Orexo AB

Your line is muted. Good afternoon, everyone, and welcome to this second quarter interim report presentation from me, Niklas Arntzen, the CEO of Orexo and Fredrik Jastén, who is the CFO of the company. So those of you who have been following the day, you understand that this quarter, the second quarter of this year, we have continued to clean up the company and going through the transformation after the sale of Subsov in the end of last year. This has had some impact both in terms of operational expenses, where we have resolved disputes and discussions with suppliers, so we're taking a one-time cost on some of these contracts to exit some of those contracts. We have also continued to phase out employees from the US and also reduced the staff in Sweden during the quarter. So all in all, we have in this quarter, we have an inflated both cash flow position and OPEX position, which is driven by this transformation that we're going through. But we feel it's important right now for the company to come through with a clean slate and be as transparent as possible of where we stand at the moment. So where are we right now? I think in parallel with working through all of these different operational items to prepare the company for the new future, we of course continue to work in our R&D programs, which is really where we're building value long term. And if we look at what we have accomplished during the quarter, our 390 project we have gone through in vivo study, which has positive results. ICIPRI, we are well on track to file in Q3 in September with 640. We are on track to start the clinical trial that we are scheduled in for Q4 this year. We are also during the quarter, we started what we can call an early stage scientific collaboration with an external pharmaceutical company to basically work out with the Amorphox application to GLP-1 agonist. That is an early stage, but it's a good access for the company to really understand how we can optimize this program to create interest from pharmaceutical companies. I'll come back to that a little later. We could also strengthen our business development. We have recruited a new head of business development, Raheela Nasati. So this is really to leverage the interest that we've seen growing interest in our Amorphox platform from different companies. We have intensified our discussions with the Department of Justice. This has been something that has been following us more or less to the date. I think it was the 14th of July that we started and six years ago. So it's a little more than six years now. And we really would like to put this behind us. It's a difficult process. It involves more than OREXO. It's also some of the employees in the US. So this is a complex process to coordinate, but we are making progress. We look to be transparent from where we are right now. We have opened the process to look at what are the financing opportunities looking forward. And this is in terms of our strengthening our position in our business development discussions long term to show that we have alternatives and we are well financed to complete the programs. together with the partner, but also of course to ensure that we can continue with high pace even if we should reach a settlement with the Department of Justice. I'll come back to some of the details around that a little later. As you saw in the report, we have a cash position of 233 million. It was relatively significant cash going out this quarter. A lot of that is associated to rebate payments and others from sub-salt sales. That was before we exited the sub-salt business in the US, and Frederik will comment on that a little later. So a little more into the details. So where are we? We have, as you know, we are working with, say, three segments of Explore, Develop and Partnering. And if you look at the programs that we're running right now, all of them are built on the Amorphox platform. So it could look like we are quite differentiated and work with a lot of different programs. Actually, what we do as a company is very focused around the Amorphox technology. and our involvement in the explore space and GLP-1 in infectious disease is limited for us to do the amorphox powder. If it's a natal delivery, we can also support in the next steps, but we really look at partners who should take the heavy lifting of driving the programs forward rather than OREXO, for example, becoming a vaccine company. But we do see that the technology is very valuable or could be very valuable for vaccine companies Where we do have more efforts is in our developed segment, where we're working with anaphylaxis of the two agonist intoxication and opioid overdose. These programs are those who have been running for a while, and as you know, a couple of them are now approaching their final stages. So it's kind of a legacy for working with this. I don't see that Oryx should become a vaccine company moving forward, but there we will rather work with companies who are active in that space. So in a little more detail, in GLP-1 agonist, we are working towards an in vivo study this quarter to start that in oral formulation for GLP-1. we're quite pleased to have established what i would call a scientific collaboration so don't confuse this with a partnership but it gives us access to quite high quality input in terms of methods for study design it's about how to do the analyst analytical methods in the in vivo study it's about access to some excipients that we're working with. So this is an important for OREXO as we have not worked with GLP-1 before to have access to that kind of competence. And of course it gives us a foot if the results are good because the partners of course doing this with an expectation. to look at those scientific results and see if this is applicable to their portfolio. So we are ready to start an in vivo study with an oral formulation in Q3, but we also continue to work with the nasal formulation and also there we would be looking for partners to support the company moving forward in nasal formulations. Infectious diseases, so vaccines. It's quite interesting to see what's happening in the vaccine world. I see more and more recognition of the value of a nasal formulation and this is exactly the sweet spot for Morphox. And here I'm quite pleased with my experience of going to US Bio in San Diego a few weeks back where we met several vaccine companies and actually gained some good traction and interest of testing our technology to vaccines that could be taken nasally or even for some companies, existing vaccines that could eliminate the need for cold chain. So this is something that we really see as a big opportunity for Amorphox. But again, we don't do this with anticipation that Oryxia should suddenly become a vaccine company. It is basically to add to allow the technology to flourish with other companies and enable their