Arecor Therapeutics plc (AREC) Earnings Call Transcript & Summary

Okay. So good morning, everybody. And it's a pleasure to be here. Thank you for taking the time. We've got a full room today, which is great. So welcome, everyone, that's here in-person and for those on the lines today. So it's my pleasure to be here with Manjit today, and he will introduce himself a bit more fully because I think it's his first introduction to many of you, and to present Arecor Therapeutics results for the year ending 31st of December 2023. So I'll draw your attention to our customary legal notice. So I think everybody knows me, just a very quick introduction. My name is Sarah Howell, the CEO of Arecor. Background, as I think you know, in pharmacies, product development and commercialization. And I'll just hand over to Manjit to introduce himself a little bit more fully than that.

Thank you. Good morning, everybody. Manjit, the CBO. Joined the company just over a year ago. Since I've been in the industry for over 25 years, it is over 25 years, but much like your passport photo, you're going to stop at a certain moment in time. So my history is as an immunologist originally and went into clinical development in Big Pharma, then international project management, then I've been in business development and licensing for the last 20 years. Last 10 has been specialized in M&A and private biotech. We had a couple of nice exits, useful when we're talking to partners that they know that you've been there, seen it, done it. And very happy to join Arecor and see what we can do here.

Great. Thanks, Manjit. So I'm just going to give a high-level overview for our Arecor Therapeutics for anybody that's joining us for the first time today, then we'll go into the operational highlights and that include post-period events, and then into some of the products and partnerships in more detail, and finally, the financials and then some forward-looking catalysts as well. So I think as everybody knows, Arecor's vision is very much to bring enhanced medicines to patients that can transform their care and quality of life. We do this by leveraging our innovative and proprietary formulation technology platform, Arestat. So we're essentially here developing novel formulations of existing therapeutics with enhanced properties and very much focused on improved efficacy, safety and ease of use. We've got a very diverse and derisked portfolio of both partnered and in-house proprietary programs across our partnering programs, this is under a technology licensing model. So these products incorporate the Arestat technology. They're either pre-licensed, these are the technology partnerships where we're working with major pharma and biotech companies to enhance their proprietary products. This generates revenue and has the upside potential from conversion to licenses, which tend to be milestone and royalty bearing. And as you can see from this slide, we have 3 products under license currently. So these are fairly under control of our partners, funded by our partners. And it's notable that the first of these, AT220, is now on the market and generating royalties. So this is the first product commercially incorporating the Arestat technology. And then if we move across to our in-house proprietary pipeline, here, we're very much focused on areas of high unmet patient need in high-value markets. So particularly in that diabetes and obesity space. So we have 2 clinical stage products, insulin-based products, AT247 and AT278, and we'll obviously talk about those in more detail today. And through the early part of this year, and we've entered into 2 additional collaborations in this diabetes and obesity space on oral GLP-1 and products in partnership with TRx Biosciences and most recently a collaboration with Medtronic to develop a novel and firm stable, highly concentrated insulin for implantable pump therapy there. And then with our hospital portfolio, these are under this abbreviated 505(b)(2) pathway, so limited or no clinical studies here. And we're looking to develop these ready-to-use medicines prior to partnering them in AT307 that you can see here with Hikma, started as an in-house proprietary program there. And of course, finally, we have our commercial products. This is under Tetris under new leadership of Helen Parris as well here. And this is really led by Ogluo, which is, again, a treatment for severe hypoglycemia and diabetes, and we've been seeing strong sales growth across that portfolio. And again, we'll talk about that in more detail. So really here, we have grown revenue streams through those partnerships and licenses, and significant upside potential from our own proprietary pipeline across that diabetes, obesity and specialty hospital space. So if we go to the operational highlights, these also include post period events, so those through this year. So again, on the licensing and partnering AT220, it's now on the market. It's generating royalties. AT307, this is a ready-to-use medicine under Hikma now. It's notable that they had a very positive pre-IND meeting with the FDA, which validates that abbreviated regulatory and development pathway 505(b)(2). So that means limited or no clinical studies, so that -- brings that product quite quickly to market there, and it's obviously lower cost and lower risk. Sanofi, this is a partnership around INBRX-101. And I think, as you all know, they're in the process of being acquired by -- it's Inhibrx in the process of being acquired by Sanofi. And we've also entered into 6 new technology partnerships. So these are this pre-license, but revenue-generating partnerships that have that upside potential to convert to licensing if our partners then decide to take those novel formulations and enhanced versions of their products further forward. On the in-house proprietary pipeline, I'll just flag it here because we'll talk about it, obviously, in more detail. AT278, we have a Phase I clinical study in Type 2 diabetic patients there with high BMI. So very relevant patient population. That's on track to report headline results in the first half of '24. Obviously, it's the