Arecor Therapeutics plc ($AREC)

Hello. You're watching Proactive. I'm joined by Sarah Howell, the CEO of Arecor Therapeutics.

Sarah, very good to speak with you this morning. Can you remind us what Arecor Therapeutics does?

Yes. So we're a clinical stage biotech company. We are developing superior therapeutics that can reduce treatment burden and improve outcomes for people living with diabetes, obesity and other cardio-metabolic diseases. So our focus as a company is in two core areas: in diabetes and the oral delivery of peptides. And there's a significant unmet patient need here in a large multibillion-dollar market. So our lead program is an ultra-concentrated, ultra-rapid-acting insulin, AT278, where we've shown clinical superiority. And it's a profile that's been designed for use in automated insulin delivery systems, so delivery via insulin pumps, and there's some very specific unmet needs there that we're addressing. And we're also working towards developing an oral delivery platform technology for oral peptides, which has been a particularly difficult challenge over a number of decades actually with bioavailabilities there of being less than 1%.

Sarah, how would you sum up the past year?

Yes. So we've had a really great year actually, and it's been a very significant year for Arecor. Obviously, as I mentioned, those two core focus areas for us: our lead asset, AT278, and that oral delivery of peptides. For our lead program, AT278, we have entered and met a number of milestones across the year. We entered into a co-development partnership with a U.S. commercial stage insulin pump company, so a device company there called Sequel Med Tech. And that is to enable us to work together under a co-development partnership to enable a Phase II clinical study. On that Phase II clinical study, we also had a very positive meeting with the FDA, a Type C meeting, which included our Phase II clinical study design there. So we're very confident about that Phase II clinical study moving forward there. And so we're confident in the preparations that we're undertaking at the moment with them. And furthermore, with Sequel Med Tech, both companies have confirmed our strategic intent to enter into a broader development, so Phase II and beyond and commercialization agreement. And that's our best option for bringing AT278 to market in this important patient population in these AID systems. In addition to that, in our oral delivery peptides program, we overcame the first challenge here. So we've initially focused on GLP-1, and we're able to stabilize that GLP-1 and that peptide. So we're using semaglutide here in a very novel delivery matrix. And we filed IP in that area, and it's obviously important for us to file the IP and hold our space there. And now we're focusing on improving bioavailability. And I think the third stream during the year that I would highlight is that we entered into a royalty financing agreement with Ligand Pharmaceuticals, which secured $11 million, of which we've received $7.5 million. So that obviously there strengthens our balance sheet. It obviously puts us in a position of strength while we're negotiating these next phase of co-development agreements for AT278 and gives us cash through into the second quarter of 2027 there. And we started the year with cash of GBP 6.1 million. So real strength there across all fronts, both operationally and from a cash balance moving forward.

Sarah, starting with that lead program, AT278, that's your ultra-concentrated, ultra-rapid-acting insulin. How is this going?

Yes. So just maybe as a little bit of a recap, AT278 has been designed to address significant unmet need for people living with diabetes who require intensive insulin therapy. So they're taking insulin every day here. And we're looking at reducing treatment burden, broadening access particularly for the use of AID systems and improving outcomes here. So our initial target patient population where we see the most significant unmet need here are twofold. If we look at the U.S., there's 4 million people in the U.S. that are on intensive insulin therapy. Of that 4 million, around 1 million of them require more than 100 units of insulin a day. And if we take the current best-in-class insulins which are 100 units per ml, so 5x less concentrated than AT278, then around 1 million of this patient population simply can't achieve even 3-day wear in the current pump format. And that's current standard of care, which means AID is just not accessible for them. And there's those that are already using the AID systems. And what they're looking for, they want pumps that they can wear for longer. They want pumps that are miniaturized, that all needs concentrated insulin. And they want better outcomes, which means faster-acting insulin so we can improve time and range. So if that initial 4 million patient population, we see a real unmet need for at least 2 million of those for a highly concentrated, ultra-rapid-acting insulin. And AT278 is the only insulin that meets this profile. It's the only insulin that's been clinically shown to have this profile and, of course, we've shown superiority against those best-in-class insulins. And of course, our next step is to enter into Phase II clinical studies. All of the work and development work is ongoing at the moment, and we'd be confident into heading into Phase II clinicals in the second half of this year.

As you said, the deal with Sequel is to help you prepare for the Phase II clinical trials. How are the discussions going to sign a partner for the Phase II?