vaccines to be delivered nasally and or avoiding a cold chain and thereby having much longer stability and much easier distribution to the end user. For our anaphylaxis study over at 640, we are well on track to start our nasal allergy channel study in Q4. What's needed for that is to upscale the manufacturing to what we call commercial scale. That means that the testing needs to be done on the final commercial product. Here we're fortunate that we have the entire manufacturing chain set up for ICIPRI so we can basically use the setup with the reliability data with the FDA-inspected process for ICIPRI we can use on OX640 taking away an immense amount of work and risk from the OX640 project. It's a very large market and I see more and more recognitions even scientifically for the need for a more convenient formulation like a nasal formulation. There are some momentum building in the market in the US and even though it's still small it's interesting to see that they have after one year they have surpassed the size in sales than what we had with Softsol when we were at the peak level and continue to show quite good year-over-year growth. Alpha-2 agonist intoxication, that's our Work390 project. I would say a real, the active substance that we're working with, adipamazole, is used daily by veterinary clinics all over the world under the brand name anti-sedan. And the big test here, is it nasally absorbed in a way that is meeting the need for bioavailability to have a nasal formulation? Because this is really what we see as the opportunity here is not to develop a new injectable, but to have a nasal formulation that can be widely distributed to first responders, community workers, and maybe even patients. And here to see that we have successfully gone through this in vivo study and with all of our experience of running in vivo studies on other formulations, we are quite certain that the data we see in vivo studies in animals is applicable to humans as we come further along. Although an ADPAMASOL is available for animals, it is in the eyes of the regulatory agencies, it is an NCE project. That means that we actually have to do a lot of toxicology testing and what we call preclinical testing before we're ready to go into the clinic. As you know, this project is to the vast majority financed by the American Authority, BARDA. Opioid overdose, our ICP, or before weeks one to four, we are well on track to file the product in September. So we expect to have the filing in September, and that would mean the expected review time from FDA is six months. That takes us into the end of Q1, when we should have approval in the US. For both the 640 and the opioid overdose programs, we are starting and intensifying a partnering process where we are looking for OX640 to have a partner who can take the commercialization of partners, because this could very well be different partners for different regions in the world. This is clearly a global product. but we will have partners who can support both the final development and also the commercialization. We expect from OREXA, we have the funds and are expecting to drive the study to the national allergy channel study, but would then look for a partner to take the program over the last regulatory studies and also start the commercial manufacturing. In opioid overdose, we also see a major milestone is the submission to FDA. So when we reach that, it's also a very good trigger of really intensifying the partnering efforts for the US market. So where, and just to give an overview of our future, where we are putting most of our money right now and are expecting to have most of the investments moving forward is the 640 program. And this is a program where you're addressing anaphylaxis. So for those of you who are new to the company, anaphylaxis is when you get an allergic shock. and you need epinephrine to basically reverse the allergic shock. Today, this market is to 99% dominated by autoinjectors on a global scale. There is a nasal formulation that's come into the US and have been started to launch in some markets in Europe also. And it is interesting real-life data that comes out of those, both from Europe and also from the US, where we start to see scientific evidence and value of having a more convenient administration than the auto-injectors. There was a recent study sponsored by the Danish company LKL Velo, who is launching a nasal spray in Europe, where nearly 40% said they didn't carry their anaphylaxis products regularly. which is a big risk because rarely you get the anaphylactic shock when you're at home. You often get it in a place where you can't control how the food has been treated or what is happening around you. So we see here that having smaller and more convenient, more stable formulations would have a major meaning for patients, and we believe this is going to drive continuous growth in this segment. One of the hurdles, we saw that with Naloxone when that was launched back in 2015 in the US, nasal Naloxone products. It took some time before people got convinced that a nasal formulation has the same effect as an injectable. And it took basically, I think, two years before we really saw the market starting to pick up in the US with nasal Naloxone. And today that is completely dominating the market. Should that happen in the epinephrine market, we are looking at a market that is worth more than $3 billion on a global scale today. For Rexo, we have somewhat around 200 million left in external expenses. Then we also have an internal team working with this, of course, and the majority of this is expected from the second half and into the first half of 2028, where we then expect during the summer to have the filing ready. if everything goes according to plan. And we will seek a partner to run this. And why do we think this is an important project? It's basically because we're just looking at the product profile of OX640 compared to the competitors We see a product that is more stable. We see rapid onset. We see that we have an extensive absorption of the product and even after an extended period. So we don't see a drop in the amount of epinephrine. We basically see that we continue to have an extended absorption even on the nasal allergy challenge from the first started we have. And that is something that is differentiating us from the competitors on the market today. We see an opportunity to have a long shelf life. We have an incredibly stable product. We don't see any degradation, which you actually see on both the nasal liquid in the market today and also in the auto injectors. And then on top of that, we have IP exclusivity to at least 2044. So it's a long runway from where we are today with Wix 640. So even smaller parts of a billion dollar market is highly valuable for Rexel. So what are we trying to do apart from our projects? And I just say with Amorphox, this