middle of May, so it's quite soon. And we have that expanded pipeline that we talked about. So the oral GLP-1 partnership and the novel insulin for that implantable pump therapy with Medtronic, who are the largest medical device company in the insulin space in the world currently. So that's a great partnership. With Ogluo, we've seen strength in that portfolio there. So compared to financial year '22, we saw 3x revenue growth. And the majority of the revenue streams from product sales within Tetris now are coming from Ogluo, so that's very much delivering on that strategy to grow Ogluo in the U.K. in selected European markets. Now IP is the lifeblood of Arecor, really. This is how we are able to run under a licensing model, which generates these milestones and royalty upside here. We have more than 90 granted patents now in major territories and we added a further 5 granted patents in the U.S. and U.S.A for the -- U.S. and EU even over the period. And from a leadership team perspective, we continue to strengthen there, obviously, with Manjit joining us last April now, I think you also said, and as CBO and obviously, Helen, who we'll look forward to introducing you to in more detail through this year, who's joined as SVP of Commercial and Head of the Tetris business. And as you know, Susan Lowther, who's currently CFO, is stepping down from the company's CFO and Company Secretary. And the search for a successor there is well underway and progressing well. So just very briefly on the portfolio, already spend very long on this because we'll talk about all of these partners and -- partnered and in-house proprietary programs. I think the key point to note here and just as a reminder is because we're taking existing therapeutic medicines here, where the safety and efficacy of them are already known and demonstrated. This means we can follow these abbreviated regulatory and development pathways to market. So it means it's a lower cost, lower risk and faster to market development pathway. However, we can bring genuine benefits and significant benefits to the patient population and meet unmet needs there. And if we can get that right, obviously, we can retain and grow value and return that value to our shareholders. So just talk in a little bit more detail about our license partnerships. So AT220 clearly launched, generating royalties now. I think this is important on a number of fronts. Clearly, it validates that the Arestat technology when embedded within these products is approvable by the major regulators. So that's a big tick in the box. Validates the commercial value that we can bring with partners that they've taken an Arecor-embedded formulation to market here. And of course, from a commercial and revenue perspective, this starts our journey in recurring royalty revenue, which we can obviously further plan the business on. And we've been quite pleased with the partner's progress so far. They're making great progress in their launch territories. And obviously -- and when we report the interims, we'll be able to talk in more detail there because we'll be able to report the first half of '24 revenue streams as well from that royalty agreements. And AT307, we talked about that, Hikma fully responsible for this program. It's in active development, and they have very clear and clarity now from that FDA meeting of that development pathway moving forward. On INBRX-101, it's currently sitting within Inhibrx, but of course, they're in the process of being acquired by Sanofi. That acquisition is expected to close on the 30th of May. So the end of this month, and of course, Sanofi here validating the need and the patient need for these products and of course, with their rare disease expertise, this increases and enhances the probability and the opportunity for this product to come to market. And again, this is under a license agreement with Arecor. They're currently in a registrational -- pivotal registration-enabling study. Inhibrx expect this to complete at the end of 2024. And this has the potential to be the last clinical study prior to registering for approval for this product. So I was going to spend a little bit of time talking about Specialty Hospital. And then you'll be pleased to now be handing over to Manjit, who's going to talk about the diabetes portfolio because -- we talked about specialty hospital, but not really probably characterize much around the value generation and the opportunities here. So we thought we'd put a little bit more color on this for you today. So this is where we're taking products used in the hospital setting, looking to -- a lot of them are lyophilised, so their powders require this complex reconstitutional mixing procedure prior to use. And we're using now Arestat technology to develop ready-to-use and ready to administer versions of these. So stable liquid, ready to go. And the reason this is important is, well, there's a number of reasons. The first and foremost is from a safety perspective. By having these therapeutics ready-to-go in the hospital setting, it removes the need for this reconstitution procedure, which removes an area of potential error. There are errors made in this reconstitution administration, and that can lead to safety issues with that patient population. In some cases, that can be life-threatening. So by removing that process step there, you know that you're delivering the right dose to patients each time. It's also really important. A lot of these products are very high-volume products. They're used at high volumes for many patients every day within the hospital setting. And we know the resources are constrained there. So if you can reduce the workflow of the use of these products is either ready-to-go off the shelf, then that's a significant advantage. And it's a significant pull and draw for those people, the tenders and the prescribers of these products. And of course, as we've shown through and it's been validated to a certain extent by Hikma with the FDA feed, but these can follow this abbreviated 505(b)(2) pathway. And this is important because this is a genericized market. So these products are already generalized