Nxera Pharma Co Ltd

Time has come, so we will now begin the financial results briefing of Nexara Pharma for FY 2024. Thank you for taking time out of your busy schedule to join us today. I am Nomura, CFO. I will be the moderator. Today, we have Chris Cargill, CEO, Dr. Matt Barnes, President of Heptaris and Head of UKRD, and Dr. Makoto Sugita, Chief Medical Officer and President and CEO of Nexara Pharma Japan. simultaneous interpretation is provided. Please click on the earth icon in the lower right corner of the screen or click the details button and then the globe icon and select either Japanese or English. If you choose off, you will hear the speaker's original voice. Today, we will explain the progress of our business using the materials in the first half, followed by a Q&A session in the second half. The presentation materials will be shown on the screen and are also available on our website. If you want a copy, please access our website by selecting IR News from the Shareholders and Investors tab in the upper right corner of the website. For the Q&A session in the second half, institutional investors, analysts, and members of the media are welcome to raise your hands and ask questions during the Q&A session. For all others, please submit your questions via the Q&A button. Questions can be submitted any time during the webinar and will be answered as time permits during the Q&A session later. So we will start the briefing, I will first explain the full year financial results, followed by an operational update from Chris, Japan and APAC commercial business by Sugita and R&D progress, mainly in the UK by Matt. Finally, Chris will explain our FY 2025 goals and medium to long term objectives. Please turn to page five of the presentation. This is page 5. This is the summary of the financial results for the fiscal year ending December 2024, divided into three parts, revenue, profit, and cash. First, revenue increased 126% to 28.8 billion yen, compared to 12.8 billion yen in the prior year. Details will be explained later, but this is thanks to the fact that sales of pivlots were strong. and that it contributed for the full year in 2024 while it only contributed for five months after the acquisition in 2023. And also thanks to an increase in milestone due to the progress of many partnered programs. Next, regarding profit. Core operating profit increased by 3.6 billion yen compared to a loss of 3.1 billion yen last year. This is thanks to the sales growth mentioned earlier, as well as the fact that R&D and SG&A expenses were both lower than the revised estimates as the integration progressed well. Also, operating profit on accounting basis was a loss of 5.4 billion yen, which is calculated by subtracting non-core expenses of 9 billion yen, Of these non-core expenses, most of the M&A-related non-recurring expenses in 2023, mainly additional cost of sales charge and integration costs, were completed in 2024 and will not be carried over to 2025. Finally, cash decreased to 36.2 billion yen, compared to 49 billion yen in the prior year. This was mainly due to the advanced purchase of API of QVIVIC to ensure the stable supply in line with the launch. Moving on to slide 6. The summary is explained in a bit more detail, showing the trends in revenue and its breakdown, operating profit and core operating profit on the left, and the factors behind the increase or decrease from the same period last year on the right. One thing I should add from the summary is that, as you can see from the breakdown of milestone on the upper right, Two milestone payments from Neurocrine in line with the development progress of M4, the success of the long-term toxicity study and the Phase 2 study of M4 contributed greatly. Next is slide 7. Slide 7 shows the breakdown by business domain as well as by core operating profit and accounting operating profit. As mentioned in the summary, the non-recurring costs associated with the acquisition of Edorcia Japan in 2023, specifically A, the inventory adjustments, and C, integration costs, shown in pink on the right side, ended in 2024 and will not be carried over to 2025. Including these, non-core expenses for 2024 amounted to approximately 9 billion yen, putting pressure on accounting profits, but the core operating profit for the entire group was 3.6 billion yen. Next, slide eight. This slide shows our forecast for R&D and SG&A expenses for the fiscal year. R&D expenses are expected to be between 12 and 14 billion yen, a slight increase from the 11.8 billion yen forecast for this year. The main factors behind the increase are the costs associated with the progress of development of our three in-house developed products that have entered clinical trials, EP4 antagonist, EP4 agonist, and GPR5-2 agonist, as they move from Phase 1b to Phase 2, and the expected development costs in Japan and APAC through in-licensing. Regarding SG&A expenses, as the integration process has settled down and we have made progress in streamlining our expense usage, this will offset the increase in amortization of intangible assets due to the launch of Qvidic and the increase in IT investment costs aimed at further efficiency. And we are aiming for a flat to slightly decreased level overall from 2024. That concludes my brief summary for the full year financial results. Chris will now update you on the business. Chris, please.

