Arecor Therapeutics plc (AREC) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Arecor Therapeutics plc 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 can review all questions submitted today, and we'll publish our responses where it's appropriate to do so on the Investor Meet Company platform. And before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Arecor Therapeutics plc, Sarah, good afternoon.

Good afternoon. Thank you. So good afternoon, everybody. Thank you for taking the time to join us today. As you know, my name is Dr. Sarah Howell, I'm the CEO of Arecor Therapeutics, and I'm joined today by -- with David Ellam, who's our Chief Financial Officer. So today, we're going to talk you through our results for the year ending the 31st of December 2024. So I'll draw your attention to our customary legal notice. So I think probably most people on the line today, I'm sure I would have spoken to you previously and you would have heard me present. But I'd like to take the opportunity to allow David to introduce himself. Many of you may have seen that David joined us as Interim CFO back in November of last year. I'm very pleased to confirm he's now joined us permanently as our Chief Financial Officer. So David, if I could just hand over to you to give a brief introduction of yourself, please.

Thank you, Sarah. And just a very brief introduction. Good to meet everybody. I have been probably in biotech for about 25 years, quite a few of those as CFO. And just as per the blurb on the sheet, some of the more relevant roles, I was CFO at Silence Therapeutics when it was AIM listed before it went to NASDAQ for a few years. I was CFO at Juvenescence Limited, which is a private company you may have come across, which is into the field of longevity and has many subsidiaries in many different areas of medicine. And then before both of those, I was a regional CFO at BioMarin Pharmaceutical when the company was on a huge growth trajectory in Europe between 2010 and 2016. So look forward to speaking with you today.

