Arecor Therapeutics plc (AREC) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Arecor Therapeutics plc Interim Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate do so and these will be available via your Investor Meet company dashboard. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Sarah Howell. Good afternoon, Sarah.

Great. Thank you, and good afternoon, everybody. Thank you for joining us today. So my name is Sarah Howell. I'm the CEO of Arecor, and I'm joined today by Susan Lowther, who's our CFO. And we'll talk you through today the interim results for the 6 months ending 30th of June 2023. So I'll just draw your attention very briefly to our customary legal notice. So by way of background as to Arecor, for those of you that may be joining us for the first time today, we're very much focused on improving patient care by enhancing existing therapeutic medicines such as they're safer, more effective and easier to use. And we do this by leveraging our innovative and proprietary formulation technology platform Arestat. And we use this platform to develop these enhanced and differentiated versions of existing therapeutic medicines. So during this slide, really, what I want to talk you through is the vision for the business and how we see generating value and growth for the business. And our vision ultimately is to transform patient care by bringing these enhanced medicines, both ourselves and with partners, to market, and in doing so, building a large self-sustaining biopharmaceutical company. And if we really walk through those elements of the value generation here and the value build, so if we start on the left-hand side. This is our -- what we call our more early-stage pipeline. So this is a combination of early-stage R&D in our in-house proprietary products and also our prelicensed technology partnerships with pharmaceutical companies. So starting with our proprietary pipeline, we have an in-house proprietary portfolio, what we call specialty hospital products. So these are products that are existing, that's already used within the hospital setting, but they're inconvenient to use in some way. And we're very much focused on an area where these products are like-for-like powders that require a complex reconstitutional mixing procedure prior to use. And we use the Arestat technology here to develop stable liquid, ready-to-use or ready to administer versions of these products. So essentially, they're ready to go at points of care. And we're developing these products ourselves internally, and at the point of IPO, when Arecor IPO'd in the middle of 2021, part of our use of proceeds there was to really build and initiate this platform. So we phased in products since that time, and we've been working on developing these ready-to-use formats of these products. And we've made great progress there. So we have a number of product base that we initiated earlier on in that life cycle where we applied the Arestat technology. We've been able to demonstrate that it's a good fit and we can indeed enable these difficult-to-achieve, ready-to-use formats of these products. And we've been very busy filing IP there. And really moving forward there as we develop those data packages and the IP, the upside potential comes through partnering here. And we'd be looking to enter into product licensing on a milestone and royalty generating basis, very similar to the deal that we've already entered into for one of our specialty hospital products with Hikma Pharmaceuticals, and I'll talk about that later. So that really has the potential then to move assets from that pipeline up this value chain through into milestone and royalty bearing partnering agreements. And then on the technology partnership, this is where pharmaceutical partners come to Arecor, looking to achieve something special. They're essentially looking to achieve a differentiated product profile that they've not been able to achieve themselves internally. So these are revenue-generating partnerships from day 1. So our pharma partners will pay Arecor to perform that initial development work. So that's essentially us applying the Arestat technology to deliver these enhanced profiles. We will then develop a data package which demonstrates that the target product profile has indeed been met. And at that point, our partners have the opportunity to take that formulation and, importantly, a license to Arecor IP, and further forward into development and commercialization, and this is under a technology licensing model, which again tends to be milestone and royalty bearing. So again, there's upside potential from these technology partnerships. We've entered into 3 additional partnerships so far this year. The last partnership was with a top 5 global pharmaceutical company. And these would then have that future upside opportunity. And then as we move to the right here and up that value chain, we have our clinical development portfolio in the diabetes space. So we have 2 insulin-based products here. We're developing a very rapid-acting insulin AT247 and a highly-concentrated rapid-acting AT278. And I'll talk about these in a lot more detail later in the presentation. And again here, we're able to use the Arestat technology platform. But here, we're looking at improving clinical outcomes for patients. So we're looking at improving the clinical performance of these insulin products compared to the gold standard insulins that are available for patients today. So here, our strategy is to develop clinical data packages to prove the superiority of these insulins compared to those gold standard insulins, to demonstrate the benefit to the patients and also, of course, to drive then key data packages and valuable data packages to drive high-value partnering. And our strategy is to partner these for late phase development and commercialization. And we anticipate, given the clinical differentiation here and the market size, we're targeting greater than $6 billion market, that any deal in these areas across our Incident portfolio would be transformational for Arecor. And then we have our licensed partnerships. We have 3 products under license, these products that incorporate the Arestat technology and have been fully transferred to our partners. So the further development and commercialization of these products is completely under their control. However, they are under license agreements with Arecor again milestone and royalty base there. And these really offer that with both near-term revenue generation potential from achievement of license milestones, and I'll talk about these in some more detail also. And then as we build towards that large self-sustaining company as they come to market and offer more sustainable and predictable commercial revenue streams from royalties or equivalent there. And we are anticipating first product, AT220, to be in the -- on the market in the not-too-distant future. And again, I can talk a little bit more about some of the milestones around that product. And then from the commercial side of our business, many of you may know that we acquired a commercial company, Tetris Pharma, in August of last year. So we've just come past our first year anniversary. And they're a sales and marketing and distribution company for specialist hospital products. And the rationale for acquiring Tetris is twofold essentially. First and foremost, they have licensed rights to a key product Ogluo. This is a ready-to-use glucagon product. It's for the treatment of severe hypoglycemia in people with diabetes. So it's like the EpiPen for diabetes there. So we saw a real patient need here for a easy-to-use, ready-to-use product in an emergency situation, in a patient population that we know well, that's these people with diabetes that are taking insulin. And also with Tetris, it offers us the optionality moving forward, if there are products within our portfolio, such as our specialty hospital portfolio where it makes sense to take those to market ourselves in the U.K. and Europe, we can do so through our Tetris Pharma commercial on there. So offers that optionality to retain more of the value as we grow in this large self-sustaining business. And again, I'll talk about the progress of Tetris shortly. But we're seeing certainly sales growth across Ogluo there and confidence in that continued growth moving forward. And then as we move towards the license partnerships coming to market there, obviously, once they're on market, that offers us more predictable and sustainable recurring revenue streams from those royalty-bearing license agreements that we have in place. So just looking very briefly at the portfolio, because I've covered a number of these elements on the previous slide, and I'll talk in more detail around our proprietary portfolio and partner programs here. So as I mentioned, we have a portfolio of derisked and diversified in-house partner programs and also in-house proprietary programs, sorry, and also partner programs. So our strategy for our in-house proprietary products is to take those closer to market, to generate the data packages, whether that be clinical in the case