is really part of what we're trying to build on right now is when we look at the global market for pharmaceuticals, we see some growing issues where we believe amorphox can be a solution. It's around stability of biomolecules. We see a lot of the vaccines and biologics require cold chains to remain stable and even under cold chain they have short shelf lives. Cold chain is a bottleneck and a growing bottleneck in both in the pharmaceutical manufacturing but also when you come out in the distribution of the products of the end user. This is something that we can address. They are limited by molecules, they are by far, the majority are delivered through injection. We think that there could be opportunities for more to be delivered through nasal, and we have seen, as you saw, our first nasal study on the GLP-1 agonist semaglutide through the nose, so much higher bioavailability compared to the reference product. We see an increasing patient interaction model that is changing, in particular in the US, where patients are more and more relying on virtual interactions or virtual interactions with their physician and then home delivery of their product. So you basically, instead of going to the pharmacy, and this, of course, an immense amount of closure of pharmacies in the US the last years, we see that patients are expecting to get the product sent home. And of course, that is an obstacle if you have an injectable and also something that requires a cold chain. Finally, most if you're just doing a normal injectable, you will have little IP associated with the formulation and we have today a long IP and the more APIs we're putting into a MorphX, the longer IP we expect to have. We even have for GLP-1 agronist, Our IP is expected to go into 2047. So that's actually 21 years from where we are right now. So we can with Amorphox offer a significant extension of IP for many products and development. And if you look at vaccines, this is where we really see a big value because we see that most of the vaccines are very, very sensitive and we can provide something with more stability. And one thing I would highlight here is just a very recent Swedish study that was talking about how you need mucosal immunity for or to avoid the the full effect of influenza and others. You can maybe be injected and have a systemic immunity, but if you don't have the local immunity, you will still get sick. Maybe not as serious, but being sick also means that you can spread the virus. And by having something that creates a local immunity, you'll actually have a much bigger opportunity to stop the virus from spreading and avoid disease at all. So this is an area, and it was interesting to see the Swedish study done at the Swedish hospital, the Dandelud Hospital. to see how they came to the conclusion that we need to deliver flu vaccines through the nose to ensure full immunity in a vaccination. So I think we are quite spot on to one of the real hot topics in the vaccine space at the moment. and then our model so again the risk of course by working with so many different molecules is that you are getting too fragmented and and spread your your resources across many different areas what we are basically doing is that we are offering companies with Sorry, I believe I got disconnected here. So I hope that it didn't disturb you too much. And the sound quality is still good. So what we're trying to do is basically with the Amorphix platform is offering a way to create, we do the powder and then our partners will basically have to lead the clinical development and the development and supported data for the API. We can then of course, based on all of our experience from having taken products to the market offer support throughout the entire development process all the way up to manufacturing to do some of the clinical testing. But of course, for clinical trials, we need to rely on the partner to do this. So really, the work that we are offering is focused around creating a powder where we encapsulate the API and make it bioavailable either through the nose or through reconstitution, where you can then avoid cold chain and also increase the stability and shelf life of the product. And we're taking this to customers, to our business development group, where we just recruited Raheela Nassaji, who's a long experience from business development, worked with both large and small pharma companies, most recently as the CEO of a small vaccine company. And with Raheela, we are basically working to leverage the increased interest we're seeing in Amorphox to create new collaborations. So building on the early stage scientific collaboration, looking for other partners in the GLP-1 space. We see high interest from the US authorities in thermostability in vaccines. So again, going with other companies and maybe build on our experience with BARDA to seek financing together with other companies to test these nasal formulations should be feasible. And we have right now several ongoing discussions with Swedish and international vaccine companies where we're discussing how can we best assess the value we can bring to their vaccines. So the focus areas in business development right now is in the Amorphox platform. It is finding a commercial partner for ICIPRI ahead of approval in Q1 next year, and also to work to find one or more partners for the ORX640 project, where we see this project could be purely a global, have global opportunities where ICIPRI is more US. We think ORX640 is something that deserves to have a global market. So to round off, why do we think that we are at an interesting time right now? I think OREXA, we have several products that are right now approaching approval or very close in their final stages. We have ICPRID that we are expecting to buy just within a few months. we have 640 which we could file also in 2028 with approval either late that year or first of all late that year or early the year after we have an work 390 project which is maybe a little longer ahead but the risk in the project both from a development perspective but in particular also from from a finance perspective is relatively low because Oregsu is only covering a fraction of the expenses So we're doing this based on our differentiated Amorphix platform. I think we again and again, we see that we can do stuff with APIs that no other company can do. We have our high value, late stage pipeline. We have experience. We've taken four products to the markets. We know what it takes to get a product approved. And we see that we have multiple quite interesting inflection points coming up relatively soon in the company. such as the IC pre-submission, OX640 commercial scale manufacturing, NAG study results, new partnerships and collaborations around the InvolveFox platform. And with that, I will open up for Fredrik to take us through some of the financial numbers. Fred, please.

