Bora Pharmaceuticals Co., Ltd. ($6472)

Hello, and welcome to the Life Sciences Investor Forum. On behalf of OTC Markets and our co-host, Zacks Small Research, we're very pleased you've joined us. The first presentation of the day is from Bora Pharmaceuticals. [Operator Instructions]. At this point, I am very pleased to welcome Bobby Sheng, Chief Executive Officer and Chairman; Alice Wang, Chief Financial Officer; Nadiya Chen, Investor Relations; and Ting Chen, Associate Director of Finance of Bora Pharmaceuticals, which trades on the OTCQX Best Market under the symbol B-O-R-A-Y and on TWSE under the symbol 6472. Welcome.

Okay. Thank you, everybody, for attending this call and allowing us to introduce Bora Pharmaceuticals and our year-end earnings for 2025. So a little disclaimer, as a public company in Taiwan and in the U.S. So get to know Bora, here's Bora by the numbers. We are a market cap of about USD 2 billion. We have over 2,100 employees worldwide in North America and in Asia. We export to over 100 countries, and we have 10 manufacturing sites. Our fiscal year 2025 revenues are USD 634 million. 95% of revenues are outside of Taiwan, primarily in North America. And for Taiwan, we are the #1 pharma manufacturer in Taiwan. Some highlights for us. In 2025, we had a lot of milestones, primarily more on the CDMO side. We re-signed numerous multiyear commercial products and contracts, especially with some anchor clients recently announced with our $200-plus million signing with GSK in our Mississauga facility. We also had an annual largest amount of CapEx invested and investment in our sales and marketing for the CDMO business, also while maintaining increased free cash flow for other business expansion in this year and years to come. We completed a very important strategic investment into Tanvex Biopharmaceuticals, which successfully was rebranded as Bora Biologics. And now we are literally a full-service CDMO with small molecule and now large molecule offerings. On the drug commercial -- drug product side, we saw solid execution outgrowing our specialty pharma business, under the name Upsher-Smith, has demonstrated a strong ability to deliver on our M&A synergies. Now we have a growing vigabatrin franchise to become the market leader in infantile spasm, and we made continued progress in pipeline formulation and investments into rare neurology and pediatric disease. Some highlights and updates into our fiscal year 2025 income statement results. As previously shown before in our prior presentations, we had a record year of top line revenues for 2025. But what's changed for the quarter-over-quarter earnings, we have revenues similar to quarter 3, but our gross profits, the percentages have been down a little bit, but that's primarily because we've moved from the COGS from discontinued operations from the closure of one of our Plymouth facilities, and we moved them now into Q4 into the COGS -- actual cost of goods sold. So you see a lower profit margin there. Overall, we've shown a decent quarter, but we've shown the effects of an impact on dexlansoprazole and competition into dexlansoprazole generics that is showing some impact on our bottom line quarter-over-quarter. Now from the discontinued operations, as promised, we've shown a large increase in our cash flow from the closed shutdown and also from the discontinuation of low-profit products. As you can see, the highlights of our cash efficiency by quarter 4 of 2025. Our operating cash flow margin has increased 38.74 points year-over-year and we've also increased our net working capital ratio compared to over revenues by -- down to now 26.62 points. What's that enabled us to do? It's enabled us to increase our cash flow and have cash available to do more accretive acquisitions and continue to invest in CapEx for organic growth. Some highlights into the CDMO business and our North America-based global network. In our CDMO business progress highlights: We've had another strong quarter in both revenues and gross margin, supported by expansion capacity and dosage forms. Revenues grew by 53.8% year-over-year to TWD 10.64 billion, including internal orders. Excluding internal orders, revenues reached TWD 7.5 billion, an increase of 19.53%. CDMO backlog has been impressive in the next 12 months after a strong Q4 digestion, slightly decreased to about USD 264 million and the total external wins reaching a phenomenal USD 482 million. 89% of them are commercial stage and 16 molecules are in the pre-commercial stage. We continue to have very strong on-time and full delivery records for our clients up to 96%, which is industry-leading and right first time of 93%, which is also in the top brackets of industry-leading. Revenue per headcount continues to improve by 30% year-over-year. And our expansion into aseptic filling capacity increased by 10%, solid and liquid capacity by 3% and we fully retooled for now for more efficiency. Some highlights into the numbers that we produced in 2025. We produced over 2.5 billion doses. We have over 117 commercialized molecules now. And just in 2025, we have 24 new molecules signed. Our goal is always to be a one-stop shop for all of our customers' CDMO needs. We are hearing the customer out, and customers want a very reliable one-stop shop CDMO to go to. So we have a complete array of offerings from ophthalmic, semisolid, liquids, nasal spray, oral solid, sterile fill/finish and now with the investment into Tanvex relabeled Bora Biologics, we now have biologic capabilities all the way from cell line development to drug product, the drug substance. 