of diabetes, or nonclinical in the case of our specialty hospital products, and take those close to market higher value inflection points. And then to partner on these to bring them to market. And as you can see in the diabetes space there, we'll be looking to gain market share with a partner in that interesting $6.4 billion marketplace. I'll talk about our licensed partnership shortly and some of the near-term and longer-term milestones that we have against those license agreements that are in place there. As I mentioned, the technology partnerships, these are pre-licensed, have that opportunity to move over to milestone revenue-generating technology license agreements. We've entered into 3 this year. That brings us to a total of 11 since the IPO. And that really validates the strength and need of the technology. And Xeris with the Ogluo product there, we're seeing strong growth of Ogluo, and those revenues representing a significant proportion of the Tetris Pharma sales. So talking through the operational highlights, this includes highlights up to the end of the -- end of June, but also some post-period events here. As I mentioned, what we've been really pleased to see is very significant progress across our licensed partnerships. So these are fully in the control now of our partners. Obviously, we have close relationships with our partners here and follow the developments of these products very closely. But they're fully funded and in the full control of our partners. Now AT307 is a ready-to-use specialty hospital product. It started its life as an in-house proprietary product at Arecor and we subsequently licensed this to Hikma under a milestone and royalty-bearing agreement. Earlier this year, Hikma took on full development and commercialization responsibility for this product. So this is now fully funded as well by Hikma Pharmaceuticals. And really importantly, very recently, they had a very positive pre-IND meeting with the FDA. And this confirms that AT307 can be developed under the 505(b)(2) regulatory pathway. And this is important because it's an abbreviated development pathway to market. So it derisks the development of this product and gives that certainty of the development steps that need to be taken to file for approval there. It's also important because we have assumed across our in-house proprietary portfolio of specialty hospital products that they can also follow this 505(b)(2) pathway, and this is certainly a validation of that assumption by the FDA. So further derisks and strengthens the partnering package for that pipeline of specialty hospital products that we have under development. Then for AT292, this is, again, a product. It's a novel therapeutic in development by Inhibrx. They're a California biotech listed on Nasdaq. They have initiated a registration enabling clinical study for this product. So they anticipate this being the last clinical study required prior to them filing for approval of this product. And this also incorporates the Arestat technology. And the next license milestone under this agreement is on first patient dose in this study. So we would anticipate this happening within 2023 there. And also just to note, Inhibrx closed a $200 million private placing in August of this year, so last month. And this was to fully fund the development of this product, both this clinical study and they're also going to initiate a further clinical study in a new indication. So this shows great progress for these products and get them much closer to market, again, under a license agreement with Arecor. And then as I mentioned, the first product that we anticipate coming to market is AT220. We -- this is a biosimilar product. And the partner at this stage is undisclosed, but we would be expecting them to gain regulatory approvals for this product in the coming months. Subsequent to that, there would be commercial launch, which would lead to recurring royalty streams. Of course, the timing of this and strategy around the lead time between approval and launch sits within the control of our partner. But I think what's key here is, given the stage of development there, it's -- we would see this as low risk with this coming to market. And I've talked about our technology partnerships. In terms of the in-house proprietary portfolio, again, I'll talk about this in much more detail. We're currently in the middle of the clinical study for AT278, and I'll talk about the details of that. We've presented our Phase I clinical data in type 1 diabetic patients earlier this year during the summer at the American Diabetes Association. This is the leading diabetes congress, and it's very well received and generated lots of interest there. And as I mentioned, we've made key development progress across our specialty hospital and portfolio. And the next phase for us for the most advanced of these assets would be to move towards partnering there, which brings the upside of milestone royalty-bearing agreements. For the Ogluo product on the commercial side of the business, we have launched Ogluo now an additional 3 EU territories in 2023. So we've launched in Austria, Norway and Denmark. And that's in addition to the U.K. and Germany where we've launched in 2022. So it's now available in 5 territories. And we've also entered into a commercialization agreement with Goodlife for the Benelux region. And our main target there would be the Netherlands. So we look forward to them launching and we expect them to launch in the Netherlands in the first half of 2024. And finally, on IP, we continue to make great strides across our intellectual property portfolio. It's obviously core to our business in protecting the technology and also the proprietary products that we're developing using the technology. We have more than 75 granted patents now in major territories. And we've had 5 additional patent grants so far in 2023, including key patent grants across our diabetes portfolio, AT247 and AT278 million. So perhaps talking in a little bit more detail about our licensed partnerships. So first talking about AT307, so our ready-to-use specialty hospital product with Hikma. As I mentioned, they took on full development rights earlier this year, and since then have made really great progress. They've had this positive meeting with the FDA. So that's the regulatory and development pathway confirmed. And now looking forward, there are additional license milestones in the near term under that license agreement with Hikma. And then ultimately, when this product comes to market, it would be under a royalty-bearing agreement. Now we have thought previously a little bit about framing the value opportunities for these. And for our in-house proprietary products where we are taking the investment, we're filing the IP, it allows us to drive higher value licensing deals here. And Hikma certainly falls into that bracket there. So we look here for royalty percentages in the region of the mid-to-high single digit to double digit royalty streams of product sales, and Hikma certainly fits into that category there. So we're very much looking forward to the continued development from Hikma. And ultimately, we hope for a successful commercial launch of that product. We see that as really driving value and, of course, recurring revenue streams to the Arecor business. And then just quickly on the other 2 partnerships at AT220, this is important because we do expect this to be the first product that would come to market, incorporating the technology. There is an additional license milestone payments under our license agreement with our partner prior to that recurring royalty revenue stream, and we will update the market, of course, once this has been achieved, and then ultimately move forward into, which will give more clarity on the time frame of that recurring royalty stream associated with that product. And of AT292, as I mentioned, Inhibrx have initiated that registration-enabling clinical study. And the next license milestone payment to Arecor is on first patient dosing, which we expect this year. And Inhibrx have publicly announced they expect the initial readout from that study to occur in late 2024. So I think if they keep to those time lines, you'd be looking at 2025 there for submission for regulatory approval. So that product again is progressing now much closer to market. So to talk in a little bit more detail about our diabetes products. So diabetes is a pandemic, and we believe it will remain to be the case. There are around 537 million adults living with diabetes. And at Arecor, we're very much focused on a specific area here, a specific treatment. And this is around mealtime insulins. And we're looking to develop the fastest acting and most highly concentrated, fastest-acting insulins. And this is, to me, very specific on that patient need here and to really deliver improved treatment options for these patients. So if we talk about the 2 products, our first product is AT247. So this is we've taken existing insulin, used the Arestat technology to reformulate this and we're focused on accelerating the absorption post injection so that we have a faster