Thank you, Nomura-san, and good afternoon, everyone. Please turn to slide 10. So it was a fantastic year of progress as we continue to invest to transform the company into one of Japan's leading biopharma companies. We achieved our full year sales target for PIVLAS of 15.2 billion yen, beating our guidance set at the Q3 2024 results for sales greater than 15 billion yen. We secured the on-time PMDA approval in Japan for Daradirexin, brand name Qvivic. And while we did not achieve an in-license of a new product in the financial year 2024, we remain active in multiple discussions with global partners to secure new products for Japan and APAC. We executed two new major partnerships. O-Ringer Ingelheim paid for an exclusive option to license our GPR-52 agonist program for schizophrenia. Shionogi became our powerful commercial partner in the successful launch of Qvivic, a potentially best-in-class treatment for adults with insomnia. We initiated a new Phase 1 study for our wholly-owned EP4 agonist program, targeting IBD. And we launched a new brand concept for the entire company, Nexera Pharma, which was well-received internationally. We've now completed all transitional service agreements with Eudorcia and are now fully independent of Eudorcia's supply chain and financial and IT systems following the acquisition of Eudorcia's businesses in Japan and Korea. Please turn to slide 11. So across our core businesses, we remain extremely productive. We are accelerating investments in science and drug development to support our goal to build a high growth, high profit emerging biopharma company for Japan. In the UK, we continued to invest in the next wave drug discovery platform to ensure we are the definitive leader at drugging GPCRs. And we're focused on developing drugs that target GPCRs in the largest areas of unmet need, such as neurology, metabolic disease, and immunology. It's a very exciting time to be at Nexera as together with partners, we now have multiple programs advancing through the clinic. Of note was the successful phase two study of MBI-568 by our partner Neurocrine, which is a potentially best-in-class profile muscarinic M4 agonist fast-follow program for patients with schizophrenia. Following its successful end of phase two meeting with the FDA in January, Neuroquin will move this program into a global phase three study in the first half of this year. In Japan, PIVLAS has firmly established itself as the leading product preferred by neurosurgeons for the prevention of cerebral vasospasm associated with ASAH. And furthermore, our second product, Qvivic, was successfully launched by our partner, Shionogi, in December 2024. Qvivic rapidly became one of the most detailed products in Japan across December 2024 and January 2025, which validated our strategy to secure a powerful commercial partner to ensure Qvivic is available to as many patients in the $1 billion US market for dual orexin antagonist treatments in Japan. Please turn to slide 12. As you can see on this slide, we have a broad and balanced innovative pipeline that's targeting some of the biggest areas of unmet medical need. Nexera Pharma is well advanced in its mission to accelerate innovative medicines to patients and become a leading player in Japanese pharmaceuticals. With two recently launched products driving stable top line sales growth, plus a pipeline of innovative clinical stage programs, the risk reward is very attractive. We have the upside potential of a biotech with the diversification and protection of a commercial pharma company. Please turn to slide 13. So we are delivering on science with significant future commercial potential. In Japan, where our commercial business is now thriving, we prioritize focusing on diseases that truly matter in this region, such as age-related conditions and quality of life diseases. PIVLAS and Qvivik are both amazing products servicing diseases in this area. We're focused on recruiting the best team in the industry, and collectively our colleagues have contributed to nine Japanese NDA approvals in recent history. And we aim to stay lean and agile. We believe we're second only to Chugai in Japan when it comes to sales force efficiency, generating over 400 million yen per sales representative annually in Japan. In the UK, the hub of our research activities, we focus on the continued investment in our next wave drug discovery platform to be the definitive leader in drugging GPCRs. We focus on innovating in areas that matter, especially neurology, metabolic disease, and immunology. And our partnered programs are exposed to some of the fastest growing areas of healthcare, such as muscarinic agonists for neuropsychiatry with Neurocrine, orexin agonists for narcolepsy and sleep disorders with Centessa, and oral small molecule GLP-1 agonists for obesity with Pfizer. In the next sections, my colleagues Sugita-san and Matt Barnes will provide more detail regarding the two products that we've recently commercialized in Japan and our most advanced programs in the clinic, including both partnered and wholly owned programs. Thank you and over to you now, Sugita-san.

