Gubra A S

Ladies and gentlemen, thank you for standing by. Welcome everyone to the Gooba Earnings Release Q1 2024 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the one once again. Thank you. I will now hand the call over to Mr. Henrik Blau, Chief Executive Officer. You may begin your conference.

Great, thank you very much, Operator. It's a pleasure for us to present here today. I'm joined by Goobra co-founder and current CSO, Niels Frey, and also CFO, Christian Borbos. And today we will, of course, be focusing on the first quarter of the year. And first of all, zooming in. hubra what kind of company are we so really we are specialized in pre-clinical services we've built a core research engine we have the testing facilities we have all the labs needed to conduct the analysis when you develop novel drugs and our area of specialty that's metabolic diseases and this core research engine we are using for two purposes. One arm of the company is delivering services to biotech and pharma companies who are developing new drugs towards metabolic diseases. So that's one arm, that's the CRO of the company. The other arm of Google, that's our discovery and partnerships. This is where we use this core research engine to mature our own ideas for new therapies, new drugs. We mature them to the right level, and then we partner with biotech and pharma companies. So these two arms goes very well hand in hand, and there are a range of synergies for us when running our business in this way. So as of today, we are approximately 220 and actually a little more. Now we are growing rapidly. Employees, most of them located here in Hørsel, north of Copenhagen, Denmark. We have in the service business more than half of our revenue from customers located in the United States. We are in the CRO servicing a range of biotech and pharma companies, and we either have or have had 15 out of top 20 pharma companies in the world on the customer list. So zooming in on the recent highlights. In Q1, we experienced very significant growth of the revenue in the service business, 51% up compared to the same quarter last year. The obesity services were the main driver of this growth, and we definitely feel the increased interest in general across the industry in obesity, and especially when it comes to delivering services to other biotech and pharma companies, really obesity is the driver. However, we are also, of course, still delivering services within other diseases, such as MASH and other metabolic diseases. So in the discovery and partnership arm, we have our most advanced non-partner program. That's the Emmeline program, which is in phase one. We dosed the first patient a little more than five months ago, and that program is progressing according to plan. Also recently, we revealed the target for one of our other obesity pipeline programs, UCN2, and that program is focused on healthy weight loss. And these two programs, we will hear a lot more about today when Niels Vran will show you some more details on that one. Also, recently, as of today, actually, we announced that after July 1st, the new CSO, Chief Scientific Officer of GUBER, will be Louise Kjellerup-Dalbøe, And she's currently the research director in Gubra and has a long history within Gubra and has been a key player in developing the pipeline that we have today. And that means that our current CSO, co-founder Niels Frank, will transition into a new role as scientific advisor to the executive management. However, all this is only to be activated on July 1st. So zooming in on the core competencies of Gruber, it all started out within diabetes, within obesity. And from there, we've grown into other metabolic diseases, other related disease areas such as MASH, and we've also built up an extensive catalogue of kidney models. We are setting up IPF lung models, and also we have heart models, brain models, and a range of other services that we deliver. We're also a very technology-driven company. We have a range of very sophisticated technologies that support the research that we are doing. A key strength of Gubra is that we have in-house, the in vivo testing facility, and also in-house, we have a range of laboratories used for testing And that means that we control the research, the studies that we conduct from A to C, and therefore we control speed and quality. And that has high value both in the internal research programs and also when we deliver services to our customers. And with that, I will hand over the word to our CFO, Christian.

Thanks, Henrik. And this is just a repeat of what Henrik said, really. You know, we had a great start to the year in growing the CRO business by more than 50%. And the main driver, as Henrik talked about, was the obesity area. And the obesity area, I don't think it's become unnoticed by anyone that there's an very big drive within the whole pharma and biotech industry to develop new compounds in this area. That, of course, benefits Gubra since, you know, obesity is a stronghold that has been ever since the company was formed back in 2008. So we're clearly reaping the benefits of being a strong player in this area. Having strong revenue, it filters down to our earnings and we had an EBIT margin for the CRO business of 39% in the first quarter. And actually in absolute terms, it was a doubling of the EBIT level. compared to the same quarter last year. So all in all, very good start to the year. And I should also mention, we'd also see other disease categories growing apart from obesity, but obesity has been the strongest driver in the first quarter. With that, I'll leave the word over to Nils. Nils, please.