or will, at the time of launch, come off patent from the originator and be subject to generic competition. So once these have been genericized, you do see a price adjustment. So -- and post that price adjustment, these products on average are worth between about $100 million to $300 million per annum in revenues there. And with our product portfolio and alongside our partners here, we're really looking to drive market share within these market segments -- competitive market segments by having the only ready-to-use, ready-to-administer versions, which bring all of the benefits that I've spoken about today. And of course, with Tetris Pharma, as we've always talked about strategically here. For Tetris, our key and primary focus is Ogluo and growth, a significant additional opportunity to continue to grow that market and step up through those single digits and ultimately into double digits. Millions of revenue there, but it also gives us the optionality in terms of being able to take specialty hubs through the products, where it makes sense to markets, ourselves in those territories and where we're embedded in the U.K. and Europe. And then just to give you an idea, this is illustrative idea of value here. So if we take these products being between GBP 100 million and GBP 200 million -- GBP 300 million, we'd expect our partners to gain between 20% to 30% market share because of the advantages that we're bringing to the table here. And if you look at our royalty range of between 5% and 15% here, that -- this would give you this kind of royalty range, which you can see is quite broad here, between GBP 1 million to GBP 11 million per annum there that you can generate -- that Arecor can generate per product once these are licensed and taken to market. Under these deal structures that are milestone and royalty bearing, we'd expect to recoup our R&D costs, at least recoup our R&D costs in those pre-commercial milestones. And then you can see from the royalty streams there, you can start to see attractive revenue growth, especially as we convert more of our pipeline through to these licensing and partnerships, you can start to see these stacking and starting to see the significant growth across the royalty streams. I mean we work on looking at average case, if there's -- if the market is GBP 200 million, our partner against 20%, which might be a bit conservative. And a 10% royalty, you'd be looking at GBP 4 million per annum in terms of royalty growth here. And we're confident we have an internal proprietary pipeline of specialty hospital programs that fit this brief as ready-to-use, ready-to-administer, so we'll be confident in entering into further licensing deals with key partners moving forward. So just finally on Ogluo, just for anybody that's joining us for the first time today, just very briefly, on the product. Ogluo is indicated -- it's a ready-to-use glucagon products in an autoinjector pen. It's indicated for the treatment of severe hypoglycemia. So this is dangerously low blood sugar, and it's characterized here by the patient themselves is unable to administer glucagon to themselves or rescue themselves from this severe hypoglycemic event. In the U.K., which is our first market and currently our largest market, there is one competitor product on the market. It's from Novo Nordisk. You can see on the screen here, it's called GlucaGen, and it's a glucagon rescue kit. So it's a lyophilized powder and syringe for injection. So it requires this complex reconstitution procedure, which you can imagine is in quite a stressful situation here and a third-party caregiver has got to administer this product. Whereas Ogluo is in an auto-injector pen, you simply press it -- you put it against the skin and press a button there. So we're seeing significant growth now with the products. You can see the revenues for financial year '23 for Ogluo with GBP 2.9 million compared to GBP 1 million for financial year '22. And now with Helen on board, she has a strategic and tactical plans in place there. We've got confidence of continuing to step up and see that increase pull and need for that product across the U.K. and those selected territories in Europe. So we're going to move on to insulins. I know it's given very brief instruction and then hand over to Manjit. I won't labor on this because I think we all know this, that diabetes has reached pandemic levels. There's around 537 million people living with diabetes. And we know that despite those continuing advancements in treatment options in care, there's still some really significant needs within this patient population. And this is really driven by -- we look at the people with Type 1 and Type 2 diabetes who are taking insulin to manage their blood glucose, still less than 25% of this patient population are meeting the recommended targets for their blood glucose control. So these are these HbA1c targets. So it shows us here, there's still significant room for improvements in treatment options and care here to help them better manage their blood glucose on a day-to-day basis. And it's a really high burden disease as well, which we shouldn't underestimate. So we're really focused on mealtime insulins, as you know. So we're looking at developing much more rapid-acting insulins and also highly concentrated rapid-acting insulins. And this is to help people with diabetes manage the blood glucose around mealtime. So this is the really difficult -- this is a problematic time. This is what pushes people outside of those healthy target ranges because it's very difficult to track that swift rise in blood glucose and use insulin to bring yourself back inside that target range fast enough. So those -- the best insulin is available today, they're good insulins, but there's still room for improvement there for them to be much faster acting to help people stay in that healthy target range. And it's that time spent out of range, as we know, that leads those really serious disease complications associated with diabetes. So 70% of people with diabetes, for example, will die from cardiovascular disease. And on that note, I'll hand over to Manjit.