Thank you, Chris. Thank you very much, ladies and gentlemen, for taking time out of your busy schedule to attend today. I am Makoto Sugita. As of October 1st last year, I assumed the position of Chief Medical Officer at Nexer Pharma Inc. and concurrently serve as the President and CEO of Nexer Pharma Japan Inc. Today, I'd like to provide you with an update on the latest developments in our commercial business in the Japanese and Asia-Pacific markets, focusing on the market growth of pivlats and kuvivik, as well as our future plan. Now, let me begin the presentation. Next slide, please. Let me introduce pivlats, one of our key products. PIVLATS is an endothelial A receptor antagonist developed to suppress cerebral vasospasm following surgery for subarachnoid hemorrhage caused by cerebral aneurysms. By doing so, it helps prevent secondary complications such as cerebral infarction and ischemic symptoms. Currently, surgical treatments for cerebral aneurysms such as coiling and clipping are widely performed. However, post-surgical complications due to cerebral vasospasm remain a major challenge that significantly impacts treatment outcomes. PIVLADS was specifically developed to address this issue by reducing the risk of postoperative vasospasm. In doing so, it supports neurosurgeons in their treatment efforts and contributes significantly to improving patient outcome. Market Growth and Sales Performance of Pivlots Since its launch in 2022, Pivlots has demonstrated steady growth. Last year, it achieved a market share of 69%, and we expect this to exceed 75% by 2025. Sales have also expanded steadily, with a 47% increase from 2022 to 2023 and a 14% increase from 2023 to 2024. With this continued growth in both market share and revenue, we are targeting sales of 13 to 14 billion yen in 2025. Moving forward, we will strive to reach more patients and promote broader adoption in medical institutions. Now, the NHI-based revenue will be shown on net basis, our revenue basis going forward, so the numbers will be different going forward, so please take note. Now, to further accelerate the growth of PIVLOTS, we are implementing three key strategic initiatives. Enhancing medical information dissemination. We will strengthen educational activities for neurosurgeons by leveraging clinical data, promoting the appropriate use of PIVLOTs, and expanding adoption across more medical institutions. Next is further expansion of market share. While PIVLOTs has already secured over 70% market share, we aim to exceed 75% by 2025. To achieve this, we will deepen our collaboration with medical institutions and expand our network to ensure continued market penetration. Lastly, improving profitability and ensuring sustainable growth. By optimizing our sales strategy and maintaining competitiveness, we aim to build a solid foundation that supports long-term market growth. As demonstrated, Pivlats is accelerating its market penetration while maintaining stable revenue growth, establishing itself as a leader in the neurosurgical field. With our 2025 revenue target of 13 to 14 billion yen, we will continue to drive market expansion and strengthen our leadership in this sector. Next slide, please. Next is Kuvidik for insomnia. Let me first explain the mechanism of action of Kuvivik. Kuvivik is an insomnia treatment classified as dual orexin receptor antagonist, DORA. Orexin is a neurotransmitter that plays a crucial role in maintaining wakefulness in the brain, keeping the brain in a state of alertness through its interaction with the orexin receptor types A1 and 2. DORA works by simultaneously blocking both of these receptors, thereby suppressing the excessive wakefulness system and promoting natural sleep. This makes Kuvivik a new type of insomnia treatment. Next is market growth and expansion of Kuvivik. Kuvivik entered the market as the third DORA insomnia treatment. In recent years, there's been a rapid market shift in Japan from benzodiazepine and Z-class insomnia treatments to DORA medication. The market data clearly shows this growth. The growth trend of DORA-based insomnia treatments in Japan are as follows. Since 2019, the market for the two existing DORA drugs has grown by over 10% annually. The prescription rate for DORA drugs has now reached nearly 50%, with further increases expected. The domestic market size in Japan is projected to reach approximately 10 million US dollars. As such, the market share of DORA medication in the insomnia treatment market in Japan is rapidly expanding. Japan's importance as one of the key markets for DORA globally is growing. Nexera Pharma has formed a strategic partnership with Shionogi and Company, and we are working together to make QVVIC the best-in-class treatment. We are accelerating its market launch with this partnership. By implementing this appropriate marketing strategies and strengthening collaboration with healthcare professionals, we aim to further drive the growth of DoraMarket and evolve QVVIC into a leading product in this space. Next slide, please. The growth of QVVIC is not limited to the Japanese domestic market. We are currently actively expanding into Asia-Pacific market. In Japan, through our partnership with Shionogi and Company Limited, we have built a system that can address over 20 million insomnia patients. Since its market launch, Tuvivik has steadily increased its recognition in Japan, and along with the growth of the overall DORA market, further market expansion is expected in the future. In South Korea, we are progressing with partnership with local companies, and clinical trials are progressing smoothly, with a market launch targeted for 2027. With more than 6.5 million insomnia patients in South Korea, there is significant market growth potential. Currently, our partnership is in the form of development cooperation, but we will continue to consider strategies for sales and marketing going forward. We are also in discussion with several potential partners in other Asia-Pacific markets, and we are committed to building optimal strategies tailored to the unique characteristics of each country to ensure steady market expansion. As shown, our company is not only focusing on the Japanese market, but is also actively expanding in the Asia-Pacific region, building a system to reliably deliver QVVIC to patients who need it. We will continue to strengthen collaborations with our partner companies and develop market-specific strategies to drive the growth of the DORA market, clearly differentiate Kuvivik from our DORA products, and achieve sustainable revenue growth. Through these efforts, we will strive to provide sustainable corporate value to our shareholders. This concludes the report on Qvivik's expansion strategy in the Asia-Pacific market. I will now proceed with an explanation of our 2025 revenue targets and future growth strategies. In my last slide, I will explain the sales growth of our key products, Pivlots and Qvivik, and 2025 revenue targets. So, our target for 2025 fiscal year pivots 13 to 14 billion yen, QVVIC 4 to 5 billion yen. To achieve these targets, we will focus on three pillars. One, expanding market share. Two, optimizing sales strategies. And three, accelerating growth in the Asia-Pacific market. These initiatives will ensure steady growth toward our revenue goals. PIVVLATS has consistently grown in the market, while QVVIC is now at a crucial stage where building a solid foundation for its future growth and expansion is key. PIVVLATS is achieving stable market share expansion and revenue growth, QVVIC expanding from the Japanese market into Asia Pacific region, achieving the 2025 revenue target of total 17 to 19 billion yen. We are committed to providing innovative treatments that contribute to improving patient quality of life while also driving further market growth. We also promise to continue enhancing corporate value for our shareholders. Next, R&D progress will be explained by Dr. Matt Barnes. Matt?