Thank you Nikolaj. So starting with the P&L for continued operations which we as you know after the divestment of Subsol US no longer follow up on a segment basis. Now this vested Subsol US business is presented as discontinued operations in note 10 in the report and will be presented that way for the remaining part of 2026. So on net revenues of three and a half million for the quarter, abstract royalties were low, reflecting ongoing trend of individual country royalty agreements expiring. In addition, royalties were also negatively affected by the turmoil in the Middle East. Error royalties were also lower following launch of generic products in Canada. Sub-salt ex-US royalties, on the other hand, were higher, explained by positive true-up of Q1 royalties, where we hope to start seeing the effect of course increased market efforts when finalizing their sub-salt manufacturing setup in Europe. OPEX, so that amounted to 107 million for the quarter, which is up from Q1 last year. But the absolute majority of that difference comes from the settlement with GAIA, as Nikolaj talked about, terminating the collaboration in relation to digital mental health products. That increased admin expenses by approximately 20 million. Seven expenses were lower than last year, mainly due to lower marketing related costs for SIPRI and lower digital mental health product activities. ADMIN were high mainly as I mentioned from the settlement with GAIA, but also from increased legal fees seeking a settlement in the DOJ investigation. R&D costs were also higher, following higher costs for the development of OATS 640 and OATS 390, which on the other hand also meant higher BARDA reimbursement of OATS 390 related costs of in total 4.5 million. That being the main reason for a total positive contribution from other operating income and expenses of 5 million. Another comment on OPEX and the total this quarter of 107 million and we look at what that would be without non-recurring items such as the settlement with GAIA and normalized with no transition related expenses or legal costs in relation to the DOJ investigation. We would for the quarter instead look at OPEX of some approximately 60 million excluding depreciation or annualized about 240 million SEK. We are also continuously looking at how to become more and more cost efficient going forward. We have, for instance, reduced the Swedish workforce with approximately 10% after this intersection. Net finance items nowadays, after the redemption of the bond, give a positive contribution. It was one million for this quarter, mainly explained by higher interest income from bank accounts. Net prop is then for continued operations minus 102.5 million SEK and for discontinued operations plus 2.1 million. And there the restructuring cost post transaction is starting to phase out, although will remain in some degree until the transition period has ended, likely end September. And next page. cash flow we reported total negative cash flow in Q2 for continued operations of minus 98 million where we had a negative contribution from operating activities of 93 million, primarily impacted by negative operating earnings, a negative adjustment for non-cash items, where the major part was payment of provisions for outstanding rebates related to sub-sold sales in 2024. That is before the transaction with Dexel. These rebates will decrease significantly going forward, expecting to be fully phased out by year end. We have like 3 million left to be paid of our provisions for rebates the last two quarters this year. Furthermore, we had positive changes in working capital, mostly related to an increase in accounts payable from our own operations. And then under the Transition Services Agreement, following the divestment to Dexel, OREX also continues to collect software revenues on behalf of Dexel during the first nine months of the year, which also had an effect on working capital through both accounts receivables and accounts payables. Now, this setup with Dexa, though, is just a pass-through exercise with a net zero effect on cash flow over time. But 44 million of our cash in the balance sheet end of this quarter is payable to Dexa. So cash flow from continued operations was a negative 98 million, as I said. Cash flow from discontinued operation was a negative 14 million. And this is mainly from payment of severance and other post-transaction related restructuring costs. So the total negative cash flow for the quarter is then 112 million. After adjusting for a positive FX effect of 2.6 million, that meant a decrease of a cash from end of Q1 of 109 million to 277 million, after which then 44 million belongs to Dexel. So our own cash is $233 million in the future. And with that, back to you, Nikolaj.

