Nxera Pharma Co Ltd

Time has come, so we will now begin the financial results briefing of Nexera Pharma for the first half of FY 2025. Thank you very much for taking time after a busy schedule to join us today. I'm Nomura, CFO, and I will be the moderator. Today we have Chris Cargill, CEO, and Dr. Matt Barnes, CSO and President of Nexera UK. Simultaneous interpretation is provided. Please click on the language selection icon and select either Japanese or English. If you choose off, you will hear the speaker's original voice. Today, we will explain, as always, the progress of our business using the material in the first half, followed by 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 enter from the news tab on the website on the left side and access the financial results material. 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. 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. So we will start the briefing. Chris will first explain the operational highlights, then I will explain the first half results and Japan and a pack commercial business, followed by matt on r&d progress, mainly in the UK and, finally, Chris will explain our fyi 2025 goals and medium to long term objectives, please do to page five of the presentation, Chris the floor is yours.

Fantastic. Thank you, Nomura-san. And good afternoon, everyone. I'm Chris Cargill, CEO of Nexera Pharma. Thank you for joining us today for our Q2 2025 results presentation. On slide three, I'll begin by walking you through our operational highlights, and then I'll pass you over to Nomura-san for our financial results and Japan and APAC commercial updates. Lastly, Matt will take us through key progress from our R&D business in the UK, and I'll finish with a strategic outlook for FY 2025 and beyond. So I'm on slide five now. Firstly, let me briefly recap our priority objectives for the full year. So our first objective is to exceed 17 billion Japanese yen in sales for our two key products, PIVLAS and Qvivik. I'm pleased to say that our commercial performance is on track to meet this objective, following a successful first half of the year for PIVLAS and the inclusion of Qvivik, which is progressing well with our partner, Shirogi. For our second objective, we are in active discussions with a number of partners regarding in-licensing late-stage assets for our Japan and APAC business, and I look forward to sharing more progress later on this year. Similarly, for objective three, our business development discussions continue to progress with a range of potential biotech and pharma partners. And we are also expecting, very shortly, to start a Phase 2a study of our wholly owned EP4 antagonist NXE732, and that's together with Cancer Research UK. We're making great progress against our fourth objective as we continue to invest in optimising our internal business systems. And regarding the final objective, we continue to push the GPR52 agonist program forward and will be able to provide an update later this year regarding the timeline for the expected Phase 1b data readout that will support the option exercise decision. So we're focused on prioritizing and accelerating key programs in attractive commercial markets that will create long-term value. And for example, this week we revealed the launch of our comprehensive obesity and chronic weight management pipeline. Please turn to slide six. Now, the first half of this year has seen great progress across our core businesses where we remain extremely productive. We enriched the management team with two new external directors and a new head of IR to enhance transparency and communication with shareholders, particularly in Japan. We simplified our governance structure in Japan, streamlining MPJ structure to a single representative directive, representative director, sorry, Mr. Toshi Maeda. And in our UK R&D business, we've hit several pipeline inflection points. So TMP301, which is our mGlu5 negative allosteric modulator program, partnered with Tempera Bio, is for substance use disorder, and it entered phase two. MBI568, our partnered M4 agonist with Neurocrine, entered a phase three study for schizophrenia. And ORX142, our second OX2 agonist, partner with Sintesa, initiated a phase one study. As I mentioned, we also announced seven new proprietary obesity programs, building out our metabolic disease portfolio, which we will provide further detail on later in this presentation. Now, Pfizer discontinued development of PF522 following a portfolio decision, but we intend to enter discussions with Pfizer regarding potential opportunities to advance GLP-1 molecules discovered through this collaboration. Our Japan and APAC business has seen great progress on the commercial front. As I mentioned, PIVLAS remains the clear market leader for the prevention of cerebral vasospasm in Japan, where sales continue to grow. And following our agreement with with Holling for Daradirection in Taiwan, launch plans are underway for that product in that market from mid-2026. And we also assigned the rights for Sineramod in Japan and APAC to Viatris. And in Korea, we're now exploring non-reimbursed access pathways for PIVLAS following our decision to withdraw from drug price negotiations in Korea. Please turn to slide seven, please. As you can see on this slide, we have a broad and balanced innovative pipeline targeting some of the biggest areas of unmet medical need across three key therapeutic areas, metabolic disease, neurology, and immunology slash GI. Nexera Pharma is well advanced in its mission to accelerate innovative medicines to patients and become one of the leading players in Japanese pharmaceuticals. With two recently launched products driving stable, top line sales growth, plus a pipeline of innovative clinical stage programs, the risk and reward is very attractive. We have the upside potential of a biotech company, but we have the diversification of a commercial pharma business. Please turn to slide eight. So earlier this week, we formally launched our broad new pipeline of programs targeting obesity and chronic weight management. The central to this pipeline is our new wholly-earned oral small molecule GLP-1 agonist program. And this is complemented by six additional innovative programs targeting the GIP, amylin, and apillin receptors. The obesity field is undergoing a shift towards oral therapeutics, and that's driven by patient demand, real world practicalities and payer pressures. And so our internal pipeline was designed to meet this rapidly emerging need. And as shown here, we are one of the few players in active development across all four of these mechanisms, offering significant opportunities beyond the current GLP-1 space. For example, amylin agonists are likely to play a huge part in the emerging treatment landscape for preserving muscle in weight loss. And we're confident that we can achieve significant progress over the midterm, delivering clear value for shareholders and patients in a rapidly expanding obesity market. So I will now pass over to Nomura-san, who will take you through our financial results for the first half of the year and also our commercial performance in Japan. Thank you, Nomura-san.