Yes. So on that, obviously, we've entered into that initial deal with Sequel Med Tech. So that was both companies have committed $1.3 million under a co-development structure to get ready for that Phase II clinical study. And of course, with the positive Type C meeting with the FDA, we know exactly what data and development data is required for us to enter into and have a successful approval to run that clinical study in the U.S.. And that is all on track there at the moment. The strategic intent from both companies is to obviously extend beyond that now. We're working together for Phase II and really around this co-development partnership now for Phase II and beyond. And from an Arecor perspective, very much our commitment here and focus is to do the best deal for the company to move AT278 forward at pace and to bring that product to market in partnership with an insulin device company. And we're working obviously with Sequel Med Tech on that. So those negotiations and discussions are at an advanced stage now. So we're very confident here in being in a position to enter into that Phase II clinical study in the second half of this year.

How much will the Phase II cost? And how will you manage these costs, yourself or via a partner?

Yes. And I think I have talked about this previously, and we're still confident here. Obviously, we're confident in the clinical study design. It will be a multicenter U.S.-based study comparing AT278, which is a highly concentrated, obviously, ultra rapid-acting insulin compared to NovoLog, which is Novo's 100-unit per ml insulin. So we're confident about that clinical study design. Of course, exact costs, we won't know until we've contracted all of the clinical sites in the U.S., but we have a good idea around those. So we're still confident that the direct cost of running that study in the U.S. will not be more than $15 million. And in terms of how we fund that in partnerships, our intent here is very much to enter into a co-development partnership. So we'll be looking to share these direct clinical costs with our insulin device and AID partner here.

So what's the next milestone for the GLP-1 program? Will you share some data during 2026?

Yes. So as I said, we've overcome that first initial hurdle with oral GLP-1 in terms of stabilizing that peptide in the delivery matrix. And that's important here because parts of these challenges, why there are very few oral delivery peptides on the market today, is that they have to go through your GI tract and your stomach, which has a very harsh pH. And this harsh pH tends to degrade the peptides themselves. So they're not available once they're delivered to the target site. So stabilizing the peptide through these harsh pHs in harsh environments is absolutely key. And we've achieved that, filed that IP. We're now very much focused on developing a nonclinical pharmacokinetic package. So this is essentially measuring the bioavailability and improving that bioavailability. And we'll be generating that data through 2026. And of course, that data will then inform next development steps for us for that oral delivery platform. And I think the key here is that we've started with GLP-1. But if we see success for GLP-1, then this is very translatable to a broad range of peptides, and this is a really important therapeutic class here of medicines. And there's more than 800 peptides into clinical development today, many of which would benefit from oral delivery but it's just not achievable today. So there's a significant opportunity for us there if we can see success in oral GLP-1.

Sarah, why the focus on developing an oral GLP-1? Aren't you up against some huge pharma players in the market?

Yes. I mean, obviously, the GLP-1 space and that obesity space generally has exploded, and there's a number of products on the market and through development today. The reason we picked GLP-1 is it is one of the very few orally delivered peptides on the market today. So we can have a reference point here and we can compare directly with that product. So oral semaglutide is essentially Novo Nordisk Rybelsus, which is on the market today. And despite that, Rybelsus has a less than 1% bioavailability. But despite that, Novo posted sales of $3.4 billion in financial year 2025, which shows that patient preference for oral delivery agents there. And that's around compliance, adherence, then improving outcomes, and essentially, people prefer to take a daily pill rather than injections. So there's commercial opportunity for GLP-1 if we can improve that bioavailability greater than that 1%. But really, the key here is then that we have validated data against a product that's on the market that we can then translate to other peptides and develop a true platform for the oral delivery of peptides. And that's a huge opportunity both for partnering with pharma, and we'd be looking at transformational partnering deals there, and also the opportunity for Arecor to take clinically validated assets and further develop them as oral agents ourselves.

Sarah, what does the second half of 2026 hold in store for Arecor?

Yes. I mean, obviously, we had a great year in 2025 and momentum through 2026, and there's some really exciting milestones coming up for the business. Obviously, our key focus areas, we've talked about today, AT278 and oral delivery. For AT278, clearly, our focus now is on finalizing that co-development partnership for Phase II and beyond and very much focused on entering into the best deal that we can for Arecor that helps us move us forward at pace but returns value to our shareholders. And this is in a significant market, right, when we look at AT278. This is for automated insulin delivery. And looking at the U.S., this is a 2 million patient population is our initial target patient population where they have real unmet needs in this area. And that translates to a greater than $3 billion market opportunity revenue. So it's a significant opportunity. So that's clearly our top priority there is entering into that deal, moving forward into a Phase II clinical study in the second half of the year and accelerating that development through to market. And then as I mentioned, for oral delivery, that's very much around now generating this nonclinical pharmacokinetic data, which will inform us where we are in terms of improving that bioavailability. And again, success there would allow us to expand that to a broad range of peptides, which is a really significant opportunity. So they are really the two key focus areas for us in the business.

Well, Sarah, I hope you'll continue to keep us updated with your progress. Thank you so much for your time today.

Thank you.

Sarah Howell, the CEO of Arecor Therapeutics.