Thank you, Fred. Again, as you can understand, this is a relatively complex exercise, particularly given the U.S. setup where you have returns, you have rebate payments, and some of those returns and rebate payments are coming in. QUITE LATE AND CAN BE ASSOCIATED WITH THE OREXO SALE OF SUBSAL PRIOR TO THE TRANSITION TO DIXEL SO THIS IS A HAS BEEN A PERIOD OF TRANSFORMATION AND ALSO TO where we have to work with parallel both continued and discontinued operations, which of course is clouding the picture a little about the financial performance. But I can promise you we are working intensively to bring down our spend and to really focus our resources where we see most value and to avoid future expenses associated with the US legacy operations, that means the commercial operation. So to the legal update, and we did mention that we've intensified the discussions with the DOJ. When we look at the structure that we expect, it would be a settlement where the payment will be over several years. So there will not be one big payment coming when you have reached the settlement. It's something where I think there's a very constructive dialogue with the DOJ for what is feasible for OREXO to ensure that we can continue our operations looking into the financial situation. which is some of the stuff we have done during the spring, is basically to show forecasts and also give the DUJ a full insight into our ability to pay in such a settlement, which of course is relatively limited given where we are at the moment. We also expect that parts of this will be covered by insurance and as I said before the settlement will cover not only OREX but also some individuals who have been working in leading positions in the US and for those individuals that we have a D&O insurance which should cover their exposure which should take a decent amount of the total settlement and the amount should be covered then by insurance. However, the discussions are ongoing. It's not been closed. It's a slow moving process. So it's something that we have been spending, as Fredrik said before, a decent amount of legal fees during the quarter and historically quite a lot of legal fees. But I do see that we have made some progress during the quarter, which give us some confidence that we can be approached a final resolution, even though I'm also fully aware that the details in the settlement agreement is still to be worked out. Our position remains that we have been compliant. We have used external legal advisors, regulatory advisors to review our commercial material and training material and others. And we get the word from our lawyers that we've been compliant However, given where we are, this has been going on for six years, we would really like to put this behind us and also to avoid the cost of a potential legal proceeding in court in the US and also the continuous expenses that we have right now to manage this process. So, final slide. We have shown this before. Subsol EU, we haven't seen an effect of the EU sales yet. I will say right now, what we have in our account is actually based on projections and not the final sales report. But we do know that the Subsol EU material was released in the end of the quarter, so we expect relatively soon that the material from Accord will reach the market and be the basis for the future commercialization in Europe, which should give them a much more competitive cost of goods in the European market, which in its turn should also have a positive impact on the orexo royalties. 390 in vivo study, as you understand, is important and we will relatively soon, in just a few months, we will hopefully put another buck next to the Q3 filing of ICPRI. And then trial start of week 640 will come shortly thereafter, plus the in vivo study in GLP-1 agronist, which is scheduled for this quarter also. So we're looking quite well to basically put a tick in the box between each of these milestones in the short term. And we are working now with a much stronger business development set up have joined us to increase the number of partnerships and get more companies to test and work with our Amofix platform. With that, I'll just remind you about our financial calendar. Next report is coming in October 22nd. And we are participating in the numerous, and this is just a small subsection of some of the activities where we are with business development. And again, with Ahila joining us, this is an area where we expect to increase activity levels quite substantially during the next half year. So with that, I will open up for Q&A.