acting insulin that can bring down blood glucose and for people with diabetes much faster. It's at the standard concentration that is used today 100 units per ml. And really, the aim for AT247 is to be the fastest acting insulin that can enable this transformational, fully closed-loop artificial pancreas system. And I'll just spend a couple of minutes talking through what that is and what the challenges are here. So this system is a system where the individual wear a continuous blood glucose monitor that measures their blood glucose at any point in time. This reading is then fed to an algorithm, which calculates based on that blood glucose reading how much insulin the individual needs to keep their blood glucose within their healthy target blood glucose range, which is automatically delivered by the insulin pump. Now these systems are in use today. All of this hardware and technology is available and available commercially. But they're called hybrid closed-loop systems. And the reason it's hybrid is the challenge around meal times. Because when we eat food, our blood glucose rises very rapidly, and the fact is even those best-in-class insulins that are available for patients today are not fast enough acting to counteract that very swift rise in blood glucose in real time. So what this means is around meal time, so the patient instructs the system to give them a large single dose or a bolus dose of insulin to manage their blood glucose around meal times. So really with AT247, what we're looking for here is much faster acting insulin that can counteract that swift rise in blood glucose even at meal times and allow patients to stay in this fully closed-loop system. So essentially, the system is controlling their blood glucose and doesn't need their intervention. So this really lowers the burden for patients, which shouldn't be underestimated. It's a significant burden, managing diabetes on a day-to-day basis. And it also would look to improve the outcomes of the patients. We know that when they're in that closed-loop system, that their outcomes are improved. And we have -- I don't have the data within this presentation, but I presented it previously. We've conducted 2 Phase I clinical studies for AT247 comparing against those gold standard insulins today. So insulin from Novo Nordisk, which are rapid acting and ultra-rapid acting. And we've been able to demonstrate superiority of AT247. We've demonstrated that we have indeed accelerated that absorption of insulin post injection. Now the second product that we have in development, insulin product, is AT278. So this is very highly concentrated and rapid-acting insulin. So this is at 500 units per ml. So it's 5x the standard concentration of insulin that's used today. And the reason that we're developing this product is that there are a growing number of people with diabetes who require high daily doses of insulin. Now a majority of these at the moment are type 2 diabetics and with high BMIs. But we're seeing an increase in the number of people with type 1 diabetes who are requiring high daily doses of insulin. And this is linked to BMI, so linked to weight and obesity, which we're seeing rising significantly. And there's not really a good insulin option available for these patients today. They have 2 options available to them, which both bring compromises. They can use one of the gold standard rapid-acting and ultra rapid-acting insulins. So this gives a little good blood glucose control, albeit not as good as you would achieve with AT247, but they also required to inject high volumes of insulin and multiple injections multiple times a day simply to get their high doses on board. Or they can select the only very concentrated U-500. So it's 500 units per ml, same concentration as AT278 insulin. This is a product from Eli Lilly, it's called Humulin R U-500. So this gives them the benefit of reduced injection volume and fewer injections today. However, it's an intermediate acting insulin. So it's a slower acting insulin, which means there's a compromise on blood glucose control, particularly around meal times there. So with AT278, we're basically saying that you can have the best of both worlds here. You can have lower injection volume, fewer injections a day, but no compromise on blood glucose control because it will be as fast acting as those gold standard insulins that are available today. And also with AT278, what we're really excited about is the future. And we very much see the future moving towards these very small, miniaturized body warm patch pumps for people with diabetes. So these are insulin pumps that will be worn on the body that they wear for a longer period of time, again. So these insulin pumps are available today. There are insulin patch pumps available for patients, but they're much larger than the image you're seeing on the screen today. And there's a real drive from the device company, so the insulin pump companies, and they talk very publicly about this, around moving towards miniaturized devices and extended wear. At the moment, the insulin pumps are used in 3-day cycles, and now they're talking about moving towards 7 to 10-day wear, and also making them as small as possible, because the size of these insulin pumps is a barrier to use for many patients and it's a particular barrier for type 2 patients as well because they generally need more insulins so they need to have more insulin onboard on their pumps, and they don't want to be wearing or carrying with them a large insulin pump. And again, those device companies see a transition of type 2 patients over to insulin pump therapy as a very underpenetrated market. In the U.S., less than 5% of type 2 diabetics currently used an insulin pump. So there's a significant opportunity there. But the key here is if -- to enable a very small longer wear pump, it means you've got to get your -- much more insulin onboard in a much smaller volume. And AT278 is the only highly concentrated rapid-acting insulin in development. And the reason it's the only product in development is this is a particularly difficult profile to achieve. We've achieved it with the Arestat technology. And we also have a really strong patent portfolio with protection out to 2037 for the techniques that we've used to deliver this product profile. So then in terms of clinical validation for AT278, we have performed one clinical study in type 1 diabetic patients where we compared AT278 to NovoRapid. So NovoRapid is Novo Nordisk's 100 unit per ml insulin and it's rapid acting, it's on the market today. AT278 is a 5x concentration here but also rapid acting. And in that first clinical study, we showed that it was noninferior to NovoRapid in type 1 diabetic patients. And in fact, we showed superiority in the first 60 minutes. So we got more insulin onboard and a superior blood glucose lowering profile compared even to NovoRapid 100 units per ml insulin. Now the current clinical study is really important because it's in type 2 diabetic patients with high BMI. So these are overweight and obese patients. So it's really the first primary target patient population that would really benefit from a profile such as AT278 here. And we're comparing AT278, again against NovoRapid and its type 2 patient population, but also importantly, against Eli Lilly's product Humulin R U-500. So it's against the 2 treatment options that is available for this patient population today. And what we would expect to see here is, against NovoRapid, that it's, despite that fivefold increase in concentration that is equivalent in terms of PK/PD profile here and against Humulin R U-500 which has a slower profile, but it's superior, there. So really demonstrating the benefits of this product. Oh, and I should say we'd be looking to report headline days from the study in the first quarter of 2024. So just circling back to Tetris Pharma, and then I'll hand over to Susan to talk through the financials here. I mean I've covered a lot of this. So Ogluo is now available in 5 territories across the U.K. and Europe. We expect a further launch in the Netherlands in the first half of 2024. And we're really seeing that growth of Ogluo with it now representing a significant proportion of those Tetris sales, which really puts us in a good place to drive that continued growth and confidence in the growth moving forward. You may all also have seen if you're following us in our business update over the summer, that Shafiq, who's the current Managing Director of Tetris, will be leaving the business later this year. And we are in process of interviewing a really high-quality shortlist of candidates for this leadership position at Tetris. And here what we're really looking for is somebody with a proven track record of commercial sales of specialist products such as Ogluo across Europe as well as the U.K. And I'm really pleased with the candidate shortlist that we have, and I'm sure in the not too distant future we'll be able to announce who will be taking on the leadership of the Tetris business and driving that business moving forward. So I'll pass over to Susan now to talk through the financials.