Yeah, thank you, Kristen. And now it's time for a slight change. We'll start by discussing overall our Discover and Partnerships business, the D&P segment of Goobra, where we discover, design and develop peptide-based drug candidates. And we have developed this streamlined platform over the past four to five years, where we actually combine the best from wet lab with the best from machine learning and AI. And this has enabled us to, you can say, accelerate the peptide drug candidate identified in this machinery. Also, it has enabled us to enhance and build stronger patents. So secure better IP and by having this automated almost platform build up, it also enables us to have a much richer pipeline and actually develop more programs in parallel than we could before with the same number of If we go into our pipeline and take a look at that, we have currently five active partnerships. We have four with Boehringer Ingelheim. One is currently tested in a clinical trial in combination with both CelacroType and CervoType. And then we have one that's on its way through preclinical development. And we have two earlier programs with Boehringer in the drug discovery phases. A testimony to our streamlined platform is actually the fact that we have a collaboration with Danish biotech Hemat that's working with bleeding disorders and they're using our streamlined platform also to identify potent and long-acting peptide drug candidates. When we look into our own programs, and these are the six green programs that we have shown here, we have, of course, our AMALYN program that I will tell you a little bit more about. Then we have this newly revealed UCN2 program for healthy weight loss that I will also dive into and show you some preclinical data. We have a GLT1 agonist program, and we have another yet not unblinded obesity program. We also have a program for the rare, two rare disorders, one the narcolepsy and the other is hypopyrothyroidism. These are still in drug discovery and I'll not come into or go deeper into that today. So for our AMALYN program, as Henrik rightly mentioned, we are in phase 1a with this program and we are quite excited about the progress of this. It's progressing according to plan. And I just want to highlight a few features of this drug when it's given to obese rats. We don't have readouts from our phase 1a study in humans yet. That's also mainly a safety study. But if we dose this compound to overweight rats, and this is a purple line you see in the middle, the group any compound alone, we can see a substantial weight loss following daily treatment of this molecule for four weeks. However, if we combine it with either a GLP-1 analogue alone, a GLP-1 GIP analogue, like Ticepatite, or a GLP-1 glucagon analogue, like Subvertotype, we can see a very nice additive weight loss. So suggesting that the GUP-AMINE can be used as a combination partner for any one treatment that is containing a GLP-1 agonist. If we then look at where we are right now with our first in human study, we are in phase 1A, as I mentioned. It's a randomized placebo controlled single ascending dose trial. And primarily we are looking for safety readouts. But of course, we will also gain information about pharmacokinetics and also some pharmacodynamic readouts. And that includes effects on certain hormones. It also includes effects on gastric emptying and potential some effects on weight, although you never know before you see that. We have included lean to overweight, but otherwise healthy subjects. It's in males. We have up to six cohorts, so up to a total of 48 subjects. And we are running the study in the UK with Quotient Sciences. First cohort, as Henrik also mentioned, was administered last year at the end of the year, and we are now into the third dose group and we are enrolling key cohorts and expect to be finalized with that mid of this year. And we also anticipate top line results in the second half of 2024. So again, primary objective safety, but of course also some secondary objectives. I will skip immediately now to our other healthy weight loss program the UCN2 program and I'll go slightly deeper into the details of that program. So today we know that weight loss, there are certain that definitely weight loss drugs on the market that leads to a very substantial weight loss. And that's also why they have become so successful. A part of this weight loss, however, is also the fact that you not only lose fat, but you also lose 20 to 30 percent of lean mass. So that's muscle, bone, different things like that. Of course, it would be great if we could somehow minimize the loss of lean mass and maximize a lot of fat mass. And the UCN2 program, we aim to do exactly that. We have data from preclinical models that I'll show you in a little bit that supports primarily loss of fat and actually an increase in lean mass. So UCN2 is a peptide that acts on, actually the native peptide acts on both, on two different receptors, but we have created a molecule that only activates the CRH2 receptor, so it has no activity at all on the so-called stress receptor, the CRH1R receptor. And we have created a molecule also with excellent properties. So it's an excellent molecule that is very stable and can be formulated and also can be delivered according to our models that we use preclinically as a once weekly injection in humans. This molecule has excellent properties in the sense that we have seen that in animal models that it leads to increased fat mass loss, actually an increase in lean mass and indicates that it's muscle and it also improves glucose homeostasis. So it does have effects that is very well suitable for treatment of metabolic disorders. It has also shown effects in some animal models on kidney function, in animal models with diabetic kidney disease, and it also has some positive effects on heart and cardiovascular function. So here are some data, and I'll just try to explain them from the left going to the right. So if you look, this is a study done in DIO rats. In rats, we don't see a long lasting effect on total body weight. As you can see to the left, the green lines, that is animals dosed with the UCN2 molecule in different doses. And you can see that there is an initial loss of weight, but that weight is regained so that they end up with the relatively same weight as the control animals. However, if we look in the middle graph, you can see that lean mass, so that's muscle mass, bone mass, et cetera, is actually increased when we dose with this molecule. And at the same time, if you look on the right, and remember, please, that these are obese rats, you can see that there is a decline in body mass, in fat mass in these animals. So you see a shift from fat to lean mass, which is definitely beneficial in a number of different aspects. if we look on also a relatively complicated slide here if we look on the effect of this molecule either alone if you look on the left graph you can see that given alone there is no substantial effect in these obese rats and if we give it together with either cagrelin type this is an amylin analog semaglutide or semaglutide you can see that there are effects on on body weight they are not Additional effects, it appears on body weight, but if you look in the middle, you can see that the slight loss of lean mass that you see with cagrelin type or semacrotide alone can be prevented if you give the UCM2 analog together with this. These are the two bars to the very right in the middle panel. And if you then look on the loss of fat mass, these molecules, of course, give rise to a fat loss on their own. But if you add this using two molecules on top, you can see that the fat mass loss is actually increased. So this suggests that this molecule has beneficial effects on lean mass and fat mass loss, and that it is well suited for combinations with other molecules, either of amylin origin or of GLP-1 origin. And this is just to sum up on our, you can say, expenditures in our discovery and partnership. We are, of course, pushing these very promising molecules forward. So that's why we have a slightly increase in our costs in Q1. And we also expect to increase costs slightly throughout the year in our DNP segment. And with that, I will hand over the word to Henrik.