Yes, thank you, Sagita-san. Good afternoon, everybody. My name is Matt Barnes. I'm the president of Nexia Reformer UK and head of R&D. 2024 has been a year of significant achievements with substantial progress across our portfolio and the achievement of significant milestone payments from key partnerships. So let's begin with an overview of our accomplishments. Please turn to the next slide. So as I mentioned, 2024 has been a transformational year for Nexera Pharma UK, marked by major milestones across all aspects of our R&D portfolio. In the clinical phase from our partner pipeline, we were extremely pleased to see three significant milestones in our highly successful partnership with Neurocrime around a suite of muscarinic agonist programs for schizophrenia and other neuropsychiatric disorders. These included the completion of a successful long-term toxicology assessment and phase two study in schizophrenia with MBI-568, an oral selective M4 agonist. In addition, we were also pleased to see MBI-567, an M1 oral preferring agonist discovered by Nexera, enter into phase one trials in May. We were also excited to see the progress of Centesa have made with ORX750, a selective OX2 receptor agonist for narcolepsy, as it entered phase one trials in May this year, and then on the back of encouraging data subsequently into a phase two study in November. From our in-house pipeline, we initiated a phase one study with NXC 744 for inflammatory bowel disease in March. And also at the end of the first quarter, we were proud to announce our collaboration with Boehringer Ingelheim to progress our first in-class novel GPR52 agonist for the treatment of schizophrenia. I will talk more about these important programs on subsequent slides. In the early phases of research, we have strengthened our AI-driven approaches through strategic partnerships with Precision Life to identify novel autoimmune disease targets and with Antiverse to design novel GPCR-targeted antibody therapeutics using generative AI. We also achieved a milestone payment in our collaboration with AbbVie in the neurology area, transitioned two new projects into our internal discovery phase, and completed the reversion of our GPR35 agonist preclinical candidate from GSK. So these milestones underscore the success of our strategic approach, progressing high-value programs at pace while leveraging partnerships to maximize innovation. Please turn to the next slide. So our collaboration with Neurocrime Biosciences has enabled the development of one of the most comprehensive muscarinic receptor agonist portfolios in the whole industry. The lead program, MBI-568, an M4 selective agonist, has now completed phase 2000 schizophrenia, demonstrating promising efficacy and safety. This success paves the way for phase three initiation in the first half of 2025, as well as exploring an additional indication bipolar mania in phase two in second half of 2025. Beyond MBI 568, the broader muscarinic agonist portfolio is progressing well. MBI570, a dual M1-M4 agonist, is advancing to phase 2 trials in schizophrenia in the second half of 2025, while MBI567, the M1 agonist, is currently in phase 1 development, with further data expected later this year. So with multiple assets advancing in this space, we believe Neuroclient are enabled to deliver innovative therapies that redefine the treatment landscape for neurological and psychiatric disorders. Please turn to the next slide. So two additional exciting partnerships we have are also with Centessa and Pfizer. Centessa's ORX750 and orexin-2 agonist discovered using our NextWave platform has now entered phase two trials for narcolepsy and idiopathic hypersomnia, with data expected across all these indications in 2025. This compound is positioned as a potential best-in-class therapy addressing critical unmet need in sleep disorders. Similarly, we were encouraged to hear Pfizer commenting at JPMorgan Healthcare Conference that they were all in on oral small molecules for metabolic disease. Pfizer's PF522, an oral GLP-1 receptor agonist for type 2 diabetes and obesity, and discovered by Pfizer using the NextWave platform, continues to advance in phase one, further reinforcing the versatility of our structure-based drug discovery approach to generate high-value assets that translate into the clinic. These partnerships are key to our strategy, leveraging our cutting edge platform while maximizing value through collaborations with industry leaders. Please turn to the next slide. So now focusing on our in-house programs, which continue to make significant progress with a growing impact on global healthcare. Our pipeline spans multiple therapeutic areas, including neuroscience, immunology, and oncology, positioning us as a key player in the development of next generation treatments. We are focused on pioneering breakthrough therapies that address substantial unmet medical needs. Our internal assets, including NFC 149, 732, and 744, talked a range of critical diseases from schizophrenia to inflammatory bowel disease and cancer. And over the next few slides, I'll provide a detailed update on these key programs currently advancing through clinical development that have made significant progress since the last update at our R&D day in October. So our innovative GPCR targeted therapies combined with our structure-based drug discovery platform continue to drive scientific and commercial success. Please turn to the next slide. So for GPR52, NXE149 is a first-in-class GPR52 agonist. That's designed to address the full spectrum of schizophrenic symptoms, including positive, negative, and cognitive impairments. And this program represents a novel non-dopaminergic approach to treatment. As previously mentioned, neuropsychiatry is attracting a lot of attention. And we're pleased to have a clinical stage asset in this space. The unique feature of GPR52 is based on its receptors co-expression profile. GPR52 receptor is located on D2 dopamine neurons in the brain, and its activation may provide a similar effect to D2 antagonists, which is the target of atypical antipsychotics, offering a pathway to manage positive symptoms like hallucinations. In addition, GPR52 is also co-expressed with D1 dopamine receptor in the prefrontal cortex, suggesting that it could positively impact cognitive symptoms such as attention deficits. So we have now completed initial phase one studies and confirmed an excellent pharmacokinetic profile in line with preclinical predictions with low variability, dose linearity, which is all consistent with a once daily dosing profile. We are really encouraged by this data. And so we're now conducting phase one B studies to determine proof of mechanism by utilizing a pharmacodynamic endpoint to confirm GPR52 activation in the brain. So given the persistent need for safer, more effective treatments beyond traditional dopamine targeting antipsychotics, we anticipate significant market interest in this program as it approaches phase two. Next slide, please. So now turning to NXC732, which is a selective EP4 antagonist designed to enhance immune checkpoint inhibition in oncology. With checkpoint inhibitors benefiting only a subset of patients, there is a pressing need for combination strategies that improve response rates. Prostaglandin E2PG2, often found in the tumor microenvironment, binds the EP4 receptors to suppress immune responses, allowing tumor progression. So by blocking EP4, we aim to restore immune function and potentially boost the effectiveness of checkpoint inhibitors, addressing the needs of patients who don't currently respond to this type of treatment. The phase one stroke 2A clinical trial is being carried out by Cancer Research UK. Both monotherapy and combination with checkpoint inhibitor arms are near completed with no dose limiting toxicities, good pharmacokinetic profile and early data suggesting positive target engagement. These data all support a recommended phase two dose decision in March. and the initiation of the actual phase two study in the second quarter of 2025, positioning NXE732 as a potential best-in-class immuno-oncology therapy. As the phase one study is directly in cancer patients, the data we can expect in the second half of 2025 will likely include pharmacokinetic data, safety data, plus biomarker data in the blood, as well as in the tumor by way of T-cell infiltration, which is an important marker of stimulating the immune system to attack the tumor. which will be very useful in correlating with any reports of stable or partial responses in terms of efficacy. Please turn to the next slide. So in my final slide, I would like to provide an update on our GI TOGS and EP4 agonist program for IBD, which is particularly exciting as it aims to address the unmet need for therapies that go beyond immune modulation to promote mucosal healing. In inflammatory bowel disease, current therapies have a treatment ceiling where only about 40% of patients achieve satisfactory outcomes, and no current treatments directly repair the mucosal barrier. We were extremely pleased to announce in March last year that NXE 744, which was identified through our NextWay platform, commenced the first in-human phase one study in healthy volunteers. Our phase one trials progressed well with the fifth multiple ascending dose cohort now complete with no concerning adverse events noted to date. So next steps in the clinical protocol will be focused on demonstrating target engagement and supporting the generation of a phase two enabled data package, which is on track for the second half of 2025. So given the significant unmet need in inflammatory bowel disease, NXE 744 has the potential to establish a new standard of care. So that concludes my R&D update from both our partner and in-house programs from Nexera Pharma UK. I'll now hand over to Chris to finish with our high-level view for 2025. Over to you, Chris.