Thank you, Sarah. We are pleased to report that our revenue for first half 2023 has increased by over 140% to GBP 1.7 million. And this compares to the GBP 0.7 million that we recognized for the same period to 30 June 2022. Our other income from the Innovate UK grant also increased, and that resulted in total income of GBP 2.3 million, which was an increase of above 100% compared to the GBP 1.1 million we reported for first half 2022. Our investment in R&D of GBP 2.9 million was lower than first half 2022 investment of GBP 4.8 million. This was as we expected as our focus of expenditure in 2023 is on the ongoing clinical trial for AT278. Last year's R&D costs included a U.S. Phase I clinical trial for AT247 and costs for AT278 ahead of initiating the current study. Our closing cash and short-term investments at 30 June was GBP 8.2 million. And post the period end, we received a GBP 1.3 million R&D tax credit from -- for R&D expenditure in the year ended 31 December 2022. Just exploring a little bit more of our key financial numbers. And certainly, the -- showing here the doubling of total income and also our revenue is growing as well as broadening across formulation development, milestone revenue on pharmaceutical products. Just to say that the revenue from the 2 new formulation projects that were signed post period, we announced one in July and one in August, those revenues will be recognized from second half of this year onwards. The Hikma milestone was triggered in January and the pharmaceutical product sales represent the sales by Tetris Pharma, and we've compared those against H1 '22 pre-acquisition sales, which were just below GBP 600,000. The loss after tax reflected our planned lower R&D expenditure and increased SG&A costs, including Tetris Pharma, which were nil in the prior period. Just to say that the R&D tied up within our group is [indiscernible] and the SG&A costs effectively represent everything that is not an R&D expenditure. Cash in terms of net assets, cash and cash equivalents were boosted post the period end with receipts of that R&D tax credit, but also the reimbursement of GBP 0.4 million of grant income for expenditure that we incurred in the first half of the year. Our trade receivables GBP 4.7 million and payables and accruals of GBP 6.3 million include Tetris Pharma, which were not part of our reporting in the prior period ended 30 June 2022.