Chris, thank you very much.

Now I would like to present a summary of the financial results and some promotional activities. Slide 9, here we present a summary of the financial results for the first half of 2025 along with trends from previous periods. As shown at the top, net sales increased by 19% year-on-year from 127 billion yen. to 150 billion yen. The increase was driven by growth in pivot sales, the addition of product supply and royalty revenues from QuiviVic, which were not present in the previous year, and steady stream of milestone revenues as well. As shown in the lower section on operating profit, core operating profit for the first half of this year was 0.3 billion yen compared to 1.1 billion yen. the same period last year. The reason behind this is, as I will explain in further detail on the next page, while our company made progress in reducing SG&A expenses, R&D expenses increased significantly, primarily due to investments in compounds under development currently in clinical trials. The difference between core operating profit and operating profit under IFRS narrowed due to the reduction in accounting wise or one of the expenses related to acquisition of Eudorpha, which were significant last year. Moving on to slide 10, here we show the breakdown by business domain and by core operating income and operating income and accounting terms. In the platform business on the far left column, which is a biotech venture type business model, both SG&A and R&D expenses have increased, but the increase in R&D expenses is primarily due to investments in clinical trial stage products. As mentioned earlier, regarding SG&A, in addition to natural increases, IT investments that were previously classified as one-off expenses have been reclassified into the core section after one year following the acquisition, resulting in an increase and a core operating loss of approximately Next, the second from the left, the commercial business, which is a pharmaceutical-type business model. So, steady growth in both pivots and quivi-vic sales, while SG&A were streamlined, resulting in a core operating profit approximately of 3.3 billion yen. uh with the net of 3.3 and 3 billion uh the consolidated core operating profit was a positive 0.3 billion yen going forward the company will continue to invest in future growth while maintaining efficiency aiming to achieve profitability on a core basis or more specifically on a cash flow basis that is going to be our immediate financial goal moving on to the The next slide. Here we present our forecast for R&D expenses and SGN expenses for the fiscal year ending December 2025. I think you're familiar. No changes from the previous forecast. Regarding R&D expenses, if we take the midpoint or median, the range is 13 billion yen. 7.4 billion of it, approximately 60%, has already been spent in the first half. Considering that costs tend to be heavier in the second half of the year, usually, it may appear that we could be exceeding the upper limit of the range, you may think. However, the costs associated with the largest clinical trial peaked in the first half of this year. So they have already been picked out. So we expect them to remain within the target range. Regarding SG&A, we had anticipated a flat year on year. But as you can see from the first half results, they're in line.

Next, I will also briefly explain the Japan APAC business.

So I will briefly explain Japan APAC business. Please turn to slide 14. Piwilat's net sales are growing steadily, and our market share remains high at 73%, although it is slightly below the maximum target of 75% for this fiscal year. Looking at Q2 alone, we are in line with our 7% full-year growth target, with growth of 9% year-on-year and 7% year-to-date for the first half of the year. Although we cannot expect as large a growth as we have been seeing in the past, we will continue to carefully promote the product and maximize its value. while striving to streamline our SG&A expenses, which I mentioned earlier in the consolidated financial results. Next, slide 15. As you know, Shionogi is responsible for sales of KUBIBIK, so I will refrain from going into details, but we recognize that activities for future growth are progressing steadily and to the greatest extent possible, even with the two-week prescription restriction. The two-week prescription limit will be lifted in December this year, one year after launch. Looking at the DORA market, Devigo continues to have the largest market share, followed by Belsomra. But we are happy to see that DORA as a category is growing steadily as expected in the insomnia treatment category. Next, please turn to slide 16. We sometimes receive questions about Kuvidic's profit structure, so I will explain one slide here. The left side shows net sales. Shionogi sells the drug, so naturally, product sales are directly translated into their net sales. We, on the other hand, receive slightly lower sales as product supply and royalties. Our profit structure is shown on the right side. Currently, we do not make any profit from product supply as we supply the product to Shionogi at the purchase price. So royalty is our only profit. The cost reduction project is progressing well, and we expect that from now on, specifically from 2027 onward, we will gradually benefit from the supply of our products and improve our profitability. Please turn to slide 18. So this shows the sales target of Pivlots and Kubivik in FY 2025, which has been showing since the beginning of the year, and there are no changes. I'm sorry that this is slightly different from the previous slide. Regarding Kubivik, as shown in slide 16, the medium to long-term profit structure is explained, but this is the first year of its launch, and the product supply associated with the initial shipments is very large, making this an irregular year for us. Specifically, our sales are higher because we supply products to Shionogi ahead of time. From next year onward, we plan to move closer to the structure I just described. That concludes my brief summary and consolidated financial results in Japan and APAC commercial business. Matt will now give an R&D update. Matt, please.