Thank you, Sarah. So I'm going to spend the next 2 slides talking about AT278. Clearly, it's topical given the imminent release of data. And if those data are supportive, we're going to be moving from a kind of a Phase I mindset to a Phase II mindset. So this is we think the right time to be talking about how that unique ultra-concentrated rapid-acting profile could translate into a product and what those products might deliver, how they might help treat diabetes in new and interesting ways in 2 different types of devices in a pen and in a pump. So first off, when we think about how we might address some of those unmet needs, we looked at a specific subgroup of patients. We've got an ultra-concentrated insulin. There's a specific subgroup of patients who use very high doses of insulin because of insulin insensitivity. And they're a perfect fit for AT278. It's a big population. If you look at scripts written in 2022 for all insulin products, nearly 10% of those were for the higher dose version. So that gives you a sense of how many people there are needing high doses of insulin, and you wouldn't be using 1 of those products if you didn't have a need for higher doses of insulin. And that's a fairly small percentage, you might say, but it's a very large population. So it's still a very large number, certainly a very doable for us. This is also a population which is growing. It's been well recognized that the doses of insulin have been increasing over time. And part of this is down to that insulin resistance that occurs with obesity, which we all know a lot about. So this population is large. It's growing and it's poorly served. And our KOLs, both in the U.S. -- and I'll talk mostly about the U.S., but also in Europe, will constantly talk to us about this population. Our market research confirms that this is a poorly served population and that there are unmet needs here. They find it difficult to manage themselves with the existing products and physicians who treat this group. And in the U.S., it's predominantly endos. They have the kinds of problems, which mean that they end up at that specialist -- with that specialist. And those specialists, they find it difficult to manage those patients. So we certainly believe that there's a gap, an unmet need, and that the existing options, suboptimal. So I'll speak a little bit about what your options are if you're a high-dose user. You can use regular strengths insulins. And as Sarah was mentioning, you will find it difficult to get a high enough dose to control that postprandial high. So you'll live with poor coverage. You'll live with a large injection volume. There'll be a depot under the subcutaneous space, which will be being degraded by insulin ases by protease at the same time as it's being absorbed. So you'll have to live with that variability. And you'll also live with multiple injections and splitting doses. However, you do have an alternative in Humulin R. That's also a concentrated insulin, but it's got a very nonphysiological, we call it, intermediate-acting profile, which is incredibly difficult to manage day-to-day. It's got a slow on slow off profile. So you get a double whammy, you get poor coverage over that postprandial period. And you get the risk of late hypoglycemia because it's still active many hours after you've actually injected. So what folks do to try and solve that problem is they actually add on an additional, let's call it, a proper rapid-acting insulin for that postprandial high. Which is fine, but now you've got an additional device that you need to manage an additional injection, you've got that additional variability and that doesn't help in reducing your disease burden. So where does AT278 help? We're faster. The speed is going to help in managing that. But we're low volume. We're highly concentrated, and we've got all of those features in a much more physiological profile. And those benefits, features that we have in 278 as we move into Phase II, should lead to demonstrable advantages both in efficacy, inconvenience, in disease burden, which we'll test via patient-reported outcomes measures that we'll be able to build into those trials and costs. I mean, it's very early to be talking about cost, and we're in a very dynamic environment, but we've seen nothing that leads us to believe that we wouldn't be able to offer an AT278 containing product in a way that's going to be beneficial for patients and at least cost-neutral for payers on a unit-by-unit basis. If I move to the next slide, but carry on speaking about pens. So we're -- in our market research and talking to our KOLs, there it simply isn't a product, which has been developed for that target patient population. We believe and they believe that if such a product was available, it would become the standard of care for that population. Some of our market research indicates that for very high users of insulin products that 100% of patients would switch. As you reduce down the volume or the requirement for insulin that kind of percent, you can convert changes, but still very significant. What we would like to be able to show there is better postprandial control in that after meal period. We'll have a smaller volume, which should relate to -- which should lead to less pain, less discomfort, less bruising on injection. And the speed of AT278 has some very significant advantages in terms of ease of use. At the moment, you need to inject well before a meal. But if you've got AT278, you should be able to inject at meal time or just after meal time. Now this is a hassle, which reoccurs 3 times a day, which we can alleviate with 278. And then there's other advantages of having a 5x concentrate product. Managing your own personal supply chain for this essential medication is a hassle for people, and they stockpile medication. And we can make that easy. Not only do you have that security of supply issue over a longer period of time, but on a daily basis, having enough insulin on board, so that you've got coverage 3 times a day is difficult with regular strengths pens. And imagine the benefits that accrue from being able to move from using 1 to 2 pens a week -- sorry, yes, from using 1 to 2 pens a week to being able to use 1 to 2 pens a month. That pen-to-pen transition is a problem, and we can reduce that by 2x to 5x. We can reduce that hassle. We can reduce the need to split doses 2x to 5x as you transition between an old pen and a new pen. We can do things like ensure that you don't need basketball player hands to be able to push the plunger to get the dose that you need. These are all advantages that add up to a net reduction in disease burden. We expect physicians will pick this product for those patients because of those efficacy advantages, because of those handling advantages, which should lead to better adherence. And we think that the patients that we've surveyed, they want that efficacy as well, but they also want that extra handling. And if we can produce such a product and keep it not -- cost neutral for payers, we think we're onto a winner and everybody gets a better product, crisply delivered in a population which is underserved at the moment. On to the right-hand side of the slide and thinking about pumps. Actually, there's an even bigger opportunity, we think, in the pump space. And the reason for that is because AT278 can do some pretty wonderful things to the kinds of products which exist today. So I'm going to hold up an Omnipod. This is kind of best-in-class as a wearable device today. This is -- it's quite bulky, really. This is a 2- to 3-day wear product. 2- to 3-day wear product. And we, with AT278, can develop something that looks like this. Now for people who can't see it, this is like just slightly bigger than a 3 pens apiece. It's about 3x a stick as if -- sorry, 5 pens apiece. It's about 3x to stick, but that's a very, very significant reduction. A very different product, which cannot only serve that market which exists today, but can grow that market. And pumps are very, very good. They are certainly standard of care for efficacy. That's been proven time and again. But even so, if you're a Type 1 diabetic, 50% to 60% of people, their lives depend on it. They don't use a pump even though it's best in class. It's worse in the Type 2 space. Type 2s would also benefit from using a pump and automated insulin delivery and algorithmic control of insulin and blood glucose. But in the U.S., 90% to 95% don't use it. Don't use a pump. One of the big reasons for a Type 2 not using a pump is they simply can't get enough insulin into today's reservoirs to make that a reasonable proposition of swapping out capsules and devices and so on. In the Type 1 space, if you survey today's users of pumps, there are 3 main issues they have is discomfort, the size of the pump and the wear time. There's another problem, which is just as big and not as well verbalized really. If you're a Type 1 and you are well managed, you manage yourself well. You've got no problems. You've got a private invisible condition. You can be an astronaut, you can be a gold medal winner, you can climb Everest, you can just be yourself. But if you add a pump, if you add one of those enormous pumps or even one of these small pumps, all of a sudden, you've got a visible disorder, and you're sick. And that's an enormous burden. And never pumpers know that. And that's one of the reasons that they don't use pumps. But if you can get to this 5 pens apiece, 3x as thick, that's a very, very significant reduction. And the pump companies know this, and they've been on this journey to reduce the size of their pumps and to make them ever more discrete for quite some period of time, and we think Arecor with 278 can supercharge that effort. And so we're very excited about our future product. And the future product, the Holy Trinity for that product is really truly miniaturized, longer wear and then not -- most importantly, the speed that you need to allow those algorithms to do what they do best. Now Arecor can't produce that pump on its own because one of the other things that you need is you need a next-generation pumping technology, something that's not mechanical, not clockwork as it exists today. But we know that those technologies exist. And we know that 278 exists. And so we are spending a lot of time and effort trying to put those 2 bits of technology together. And the nice thing about that, as you know, and me as a transactional guy is if you want something with the profile of the 278, there is only 278, and we're the only game in town for that. So that's a nice position to be in. I think I'll stop there, hand back to Sarah. Sarah is going to show you some of the proven PK/PD of 278. And this is really what underpins all of the positioning that I've been speaking about. And it underpins our confidence that this is a great drug.

