FAQ

The following is a list of frequently asked questions and their answers.

※ This page will be updated as needed, November 8, 2021.

[Corporate Information]

When was the company founded?
Modalis Therapeutics Corporation was founded in Tokyo Japan in January 2016.
The consolidated subsidiary, Modalis Therapeutics Inc. was founded in Cambridge, Massachusetts USA in April 2016.
What does Modalis mean?
Modalis (pronounced “MO-DA-LIS”) is an original name that the Company has chosen to represent the Company’s proprietary gene modulation technology, CRISPR-GNDM, as a new modality (therapeutic technology) to assist patients fighting with genetic disorders. It is the key to treatment of genetic diseases, and the logo of the company name expresses “a gene switch” becoming the target of the CRISPR-GNDM technology.
What is Modalis’s scope of business?
You can see the outline of our business on the “Our Science” and “Business” pages.

[Financial]

When do you announce financial results?
We announce financial results following the end of every quarter. Please see the “IR Calendar” page.
When is the fiscal year end?
Annually on December 31st.
Where can I get copies of your past business results?
Please see the “Financial Results” page for past business results.
How can I check the video streaming of the briefing sessions?
We provide video streaming of our analyst meetings. Please see the video library available on our website.
Do you have any plans to disclose earnings forecasts or outlooks?
The earnings forecasts are not presented due to the difficulty of formulating reasonably accurate estimates at this time.

[Stock Information & Shareholders Information]

On what exchange is the company listed?
Modalis listed its shares on Tokyo Stock Exchange Mothers Market on August 3, 2020.
What is the stock code of Modalis?
4883
Do you plan to pay dividends?
We have not paid dividends since the establishment. As we will continue to carry out R&D activities that require large up-front investments, we will not pay dividends for the time being and will prioritize securing funds for continuing R&D activities.
We recognize that returning profits to shareholders is an important management issue. If the stable profit can be earned in the future and sufficient profit can be secured to cover R&D funds, we will also consider profit distribution after comprehensively considering the need to enhance internal reserves to prepare for R&D activities.
Do you currently have any preferential system for shareholders?
Not at the moment.
What is the number of shares constituting one trading unit of shares?
100 shares
Who do I contact to change share registration information such as ownership and changes of address?
Please contact your securities company.
When is the Ordinary General Meeting of Shareholder?
Annually in March.

[About our Business, R&D, and Pipeline]

When will the operating revenue be recognized?
Our major operating revenues consist of upfront and milestone payments in R&D collaborations, as well as revenue from clinical/sales milestones and royalties from license agreements. Each revenue is recorded as operating revenue when the contract is signed or when the conditions stipulated in the contract are met. As a result, our operating revenue is not reported monthly or quarterly but fluctuates depending on achievement of results.
I understand that this is an industry where if you spend money in the business, the deficit may increase by that much, but what about using funds aggressively to advance development?
As one of our options, the company believes that the Company can reap more fruits by making a larger investment in R&D. On the other hand, the Company also believes that financial discipline is important.

To achieve financial discipline, by combining collaboration pipelines and the internal pipelines, Modalis aims to establish a “hybrid model” that benefits from early revenues from the collaboration pipeline and huge potential future profits from the internal pipeline.

The Company will aggressively invest more in our R&D within this framework of discipline.
When the license-out agreement is concluded, will IR be conducted accordingly? Or will it be at the time of financial announcement?
In accordance with laws, regulations, and rules, we will proactively disclose important corporate information, such as contracts that have a significant impact on our business performance, to investors in a timely manner. While we are unable to say whether or not such information should be disclosed on an individual basis, we believe that important corporate information, such as license-out agreements, is subject to timely disclosure.

On the other hand, we are unable to disclose any unpublished information that we deem not to be in a situation to be disclosed, even if we receive inquiries about it.
Other than during the announcement of financial results, do you release information/IR regarding the status of R&D activities (such as the NHP trial)?
The company is currently in R&D phase, so the release of IR regarding the status of individual pre-clinical R&D activities is restricted. Depending on the progress and expansion of future pipelines, we believe there may be increased opportunity for IR.

Moreover, regarding the status of individual R&D activities, we have decided that publicly disclosing this information is not favorable from a competition standpoint, as it could be advantageous for our competitors and could have a harmful impact on stock value in the long-term. Furthermore, when a license is being negotiated, details of the research status can be communicated only to the negotiating party, so restrictions on public disclosure are standard.

