Arecor Therapeutics plc

Good morning and welcome to the Aracool Therapeutics PLC investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. Before we begin, I'd like to submit the following poll. And I'd like to hand you over to the executive management team from Aracool Therapeutics PLC. Sarah, good morning.

Thank you. Good morning. Good morning, everybody. Thank you for taking the time to join us today. So my name is Dr. Sarah Howell. I'm the CEO of Arakor Therapeutics, and I'm joined today by David Ellen, our CFO. We'll be talking through the full year results to the 31st of December 2025. So our customary legal notice. So at Zara Core, we're very much focused, just as a quick recap, we're a clinical stage biotech company, as you know, and we're focused on developing superior therapeutics that can reduce treatment burden and improve outcomes, specifically for people living with diabetes, obesity, and other cardiometabolic diseases. Our focus is very much on two core product areas, being in the diabetes space and the oral delivery of peptides. And these are areas where there's significant unmet patient need that we're aiming to address with our superior products in high multi-billion dollar growth markets. So our lead program is our best-in-class insulin, AT278, so this is the only ultra-concentrated ultra-rapid-acting insulin in development. And it's been specifically designed with this profile for use in next-generation automated insulin delivery systems. And I'll talk a little bit more just as a reminder around what we mean by automated insulin delivery system and our algorithm and aid systems. We're also exploring a next-generation drug delivery platform for ill-delivery peptides, where very poor bioavailability, less than 1%, is the drug delivery challenge that we're looking to overcome. So the AT278, in terms of high-level status, we are very busy preparing for the phase two clinical study, which is all on track, and that's with our partner, SQL MedTech. And again, I'll talk about our partnership with SQL MedTech in much more detail. And then for the oral delivery of peptides, our focus now is on generating that key non-clinical pharmacokinetic data, which is essentially assessing the bioavailability, which is the challenge that we're looking to overcome. And those studies are ongoing and through the course of the second half. of this year. And both of these product areas, of course, are underpinned and leveraged. We're leveraging our innovative and proprietary Alistat formulation technology platform here. We also continue to partner with leading pharma and medtech companies. So we have partnerships. And as you know, we previously announced with companies such as Eli Lilly, Minimed, who are actually now the diabetes division that spun out of Medtronic, they IPO'd earlier this year, and also Ligand Pharmaceuticals, amongst others, they're the companies where we've been able to publicly announce their names. So now I'm going to move on to talk a little bit more around our operational highlights here. So around AT278, obviously our need program there, we signed a co-development partnership with SQL MedTech last year, around September time last year, where both companies are co-funding all of the phase two enabling development activities. required for us to file for an IMD so to file for clinical trial approval with the FDA in the US and we also have very positive and what's called a type C advice meeting with the FDA, this is where we presented our phase two clinical plans or protocols for that study. and also the data package that we intend to submit under our R&D. We have very positive feedback from the FDA there, so we're very confident there around that clinical study design and its improveability to be able to perform that study, which would be a US-based study. Importantly, as part of that co-development deal, both companies, so both ARACOR and SQL MedTech, have confirmed their strategic intent to enter into a broader agreement that would be for phase two clinical development through to commercialization. And the terms of that deal are at a very advanced stage now of negotiation, so we're confident around moving forward and entering into that next phase of that deal, which is very important for us in terms of taking AT278 forward. Then on the oil delivery of peptides, programs were initially focused in the GLP-1 space, and I'll talk a little bit more around why we focused on GLP-1 there. We've generated initial positive results stabilizing the GLP-1 or stabilizing that peptide under the very harsh conditions that it needs to survive. And we filed new IP in that area. So that's a very positive first step. We've overcome that first challenge and obviously filed our IP so we can start to protect that space. And as I mentioned earlier, we're now focused on improving bioavailability in those animal PK studies. On the financing side, we entered into a royalty financing agreement with Ligon Pharmaceuticals. It's raising $11 million of non-diluted funding, of which we received $7 million up front. And we've subsequently this year received a further half a million dollars, which is part of the $4 million in CVRs. So we have an additional $3.5 million in CVRs related to that royalty financing agreement that are obviously related to certain commercial milestones. and they all remain on track. So this has really strengthened the balance sheet for our core and allowed us the time, essentially, to negotiate the best deal that we can enter into that next phase of development for AT278. So we're doing that from a position of strength, which is very much our focus now. So we have a very strong corporate and financial position, and now I'll hand over to David to talk about that in a little bit more detail.

Good morning. So the key message that we have today is that we have secured a cash runway to Q227 that allows us to focus on two core areas, the AT278 insulin and the platform for the oral delivery of peptides, and specifically to be able to close a co-development and commercialization deal for the insulin AT278. starting with the income statement revenues have increased by 0.1 million with that increase being down to formulation revenues and obviously the most sort of standout item on an enl is the other income 5.5 million 5 million of that was the gain on the sale of royalty rights to ligand there was also at 0.3 million being our deck r d tax credit income and 200 000 of recharging to SQL MedTech under our existing co-development agreement. Operating expenses decreased by approximately half a million pound. We had a small decrease you can see in the G&A expenses on the corporate side, and then R&D expenses down 0.4 million. Some of that is because within 2024, we had at the beginning of that year, costs remaining on the phase 104 phase one for 8278 none of that in 2025 that we have started the phase two pre-enabling costs for 8278 already profit or loss for the year 0.9 million and then below that the loss for the year discontinued operations so that is for the tetris business where we ceased operations in september Within that, we had a gain of $0.4 million when we sold the rights to the non-aggluo products to Aspire Pharma, and the numbers for last year were impacted by the $3.3 million impairment overall on the Tetris business. Next page, please. So we finished with the year end cash of just over 6 million. Obviously, the largest element towards that was the sale of the royalty rights, where we received 5.2 million up from proceeds from Ligand. And we have received another 500,000 already this year in dollars, and we expect to receive another half a million dollars before the end of the year. Net cash used in operating activities for continued operations was 3.1 million pound. which was greatly decreased from 5.7 million in the previous year. As mentioned, this all works towards extending the cash runway to the second quarter of 2027. And then just lastly, on the discontinued operations, then we generated cash of 0.7 million, whereas the prior year we used cash of 3.6 million. And that all comes from no more purchases of inventory and collecting all the receivables on the Tetris side of the business.