Thanks, Manjit. So I'm just going to do a recap of our Phase I clinical data in Type 1 diabetic patients. And now everybody is waiting really for the data from the Type 2 study. And as soon as we have that to hand, we'll, of course -- we'll be able to come back together and talk through that data. But I think it's good to recap to understand what are we looking for as well in the current study with the Type 2 patients. So this is a clinical study -- full crossover study in Type 1 diabetic patients comparing AT278, so this is 500 units per ml with NovoRapid, so this is Novo Nordisk 100 unit per ml rapid acting insulin here. And what you're looking at on the screen is the pharmacokinetic data. So this is the PK data. So this is the appearance of insulin in the blood essentially after a single injection, and that injection is at time 0. And at a very high level here, what you can see is for AT278, which is in the yellow, we have the shift to the left. So what this is showing us is that we've indeed accelerated the absorption of AT278, and we've got more insulin on board faster here. And this is in this first 60 minutes post dosing. And it's this period of time, it's really important because it's when you're dosing that insulin, you've seen your swift rise in blood glucose after you [ veet ] him, and you need to pull that, that back down quickly enough. So this demonstrated we had accelerated absorption even compared to NovoRapid despite that fivefold increase in concentration. And as Manjit just talked about, as you increase the concentration of insulin, it blunts its time action profile, so it becomes slow acting. So if you do nothing special here, a 500-unit per [indiscernible] so it would be slow acting and that's really the value that we're bringing to the table here. And then this translated into the pharmacodynamic profile. So the PD profile. So what you're looking at here is the glucose lowering impact over time. And again, we see the shift to the left, so it shows that we've got more insulin on board faster. That was what the PK data showed us that this importantly translated into an improved glucose lowering profile here. Now for the current clinical study, this is in -- it's important because it's in Type 2 diabetic patients with high BMI. So these are overweight and obese patients. So for that pen application that Manjit just spoke about, this is the primary highest use target patient population. These are generally not very well controlled. Many of these are uncontrolled patients with high HbA1c and readings here. And they tend to require high daily doses of insulin per day here. So it's really important for us to demonstrate here. And what we're looking to demonstrate that is the AT278 can provide blood glucose control, that PK/PD profile for this Type 2 patient population here. So again, we've compared its crossover study comparing with NovoRapid. So that's Novo's 100 unit per ml. But we've also included Humulin R U-500. So this is Lilly's concentrated insulin, which has this slow time action profile, so it has almost 24-hour profile. That's why it's not -- as part of the crossover study, you can't blind Humulin R U-500 because of its profile here. So we're on track to report, as I mentioned earlier, these results in the first half of this year once we have the results to hand and we'll come back together and talk through those. Good results in this study would be that despite that fivefold increase in concentration, it's equivalent in its PK/PD profile to NovoRapid. We'd expect it to be much faster and much better glucose lowering compared to Humulin R U-500. A great result would be mirroring our Type 1 diabetic study here where we see superiority. And there -- and this is key. And I think as Manjit mentioned, nobody has managed to achieve a highly concentrated, very rapid acting profile for an insulin, so it has this application in a high daily dose, patient population and also that real potential to enable that next generation of miniaturized longer-wear devices, which we know is a key ask and a need from the patient population and in where the device companies are focusing their efforts currently. Clearly, I know you're all going to ask me, next steps are really dependent on clinical study, of course, and the data from there, but we'll be looking at those options that we'll have on the table at that stage in terms of that further developments of AT278 either ourselves or in partnership and, of course, being able to really realize the value of these products, both to patients, but also the commercial value and return value to our shareholders there. So I'm going to talk through the financial highlights as well here. So I mean, as you can see, we've seen significant revenue growth across the group, we saw a 90% increase compared to financial year '22, and that's driven through a combination of the Tetris revenues, which were 2.9, but also from our Arecor revenues from our partnerships, both pre-license and license milestones as well. Other income, this is -- the majority of that is grants, there some R&D tax credits in there as well. So we're still effectively accessing that nondilutive funding to support our proprietary programs as well. And as you see, the investment in R&D has gone down compared to financial year '22. This reflects the clinical studies in financial year '22. We were running concurrently an overlapping clinical study for AT247. That was the 3-day pump study and also in the first half of the AT278 study. So this study in the Type 2 diabetic patients that we've just spoken about. You can see the increase in SG&A expenditure is mainly driven by is full year for Tetris. So for financial year '22, that was 5 months for Tetris, we acquired them. You may remember in August '22, and that's a full year of Tetris in financial year '23. And we ended at 31st December with cash and short-term investments of GBP 6.8 million. So this is broken down, but I probably actually covered this slide and some more detail here. I think it's really key to note, I mean, you can see the royalties here. So we've got the license milestones that's across the 3 licensed partnerships that we mentioned formulation development. So this is where what we call technology partnering, so pre-licensing and revenue where our partners are paying us to develop novel formulations of their proprietary products with the upside through licensing, which will be milestone and royalty bearing. The royalties reflects it was a launch in November, middle of November. So it's a short period in that last quarter. And as I said, we've seen -- where we've seen strong growth there from our partner and we'll be able to report first half of '24, of course, in the interims there, but we certainly expect those to continue to increase. So really moving on to the final slide and really talking about some of the near-term catalyst here. Obviously, the clinical data is what we're all waiting for on AT278, we're waiting for that, too. And so -- look out for that, it's on track for the first half of this year. I think what I would say is commercially, we're in a strong position here. We've got growing revenue streams. We've got products on the market now generating royalties, which we would expect to continue to grow through 2024 and beyond. We've got 2 additional licenses. We have very credible pharma and biotech partners there as well that are getting closer to markets. And also best-in-class data across our diabetes portfolio here. So we're addressing high unmet needs and as we've spoken about, in large markets as well. And we also have additional opportunities, obviously, the continued growth of Ogluo across the U.K. and Europe now under the leadership of Helen. And we haven't really talked about it today, but the oral GLP-1. Obviously, it's an early-stage research program, but something we're really excited about. And this is a combination of technologies here to circumvent -- some of those challenges around oral delivery of GLP-1 in the first instance, but then more broadly across that peptide class. There's lots of opportunities there, of course, where there is patient unmet need, and these are very high-value markets, as you know. So we have these growing revenue streams through the partnerships and licensing and that significant upside potential from our proprietary pipeline. So I'm going to close the presentation here, but of course, happy to take any questions from the room or anybody on the line today.