Great. Thanks, Susan. Just to make sure I was on. Really this is a really closeup slide here to give a little bit of recap of some of those milestones we've talked about, and this is a longer-term view here. So hopefully, I think what you've seen through the presentation today is that we've made really significant progress across our in-house proprietary product portfolio, our partner portfolio, and also now commercial operations here. So across that partner portfolio, of course, we have the Hikma specialty hospital product, AT307, moving across to there at full control and development and investment here at the FDA meeting. And they're in that confirmation of the 505(b)(2) platform, and very much commitment from Hikma now for further development. And ultimately, we hope, commercialization of that product, and that's under a milestone and royalty-bearing agreements. For AT220, we still expect very much so that to be the first product on the market incorporating technology. We have that near-term license milestone as well that's pre those recurring revenues. And then once on market, we move into that more predictable and reliable royalty generation streams there. And then with Inhibrx, AT292, we very much expect them to be doing first patient within 2023. And then importantly, working through that clinical study to set them up for regulatory approval. Again, there are a series of license milestones prior to those commercial -- post commercial streams. And then we can look to the future and see more products coming to market incorporating the technology. We do have technology partnerships that are pre-licensed with pharmaceutical companies as well that have an opportunity then, that generate revenue now, but also the opportunity and a real upside potential from licensing. And as I mentioned, for our specialty hospital portfolio, we've made great progress since we've been initiating those products, we're now in a strong position around filing IP. So we'll be looking as we go through the remainder of this year and certainly into 2024 at converting additional value-driving licensing, so Hikma type deals with pharma. And then from the commercial operations side and revenue growth there, we see that continued growth sales of Ogluo really providing us a strong platform for growth commercially moving forward. And then I think if we look through into 2024 and beyond. I mean, clearly, for early 2024, we'll be very much looking forward to the clinical results from the AT278 trial. That's important to further drive discussions that we have with potential partners and also endocrinologists and really that pool, and excitement around that product, which we are ourselves very excited about for all the reasons that we talked through today, to continue to expand our in-house portfolio of products to provide those opportunities and those license opportunities for the future, and then with the anticipation of products coming to market such as AT220. And then as we go towards 2025 and beyond, additional licensed products coming to market, we start to see that build across multiple products, incorporating the technology then and that build of recurring royalty and equivalent revenue streams, which really allows us to realize that vision of building a large self-sustaining pharmaceutical company. So this concludes the formal presentation for today. But of course, happy to take any questions that have been submitted today.