And these are invested in green assets.

And one thing that we're currently looking into trying to get the permission for is a solar power panel site in order for us to generate the electricity that we are using on site here. And with that, I will hand it over to you, Christian, for the final financial remarks.

Yes, so we round off on a strong note. So yesterday we raised our financial guidance for the CRO business, and now we expect a revenue growth of 15% to 20% compared to their expectation of 10% to 15%. And in the same manner, we also increased the expectation to the earnings debit margin. Now we expect 28% to 31% for the full year for the CRO business compared to 25% to 28%. So that's, you know, a function of a very strong first quarter and a solid situation when we look at the order book. As Nils mentioned, on the discovery and partnership side, we increased the cost slightly for developing the UCN2 within healthy weight loss. And we also, you know, move as quickly as we can on the Kubernetes so that it is a slightly higher cost. So we then we increase the total cost reputation by say around 10% for the BNP business. I think that concludes our presentation and I just leave the word over to Henrik too.

Great. Thank you very much for listening so far and now we are ready to take questions if you have any questions sitting around.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. We will pause for just a moment to compile the Q&A roster. Thank you. Our first question comes online on Martin Parkway from SEB. Please go ahead.

Yes, good morning, gentlemen. Martin Parkway, SEB. Just a couple of questions. First, on the growth in the CEO business, you were so kind to wait with the Q1 growth until today while you gave the guidance yesterday. So could you just provide us with some insight Why are you seeing this steep deceleration to growth? I understand that you should not guide 51%, but still that's a long way from 51% in the first quarter and down to 15% to 20% for the full year. So what have you seen in the order book right now that makes you sure that guidance will be back on maybe the original guidance level for the last three quarters? And then secondly, just on the additional investment in the API for the Group Army, you say that could potentially speed up development time. Maybe you could elaborate a bit on that. Thirdly, if I may, we have since your last quarter release seen some activity for some of the big guys, Noah and Lily, increasing interest in the Amelin area, latest with Lily starting at phase two. How do you see that impacting the partnership potential for your compound?