Thanks, David. So just as a recap really here. So at Arecor, we're very much focused on transforming patient care by bringing enhanced therapeutics to market that reduce patient burden whilst improving their outcomes. And we do this by leveraging our innovative and proprietary formulation technology platform, Arestat to develop novel formulations of existing therapeutics with these enhanced properties. We're very much targeting areas where there's significant unmet patient needs in high-value markets, either ourselves through our clinical stage proprietary pipeline within the diabetes and obesity space or via our partnerships with major pharma and biotech companies. All of these areas I'll talk about, obviously, in more detail today. So we have existing growing revenue streams from our partnerships and also high value creation potential across our proprietary pipeline. So just looking very briefly across our portfolio here. So we have a very broad and derisked product portfolio of both these partnered programs. We're agnostic to therapeutic area, but also our in-house proprietary products, which are based in the diabetes space with our insulin assets that are in clinical development and also within the diabetes and obesity space where we're looking at the oral delivery of peptides with our first target molecule there being oral GLP-1. And again, I'll talk about all of these areas in much more detail. So that's just really a snapshot of our pipeline as it stands today. So if we go now to looking at operational highlights, this also includes post-period events. So starting with our diabetes and obesity pipeline. We had stellar results in 2024 for our lead insulin candidate, AT278. So this is a highly concentrated 5x concentrated very rapid-acting insulin. And why this study was so key here is that we went head-to-head with the best 2 insulins that are available for this particular patient population. So NovoRapid is a rapid-acting insulin from Novo Nordisk and the only other highly concentrated insulin, which is a Humulin R U-500, so a 5x concentrated 500 unit per ml insulin. So same concentration as AT278 from Eli Lilly. And what was really important here is this clinical study was in type 2 diabetic patients with high body mass index. So these were overweight to obese type 2 diabetics. And why this is important is that this is -- they are a particularly difficult patient population to treat. They tend to have -- be the most out of control with their diabetes and have the highest blood glucose levels here. So really looking for improved treatment options for this patient population. And we'll talk more about the patient need and the commercial opportunity there for AT278 as well. We're also making significant progress towards striking a strategic partnership for the further development and commercialization of AT278, and we see the most value for AT278 to patients and commercially in the insulin pump setting. And again, I'll talk much more today around that patient need and the commercial value potential for AT278. Now our other insulin in clinical development is AT247. So this is a standard concentration insulin at 100 units per ml. Again, we have clinical data across 2 clinical studies in type 1 diabetic patients here showing superiority compared to the best insulins available today. And at the moment, that clinical data is being modeled by a number of insulin pump companies. So these device companies and what they're looking at here is with their algorithms and they have these very sophisticated in silico models where they are assessing with the improved and superior kinetics of AT247. So you get more insulin on board faster and a better blood glucose lowering profile, and how much can they use that to improve time and range for this patient population. And that's really critical towards lowering the burden, improving outcomes. That's all being funded by the device companies, and we'll expect to see data coming out of that during the second half of this year. And then within the oral delivery of peptide space, we've selected oral GLP-1 as our first model compound here. We've made significant initial progress. We've overcome the first initial challenges here of stabilizing the peptide, GLP-1 as a peptide within our oral delivery matrix. And now we're working towards conducting a series of nonclinical. So these are animal pharmacokinetic studies, so looking at the bioavailability, so the uptake of the drug post dosing, and we'll be performing a series of these through the second half of 2025, which will inform our next development steps there. And again, we'll talk about that in more detail. Across our partner portfolio, of course, as you'll know, there is a biosimilar product, AT220. This is on the market. It's being launched globally by our partner under a royalty-generating license agreement with Arecor, and that's generating growing royalty streams under this license. And we would expect to see those to continue to grow across 2025 and beyond, particularly as the major markets come on board there, and David will talk about that in a little bit more detail later. And we have a growing portfolio of both licenses. We entered into a new exclusive milestone and royalty-bearing license agreement for ready-to-use medicine at the end of 2024. And you may note that we've entered into 2 additional pre-licensed partnerships so far in 2025. So these have significant upside potential in the future if they convert to these milestone and royalty-bearing agreements. Across our intellectual patent portfolio here, this is really the lifeblood of the company. Of course, it both protects our Arestat technology platform, but also those enhanced formulations of existing therapeutics that we develop using the platform. We had 15 key patents granted across 2024. We've had a further 2 granted so far this year, including increased protection and grants across our proprietary diabetes portfolio, so AT247 and AT278, which is critical, of course, to protect the commercial interest of those products and also driving our partnering licensing model with major pharma and biotech companies. So I'm going to move to talking a little bit more detail around our insulin products that we have in clinical development. So just taking a step back and a really high-level view, as I talked about AT247 is a standard concentration. So it's 100 unit per ml ultra-rapid acting insulin. The target here is really around with AT247 having superior kinetics. So it's the fastest acting insulin in development today, has the potential to enable what we call a fully closed loop system here, sometimes known as the artificial pancreas here. So this is an automated insulin delivery system. And this is around lowering burden for the patient population. So almost being able to apply your pump and your algorithms and your CGM and then forget about it and not have to interact with the system whilst you're wearing that whilst improving outcomes. And this is really around improving this time and range. So it's the time that the patients or the person with diabetes is spending within a healthy target blood glucose range. So very much a product targeted at the type 1 patient population. Now for AT278, we're really excited about AT278. It's very unique insulin. It's the only very highly concentrated, so 5x the standard concentration but ultra-rapid acting insulin. So physiologically, if you concentrate up insulin and you don't do anything special, which is what we've done here, you would see a very slow acting insulin. And I'll show you some clinical data here as well that demonstrates that. So you would see a slow uptake of insulin and glucose lowering profile there. So that has an impact on outcomes. We've overcome this with the Arestat technology. So we have this very ultra-rapid-acting profile and the key here is that AT278 is the only insulin here that can enable that next innovation leap within the insulin pump setting. So there's very much a drive in a patient pull and a strategic drive from the insulin device companies here, the pump companies to move towards a longer wear systems that currently worn, the standard of care is 3 days to move to 7 days plus and also make these pumps as small as possible here. Now if you want to have longer wear pumps and you want them to be much smaller, you need to get much more insulin on board within these systems. So you do need a highly concentrated rapid-acting insulin. And I'll talk about some of the market opportunity around that and so the numbers of patients that this would be applicable to shortly. So this is very much enabling people with diabetes with high daily insulin needs to transition across to insulin pump systems, there's a whole wealth of data and real-world data out there showing that people with diabetes do better on pumps. But despite this and particularly for the type 2 patient population, where the average daily dose or the daily need of insulin is around 100 units a day, less than 10% of them are currently using insulin pump systems because they're simply not practical for them to use today because of their very high insulin needs. So I'm just going to do a very quick recap of the AT278 Phase I clinical data. So this is our type 2 diabetics with high BMI. So we were comparing AT278, which you see in the yellow here with NovoRapid. So that's Novo's 100 unit per ml insulin, has about half of the mealtime insulin market today. So these are all mealtime insulins in the blue. And then Lilly's concentrated insulin is Humulin R U-500 in the purple. And you're looking at the pharmacokinetic data here. So this is essentially the absorption of insulin or how much insulin you're getting on board over time post a single injection here. And what you can see here is that we see a shift to the left for AT278. So this is essentially showing us that we get more insulin on board faster. We're accelerating the absorption post injection, and we're getting much more insulin on board much faster than NovoRapid. And as you can see, a very dramatic difference compared -- an improvement compared to the only other concentrated insulin in Humulin R U-500. And then if we look at the pharmacodynamic data, so this is essentially the glucose lowering profile we've seen from the previous data that we got more insulin on board faster, and this translated directly across to the pharmacodynamic data. So this shows us that we're getting insulin on board, but we're also lowering blood glucose much faster than the 2 best insulins that are available for this patient population today. So it really confirms our previous data that we have for AT278 in type 1 diabetic patients, where we also saw superiority that AT278 has the potential to be the insulin of choice whether you have type 1 diabetes, type 2 diabetes and irrespective of your BMI. Now I spoke earlier around the type 2 patient population and how less than 10% of them are using insulin pumps today. And some of the reason why that is, is shown in these heat maps here. So what you're looking at here is on the left-hand side, the units are what the current insulin pumps that are on the market today, how much insulin that they can hold using the current insulins that are on the market today. So they can hold between 180 to 300 units of insulin. And then we map this against the total daily insulin need for type 2 diabetic population. This is U.S.