Sarah, Susan, that's grand. Thank you very much indeed for your presentation this afternoon. If I may just jump back in and then what I'll do now is just bring back up your cameras. [Operator Instructions] But just while the team take a few moments to review those questions that were submitted already. I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Dashboard. Susan, Sarah, as you can see, we have received a number of questions throughout your presentation this afternoon. And thank you to all of those on the call to submit their questions. But Sarah, Susan, if I may just hand back to you just to make your way through the questions, give your responses where it's appropriate to do so, and then I'll pick up from you at the end.

Great. Thank you. So I'll read out the questions and then Susan and I will answer these between us. I think people will know that have listened into before, we like to answer every question where we can. So we'll just work through these one by one. So the first question that was submitted is, your insulin programs look very exciting. How can you accelerate the potential here given the size of the market? Firstly, I'd say, we certainly agree with you in terms of those insulin programs. They -- we now have clinical data across both products that really demonstrate their superiority compared with those gold standard insulins here. I think in terms of the size of the market, it's a greater than $6 billion market, and it's really for us about generating that clinical data that proves we're meeting that unmet patient need, which would then give us confidence with the right partner in gaining market share within that very large patient segment and also commercial market potential. In terms of the acceleration here, we, in parallel to conducting these clinical studies, we're, of course, engaged with the regulatory, the major regulatory bodies, so that's the FDA and also the EMEA, so the European regulators as well. And that's to approve our clinical studies, but also to discuss with them pathways and abbreviated pathways moving forward. So we're confident here, as we're using existing insulin, so the safety and effectiveness, the efficacy of insulin is known, that we can follow abbreviated pathways to market. The clinical data that we're generating [indiscernible] to demonstrate that we've got superiority is not to demonstrate that insulin itself works or is safe. That's already been demonstrated. So we're confident there's abbreviated pathways to market. And we're also confident that, in the hands of Arecor, that we can conduct as we've shown, these key clinical studies efficiently and quickly and generate this high-quality data. So I think that the data from AT278 is obviously key milestone, is a key value driver and really starts to broaden out and significantly strengthen our package for future studies or partnering. The next question is, given the progress you're making and the validation through the number of partnerships, why is the company so undervalued, and what can be done? I mean, I'll say a few words on this. I'm sure Susan will have some thoughts as well. What's within the company's control, and Susan and I and the leadership team here is delivering. And I think what we've demonstrated certainly throughout our life as a public company is that we're delivering the value, and delivering what we have set out. So we're very clear on the progress that we make and the value milestones within the company. And we would agree with that, from the licensed partnerships -- we partner very carefully. So we partner with companies that's motivated to take the products incorporating our technology to market, that have the capabilities and the funding to do so. So -- but it is fully in their control. And I think we can see that through the progress that's been made across those products. And we really look forward to seeing these products come to market. And I think there, once they're on market, you'll start to demonstrate as well more publicly into the market, the value that can be generated and the recurring royalty streams within the business. I think then we look at what could be really transformational for the business, clearly, the diabetes products there and our insulin products. And again, we've generated key clinical data, demonstrating superiority. We can see the markets very much moving towards a much greater need for things like AT278 with the device companies moving towards patch pumps and longer wear and miniaturization. And we know there's very much patient need there. Again, what's within our control is to conduct the right clinical studies. We take very careful advice on the design of those studies and the data generated from those. And I think we would hope that the results for AT278 will be valued and that we'll see the value of those. Then in terms of company value in our market, the markets are difficult, as everyone knows at the moment. And I think the performance of Arecor shares and stocks is not out with abnormal market conditions at the moment for biotech companies. But Susan, you might want to comment a bit further on that.

I would just reecho what you've already said, Sarah, that it's a challenging environment and what we can influence and focus on is setting up very clearly, as we did at our IPO, our vision for the company and those value inflection points that we are looking to achieve, and continue to report and to do presentations like this to actually communicate the progress that we are making as part of that strategy. And hopefully, that will then demonstrate why we value the company. And so that will then hopefully be reflected in our share price.