Yes, thank you. So next slide, please. So while many of the milestones have already been covered by Chris, I want to briefly underscore the scientific and clinical progress we've delivered across the first half of the year. We've made significant progress with our internal pipeline, including the previously announced seven established proprietary obesity programs. And I will go into more detail shortly. We also achieved an undisclosed development milestone as part of our multi-target metabolic collaboration with Lilly, a key validation of our approach to targeting metabolic disease and diabetes-related diseases. In the clinic, our NextWave enabled programs continue to move forward with purpose. We received a $4.8 million milestone from Centessa for the ORX142 program, which is a second OX2 receptor agonist progressing from our platform into phase one clinical trials. And TemproBio initiated a phase two trial for TMP301 in alcohol use disorder and Neurocrine advanced MBI568 with both new phase two data and the initiation of phase three trial in schizophrenia, triggering a $15 million milestone. So taken together, these events highlight how our investments in science and technology are translating into meaningful clinical progress and value creation. Please turn to the next slide. So just to take a moment to outline what this Next Wave platform is. So this is our proprietary structure-based drug design platform, and it's the key reason behind our proven pipeline impact and why we believe we will succeed in delivering innovative, high-impact medicines across our portfolio. From target identification through to translational medicine, NextWave enables a fully integrated, highly rational drug discovery cascade. Each module from next start and next hit to next design is designed to drive precision and selectivity and ultimately higher probability of success. This is not a theoretical capability. We are seeing it translate directly into pipeline output. We've generated 29 preclinical candidates and today 15 of which are active and including 11 in phase one, four in phase two, and our first phase three validation of the platform with MBI 568. So critically, this platform is now being directed towards some of the most pressing unmet needs, including a new wave of metabolic programs where selectivity, safety, and mechanism-based design are absolutely essential. Please turn to the next slide. So Chris touched on this previously, but we believe there's a significant opportunity to build a differentiated position in the metabolic space. And our Next Wave platform is the foundation for doing just that. So as I mentioned, you already heard Chris talk about the breadth of targets forming our proprietary pipeline. These include the JIP, Amelin, Apelin, and of course, the GLP-1. So if we use GLP-1 as an example, I will describe the strategy and capabilities we will use across these emerging programs. So if we look at the current landscape for GLP-1 receptor agonists, it's clear that peptides dominate. Small molecules are still underrepresented, particularly in the later stages with only a handful reaching phase three. And even within small molecules, the chemical diversity is very narrow. Nearly all the current efforts fall into just two chemotypes, so the orthogliperon-like or the danugliperon-like structures. And both of these come with significant challenges, synthetic complexity, safety flags, and manufacturing risks. Our platform gives us a path beyond these limitations. So with Nexstar, we can stabilize complex targets like GLP-1 for DNA-encoded library screening, something few others can do. And our proprietary small molecule libraries and structure-guided design tools through Next Hit and Next Design allow us to explore entirely new chemical space. As many of you know, critically, our team was the first to solve the structure of GLP-1 receptor bound to a peptide agonist. And it's this structural insight and the structural insight we have over more than 60 individual GPCR targets, which we are using as part of our structure-based drug design approach. So Next Wave now empowers us to develop the next generation of best-in-class oral drug candidates in this space. Next slide, please. So we've shown how our platform can generate differentiated small molecule candidates in this space. The market is clearly signaling just how valuable these candidates could be. So even just over the last year, we've seen several major preclinical stage deals in the GLP-1 small molecule space, each with potential deal sizes nearing or exceeding 2 billion and significant upfront payments ranging from 100 to 200 million. Oral delivery is not just about convenience, it expands therapeutic reach, it supports long-term weight maintenance, enables treatment of obesity-linked comorbidities and opens new options for vulnerable or underserved populations such as the elderly, postmenopausal or sarcopenic patients. It also opens the door to combination approaches, which require design flexibility, something our Next Wave platform is uniquely positioned to deliver. So in short, the next wave of obesity treatments will be oral safe and scalable, and we are ready to lead in this space. Next slide, please. Now turning to some of our strategic collaborations. So this one is with Neurocrine Biosciences. Next slide. Yes, so this continues to be the cornerstone of our progress in CNS therapeutics. Neurocrine now have one of the most comprehensive muscarinic receptor agonist portfolios in the industry. The lead program, MBI568, a selective M4 agonist has completed phase two in schizophrenia with phase three initiated in June. In addition, a new phase two study in bipolar mania is planned for the second half of this year. Neurocrime also continues to advance further assets in this suite of muscarinic programs. MBI 570, a dual M1, M4 agonist is progressing through phase one with plans to initiate a phase two trial in schizophrenia later this year. MBI 567, the M1 selective agonist, and MBI 569, an additional preferring M4 selective candidate, are both in phase 1 with readouts expected also in 2025. Each of these programs was designed using our Next Wave platform to deliver highly selective orthosteric agonists, targeting cognitive and psychiatric symptoms with precision while avoiding the off-target effects and cooperativity requirements that have limited others in this space. So taken together, this portfolio puts Neurocrime in a leading position to redefine how schizophrenia, bipolar and other neuropsychiatric conditions are treated. So let's take a deeper dive into MBI568 and look at some of the data. Next slide, please. So just starting with the phase three design. So this is, as I mentioned, now in phase three. So this is the first and only highly selective orthosteric M4 agonist to reach this stage, offering a fundamentally new approach. The study design is simple. A five week double blind study evaluating once daily dosing of 20 milligrams of MBI 568 versus placebo in a one to one randomization in adult inpatients with schizophrenia. The first of these studies began in May and June. with a second study plan for a Q3 start later this year. Compared to other M4 assets, MBI-568 stands apart because it offers high subtype selectivity targeting only M4 and does not require endogenous acetalcholine for activation. That gives it potential advantages in both consistency of response and therapeutic window. It also introduces convenience because of the once a day daily dosing with or without food, which could be a meaningful differentiator in the real world use. So there's a large opportunity for MBI-568, not only in schizophrenia, but potentially in bipolar and other neuropsychiatric conditions. Let's look at the next slide, please, which highlights the phase two top line data. So these results were highly encouraging. So the 20 milligram once a day dose demonstrated both clinically meaningful and statistically significant improvement in PANS scores as early as week three with a consistent separation from placebo through week six. The placebo adjusted difference at week six was minus 7.5 with an effect size of 0.61, which is a strong signal in this population. Neurocrine also saw significant improvements on the CGI severity scale with a significant mean change of minus 1.2 with just minus 0.5 for placebo. These improvements extended to key symptom domains, including positive and negative symptoms