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Klaus Palin from DMB Carnegie. Please go ahead. Thank you for taking my question.

And my first question is about this COG process that you're sounding a little bit more optimistic that you're making progress. Is it possible to share any further details what has happened in this process during the past month?

Thank you, Claes. So the DOJ, what we're working with is a slightly moving target because there have been some reorganizations at the DOJ. We're working on several different lists to try to resolve this, talking to different people within the Department of Justice, but the main constituents are, of course, is the Western District of Virginia. It's one prosecutor office who initiated this investigation. What I can say, because we can't disclose any details, but I will repeat what I've said previously, is if you look at the size of the case, the claims, and also the number of involved parties, meaning both OREXO and some individuals, the total expense to run such a process is likely to be north of 10 million dollars. So the logic, the rational decision if you see that threat is to look for a settlement when you're in that neighborhood if you can get to a reasonable financial terms. And that goes not only for Rexel but it also goes for our insurance companies and we are here in the discussions. We are expecting to see insurance coverage for a decent amount of this. So I can't disclose any more details as we are on negotiations at the moment. But this is some of the logic that we are looking at. We really would like to close this. And of course, what we would like to avoid, even though we believe we have a strong case, is to enter into a court process where it would be very difficult to get back on the legal fees and of course there's always a risk when you go to court that there will be parts of the decision which is not positive for the companies or the individuals involved in the process.

But you have a clear counterpart at the authority to discuss these issues with today.

Yeah, there's no permanent prosecutor assigned to the Western District of Virginia. As you know, Todd Blanch, I believe, was confirmed yesterday as a new attorney general for the US. And I think that's been a little of a delay in that process. But there is an interim head of the district, and that's the person that our legal team is speaking to.

Thank you. And another question. You have done a lot of cleaning of your business this year. And if we exclude the DOJ process, are you done now or is there any more cleaning to do?

So I would say right now we are at the position where we have one person who still works on a temporary contract in the US. In Sweden, we have also one person who is also working with a final end date in the quarter. And I don't see any other supplier contracts that we would need to review as it looks like right now. So yes, we are done in that line. What I will also remind is in Sweden, we're actually moving out of our existing offices and we're moving to a smaller and more space efficient office closer to Uppsala University. And in the new office, we expect to see nearly half of the expenses for our office. That, of course, is not directly associated with the U.S. transaction, but it's something that will have full effect from next year.

Great. And just my last question, Dan, is related to OX390. I guess you have had a meeting with the FDA now. Were you satisfied with what came out of this meeting?

This was about our preclinical work and we got full support from FDA on the plan. There was, as always, there are some suggestions for things that we could add on further details and we are working together with BARDA to discuss those activities and of course expecting to continue with the same setup with BARDA where the majority of those expenses will be covered by VADA. So that was good. FDA also basically wanted to start a process discussing the clinical program so they accelerating that process ahead of the IND. I think that is quite positive also because the clinical program is the little more complex setup because you can't go out and test the product on the end users because they are basically people who are suffering from an overdose with different kind of adulterated opioids on the street. So to have that dialogue earlier with FDA, I think it was quite beneficial for the company. And I would say, 390 is creating a lot of interest, not only from Bada, but also from other authorities and all the way up to the White House in the US. They are desperately looking for solutions to this zombie drug that's called Trank. silithin-metatomidine overdose combined with fentanyl. So this is something that is gaining a lot of traction on a political level on both sides of the ice in the U.S. I think this is an interesting project because we're really in the center of U.S. politics with this project, and we are the only one working with an overdose treatment that we are aware of for Trank.