I think I can talk about what a [indiscernible] is. I know you can't talk about what AT220 is. But in terms of -- and you've given us indications previously at the size of the market is branded. Can you talk about how it's progressing as a generic and where the pricing is, now it's on the market?

Yes. We don't know about the pricing at the moment. So there's not clarity in the public domain around that. But in terms of -- I think areas to note with AT220 is that our partner's first to launch. And there's a significant advantage in the biosimilar market, first-mover example there. So if we look at benchmarks across biosimilars, you tend to find that the first to launch to get up to around 40% market share, conversion of the originator market to the biosimilar market, and it's quite sticky. They tend to hold that. And then you go down on a sliding scale or the second market, third, fourth. So there is a significant market opportunity for first launch, and that was part of what Arecor brought to the table here around the IP enabling that first launch of the product. So there is a significant opportunity there for our partner. Now on pricing, we don't know how they've priced it yet. It's not in the public domain. But again, as first to launch, they've got more flexibility there to not potentially go as low on pricing. But biosimilars, the pricing can be anything from single-digit percentages up to 30%, 40%, 50% price reductions there. So it's difficult to say at the moment, but they're in a good position strategically being the first to market. So I don't think they'll need to cut their prices low, certainly in this first lead-in period. And then for them, it will be about gaining market share, which is generally quite sticky. So they're in good shape. So we're confident there on that sort of growth moving forward.