-based data here. And what you can see is that for the standard of care of 3 days, between 60 -- around 60% and 85%, depending on which pump they're using type 2 diabetics can't even achieve 3-day wear. So it's simply totally impractical for them. And if we're moving towards 7-day wear systems or even further miniaturization, then almost all of the type 2 patient population are unable to get to 7-day wear plus. So this shows us here and there's a significant unmet need for a much more concentrated but very faster-acting insulin. As you see on the bottom, AT278 500 unit per ml insulin, all type 2 diabetics will be able to get to 3-day wear and the vast majority of them would be able to get to 7-day wear. But this is not just a type 2 problem here. We also see this to a lesser extent, but still significant across the type 1 patient population. Again, the same theory here is that the data is mapped against the total daily dose for type 1 diabetics in the U.S. And as you can see here, if we're looking at current 3-day wear, they're broadly served and the pumps can broadly address their needs. But moving towards 7-day wear, again, you have between 60% and nearly 85% of type 1 diabetics as well today cannot achieve 7-day wear. And a real ask and a pull from that patient population is to have smaller devices. They want smaller body-worn devices because it's a very visible indicator of the fact that you've got a chronic condition. So if you miniaturize the devices, you can get less insulin on board or less volume of insulin on board. So this really exacerbates this issue. And we're very much seeing if you look at publicly what the insulin device companies, pump companies are saying now, they're all talking strategically around longer wear systems, miniaturized pumps. and transitioning type 2 diabetics over to their insulin pumps because this is a significant upside opportunity, of course, for them. So taking that now and translating into that, what does that look like in terms of addressable market opportunity here. So again, this data is based on the U.S. only at this point. So there's some upside opportunity that I'll talk about. So it's the initial addressable market for AT278. And what we've looked at is essentially 2 patient segments here. The first is people with diabetes with high total daily dose needs. So we have the cutoff here of greater than 100 units a day. So for this patient population, as we've just seen, current insulin pumps are not accessible for them. Almost all of them can't make that to 3-day wear now. So they're using multiple daily injections because there's no pump system that can match their total daily needs. And there's around just over 1 million of these, about 1.1 million of this patient population in the U.S. today. And then we look at also the people with diabetes that are on insulin pump therapy, so they've transitioned across but would switch to an AT278 insulin pump combination product to be able to access 7-day wear. And there's around 1 million of those patients in the U.S. today. So if we take this patient population and their average daily insulin need and multiply that by the insulin net price per unit, so it's $0.05 per unit in the U.S., and this is incorporating all discounts, rebates, the IRA Act, et cetera, here, that gives us a total addressable insulin revenue market of just under $3 billion per annum here. And of course, there will be significant additional upside commercial potential here. If you miniaturize those pumps, that further exacerbates and drives the need and broadens that addressable patient population for AT278 and of course, also commercializing AT278 and an insulin pump outside of the U.S. as well. So in terms of next steps for AT278 and the next development steps, we've been doing a lot of work both in combination with a team of ex-FDA reviewers there from the diabetes division and also the insulin pump companies themselves to really map out what's the most accelerated development pathway to market whilst, of course, generating the data to demonstrate the superiority of the product and outcomes for the patient population, which would drive its uptake in the market. We will be going to the FDA. We'll be filing what's called a Type C. It's essentially a scientific advice meeting to the FDA during this quarter there, and that's to really talk about the clinical study design and that interaction with the pump and the further development pathway to market, and we'll expect to gain feedback from the FDA within the second half of the year, which should ultimately lead us into a position of being able to file for approval for this clinical study. So currently, we're assuming this is a phase straight into Phase II clinical study, so it's accelerated development here. And we'd be looking at comparing again with NovoRapid or NovoLog as it's called in the U.S. in this high insulin need patient population. So we'll be really confirming and generating that key time and range data, but also looking at the precision, accuracy and safety of dosing a very highly concentrated insulin over a continuous period of time. This will be a 6-week study in the patient population. So really pivotal and key clinical study. So I'm just going to move and talk now and talk a little bit more about the oral delivery of peptides here. So I mean, just taking again perhaps a step back in peptides generally are an increasingly important class of therapeutics. There are over 800 peptides now in development and over 100 of those are within the diabetes and obesity space, but there are only 2 marketed orally delivered peptides on the market. And this is because the oral delivery of peptides is extremely challenging, and that's due to their molecular characteristics here leading to very low bioavailability. So that's the post dosing, the amount of active drug that is still active and has survived through the pretty harsh GI track. Now one of those products that's on the market today is a product called Rybelsus. It's from Novo Nordisk. It's an oral GLP-1. And this product is on the market, is doing very well. The Novo reported sales last year of GBP 3.4 billion, but it has a very low bioavailability. It has less than 1% bioavailability. So there's a real opportunity here to further enhance and improve that product to enhance that bioavailability to bring it up above that 1%. It also has a -- because of where it's released and its dosing has a pretty strict dosing criteria that has to be dosed on an empty stomach. So we'd be looking to circumvent that as well here. But perhaps more importantly here, this is around if we can develop a technology approach and oral delivery approach for oral GLP-1 and show enhanced bioavailability, that allows us to expand this platform out more broadly to peptides as a class of therapeutics, which is a huge opportunity given the numbers of peptides in development, but also the real patient pool for orally delivered medicines because of their convenience and that leads to better adherence and compliance, which leads to better outcomes. So there's a real drive and pull towards oral delivery of peptides. In terms of status, as I mentioned earlier, we've had initial very positive results from the first formulation development phase. So the first significant challenge we needed to overcome was to stabilize the peptide within the oral delivery matrix that we were -- that we are using because it was very unstable there. So we've overcome that challenge. And as I mentioned, during the course of the second half of the year, we'll be focused on further optimizing those formulations to enhance that bioavailability, and we'll be generating that data throughout the course of the second half of this year, which will then define our next development steps. But if it's successful here with oral GLP-1, it really does open up a huge opportunity to expand into this growing class of therapeutics. And maybe just before I hand over to David, just to talk a little bit more about what's going on in the space. There's been a huge amount of dealmaking in the oral delivery space here. This is across the board. This is just a snapshot of most relevant and most recent deals. We have a spreadsheet that's running into many pages now of deal-making in this space. And it's combinations of M&A, investment flooding into the space as well as pharma and big pharma acquiring companies and also licensing, taking license rights to technology platforms. The most recent was last week, actually, a company called Cyprumed, who have a pretty early in development oral peptide delivery platform. It's at nonclinical stage. They have nonclinical data akin to the data that we'll be generating through the second half of the year and Merck have taken out a nonexclusive global license and rights to that platform. I mean it's a by books deal here. So it's around $0.5 billion, and we don't know the split there in terms of upfronts and downstream, but it's a significant deal for a preclinical stage platform. There's no clinical data yet against their oral delivery platform. So it really shows you that there's lot of opportunity here and big pharma are also prepared to move and take risk and quite early in development profiles. So I'm just going to hand over to David to talk through the financials.