Disclosures regarding individual R&D activities occasionally give stockholders expectations which may have an excessive influence on the stock price. The company has decided to proactively disclose information that will have serious impacts for stockholders.
What does the sublicense deal of which Modalis and Astellas entered into certain CRISPR/Cas9 foundational patents for use in this second quarter mean to Modalis’ business?
This outcome was already contemplated under the terms of our existing license agreements for the two programs entered into in 2019 as well as under our business plan. The detail of the deal is not disclosed due to strategic reason. This was in line with our existing arrangements and our business plan and therefore this will not have impact on our business while this allows our partner, Astellas, and licensed products to pursue further development.
From 2021 Q2 there are non-current liabilities reported. What are the details of this liability? Furthermore, what type of impact will this have on the business results?
Modalis has secured the CRISPR/Cas9 basic patent license (patent right) from Editas Medicine Inc (“Editas”). In 2021 Q2, a portion of the licensing fees were received from the out-licensing party. As a result, the amount is being reported as a non-current liability.

The non-current liability in question will depreciate in accordance with the duration of the licensing agreement, so the corresponding depreciation expense for the license (patent right) will be effectively offset on the PL Statement.
What is current development status of MDL-101?
With the very positive safety profile we confirmed in NHP and efficacy data in 2 mice disease models, Modalis works on IND enabling studies as well as regulatory meetings with FDA.

At the same time, our manufacturing team has initiated process development so that we can hand over the recipe of manufacturing to CDMO for scale up and large-scale manufacturing. This is one of the key element that rules the timeline in the gene therapy product development and should contribute to the value of the program.
Having got the animal data, what is the current partnering status of MDL-101?
While we continues to work on partnering discussion with aim to get it done within the year, but it may go beyond year-end.
As described in p10 of this document, Modalis believes the data we’ve got suffices partnering hurdle and the manufacturing agreement, which clarifies and outlines the whole manufacturing plan, added more value on the program.
So, we do not believe that delays in the partnering should not damage the value of the program itself.
How does the CDMO collaboration impacts on business?
Manufacturing is one of the important element to start clinical trial of MDL-101. As Modalis does not have large-scale manufacturing capability, it needs to be transferred to the other party. The agreement with the 1st tier CDMO allows us to get access to its vector system and capability for manufacturing AAV and paves the way for sample production for GLP studies and clinical trials.
Why is the IND plan pushed back to 2023?
Like in typical development of gene therapies, GMP manufacturing is the rate limiting step in MDL-101. Through out our discussion with the CDMO, both parties analyzed availability of manufacturing slot and procurement of materials and found it is more realistic that the clinical sample becomes available in 2023.
What does US lab relocation mean to the company?
As of Oct 20, Modalis relocated its US operation to Waltham MA.
Since mid last year, the capacity of the US lab has become one of the limitation for our growth and we explored opportunities of relocation. But, due to supply-chain issues in US, our relocation had been pushed back by then.
With this relocation, we are able to accommodate process development function as well as further increase of research team. Thereby, we can expedite and deepen our product development including MDL-101.
The budget for this relocation was included in the plan for the current fiscal year.
How does the scale and process of manufacturing look like in product development for rare disorders?
Although you might imagine manufacturing scale for rare disease product is also small, it may not be the case for some of the genetic disorders. For instance, many type of muscular disorders require systemic injection and 1000L scale of production, which is a largest batch in many of the GTx manufacturing facilities, can produce products only for single digit to low 2-digit patients.
It is important to manufacture those products in a way that complies with GMP, and it makes sense for us to work with CDMO, which has experience, capability, and capacity to manufacture.
Our current strategy is to work with the CDMO which we made an alliance this time and revisit the strategy when we establish clinical PoC and risk is well mitigated.
Dose the professor Nureki’s step down matter to business and technology development?
Not at all.

The initial development of the CRISPR-GNDM® technology has already completed and necessary technologies and licenses have been transferred to the company far before the separation.
Additional technology development is being conducted 100% by the company and there is nothing we need to rely on Univ. Tokyo.

[Other]

Do you sell novelties such as Modalis T-shirts?
Branded goods are not for sale and are for internal use only.