Excellent. And then on 278, in terms of once you get the data out, I mean, clearly, you get the data and we will go, what are you going to do next? How long realistically do you think it's going to take to come up with the next steps? Because obviously, it is data dependent. And presumably, it's slightly dependent on the discussions you're having with potential partners as well?

Yes, exactly. And I think there, obviously, it's data-dependent, as we said. And I think as we've always talked about, we are always talking with potential partners. So I think there's options there around what that could look like strategically there, we know for the device companies, there's real momentum now around that next-generation longer miniaturized devices. I think we talked -- I probably saw here a number of times and talked about how we're close to these device companies. I think obviously, our collaboration with Medtronic in its pump space, this is intraperitoneal delivery. So it's an implantable pump here, but they could have gone to anybody for that. They could have tried to go to anybody, but they recognize that Arecor, of course, got the expertise here in combination with them to enable that product. So I think that kind of validates what we have been saying is we're close to these companies. So I think there are lots of options on the table for us. And really what we'll be looking at is how do we progress these products to ultimately get them in the hands of patients because we really do believe there's unmet patient need here. And how do we do this in a way that we retain and gain the most value as well for Arecor and our shareholders moving forward. So they're the kind of metrics that we're looking at the moment.

[ Mark Stierman ] from Stifel. Just a quick question on the Tetris business. When do you think that will actually sort of reach a breakeven point? And just strategically, I always had a hard time trying to understand how that fits in with the rest of the business. I mean, obviously, I know it's all in the diabetes area, but the other areas, you're not planning to be commercializing yourself.