Thank you, Sarah. So just some comments on some of the key extracted financials on the page in front. So revenues rose 11%, and that was due to an increase in products sold through Tetris, but I think more interestingly, a nice bump in the royalty income from AT220. On the R&D expenses, we dropped from GBP 5.4 million last year to GBP 3.0 million. And although a chunk of that was reduction in clinical study costs after the AT278 study completed, we also had a GBP 0.4 million reduction in payroll costs, and that will continue and annualize through into 2025. The SG&A expenses are flat at GBP 6.2 million, but worth mentioning that within that GBP 6.2 million, GBP 2.8 million of that related to the Tetris operation. And in 2025, we see that number as more than halving. So certainly at least a reduction there of GBP 1.5 million in the SG&A expenses going forward. The exceptional items, GBP 3.3 million, that was the impairment of assets relating to Tetris, and that was covered in the January press release. And then at the bottom, the cash and investments at GBP 3.3 million, and that was boosted during the year by the successful summer fund raise. So I think that the message in these key financials is that we've entered 2025 well positioned to focus on the 2 core areas of high value, the ultra-concentrated and rapid-acting insulin AT278 partnered with medical device companies and the oral development of peptides platform. Those are the 2 key areas. And in addition to that, the 2025 cessation of activities of Tetris will be cash generative. You can see in the finance review that came out that the operating cash flow of GBP 9.2 million last year, GBP 3.2 million of that was Tetris, and we expect Tetris to be positive this year. And in addition, we have the partner revenues will continue to grow. So the AT220 royalty, we're excited about. We're pleased with the commercial traction that the partner is making, and we look forward to seeing that increase. And then lastly, we have the cost reductions already mentioned. And actually, our head count from December '23 until today has decreased by 32%, showing a commitment to cash conservation that, as I mentioned, will annualize and that will continue to impact on our bottom line. So I think that these measures with a runway well into H1 '26, they will position Arecor to focus our cash and our people on striking that partnership for AT278 and to allow for the next stages in the oral delivery of peptides platform, which are the areas we have identified as having the greatest value to shareholders. Thank you.