Thanks, Susan. So next question, can you expand on the outcome from the recent FDA meeting and ideas on next steps, timings, et cetera? So this is around AT307, which is the ready-to-use specialty hospital product that we've licensed to Hikma. So yes, I think the main aim and the main outcome from the FDA meeting there, which Hikma was the sponsor of, was to confirm that regulatory pathway. We've had this assumption, which was shared by Hikma, that this product could follow the abbreviated 505(b)(2) pathway to market. But ultimately, you need the validation of that from the FDA, and they got that very clearly. So that in terms of understanding now the next steps and derisking that program is significant. In terms of -- so next steps really for Hikma, which they're conducting, is around manufacturing scale, generating the data that's required under that 505(b)(2) pathway, which again is very clear. We would anticipate this is our -- I'm going to give you our estimations now rather than Hikma's, we would anticipate there under that 505(b)(2) pathway that Hikma could bring this product to market in the 2025 to '26 time range. That's under our royalty bearing agreement for Arecor. And that does fit in that, as we anticipate the investment that we've made in our proprietary pipeline, that fits in that high single digit to double-digit percentage royalties on sales there. So that would be a significant value driver milestone for Arecor. The next question is, what value proposition can AT247 potentially deliver? So AT247 is our ultra-rapid acting, so very fast-acting insulin here. So I think as we talked through, through the presentation, this is really a product that brings the most benefit to type 1 diabetic patients who need that very precise control. And really, there's a real patient pull and drive around a really tight control of blood glucose. But clearly, the burden of the disease, so this, again, very much a pull and a drive towards simplifying the management of diabetes whilst improving outcomes. And to enable this artificial pancreas system, so it's closed-loop system, would be a huge development towards that step. It reduces the burden. It takes the day-to-day interaction and decision-making out of the hands of the individual so they can essentially fit their pump as much as they can, forget about their disease, whilst really maintaining excellent blood glucose control and improving their outcomes. And as I said, there isn't an insulin on the market today that can close that loop. And with the data that we have for AT247, showing that superiority, there's a real opportunity there that it can enable and be that ideal pump insulin essentially for that patient population. So the next question is, what contracts, if any, have you had with Novo Nordisk and Eli Lilly regarding your insulin products? Are they interested in providing funding to Arecor? So it's a good question. We have very close relationships with many pharma companies, as you know, from our technology partnering business. I mean it's in the public domain that we're actually partnered with Lilly on one of their proprietary products as well. So we have a close relationship with them. And I would add, Sanofi also would be the third major pharmaceutical company that have mealtime insulins on the market, so have a high interest in this space. So we have very close relationships with all of those companies. And in addition, the biosimilar companies and also the device companies as well. There are lots of different ways that these products can be brought to market and different types of partnerships here. And what I would say about the major Novo, Lilly, Sanofi, is that we do talk to them about the target profiles, the patient needs. We share many leading KOLs that advise us, as well as Novo, Lilly and Sanofi as well, and we're very clear on talking and working with those top-tier KOLs. And Novo and Lilly and Sanofi have all been very generous actually, I think, in their time and their interaction with us in advising around clinical study designs, the data they would expect to see. Ultimately, they're motivated to see improved products that they would then have an opportunity potentially in the future to be the partner that can bring them to market. So they want to make sure that the data packages would meet their needs there. So I'd say, yes, we have very close relationships with them. We haven't approached them for funding, on that question there. There's pros and cons of taking funding from strategic partner, of course. And at this stage, we believe we're building significant competitive tension across those groups and we want to be able to be free essentially to drive the best partnering deal for us moving forward and not be tied early to a single partner. So the next question is, when do you anticipate having to return to the market to raise additional capital? So I'm going to give you a high-level answer, and then I'm going to hand over to Susan for the detail. From a high level, in terms of strategy moving forward, we're sufficiently funded to deliver on the key and drive the key value milestones within the business that we've talked about today. So in terms of driving that value through our existing portfolio, completing planned clinical studies, et cetera there. So if we were to raise additional capital, it would be growth capital. It would be to look to expand our internal proprietary portfolio, to ensure that we have a constant stream of opportunities at various stages of development that we can bring through, and ultimately then increase the number of products that can be bought through to the market and drive value for the business. So very much be a strategy around growth. But Susan, you might want to add a little bit more color on that in terms of cash runway, et cetera.

Yes, I can talk about that as part of our management of working capital. And what I would say is that our -- post the period end, as you see, we actually received GBP 1.7 million of additional receipts. And so our closing cash balance at the end of June has been increased post period end. In terms of managing our working capital, we manage cash very carefully. Our cash flow forecasts include existing cash resources plus forecast receivables. And we use those to support planned target expenditure, including R&D. Our forecast from a cash flow perspective only assume receivables from our existing contracts, and therefore, new deals, and you've heard about new deals that we signed in the first half of this year, those are an upside to our working capital management and modeling. As you would expect, we model downside scenarios, and they are really more around the timing of receivables, balanced with the expenditure that we plan to make. And in those downside scenarios, our cash flow forecasts extend to at least 12 months period from the date of the approval of these consolidated unaudited accounts. And as you will see in our interim statements, we've prepared our accounts and continue to prepare them on a going concern basis.