Thank you very much, Martin. I will be starting out here. So first of all, for the question with regards to the revenue guidance for the CRO. So we are in a period with rapid growth. We saw very nice growth last year, and we've also seen that here in the first quarter. And I think with growth, we did that from the beginning of the year. Now we have increased that growth guidance So definitely we are in a period of growth also. We see that going forward. That's the best estimate we have. That's why we have increased the guidance. However, we also know from our history in this space that the CRO services, there is some variation from one month to another, and it's difficult to predict the growth half a year from now. So what we've given now is a very solid guidance based on what we've seen, a nice influx of studies to Google in Q1 and also late last year and still a nice activity. So we believe a growth this year of 15 to 20% is a very solid estimate for where we will end the year. So with regards to investments in API, That's the good Ami program, so the AmiLink program. And really that is putting on the glasses for the long perspective. We have start API production for activities on the other side of the current plan, clinical studies, and really that's to ensure that there is no loss of time for a partner when partnering in this program, that there will be adequate API present. It takes some time to make a new batch of API, and that is why we have initiated this activity, already now front-loading some costs and thereby ensuring that there will be no loss of time further down the road for the Google Admin Program. The last part of your question was this activity we see right now across the industry and the interest in anilines. And we think Google is in a strong position. There are not that many aniline programs around. Across the industry, amyloid is a somewhat difficult molecule to work with. And that's also why we're very pleased that we have so strong features built into our amyloid drugs. So, yes, we do see a high level of activity, high level of interest in general across the obesity space. And as we are generating the SAV data, we are, of course, Also ensuring to speak to the various parties across the industry and ensure that they are up to speed on our programs. And eventually when we think the timing is right here, we will also be pursuing a partnership for this program as well. So yes, definitely positive that we see all this energy and interest in the obesity space.

Great, thank you very much. And then just a follow-up to the UCN, two assets. Maybe a two-fold question on that one. How far do you expect to take this through development? Now you're starting preclinical toxicology studies, but what are your plans after that? I guess that you're increasing costs for the asset this year, so should we also expect similarly higher costs for this asset next year? And then maybe also to Nils, what do you see of similar assets out there in the industry?

All right. So, yeah. You know that our model is partnering when the best opportunities are there. So we don't know yet how far we'll take this asset, but we will definitely move it forward now. That's all we have said. And then we'll see how far we'll take it before the right partnering opportunity opens up. When you look broadly speaking on the UCN2 molecule and the UCN2 agonist as such, they have actually been in clinical development previously some years back. That was very short-acting molecules, and that was in the cardiovascular space. But there are companies taking similar assets forward, not necessarily with the exact same indication as we have, but we have something which is – We see a nice position for this in the healthy weight loss space.

Just a final question from my side, and then I'll let others get to the table. Of course, we see all these clinical data from the two big guys, and everybody's trying to break the duopoly. We've seen Amgen. bringing, you know, a longer acting product potentially to market once monthly, maybe even longer. Are you also working on, in, you know, in early research on molecules with higher, longer frequency than just once weekly?

We are always working on optimizing all parameters that is at all possible, and that includes different administration routes, but it definitely also, of course, includes as long half-lives as at all possible. And we're looking into this at all times.

Thank you very much, and have a good day. Thanks.

Thank you. Our next question comes from Joseph Hedland from RX Securities. Please go ahead.

Good morning. Thanks for taking my questions. You spoke about obesity being the primary growth area for the CRO business. I just wondered if you could put some numbers to that. What kind of growth did you see for the obesity offering versus the other areas? Are they all growing or are there some areas that are more flat? And is that a result, do you think, the demand around those services, the general market demand or need for expansion of those offerings. And then just staying with obesity, what kind of capacity do you have to absorb any further increase in interest in the space? Thanks.

Thanks, Josef. And it's Christian. I'll take the first question. So we've seen, I mean, solid development in almost all disease categories. It's just been that obesity has been, you know, a bit stronger than the other ones. And again, obesity is also quite a large area within Grubera. So it's been the, you know, the biggest growth contributor for this particular quarter. But we also see, you know, some development in the other disease categories. So Again, 51% growth is not only driven by obesity, there's also other areas.

So, could you repeat the same thing? I can take that. So, that was regarding the capacity for increasing, taking up the influx of requests in the obesity area. And what I can say is that we just recently opened a new animal facility, which has increased our, you can say, capacity with about 50%. So, we have actually ample room right now to take in more orders. And It's all about actually, of course, it's also about staffing up at the same time as studies are flowing in. So it's not like... We don't want to triple or quadruple anything, but we want to make sure that we can deliver and the same high quality that we always deliver and not taking in too many orders and not essentially focusing on what we've always focused on, not disappointing a single client. That's the most important part. But at the same time, of course, also increasing the number of studies that we deliver.

OK, thank you very much.

Thank you. There appear to be no further questions.

Great. Thank you, everyone, for listening in. It was a pleasure presenting to you today, and we're looking forward to our next interaction after the next quarter. Thank you.

Thank you. This concludes today's conference call. We thank you for participating, and you may now disconnect.