OK, sounds good. That was all for me, and I wish you a happy summer. Thank you.

The next question comes from Sameer Devani from Rx Securities. Please go ahead.

Hi, guys. Thanks for taking my questions. Let me kick off with the DOJ. Just a further clarification on the DOJ, because there's clearly been some movement this quarter. I just wanted to check, has the DOJ sent you a settlement term sheet?

Not in the sense that we have a written term sheet, but there has been very concrete discussions about a concrete term sheet with the DOJ.

And is In terms of the financing going forward, I'm just trying to put this in some perspective. I'm assuming you'll have to have the DOJ resolved before you can raise further equity capital. Is that a fair assumption?

I think we would need some more clarity around the DOJs before we can do that. But to have the final, I know that the process in the US is It is a bureaucratic process, so it can take time to get all paperwork in place. But if we reach a term sheet agreement that we can share, I think that is the trigger, or that's taking away the uncertainty around the process.

Okay. Then just moving on to OX640, and you've helpfully given a figure to do the pivotal trial. I was just wondering if you could give us a little bit more on the structure of that pivotal trial and whether there is anything built into it to help you differentiate from NEFI.

So I would say in the expenses, actually the majority of the expenses is not associated with the trial. It is for doing the stability and reliability testing, manufacturing the batches needed for both the pivotal trials, but in particular to ensure that you have gone through all of the quality stops because we need to meet this 99.999% reliability. So a lot of these expenses are actually not clinical trial associated. I would say it's less than half. But what we are, we're looking at two studies right now and potentially a third plus a pediatric study. The first one we're running is natal allergy challenge. And I think this is quite important from that differentiation perspective, because if you look at the data from NEFI, the effect that they get on the nasal allergy challenge is relatively short. So what you basically see is a relative rapid peak, but then it will turn off and it will drop down after about 20 minutes. And what we saw in our first nasal allergy challenge study, we saw that we continued up to much higher levels following the profile of EpiPen. And we also had a much more extended profile. And I think this is one of the areas that created a lot of discussions around the advisory board. And there was a need, I believe, for AOS Pharma to do a repeat dosing study for NEFI to show that if you're taking it once and you don't get the full effect or there's a secondary allergic shock, then you can give another dose. We believe that with our product that should not be necessary because we have a much more extended profile when we look at our first study and we also see that we continue upwards much beyond the level of bioavailability that NEFI has reported in their studies. We do not intend to do a head-to-head study in this round but I think that the data will most likely look different than what you have seen from NEFI and this has been one of the the discussions and the reason for them in the first round that they didn't get the first approval that they need to complement the fight, which they admittedly did relatively fast. So that's the first study, Natal Allergy Childhood Study. It is in people with allergy against pollen. So you need to do this during the winter season in the Nordic Hammer Square. So we are basically talking from October into February. That's when you can run the studies. Otherwise, people would be affected by pollen in the air. So that's the first study. The next study will be a self-administration study. So you would need, again, health volunteers who basically administer the nation's spray directly in themselves when but that will not be under allergy challenge. So that is more focused on the bioavailability in healthy volunteers, plus that they can administer the product easily using the nasal spray. The one that will be depending on whether the data we see from the nasal allergy challenge study is whether we need a repeat dosing study. And that, of course, depends on whether we see this extended profile that we saw in our first study. or we see a dropping off, that could be a risk that you need to have a second dose of OX640. But the two key studies is the nasal allergy study and it's also the self-administration study that we have left, as it looks like. But we're also looking to develop an epiduractic dose, which would need to be studied. But for approval, it's those two other studies that are key.

So Nick, I'm completely 100% understanding this. So when you put in your slide the $200 million for OX640 from H227 to H128, is that including some of these pivotal studies, or is it simply for the stability and manufacturing work still?

That number is from today. So it is from today until filing. So some of those expenses will be during this third and fourth quarter and first half of next year. But a significant amount of the expenses will come starting when you come into the real final manufacturing, which is going into second half of next year and into early 2028. But we will use some of the 200 million even in this quarter and also in the next quarter. Okay, that's great.