on the mod or subscales also. So taken together, these findings show not only statistically robust effects, but a reproducible response across multiple endpoints, supporting Neurocrine's decision really to move into that phase three study that I mentioned. Please turn to the next slide. One of the other strengths of MBI-568 is its favorable safety and tolerability profile. So in that phase two study, MBI-568 showed rates of adverse events that were generally similar to placebo, particularly in critical areas such as gastrointestinal and cardiovascular side effects, which are known limitations for Coventry, where adverse event rates were three to five times higher than placebo in their phase three emergent trials. Unlike Coventry, MBI-568 does not require the co-administration with a peripheral muscovinic antagonist, has no dietary requirements and is dosed once daily, making it potentially more straightforward and convenient for patients and prescribers. While some expected CNS-related events like somnolence and dizziness were observed, importantly, there were no significant safety signals and domains that typically drive treatment discontinuation. As the FACE3 program progresses, this emerging safety and tolerability profile will be critical to MBI568's potential positioning as a next generation therapy for schizophrenia. Next slide, please. So now just turning to another partnership with Centessa Pharmaceuticals, which is advancing a differentiated portfolio of OX2 receptor agonists targeting sleep and neurological disorders. The lead asset, ORX750, continues to make progress in phase two. This is a randomized placebo-controlled trial across three indications, NT1, NT2, and IH. The innovative clinical design ensures that all patients receive ORX750 for at least four weeks, enabling optimized dose selection and efficient recruitment. Initial proof-of-concept data is expected in the second half of 2025. In addition, as Chris mentioned, ORX142, a second molecule, has now entered phase one trials being developed for neurodegenerative disorders. And also, ORX489 is progressing in preclinical development for neuropsychiatric disorders. So Centessa are building one of the most advanced pipelines in the emerging category of OX2 agonist therapeutics. And importantly, all of these three assets were discovered using our NextWave platform, highlighting its ability to generate highly selective CNS penetrant small molecules with real clinical benefit. Next slide, please. So this is a fast moving area of therapeutic development, and we continue to follow it closely given our partnership with Centessa. who are advancing ORX750. Encouragingly, there has been positive signals from other OX2 receptor agonist programs, including TAC from Takeda and from Alkermes, which are right now reporting clinical data later this year. While it's difficult to compare these results directly across the studies due to differences in the clinical stage, in the population of the subjects and the duration, it's clear that LRx750 shows promising early efficacy in the maintenance of wakefulness tests with a notable favourable side effect profile in healthy volunteers in the Phase 1b study, which may provide a differentiated profile versus the competition. so we think that this positions rx 750 well in an emerging competitive landscape and we remain confident in sentessa's continued development path and data maturation next slide please so this is the final slide on the collaboration or the partners uh so this is with uh turning our attention to tempo bio who have seen meaningful clinical progress with our mGlu5 NAM targeting substance use disorder. So this is now in phase two trials for alcohol use disorder with first proof of concept data expected before the end of the year. This will be a major milestone for the program and for the broader therapeutic class. In parallel, a phase one trial in cocaine use disorder is also ongoing that's expected to complete in the second half of this year, with plans to initiate a phase two trial in this indication within the next 12 months. Tempro also continues to advance earlier programs for methamphetamine and polysubstance use disorders. And backed by a recent $70 million Series B financing, Tempro is well positioned now to continue progressing these programs further into clinical development. Next slide, please. So now we're turning to our internal programs. So our in-house programs continue to advance with strong clinical momentum, and they're increasingly central to our long-term growth strategy. This pipeline spans three key therapeutic areas, neuroscience, oncology, and immunology, positioning Nexera as a leading developer of next-generation oral small molecule therapies. NXC149 currently in phase 1b targets schizophrenia by a novel GPL52 agonist mechanism. NXC732 or EP4 antagonist has been being developed in combination with a PD-L1 blockade for solid tumors and NXC744 a selective EP4 agonist is in phase 1b for inflammatory bowel disease. So across these programs we're focused on breakthrough biology unmet patient needs and the consistent application of our next wave to design oral selective and scalable molecules. So over the next few slides, I'll just share a little bit more detail on these programs. So turning to the next slide, let's begin with NXE149 in schizophrenia. So this is a first in class GPR52 agonist designed to treat the full spectrum of schizophrenia symptoms from positive symptoms like hallucinations to cognitive impairments and negative symptomology. And what makes this program unique is its dual mechanism potential. So this is based on its co-expression with dopamine receptors in different parts of the brain, which really offers that broad spectrum of activity across positive, negative and cognitive symptomology. Phase 1B proof of mechanism studies remain ongoing, which includes pharmacodynamic measures to confirm target engagement in the brain. This study is expected to complete towards the end of this year. And given the continued unmet need for safer, more effective antipsychotics, particularly those that avoid dopamine receptor modulation, we believe NXE149 has a strong potential to reshape the treatment landscape. So next slide is NXE732. So this is a selected EP4 antagonist. Next slide. Designed to enhance the efficacy of a checkpoint inhibitors in solid tumors. So EP4 antagonism restores immunosurveillance by reversing tumor mediated immunosuppression. This is expected to improve effector CD8 T cell infiltration and overall response to checkpoint inhibitors. We've now completed the phase one dose escalation study, including both monotherapy in combination arms with atelazinamab. No dose limiting toxicities have been observed and pharmacokinetic and pharmacodynamic data strongly support progression. Target engagement has been confirmed at all dose levels and additional analyses, including paired biopsies to evaluate immune cell infiltration is ongoing. Phase two recruitment is now ongoing in the UK, focused on four tumor types, MSS colorectal cancer, gastric or gastroesophageal junction adenocarcinomas, clear cell renal cell carcinomas, and metastatic castrate resistant prostate cancer. all in combination with PD-L1 inhibition. And we look forward to sharing some of the clinical data at the ESMO meeting in October. And then lastly, let's just turn to our third in-house program, NXD744. So this is a first-in-class opportunity to treat IBD, combining anti-inflammatory effects with direct support for mucosal healing, something that current immunomodulatory therapies do not address. Our phase one studies, including single and multiple ascending dose cohorts, have now completed with no concerning safety signals to date. We are currently enrolling a ulcerative colitis patient cohort to explore pharmacokinetics of this GI-targeted asset and preparing to initiate an indomethacin challenge-based study in healthy volunteers to further explore mechanistic effects on mucosal integrity and inflammation. Biomarker analysis is underway and insights from our clinical advisory board are helping refine our clinical development strategy going forward. So as a GI-targeted EP4 agonist with a clean safety profile and unique mechanism, we think that NXE744 has the potential to reshape how we treat IBD, really through that promotion of mucosal healing. And with that, I will conclude and now hand back to Chris. Thank you, Chris.