Yes. So in terms of our kind of forecast for that breakeven point there, unchanged really, which is great. And so you need to take those to about GBP 7 million to GBP 8 million -- not 78 -- 7 straight GBP 8 million of sales gets you to that breakeven point. Remember, we're targeting share. The total market here across the U.K. and Europe is around GBP 100 million. So you don't need to take the whole of Europe and significant market share to get to those kind of numbers and time frames. You're looking sort of end of '25, '26 to reach that point. Obviously, we're 2.9. This year, we've got plans in place, which Helen is leading through '24 and '25. So I think we're in good shape there on that business. And then strategically, how does it fit? First and foremost, we acquired Tetris because Ogluo is a great product, and it's a -- meeting an unmet need for a patient population that we care about is for people with diabetes who are taking insulin. This is severe hypoglycemia. It's a highly stressful, it can be life threatening. People do die from severe hypoglycemia events. So having a ready-to-use auto-injector pen like the EpiPen for severe hypos absolutely fits the vision for the company. And it makes sense commercially. It makes sense. And that's why we're rolling it out carefully in territories in Europe that make sense from size of patient population, obviously, pricing and reimbursement is key here and our ability to set up the right infrastructure in those markets. So that's -- strategy number one. And it makes that business makes sense on Ogluo alone. Then more broadly, there's the opportunity to, as we said, with our own specialty hospital portfolio. These are, again, ready-to-use medicines, which is effectively what glucagon is here to retain the rights to Europe, U.K., where it makes sense. But near-term priority Ogluo, then there's the opportunity, I think, to expand that business.

Just a second question on 278 in Type 2 diabetics. I mean I know you said, obviously, the data could very well be similar to the sort of Type 1 diabetics. What are the factors that might influence why it wouldn't be the same?

It's Type 2s would be first. And as you know, we did increase the powering of the study last year -- towards the end of last year. We increased that number looking at that. So there's more variability in that patient population. The high BMI, which, again, brings more variability. What we see with current insulins that are on the market, so those rapid-acting insulins from Novo and Lilly where there is data on studies in high BMI groups that you tend to -- and I think Manjit talked about this for some of those reasons, you can see a drop off in efficacy as you need higher and higher volumes of insulin there. Obviously, we might bring some advantages to the table though. We don't know yet in terms of that how does it -- how does it respond across a range of BMI, but there's certainly more variability in that patient population. We -- the actions that we took last year to increase those patient numbers, we did it for those very reasons and we're confident there on the sort of powering of those studies. So we would hope not to see any issues statistically there because of the power in the study. But that's a kind of key risk is different patient population, different adipose, fat tissue, subcutaneous space, and this is about accelerating the absorption of insulin. And that's why this study is really critical. If we can demonstrate that regardless of your diabetes type, Type 1 and Type 2, and regardless of your BMI, the [ AT278 ] and can deliver at least noninferior PK/PD profile, and that's a great result.

[ Christian Lane ] with Stifel. One question, I guess, on the -- your spec hospital pharma business, just to understand better the dynamic -- obviously, if you -- how much you're taking on our own cost and own risk around the development of potential assets that you then look to license? Because if you look at your illustration, it's over sort of GBP 2 million roughly to -- to get a product through to a point at which you license it. And presumably risk and costs around that, versus if it was fully -- you only develop something if it's already funded by partner effectively. How -- where are you on that?

Yes. So I mean I first should note, the graphic there was to illustrate. So we raised, as you know, GBP 3 million on the IPO to invest in the specialty hospital portfolio. So it certainly don't cost GBP 2 million per product to develop them. And it's really -- so what we're doing for these is that we are developing novel formulation, and that's really the bread and butter of Arecor. It's what we do for partners. It's what we're doing for the specialty hospital portfolio. So that's in-house expertise, scientists, so it's very scalable as well within the organization. And then we're filing IP. So if you look within our R&D cost for the business, so we've got an R&D run rate of GBP 3.2 million for financial year '23. That's -- that's covering our R&D efforts. We've got IP, which we run at about GBP 0.5 million, which is across the whole portfolio. So that kind of gives you a sense of actually the investment to Arecor, the actual capital investment is quite low to get to those value inflection points. The key is where we have growing expertise really, we've gone to a lot of the last 18 months or so is picking the right products that really bring improvements to that infrastructure patients and the health care infrastructure and then partnering them is really there where it's an investment of key expertise and time. But developing the novel formulations is what we do day in, day out. Does anyone got a question for Manjit?

It was crystal clear.

No. I think that's all the questions in the room. Any questions online? No? Okay. Thank you, everybody, for joining us today. And hopefully, we'll be speaking again soon around the results. clinical results, that is. Thank you.