Thanks very much.

And I believe we received some written questions, so Fredrik, if you can summarize.

Yeah, so we've got some questions again on GEJ. I think you answered everything on GEJ, so I'll move on. His third question is GLP-1. So regarding the industrial collaboration supporting the upcoming Samaglutide and Morphox in vivo study, can you clarify how involved the industrial partner is in the program and whether positive results could trigger discussions about expanding collaboration into formal development or licensing agreement?

So what I said before is we have an industrial partner who is providing under confidentiality, otherwise I could of course talk about who it is, but this is all done under what we call a materials transfer agreement. So we do have a written agreement where they provide us with ways of setting up the in vivo study what kind of measures are we going to look for what are the methods used that could provide the most reliable reliable data that they see based on their knowledge of running in vivo studies and tlp1 agonist and also they provide some material that we use for the in vivo studies so we have a a partner who's involved with mostly through their time and expertise, partly through their supply of some of the material that we use for the study. But Oregsu is the one running the study. We are doing the development and we're taking the expenses for that. So that's the level of involvement. But of course, you don't get anything for free. And of course, the other reason why we have such a collaboration and discussion is a curiosity about what we can accomplish. Some of the structures that we can look at for amorphox for both oil and potential some nasal administration is something that could be relevant if not for existing commercial products and for pipeline projects that are running at the moment. So this is to really understand how our technology could help. And I would say the results is not a It's not a straight line to a partnership because this is really driven by R&D, but it is a ticket to go into more concrete discussions around where our technology could work. So it's definitely not a partnership just of goodwill. It's something that the partner is doing to basically look at opportunities for future collaboration.

And then on capital allocation partnering, so given important value inflection points expected in the next nine to six months for Exipri 640 and AmorFox, how do you balance the need to strengthen the balance sheet against the risk of raising equity at the current valuation ahead of these milestones?

I think it's always a balancing act. It's also a balancing act around communication and there are many, many parameters that are in place. So this has been a thorough discussion both in our board of directors and also with our advisors. We have everything from the DOJ to some internal issues and also discussions with shareholders where we think by going public that we initiate a process right now is opening up for reviewing different pathways. And there can be different paths to raising additional capital. Of course, our current valuation is not optimal, but at the same time, we also know that partners will be looking at security. They want a partner who is able to run the projects going forward so that you have a strong balance sheet. And I think that's part of what we're weighing in right now is to be successful in the partnering discussions, both for amorphers, for people who are using that time and basically allow us to test the API, but also for partners for 640 and ICIPRI to know that they have a stable partner who can continue to support the program is important. And that's a reason for us to start the process right now. We think it's, of course, we see how the market have reacted today. And you could say that it would be optimal to wait. I think it's also optimal. It's a little around the partnering discussions. Could we partner the program? I would say, and I've said that before, that there have been opportunities to partner the 640 program, but that would be to partners who would not have a global perspective. It would be regional and where the amount of payment would not cover our expenses moving forward. And I think here the Natal Allergy Challenge study is a very important trigger, but to get into that process and not losing time, we need to start the process more or less immediately. And in that process, it will be valuable to show that we have a strong financial capacity from the company.

And the final question is on expenses for O640, with the majority occurring in H2.7 and H1.8. While you also intend to seek a development and commercial partner, how much of these costs does Eurexo expect to finance itself before potential partnerships?

I think this is very much up to the partnership discussions where we end up. As some of you know, we have been in in partnering discussions previously, where the partner did take the vast majority of those expenses. We would expect to have a partner in particular for the US market, which is by far the most attractive. that would take the majority of the expenses that's moving forward, in particular external expenses. So that means the expenses that are there right now. Whether that is structured as a path through expenses, through milestones, during development, upfront payments, all of that is depending on the partnering. But my expectations is that a deal would, in its full structure, cover a large share of these expenses, if not more than that.

So that's it.

Okay, thank you so much for taking the time out from a beautiful summer day. I believe in Sweden, Fredrik and I, we've been sitting indoor in a relatively nicely air-conditioned room, so we haven't been outside the door, but I hope the rest of you have been able to enjoy the summer, and I wish all of you a great summer, and thank you for listening to this presentation. Goodbye.

I'll see you next time.

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