Great. Thank you, Matt. Please turn to slide 28. So looking ahead for the next 12 months, these are our priority objectives. So we aim to achieve combined sales of more than 17 billion Japanese yen from the two recently launched products in Japan. We will strengthen the late stage pipeline in Japan by securing at least one new late stage medicine. We're going to execute at least one new major partnership and initiate at least one new wholly owned phase two program. We'll be continuing investment in systems and applications for efficiency and scalability. And for example, we've initiated an enterprise collaboration with OpenAI to deploy generative AI on top of our foundational technology systems. And lastly, if we are successful with GPR52 and our partner, Boehringer Ingelheim, triggers its exclusive license, we expect to achieve robust IFRS operating profits. Please turn to slide 29. As I detailed earlier, we have an exciting pipeline that is poised to move forward across multiple programs this year. So over the next 12 to 18 months across the wholly owned and partnered portfolio, we expect to see up to six programs move into phase two and one program move into phase three. There is no other emerging biopharma in Japan demonstrating this much progress and potential. Please turn to slide 30. So we are very strategically positioned in some of the fastest growing areas of healthcare, neurology, neuropsychiatry, metabolic disease, and immunology GI. There is huge unmet medical need in these areas. So our approach harnesses major GPCR target classes, the muscarinics, the orexins, the incretin hormones. We do this via two waves of clinical development and potential launch timings. Our wave one programs are moving from now through to the end of 2030. These are programs that could launch commercially by the end of this decade, 2030. And wave two, these are the programs that are expected to launch in the 2030 to 2035 timeframe or window. Now the value to Nexera Pharma in the form of royalties and milestones could be transformational if only one or two of these products successfully makes it to market. Please turn to slide 31. And so a slightly different view here. By 2030, we aim to lead the next era of medicine in Japan, and we're gonna build a high growth, high profit company that consistently invests in the best innovations for patients. Specifically, we're on track to grow our top line to over 50 billion yen by 2029 to 2030, which is an anticipated 25% plus compound annual growth rate. We aim to achieve sustainable profitability in the long term, and we can unlock significant upside if only one or two of the wave one product launches is successful. And with the wave two launches to drive further growth, into 20, 35 and beyond. Please turn to slide 32. This slide details that we have a very big year ahead, loaded with possible catalysts across the partnered and wholly owned portfolio. We aim to hit every catalyst on time and we're confident that together with our partners, we will. So thank you for your time this afternoon. The management team and I are now available for your questions. Thank you.