Thanks, David. So just to round up today and really just looking towards the future a little bit more here as well and what to look out for. I think as I mentioned, we're making very positive progress towards striking a strategic partnership deal with multiple potential partners very much focused on AT278 in the insulin pump setting here to bring this product to market where you see that very significant unmet patient need and commercial market opportunity there. So a real opportunity to return significant value to shareholders. Of course, for the oral delivery of peptides starting with the GLP-1, there will be a series of preclinical pharmacokinetics and PK studies throughout the second half of 2025. And with positive data there, we can leverage that to expand to that additional peptides, which we see as a significant upside opportunity for the company. And as David mentioned, we have grown revenue streams here from marketed product AT220. So those are the royalty streams, but also the additional pharma partnerships, both licensed and pre-licensed partnerships that we have in place here. So again, growing existing revenue streams, but that really significant upside potential across our proprietary pipeline where we're very much focused on addressing unmet patient needs in large markets. So that draws the formal presentation aspect of today to a close, but we'll be very happy to take questions. I've seen some questions that have been coming through. So we'd be happy to work through those and answer those.

[Operator Instructions] But just while the team take a few moments just to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can all be accessed via your investor dashboards. Sarah, David, as you can see that we have received a number of questions that were both pre-submitted ahead of today's event as well as those that have made their way through throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great. Thank you.