Excellent. Thank you, Matt. Please turn to slide 35. So as I went through earlier, these are our priority objectives for the remainder of the year, and we remain committed to delivering against these five key priorities. Please turn to slide 36. So our strategy targets three of the fastest growing areas of healthcare, neurology, metabolic disease, and immunology GI, where we believe there is still huge unmet medical need. Our approach harnesses major GPCR target classes, muscarinics, orexins, incretin hormones, as an example, and we do it via two waves of clinical development and potential launch windows. so wave one which is from the current day through to 2030 programs that could launch commercially by that time frame 2030 and then wave two the 2030 to 2035 time frame these are programs expected to launch in that window now the value to next era pharma in royalties and milestones could be transformative if even only one to two of these programs are successfully launched Please turn to slide 37. So by 2030, we aim to lead Japan's next era of medicine by building a high growth, high profit company that continually invests in areas of high patient need. Specifically, we're on track to hit 50 billion yen in core revenue by FY29 to 2030, and that's a 25% compound annual growth rate from our 2023 baseline. We aim over the long term to achieve sustainable profitability, and we will unlock significant upside if only one or two of the wave one product launches are successful with the wave two launches to support further growth into 2035 and beyond. Please turn to slide 38. So looking ahead to the rest of the year, we've got a number of potential catalysts across our partnered and wholly owned portfolio. And our goal is to hit every catalyst on time. And we're confident that with our partners, we will. So thank you for your time. And the management team and I are now available for questions.