Chris, thank you very much. So we would like to move on to Q&A session. To institutional investors and analysts and media people, please use the raise hand function. I will call out your name and please unmute yourselves and state your question. We have simultaneous interpreters. We would appreciate if you can speak slowly and succinctly. The other people, please submit your questions from the Q&A button. People like to respond to your questions as long as the time allows. We would like to move on to the first person. Mr. Hashiguchi-san from Daiwa Securities, please unmute yourself and ask your question. Hashiguchi from Daiwa Securities, thank you. My first question is about your in-house products and the outlook for the development in the future. As I listened to your explanation, EP4 antagonist? has the possibility of implementing Phase II. And EP4 agonist still requires to have more evaluation, but am I correcting my understanding? And for these items, For internal development, do you have the possibility of continuing internal development or is there a possibility for licensing out to other companies? Can you talk about both cases respectively? Thank you. So development schedule will be covered by Matt and the strategy will be covered by Chris.

Yes, thank you so much for the question and your interest in our in-house program. So starting with EP4 antagonists. So, yes, you are correct. So we are ending the phase one part of the study with our partner, Cancer Research UK. And we will intend to start a phase two study in the second quarter of 2025, which will basically be an expansion study in a smaller number of tumor types. So we are on track for that. So the data we've generated so far looks very promising and informative. with respect to selecting the doses that we will use in phase two. And so, yes, that is all on track for EP4 agonist. So you are correct in that we've passed some of the initial hurdles, I think, that you come across in phase one. So understanding the pharmacokinetic profile, understanding the safety profile, We've now identified some doses that we think are relevant, and now we wish to test those in a more target engagement or pharmacodynamic fashion to get some understanding of an early sign of efficacy. And that will really inform how we think about phase two. And we mentioned in the slides that we are gearing up to phase two. So we are generating all the toxicology data that needs to be provided. We are scaling up material to help support that as well. So we're really, really on track with that at the moment. So, Chris, maybe you can add something about the strategy with licensing or taking it forward on our own.

Sure. Thank you, Matt. With regard to the EP4 antagonist, this is currently partnered with Cancer Research UK. However, they are assisting us both financially and with execution of the clinical trials, but we own all the intellectual property. So if this program is successful in phase two, we have the ability to execute a large partnership or collaboration with a global company that specializes in oncology. Nexera Pharma is not a company that specializes in solid tumors. So you can imagine that if we do achieve very good results in phase two, that in the future, in order to take this program forward and maximize its potential, we will likely partner with one of the major global oncology companies. With regard to the EP4 agonist, as Matt said, we are funded and prepared and planning to take this program all the way to phase two. However, there is always the possibility that in a highly competitive space like IBD, where this program would be positioned potentially as an adjunctive therapy on top of biologics. that this may find its way in the future to a partner that specialises in the IBD space, a global pharma company, for example. However, for now, we have all the funding in place, all the planning and all the capability to move this forward to its phase two ready position, and we plan to do so. Thank you. That concludes my response.

Thank you. I have another question, which is on QVVIC, and it's about your revenue target. It's between 4 to 5 billion yen, you mentioned. And I think you talked about the sourcing of API and also for the supply of the products. you will be slightly accumulating the inventory and the sales or the revenues seem to be slightly higher by front-loading. Am I correct in my understanding? Or after next fiscal year, are we able to expect the same level of revenue of sales? Do you have such outlook for the next fiscal year? Thank you very much for the question. I would like to briefly respond to this question. Speaking from the conclusion, as Mr. Hashiguchi mentioned, the latter is correct. Since we are a pharmaceutical company, the initial year or the second year will accelerate, as you mentioned. So we try not to empty the inventory. That is what we are incorporating. But on the other hand, Based on our plan, this figure is not expected to decline. We are expecting to see the increase to certain extent by having the momentum. Am I responding to your question? Yes, thank you. That is all from me. Thank you.

