.S. entirely at its own expense.

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

For the nine months ended September 30, 2022, net sales were ¥784,509 thousand (net sales of ¥318,317 thousand in the same period of the previous year), and operating loss was ¥937,381 thousand (operating loss of ¥963,649 thousand in the same period of the previous year). During the same period, the Company recorded interest income of ¥458 thousand, foreign exchange gains of ¥100,147 thousand, and other items as non-operating income and interest expenses of ¥3,013 thousand, amortization of restricted stock remuneration of ¥14,676 thousand, share issuance costs of ¥30 thousand, and other items as non-operating expenses. As a result, ordinary loss was ¥854,455 thousand (ordinary loss of ¥976,891 thousand in the same period of the previous year). On the other hand, extraordinary profit of ¥21,406 thousand was recorded by selling the convertible bonds of Unleash Immuno Oncolytics, Inc. (Missouri, U.S.; hereinafter "Unleash") to Unleash. As a result, loss was ¥835,248 thousand (loss of ¥979,679 thousand in the same period of the previous year).

(2) Explanation of Financial Position

Assets at the end of the third quarter of the fiscal year under review were ¥3,455,544 thousand (19.5% decrease compared with the previous fiscal year-end), primarily owing to a decrease in cash and deposits. Liabilities were ¥982,585 thousand (40.8% increase compared with the previous fiscal year-end), primarily owing to an increase in contract liabilities. Net assets were ¥2,472,958 thousand (31.2% decrease compared with the previous fiscal year-end), owing to net loss incurred, as well as other factors.

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

For the fiscal year ending December 31, 2022, the Company forecasts net sales of ¥1,000 million, operating loss, ordinary loss, and net loss of ¥1,600 million, respectively. The Company also forecasts research and development expenses of ¥1,700 million for the fiscal year ending December 2022.

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