Thank you very much. The audio is very low. Please speak into the microphone. Institutional investors, analysts, and members of the media, please click the Raise Help button to let us know if you have questions. The moderator, I will call your name at which point you may unmute yourself and speak. Please speak slowly and keep your questions brief because there's interpretation. Everyone else, please submit your questions using the Q&A button. We will answer them to the extent that time allows. Sakai-san of UBS Securities, please unmute and ask your questions. Sakai from UBS, thank you very much. Thank you. I have two questions. Page 25, this looks familiar, M4 Agonist Phase 2. When Phase 2 data comes out, it was disappointing, shall I say. and concerning. I'm talking about this left-hand side line graph, week five to week six. It's going up. Over the long term, is efficacy going to be sustained? That was the question raised. So what is your view? Is your view unchanged in phase three? I looked at neurocrimes data, but according to the protocol, This concern can be eliminated. Is that the thinking? May I turn to Matt for an answer? So concerns raised, if you could respond to that.

Yes, thank you very much for the question. Yeah, so, yeah, Neurocrime published this. You're right, it is a familiar data readout. So they've produced this, they've presented it several times before. And actually, to me, rather than any concern with any kind of rebound effect, which I think is what your question relates to, I'm actually more interested, I think, in the data at week five there, where actually there is a mean adjusted PAN score of minus 10. And actually, you know, I think that's, you know, these were all highly significantly different from placebo from week three, right? So week three, four, five, six. So I think to me, I'm less worried about any kind of issues around sustainability of response. I think over subsequent weeks there, you are seeing routine significant differences from placebo. And, you know, they have. Neurocrine have moved forward with this 20 milligram dose. And just to remind you, the phase three study will be focused in with an endpoint of week five in that phase three study rather than in week six here. So I don't really have any particular concerns about that going forward. Thank you for the question.

All right. Thank you. So shall we wait for Neurocrine result anyway? Yeah. Yeah. And going back to Japanese, page 28, data. Some investors are really disappointed. I guess that's because due to safety profile, the catalepsy. Do you think that was the major concern from this page 2 trial? I know you don't like to comment. competitors result. But, you know, this is a very, very interesting category or therapeutic areas. So if you could give us some tips, I'd really appreciate it.