Thank you very much. We'll move on to the next questioner, C-Group Securities, Yamaguchi-san. Please unmute yourself and ask your question. Thank you, Yamaguchi from Citi. Thank you very much. So 2025 forecast. Behringer, Engelheim, if this is triggered, then on IFRS basis, you can achieve profit. So in other words, if the option is not exercised, you cannot achieve the profit? Is that what it means? Thank you. So Chris, if you could answer the question, please.

Yes, thank you for your question. If we are successful with the partner, we are very confident that we are robustly positive on IFRS profits. If the license is not triggered, then it's very much, it can be a swing factor. As you know, Yamaguchi-san, with our business, milestone income is difficult to predict. So we still could have a possibility of achieving IFRS profits, but it is more difficult to forecast is what I would say. So with 52, it's, you know, we're very, very confident. Without, it's probably much closer to break even, and that is where we'll be managing to. Hopefully that answers your question.

Yes, thank you very much. So GPR 5.2 is a 60 million trigger? Will be 60 million? Is that million euro? Yes, yes, euro. Okay, euro. I see. And other milestones? Is it 11.1 billion yen milestone came in this year? Other ones, I think you were referring to it. Is there a list of other milestones? It will help me. Okay, so let me briefly explain that. So milestone, I'm sorry, we do not know when it happens. It's difficult to forecast. But we have the list of catalysts here, events. Usually, if partner starts new study, I would not say all of them, but usually Milestone comes in. So if you could take a look at this list and guess, I would appreciate it. That is all we can do from our side. Thank you. Understood. So it's not so much the individual Milestone, the platform deal. You mentioned that you want to do platform deals in 25. So including all that. And with Behringer and Gerheim, all-inclusive, you can achieve operating profit? Is that your forecast? Yes. Allow me to answer that question. So Behringer, if we have the... From Behringer... There are unforeseeable factors. Even without the deal, this portion will be secure. That is what is mentioned on number five. But as you can see, and as you probably know, we want to forecast, but there are swing factors, variables. So we cannot say anything for certain. so that we do not be misleading. But with GPR5 too, regardless of other swing factors, we can achieve this number five. And I think you have the same agreement, same view. So that's why we mentioned this. Thank you very much. Understood. That's all for me.

So let us move on to the next question. So I will mute Mr. Yamaguchi. Excuse me for that. Pathology Associate Dion, please unmute yourself and ask your question.

Hello, thank you very much for taking my question. Can you hear me? Thank you. I just want to follow up on Yamaguchi-san's question regarding GPR5.2. And I was wondering that at JP Morgan, Buringer announced failure of a phase three schizophrenia program, I think, Connects program. Do you expect that to make them more likely to exercise their option? And can they do so at any time? Or do you expect them to wait until the phase 1B results are available? except for Boehringer, do you have, and are you able to currently also look at, are you receiving other interest on this program should Boehringer not exercise their option Thank you.

That's my question. Yeah. Do you want to go first, Matt, and then I'll... Yeah, yeah.

I can have that. Sure. Yeah. Thank you for the question, Dion. Very insightful question. So, yes, of course, we were aware of the Bowringer announcement around the GlyT1 inhibitor. And I should just point out that mechanistically that is very different from GPR52 inhibitors. you know whether whether that stimulates their increase their interest in this um you know you would have to ask them of course um i think they will be very focused on treating individual assets based on their own qualities or individual qualities right so i think that they will still want to see a very positive uh solid data package before they exercise the license Although I would say that any changes in your pipeline may influence, you know, companies from a strategic perspective for sure. And then just to your point around if they can exercise, of course they can exercise the option when they want to. And so they have that flexibility in there to do that if they so wish. So that's to answer that question. And then to answer your point about other interests, I mean, as I mentioned in my presentation, this is such a hot area right now, neuropsychiatry. And, you know, we have been asked about this program by other companies, for sure. But I won't say any more than that. But we have been. But of course, you know, we do have an agreement with Boeing, England at the moment. But there are other companies that we've spoken to about it. Chris, anything to add?

I mean, all I would say is, they're committed to this area and if they are looking to take control of of a novel asset in this space. Dion, it's a lot easier to take control of one you've already got an exclusive option to license over. You're in the box seat rather than going out and having to find another one. So certainly it's within their control. They obviously are overseeing the work that our teams are doing. They can trigger at any time, as Matt said, and they get the first look. So they're in the box seat to bring this into their portfolio should they choose to do so.

Understood. Thank you very much. May I just ask a quick second question regarding NBI 568? So you'll be moving into or Neurocrine will be moving into phase three. And I wonder if it's possible to make any comments on the design of that phase three study. And I guess I realize that is with Neurocrine. But will that be a fairly complex design? Or how do you how should we think about the design of the phase three?