Sure. No problem. And I'm not quite sure why. But as I'm going through the questions, it's leaving the slides. So I don't know whether the slides can be taken down, but otherwise, just ignore the slides. So the first question is quite long. So I'm going to summarize it a little bit. So it's really a question around creating shareholder value. It's around the share price, which has dropped since the IPO in July '21 and also really a question around when are we going to achieve those value inflection points and essentially return value to shareholders over the coming few years. So I mean, I think really here and hopefully, as we've talked through the presentation today, we're really focused and really clear across the leadership and the Board at Arecor of where we're focusing. And we're focusing on areas where there's opportunity to return transformational value to the business and then, of course, to our shareholders and really focus on these across our proprietary pipeline, 2 key areas. So AT278 and as you've seen with the data that we received in 2024 and really the market dynamics there with the insulin pump companies very much requiring a highly concentrated rapid-acting insulin. So a real opportunity there for deal-making that, again, can help us retain and grow value and return that value to shareholders. as well as the oral delivery of peptides now. The latter is scientifically challenging. So there's risk there. But actually, it's a formulation challenge, which is very much in Arecor's wheelhouse, which is why we believe we have a great opportunity there to be able to deliver something that's not been achieved to date. Of course, the public markets are frustrating. There's no doubt about that. But I think as everybody can see, Arecor is not alone at the moment in terms of shareholder -- share price movement and particularly across the AI market. It doesn't mean we're happy about it. But for us, what we can do and what's within our control is to really focus on delivering on the areas that can return that significant value to the business, and we would then fully expect that to be reflected in the value of the company. So the next question, so I note that Merck has recently signed a $493 million deal with Cyprumed for nonexclusive access to their technology that aims to deliver all peptides with superior bioavailability. Can we have a brief comparison of that platform against Arestat in terms of pros and cons for achieving that goal and perhaps comment on why Merck have chosen Cyprumed rather than Arecor as a partner? I'll take this one, David. I guess, first of all, starting with Cyprumed, I mean, I agree, a really interesting deal, as I mentioned during the presentation here. Interesting to us because of the early nature in a sense of the data of the technology platform here. So Cyprumed have used their approach across a number of peptides and they've generated some improvements in bioavailability in nonclinical animal models. So these animal PK models. So they've got to for some peptides, not all around 3% to 4%, so single digits, not 34% for some peptides here, and that's -- we can see that from their intellectual property platform. They have been around and doing this for quite some time, which will lead on to perhaps the second half of the question here. So they've been developing this technology and working on these peptides for around 7 to 8 years here. And their approach, they're using a combination of what we'd call pretty classic combination of things like protease inhibitors, permeation enhancers, enteric coated capsules to help protect in the GI tract here. So I think the important areas to note for us are that this demonstrates that large pharma are prepared to do large bio deals on preclinical data. So they're not necessarily requiring clinical studies here to demonstrate. In terms of the question of what's different and what's different with the Arecor platform and how do we think we'll differentiate essentially. So what succeeded so far and albeit this is only 2 marketed peptides on the market is the use of these permeation enhancers, which Cyprumed are also in using these, increase the absorption of drug across the biological membranes essentially, so across the intestinal lining. But certainly, the potential of permeation enhancers alone has been exhausted here. So Cyprumed are using these permeation enhancers plus some other protective formulation approaches to protect the product in the GI tract. But the field is really crying out for a radical new approach. And I think that's where -- certainly where Arecor will come in here. So we're using -- it's quite different to what Cyprumed are doing and the others in this space. We're using novel combinations here of lipids, fats which with the peptide essentially stabilized inside these lipids as a cargo. So the intention here and our scientific rationale is that we can use these lipids to trigger natural digestion as you would do normally, we digest fats essentially in lipids and absorption. So we're essentially smuggling the peptide across these membranes through natural processes. So it is a novel approach. There's obviously challenges there that we -- and formulation challenges that we're working to achieve, but a real opportunity here to have a totally different approach and see a step change in the enhancement of bioavailability here. Why didn't Merck do the deal with us? We don't have any data, PK data yet. You need a minimum. If you asked me last year, would big pharma do a deal certainly of that magnitude without clinical data, I'd have said highly unlikely. So I think it's quite interesting. And you can see it's because this is a hot space and pharma doesn't want to miss out, but they've come in so early. But we need to generate that data. This preclinical PK data is absolutely key. I mean we started to develop this platform last year. So we are moving at pace. We're not going to take 7 to 8 years to get to that, of course. So that's where we need to get a data package that we can go out and talk to pharma with. But there's no doubt if we can be successful in this area, there's deals to be done and not insignificant deals clearly to be done in this space. So the next question is, can the company confirm that they are mindful that whilst the company is valued at a market cap of just over GBP 14 million that they're very vulnerable to an unwelcome takeover approach? If so, can they outline their plan and time frame to mitigate that risk? Obviously, that's an interesting question there. We have a very highly experienced adviser supporting the company and the Board, of course, here who have all the necessary skills and capabilities to appropriately advise us in the event that such scenario arises. And I think as a public company, that's probably all I should say on that question. So the next question is, can you clarify the revenue potential and time line for the Medtronic and the AT351 collaborations? So Medtronic -- starting with Medtronic, obviously, Medtronic is the largest insulin pump company today. So interesting partnership from that perspective as well. And we partnered with them to develop a novel format of insulin. It's not AT247 or AT278, it's a different insulin that's compatible with the intraperitoneal pump. So this is an implanted insulin pump here. So there's a very specific patient population and the need there, and it's an important program for Medtronic. It's a pre-licensed program. So this is under our technology licensing model. So Medtronic is paying for the formulation development that's being conducted at Arecor and then they'll have an option in the future as we generate those final data packages for a conversion to a license there. And we'd expect that to be alongside our milestone and royalty bearing model there. AT351 is a little bit different. So that is a license. So that is a ready-to-use medicine there. Again, it started as a technology partnership here. So the partner paid for the development of the novel formulation that we developed. So this ready-to-use medicine has subsequently converted the license here. In terms of time line, at the time of the announcement at the latter end of 2024, the partner guided that they expect to file for approval with -- within 3 years, so that within 2027. So from that, we would anticipate product being on the market by 2028. And again, that's under a milestone and royalty-bearing agreement there. And what I would say is that partner is moving forward at pace. They're very actively developing that product. So at the moment, we're very confident around those time lines. I'm going to find a question for you in a minute, David. So the next question is with multiple platform technologies and potential royalty streams, do you see Arecor ultimately evolving as a licensor model? Or will you pursue in-house commercialization for certain assets? I mean I think here, Arecor is very successfully partnered with pharma. We're looking to partner for our insulin products as well as we've talked about, and this is around co-development and commercialization here. And I think it's -- for us, we're very comfortable in saying that we don't intend to commercialize our insulin products. These are really significant millions of patient populations, large markets and large global markets and Arecor is not going to set up global sales and marketing force here to commercialize insulin. So that's really part of those negotiations here with the potential partners around we'd be looking for them to commercialize -- ultimately commercialize the products here. So it's really around doing the right deals and structuring those to return the most value to the business. But I think we won't be looking to commercialize ourselves and sell ourselves our existing proprietary portfolio. Okay. David, this one is for you. What is the current cash runway? Will the company need to do a placing soon?