Thank you. No, thank you for the question. Yeah, I mean, I think this was asked at both Alkermes and Takeda's recent quarterly results as well around the catalepsy. I think You know, yeah, we don't tend to comment on competitive results. You're right. But I mean, Alkermes, I think, seem confident that they are at least seeing some efficacy on catalepsy, at least at the I think this eight milligram level, I think. And we haven't really seen actually a full data set yet from Alkermes and Takeda. So we've seen hints from the quarterly results and their press releases, but they're both going to report full data sets at the World Sleep Conference in September. I think I'd really like to see those full data sets before we make any sort of further comments because I really want to see what Takeda's effect is on the catalepsy as well. And yeah, so I think we'll just have to wait and see. But you're right to pull out catalepsy. So particularly with NT1 patients, you know, this is a real problem. And I think that any molecule we would really want to see benefits of catalepsy. uh in uh in in the data uh but let's wait to see what what september uh world sleep congress data looks like um and then of course you know with orx 750 we're hoping to get some phase two data from them in across these broad range nt1 nt2 and ih by the end of the year so it's going to be really interesting to see whether there's some differentiation around uh catalepsy and other efficacy endpoints as well thank you for the question

okay thanks for your comment no worries thank you very much for the question pathology associates dion san please unmute yourself and ask your question

Hello, Beyond Pathology Associates. Thank you for taking the question and congratulations on a great quarter. I just have two quick business related questions. And firstly, Chris, I think you mentioned that you'll give an update on NXE 149 later in the half. So I don't want to jump into that at the moment. But I was wondering, Are there any communications with BI at the moment? Any questions that they're asking? Are they active in the data room? And so on. As well as are there any interest from other players regarding your GPR-52 agonist? Thank you.

Yeah. Chris, I can take that if you like. Yeah, sure. Go ahead. No problem. Okay. So thanks for the question, Dion. So actually, just to provide a bit more color around NXE 149 and our relationship with BI. So actually, ever since the option to license agreement was signed with BI, We've had a really close relationship actually with them in terms of sharing information as the study is progressing, getting their thoughts on what we're doing, what the data looks like. So we have quite an open communication channel with Boeing and Ingelheim. And of course, you know, that's very helpful, I think, for us because we, you know, we'd really like this to be where the asset lands. And so I think it's really important that, you know, BI really go with us on this journey as the clinical development package reads out. And, you know, we're the sponsor of the study. We still hold the commercial rights to the program until they trigger that license point. And they're very respectful of that, of course. But we've been really, you know, walking with them on that journey. And so we're trying to really make the process as easy as possible. when they come to make their decision. So we're very conscious of that and very mindful of that. And so, you know, just to reiterate, we have a really, really positive relationship with them. And beyond to your question about other players as well, obviously we couldn't sort of comment in any detail there, but, you know, we do have that option to license with Bowringer. So that is, you know, if they decide to trigger that, then that's fantastic. But we do, you know, just to add some color there, we do have some interest in the program from other partners. It does come up at various partnering meetings that we go to. And we always talk about the relationship with BI and everybody understands that. But we definitely have interest from other pharma companies as this program is maturing for sure. Yeah. Thank you for the question.

Thank you very much, Matt. That's very helpful. Matt, maybe for you. We spoke about or Chris mentioned your BD focused on in-licensing at least one late stage product for Japan. I was wondering about... is there any interest in strengthening your service, your core GPCR-focused discovery business? And is there any role for business development in that? You've got a terrific platform, but there are other players in GPCR. There's a couple of small players in Europe. And given the amazing work you are now doing in obesity, Is there any role for business development in your efforts?

Yeah, I mean, I can comment and then maybe Chris or Hero can also comment. I mean, our BD activities are actually quite broad. So we have a very active BD group. And some of that activity is obviously focused on in licensing opportunities for Japan. We really have to support that vision that I think Chris has outlined previously around having five market products by 2030. That is really important. And we still know that's very in our line of sight. But you're absolutely right, Dion, the BD guys also are very active from the kind of UK side of the business. And that in itself is quite broad. So that ranges from right the way from start, you know, the early phase where we might look to collaborate with, partners for target identification or something like Precision Life or like Antiverse doing different modalities. But we also, of course, have those platform collaborations like Lilly and AbbVie that are ongoing. So we do, you know, that came from BD activity. But also there's other methods as well, right, where when you have a platform which is extremely productive like ours, and I mentioned that in my presentation, Sometimes we just can't support all the programs going forward. So we have to find alternative mechanisms to bring investments into those. And that Tempro bio is a great example of a joint venture where we've managed to kind of move that asset forward, which came from our platform. Just to reassure you, that BD activity is quite broad and there's definitely parts of that UK and utilising that platform in a very diverse way. Chris, I don't know if you want to add anything.

I think you've covered just about everything, Matt. I guess, Dion, Matt's correct. I mean, now UK business development is very broad. What I don't think you'll see us doing is you won't see us doing... like M&A deals to expand the platform, what you'll see us doing is business development collaborations where we bring in synergistic technologies or methods that can enhance our already high levels of drug discovery productivity. So you'll see us do things like that. And we're doing them all the time. But the core focus, I think, is definitely on Japan. On the in-licensing side, we maintain a BD team in Japan. And the BD team in the UK is also tasked with doing high-value deals, as we've talked about in the past. You know, in order to do that, we really need to be rapidly moving programs to, you know, at the earliest preclinical candidate stage as fast as possible, but also sometimes into the clinic. That's how we can catalyze much larger value transactions. But yeah, it's an all-encompassing BD effort. It's not limited to licensing in or out. They have a broader remit.