Yeah, thanks, Dion. Maybe I'll comment and then maybe Sugita-san or Chris can also make some comments. So I don't think Neurocrime have publicly disclosed detailed information around the phase three design. However, they were asked in the year end results around the end phase two meeting they had with the agency in the U.S., And they actually gave some quite encouraging signs, I think. So they were saying they had alignment from the agency about their thoughts around phase three, uh they were saying that they had complete support for moving forward with that 20 milligram dose into phase three and they also had alignment on end points um around the the nature of the whole registration plan these were kind of comments that they were making um i i would suspect they will be going for some more simple type of design in this study I think they are very mindful about the placebo in these studies based on their own experience, but also the experience of other companies in this space. And so I would imagine they will be focusing on something that's a more simple based design, but we will look to get more details from them in due course. So Gita-san or Chris, do you want to have anything to add?

Then Sugita would like to comment a little, especially for the schizophrenia area. Placebo effect has a higher probability of getting larger, and especially recently, Karuna's CAR-ST approval and for to agonist attention is getting much higher. So the effect to placebo is getting higher as well. That kind of tendency exists. So under such circumstances, sites should be selected prudently and then as much as possible, objectively, the effect or the benefit that should be tracked. And with respect to that, Neurocrine is highly aware about that. And within their clinical study, we also need to be conscious, and the study design should be formulated and implemented. So I believe that they understand in this manner. So we are assured to monitor the situation. That is all from me.

Understood. Thank you very much.

Thank you very much.

Thank you very much. We will take the next question. Jeffrey's Securities. Yamakita-san. Yamakita-san from Jeffrey's Securities, please. This is Yamakita from Jefferies. Thank you very much. Thank you. So earlier, Yamaguchi-san asked a question. This is a follow-up to his question. Beringer in Geheim, even without the exercise of the option, there's a possibility you can achieve profit. Now here, How is Milestone incorporated there? So the things you have visibility in the first half are baked in, I think. But for the second half, ones you are not so sure, are they already incorporated, factored in, or are you including in some proportion, weighted basis? So Chris, could you answer that question?

Yeah, sure. Basically, it's very similar to every other year. We have good visibility over milestones that would come from existing programs. What we don't have great visibility over is upfront income from new partnering deals. So every year there's always a potential that we will do new collaborations. it's just very difficult for us to know prior to negotiating what the size of those upfronts might be. So as we have discussed on today's call, we have more programs that are moving into phase two or towards phase two. And if there is any interest from partners around those programs, phase two upfronts are usually quite significant. And there's always the possibility that a company will approach us to do a discovery collaboration against GPCR targets that they want to work on. And at this point in time, we just can't accurately predict what the size of those upfronts may be. It's just that almost every year we manage to achieve one or two. So that's the thing that makes, you know, forecasting quite difficult for our company. I think you'll understand though.

Thank you very much. Yes. So my second question is Edorcia. So this exclusive option, right? So this year you have planned for a few of them this year. So thank you very much. Yes. So Chris, if you could answer that question as well.

Certainly. Thank you for the question. So those exclusive options remain. I think it's fair to say that at the moment, there is some difficulties that our partner, Eudorcia, are suffering from financial difficulties. We therefore are waiting cautiously before we move forward with a decision on those programs. As it stands today, and I mentioned this earlier on my presentation slides, we no longer have any reliance on Eidosia. Our supply chain operations are completely separate. All transitional service agreements have been completed. We have our own independent financial and IT systems now, so we have no longer any reliance on Edosia. However, if we were to enter into a new business relationship with them, it could be a little bit difficult at this time, but the option remains and we plan to move forward as soon as there is clarity regarding the financial future of Eudorcia as a company. Thank you. Thank you for the question.

Thank you very much. That's all for me.

Thank you, Mr. Yamakita. There are many people who are still raising hands, but the time has come. So lastly, for all the pre-received questions in Q&A, I would like to briefly respond to those questions. First of all, this is related to what Mr. Yamakita said, and it's about a ceremony and says that and the options are not exercised. We are not trying to be slow. But as Chris explained, E-dorsia is a financial situation and there are several other factors. And as soon as those factors become clear, we already are almost fixed with what kind of actions to take and i'm sorry that we cannot explain the details but we are in such situations we are not just awaiting and see so that is something what i wanted to explain when the things become have a progress we can take actions amongst the questions we received newer crime and for a japan right Is there right in Japan or not? We are receiving that question. And after looking at the disclosure from Neurocline, I believe you asked this question. And in principle, as we explained, we have the right, according to this slide, amongst Neurocline, the one with J. In other words, M1 agonist, we have the right, but including M4 agonist, they are globally licensed out. so there is disclosure from your client's side but this is what we have confirmed that we hope you would understand the situation So in the form of a Q&A, I just responded to some of the pre-received questions. We just exceeded the scheduled time, but we would like to conclude the Q&A session now. We received many questions in the text. Although it may take time, we would like to respond to your questions in one way or another. As for today's session, you will be able to see through our website as well. If you're interested, please look at the website. Thank you very much for taking your time to join us. And with this, we would like to conclude 2024 financial results meeting. Thank you very much.