Sure. And in the documentation that went out with the RNS within the finance review and the going concern that talks about a cash runway to March '26. We're referring here to a cash runway well into half 1 '26 on the basis that we did a very conservative cash projection for the audit. But actually, we do still have levers that we can pull to extend that runway. And I guess with regard to the rest of the question, and I think the key here is that we believe that we do have time to strike that partnership for an AT278 deal and that we do have time to generate a reasonable amount of data on the oral development of peptides. I've been a scientist, I can't at this stage say what stage that will be at. But again, that gives us another run into other financial levers if we have a success there.

Thanks, David. That's probably a nice segue into the next question, which is -- which I'll take. Why is it taking so long to sign a deal for AT278 and how will that deal be structured? I mean in terms of deal making, obviously, for AT278 here, there's a lot of competitive tension across this ecosystem. So there are about 5 or 6 insulin pump device companies with very viable pumps on the market in the U.S. today here. And what we have seen, and I think what is moving very rapidly now, certainly in the last 6 months even is the market dynamics there, and that's moving rapidly in our course favor here for AT278. So as I mentioned, we talked about all the pump companies looking at that underpenetrated type 2 patient population. So through the kind of latter half of last year and into this year, 2 of the 3 of the large incumbents gained approval for their pumps for the type 2 patient population. So they did multiple hundreds of patient clinical studies there to generate the data to show their pumps could be used for type 2s and showed significant time and range improvement. So they -- this was Insulet and Tandem and they showed 20% and 15%, respectively, time and range improvement for type 2s switching from multiple daily injections to pumps. That's huge. Medtronic are generating their clinical data currently for the type 2 patient population are anticipating filing for approval soon, and they'd expect approval within 2025. So again, it shows this real move strategically towards the type 2 patient population and also towards longer wear because they're obviously all competing with each other with the same patient population. And then we have the new innovative pump companies coming in who are also then taking market share. So that market is really dynamic, and there's a real need and a drive and much more motivation there to enter into that next innovation leap that we've spoken about. But these deal structures take time. This is around the combination product, which is quite different in this space. Normally, an insulin is approved on its own. And then separately, the studies are done to show that it can be used in a particular pump, but this will be a combination product. And we're also looking to the partner to be the commercialization partner. So again, quite a different ecosystem to that today. And for Arecor, this is around there's opportunity here and competitive tension. There's lots of different deals that could be structured here, whether they be exclusive, semi-exclusive, et cetera, and how you work those through, which are all very live discussions and negotiations. And our focus is doing the right deal for Arecor that generates a nice value for the business and, of course, return to shareholders. So they do take time. What I would say is that we have confidence here that we will strike a deal for AT278. The next question is, could an insulin-like product work for peptides? If not, why not? I'm going to try and answer this. And if I don't answer the question, perhaps if you could put in a clarifying note. So Insulet has a patch pump basically for the continuous infusion of insulin there. So perhaps the question is, could peptides be delivered via continuous infusion on a pump. In theory, yes. they could do, I think, for those that perhaps if you take a GLP-1, if it was continuous infused slowly over the course of the week, would it give a better clinical profile? I don't know. People would have to do the studies there. But there are very good injectable products, single injectable products for the GLP-1s today. So a kind of wearable patch pump in a sense, I'm not sure there'd be a patient pull for that product necessarily because they would be having to wear this then 24/7 compared to doing a single injection. Of course, taking a pill, a single pill much different. People would much prefer to as we're used to if we're taking paracetamol to swallow a pill and that be the medication administered rather than an injection. So that's really where the focus is. But if I haven't answered that question, well, I've misinterpreted it, then please do feel free to add another question. The next question is, can you outline time frames for returning shareholder value, please, 1, 3 or 10 years? I'll maybe start and then David, if you want to add anything here. I mean, I think as we've talked about, there's some very clear value-driving milestones through the course of 2025 and then certainly going into 2026. So they're kind of near term. So we're very much focused on striking strategic partnership for AT278 and structuring that in the right way, of course, that it generates the most value for Arecor. So that's something that we're -- is live and we're working on now. So we're looking to generate value from that in the near to medium term. And then the other areas around oral delivery, of course, is dependent on scientifically very challenging. It's dependent on data. But we do have world-leading scientists here. It's a formulation challenge, and that's where we excel in the formulation space. So again, it will be very much data-driven, but there's no doubt in my mind here if -- and we can see that from deal structures that are out there in the public domain, if successful, there will be transformational deals to be done there. It will make my job very easy. The scientists can deliver compelling data packages there. And then we have the underlying core business, of course, that generates and contributes revenue and income, which offsets our R&D costs. I don't know, David, if there was anything you wanted to add to that as well.