Yes, I see. Thank you very much. Thank you. Thank you, Chris. Thank you. Congratulations on what you're doing in obesity. I think it's very exciting. Thank you.

Thank you so much.

Okay, thank you very much. Let us move on to the next person. Wada-san from Nikko Securities. Please unmute and start your questions. Thank you. SMBC Nikko. My name is Wada. The key targets regarding FI 2025, page five, I have two questions regarding this page. Question number one, as I mentioned earlier, about in-license product, what is the current status? What is your view right now regarding this? On page 7, main pipeline, Lucera start. I think you're thinking about this as well, Lucera start. So what would be the triggering events to bring in in-license products? What are the triggering events to make a decision regarding unlicensed products? What is the status of Lucerastat? Favre disease? They're coming up with results in December. So if we're going to wait for that, you won't be able to make it by the end of this year. So in that case, what about the other products that you are contemplating? Goal number five. So, GPR52 agonist option exercise, whether that can be done by the end of this year? December, Phase 1b, once it's done, it will be the timing. And according to the current material, is it going to be November? Could this be brought up? So what is your outlook on the exercise of GPR52 agonist option? Thank you very much. Regarding BD, I would like to give an answer. And the latter part, I would like to ask Chris. So BD deal, one or more. So Lucerestat, of course, is one of the candidates. At this moment, there's one other. compound that we're looking at. So we're not solely dependent on Lucerastat alone. So what's going to be the triggering event for Lucerastat? Your take is correct, Bengelstad. We are paying close attention to that. Once that goes very well, we will have to rethink the potential of Lucerastat. Unfortunately, if Ingolstadt fails, there will be a larger opportunity that will be opened up for Lucerestadt. So what you're looking at is pretty much in line with what we think. So what happens by the end of this year, it could be very close to the end of the year. That's where we are. We are having very close collaboration with them. So taking one month just to process the contract, no. So once a decision is made, I think we can execute pretty quickly. So Chris, any additional comments? And number five, the progress of GPR52 agonist option exercise. If you could please comment on that, please.

Well, thank you. So just running through those questions regarding in-licensing for Japan, as Nomura-san said, we are actually in active diligence over an opportunity and we expect that that opportunity would transact by the end of this year. So that's going well. On the serostat, your second question, I don't really have anything to answer. Nomura-san answered that perfectly. We are waiting for Venglistat's clinical readout, and that will determine the size of the potential opportunity. And both ourselves and our partner are aligned on that strategy. And then on objective number five, This one really does depend on our partner and when they choose to exercise the option. Now, they may, as we've been saying from the beginning of the year, they may choose to do it early. or they may choose to take a little bit more time. So right now, whether the option trigger happens this financial year or next financial year, it's very difficult to say. We have more clarity about that towards the end of this year, but certainly, As we have said from the beginning, if the option is exercised this year, then it's a $65 million milestone, so it will have a significantly positive impact on our IFRS operating profits. That concludes my response.

Thank you very much.

That was well understood. Thank you very much.

So time is running out.

So City Yamaguchi-san, this will be the last question. Thank you very much. Yamaguchi from City. May I ask one question? Yes, thank you. so i'm sorry about the short-term financial results q2 looking at q2 alone as you mentioned there are multiple milestones and the operating income is 500 million loss and so the loss is now shrinking q3 and q4 uh setting aside the large deals So in the base business, I think you're turning profitable is within sight. So including that be ideal without with or without be ideal because that what what do you think? Thank you very much. I'd like to answer that question. Thank you for a very to-the-point question. The core is cash base will turn profitable. IFRS bases, there are various factors that come into play. So we will try to be profitable as much as possible. We cannot commit, though. So it will be too optimistic to see that. But our cost reduction measures, it's still low key, but is bearing fruit. The reduction in SG&A, R&D was spent in the first half, but in the second half, it will be reduced a bit. So the base business growth and the cost reduction combined, we want to come as close as possible to the target. Maybe it's too optimistic. We cannot commit, but this is where we are. Thank you very much. Thank you so much. So it is time. I'm sorry that we wanted to see the reciters that question, but we wanted to answer the text questions, but there are other questions too. So as always, we will answer those questions later.

please allow us a time and understand and the video of this earnings session will be uploaded to the website as always well thank you very much for bearing with us until very late with that we would like to conclude a 2025 first half financial results briefing session thank you for your attendance