Thanks, Susan. So the next question, changing tact slightly here is, when Tetris was acquired, was the need to change the CEO anticipated? So I think there -- we're really pleased, first, I would say, really pleased with the progress of Tetris Pharma, and really the focus on Ogluo and the growth of that product. So there's no issues there. I think in terms of the current MD, Shafiq, he is the founder, entrepreneur of that business, and I think it's unusual to see as the business transition, now it's really around commercial focus and operational and tactical delivery of the business to see the founder CEOs move on there. So it's all been in very close collaboration or very amicable there. And I think moving forward for Arecor, it really gives us that opportunity to hone in on that really specific expertise across the U.K. But Europe as well, Tetris very previously U.K.-focused business across Europe. So that we can really maximize and realize the full potential of Ogluo product. So the next question is, how does the technology partnership service get promoted there? So this is where we are partnering with pharmaceutical companies and they are coming to us with their own proprietary products there. So this is really a combination now. Arecor has a much high profile in the industry. We're well known. It's well known that we are able to deliver profiles that our large pharma partners have not been able to achieve themselves. A number of our current partnerships are with companies we've worked with previously. So they're coming back to us with additional products within their portfolio, which I think, again, demonstrates the reputation that we have, but also that we do deliver on these enhanced profiles that they're looking for there. We do have a business development group. We brought Manjit in April of this year as CBO. His primary focus is around our in-house proprietary products and the value propositions around those and positioning those for partnering moving forward. But he also talks with those -- the very same large pharma companies that we're talking to about our in-house proprietary products, are also potential partners for us across their proprietary product line. So there's a really good cross-flow, or cross-sell, if you like, across that side of the business. But it's really driven now, we find pharma companies coming to us, rather than the outreach from Arecor. So the next question, Susan, will be for you. There was no Ogluo earnout payment. Does that mean that sales have taken off slower than anticipated?

Okay. So the targets were proposed by the ex-Tetris Pharma shareholders. They were the sellers, and it was agreed as part of a contingent consideration at the time of the acquisition. And the targets reflected the seller's view, their experience and their assumptions. And so the earnout was not triggered in the first period. That does not mean that sales haven't taken off or slower than we anticipate. As you heard today in the presentation, the performance of Tetris Pharma post-acquisition is in line with our expectations.

Thanks, Susan. So the next question is, a company such as Scancell has taken on board a major industry relevant U.S. investor. They seem to have much deeper pockets and know-how than U.K. investors. Is Arecor talking to such investors? I think there, obviously, Arecor, again, we spend our time networking with both pharma partners, industry experts, and the investor community is part of that. We do a large proportion of our business, our partnering business, is in the U.S. So we spend a reasonable amount of time out in the U.S. as well there. I mean, clearly, for U.S. investors, there are a larger number of healthcare specialist investors in the U.S. They would look to come in on a capital raise. I don't think we'd anticipate U.S. investors buying small volumes on markets, but certainly moving forward as we move through our value propositions, if there were to be a more significant capital raise, we would look there to diversify the share register and our investor base as well. I don't know if, Susan, if you want to add anything to that.

No, I think that was good. I think that's covered everything.

So the next question and potentially the last -- so this is the last question. So if anybody's got a question, please do add it in, is -- so it's a follow-up question to the cash flow question. So you have a 12-month cash runway and will need to raise money before next June. Maybe I'll start with a high level, again, answer to this. And I think certainly on this, we -- our cash runway goes out into 2025, and that's based on contracted existing partnerships. So we incorporate into our operational forecast. We incorporate already converted partnerships, whether that be technology partnerships with pharma or our licensed partnerships there. So I think as we've talked about today, in addition to that, there is the upside potential from additional licensing, whether that be from technology partnerships, converting, or specialty hospital portfolio, and then, of course, anything around the diabetes would be transformational. So for us, a raise in the nearer term would be around growth. Susan?

Yes. And just to clarify -- thank you, John. Thank you for raising the question, if I wasn't clear, because that -- as Sarah has just said, what I was talking about was very much looking at downside as part of going concern. And as you may be aware, when you're doing going content analysis as part of releasing your [indiscernible] there's a lot of sensitivity and a lot of variables that you put in. And actually, so we're not talking about -- I was not talking about cash runway. I was talking about actually these statements are prepared on a going concern basis. And we've been through that rigorous going concern analysis. So thank you for clarifying.

Sarah, Susan, if I may just jump back in. Thank you very much indeed for being so generous of your time and addressing every single question that came in from investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. Just for you to review, to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the Investor Meet Company platform. But Sarah, perhaps before really just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that would be great.

Yes. So I mean, firstly, thank you to everybody online today for your time and for the questions. I think it's always great to have a significant number of questions as well, which helps us really get into the areas that we know you're all interested in hearing more. So thank you for that. And I hope what we've been able to show you today is, as I said, that significant progress the company is making across our derisked portfolio of both in-house proprietary assets. We're really pleased with the progress across our partnered programs there and that future now, which is becoming much nearer term potential for products on market incorporating the technology and also across that commercial operations of the business. So we think this provides us with a really robust platform for growth, and this is around bringing, as we said, improved products to patients that can really make difference. That's the core purpose for Arecor. But in doing so, really building a large self-sustaining biopharma company. So yes, thanks, everybody, for your time today. We appreciate it.

That's great. Sarah, Susan, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. It's going to take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Arecor Therapeutics plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.