No, I think that it's with -- in coming with the biotech, you look at things in stages so that if we -- when we sign an AT278 deal. And as Sarah said, we're still looking at various ways of doing that. That will create value. Then as we progress down that path as we hold the Phase II, as we get successful results for the Phase II, that then creates another value step, Phase III likewise, commercial likewise. And when -- I think one of the slides talks about the total addressable market for the insulin for us, $2.9 billion. So anything where we can show that we are targeting a certain percentage of that will again contribute towards step-up in value. And I think we heard about Cyprumed, no human data, no clinical studies. And again, I can't comment on the exact timing, but obviously, we're working towards our own data package for that. So if there is a success on that, if there is an announcement, then again, that would be a nice first step in a pathway that could lead to -- I was looking at one of the questions, there's all sorts of options we can license out the technology. We can do our own products, which, of course, is where you retain much higher value for the business and for the shareholders. So there's lots of opportunities for us to execute and to gain that sort of success and increase. The actual question was 1, 3 or 10 years. And I think it's across all of those. But obviously, over time, you hope that the steps get larger.

Thanks, David. So the next question is, is the headcount drop primarily due to Ogluo? If not, is it technical or admin? Have we effectively exited some technical research. I mean this slightly predates you, David. I'm happy to take it or if you want to take it.

No, that's okay. So I would say that the headcount drop is approximately 50-50 between Tetris and a little bit of head office G&A. And on the other side, we did have some stuff within research, and that came from a decrease in intention on the specialty hospital products division alongside fairly logically, as we ceased on the clinical trials, we didn't need a clinical group of people within R&D. But of course, if we then start on for AT278, start further on the Phase II and planning for that, then as part of that, we would increase the R&D headcount so that we've got the right skilled people to manage that clinical study.

Sorry. I was going to say, just to add to that. So we did make a strategic decision last year in that specialty hospital space. So this is in the ready-to-use medicine space that we would continue to operate in that area, but only under paid partnerships there. So we made the decision to stop developing those ready-to-use medicines ourselves because actually, that same resource, it's formulation development essentially. So it's the same amount of effort to work in ready-to-use medicine space as it is to work on the oral delivery. But the upside opportunity on oral delivery versus ready-to-use medicines is significantly different there. And we have entered into partnerships and technology partnerships and most recently, licensing, as you've seen with AT351 with the ready-to-use medicines. So we can still generate value there, but we've decided that we're not going to take the -- have the people and the financial risk essentially there of investing in that area without a partner. So we'll partner first, and then it will be paid development and license upside. I think the last question is for you, David. Are any R&D credits subject to HMRC investigation?

Well, thank you for giving me the easiest question. So the answer to that one is no. In the RNS, I think we stated that the 2023 R&D tax credit claim was filed in April '25. So we expect to hear back from HMRC within a couple of months. But no, absolutely no investigation at all.

Sarah, David, if I may just jump back in there. Thank you very much indeed for being so generous of your time and addressing all of those questions 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. But Sarah, perhaps before now just really looking to redirect those on the call to provide you with 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.

Sure. So I think to close, what I would really say here is that Arecor's focus now really is on those high-value opportunities with laser sharp focus there, and that's across our diabetes and obesity and portfolio that we talked about in more detail today. And we very much believe we're well positioned for significant future growth. And thank you all for your time today. And for those of you who are existing shareholders, thank you for your support. And for those that are not that are interested in the company, then thank you for joining us today.

Perfect. That's great. Sarah, David, 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 really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it 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.