2025 also signified a year of investment into organic growth. Continue to invest in capacity starting from -- in 2025, starting from May, we installed an AST line, automated bile syringe and cartridge line into Baltimore, Maryland facility. We have a new Norden fill line in Mississauga. We invested in our Gerteis Macro-Pactor packaging lines in Maple Grove, Minnesota. We have additional high-potency liquid capabilities now in our technology in our Zhunan, Taiwan site. If you add on to all of our 2024 investments, we've invested over $400 million in the past 2 years to improve our organic growth and our future capacity. With the recent investments into our U.S. sites, we're well positioned for U.S. manufacturing and U.S. resilience. As you can see on the right side, we have a Plymouth facility, Mississauga facility, Baltimore facility and San Diego facility and a biologic facility in San Diego down in the bottom left. On the left side, you'll see our facilities in Asia, primarily in Taiwan, and we have our oral solid facility, sterile ophthalmic facility, oral topical facility and OSD facility and also early development -- product development of biologics in Taipei as well -- Taiwan as well. Some highlights in our CDMO facilities. Here is an update on our biologics facility. Obviously, we see a very, very strong future biologics, especially with multiple products being developed every single year, including the biosimilars that are getting -- or the on-patent products that are trading biosimilars within the next 5 years. We renewed the U.S. expansion into -- amongst our stainless steel and their single-use capacity remains still unserved. So what we're seeing in this chart on the right side, you have a lot of capacity here, a lot of approved products from 2024-2025 from the FDA, all biologics. Half of them are for stainless steel large capacity reactors. But the other half, including novel mAbs, ADCs and also bispecific trispecific monoclonal antibodies, they all use single-use bioreactors. We do see an underserved market in that, and we've just completed our two 2,000-liter installation into our San Diego facility. It has a brand-new offering, we're seeing a lot of demand for those 2,000 liters in our San Diego facility, and we have room to grow in that facility as well. So we're very excited about the future potential of that site in San Diego. And we continue to make investment in aseptic technology as well. Obviously, with the recent demand for GLP-1s, we're seeing a huge shortage of sterile fill and finish facilities. We're seeing a lot of demand for our fill and finish site in Maryland. So we continue to make investments in that. In December 2025, the site received state-level permit to fill the clean room construction to start in Q2 of 2026, which is next quarter. We have 20 near-term projects that are new and existing clients waiting to onboard and validate their batches estimated for Q4 2026. And we continue to expand our capabilities for isolator-based aseptic filling lines directly addressing markets demanding for advanced technologies, as you can see on the bottom right here. We currently have a FlexPro already online, and we have the AST line being installed in the second half of the year, ready for 2025 capacity as well. For our topical fill line, which is the Norden fill line in Mississauga, we just finished that. That site in Mississauga, now in Canada, is a big site for us for these liquid fill and semisolids. And so the demand continues to go into that facility. GSK increases their demand in that facility. We continue to install and make new CapExes in that facility as well. We also added a liquid fill hard capsule filler in our Zhunan facility. Some updates on our pharma sales business, which we call the second part of our dual-engine strategy. We continue to focus on our core strengths, which is continued investment into specialty pharma. Some highlights here. As you can see, we've continued to communicate to the market that although generics is a base for the business as it was in 2022 and 2023, we are diversifying into now what we consider more stable long-term growth, more well-positioned products in the -- primarily in the specialty pharma branded generic space and branded space. Vigabatrin is definitely our market leader in that space. And we have excellent payer coverage and reimbursement with 80% coverage for that product. And it's consistently led by our VIGAFYDE brand in that product. As you can see in 2025, specialty now accounts for 45% of our total sales; whereas in 2023, it only accounted for about less than 5% of our sales. What has allowed us to be strong in brand positioning and strong in the specialty pharma business is that we are very well recognized amongst the rare and orphan pediatric market. And we continue to invest in patient advocacy, continue to invest in patient access to these drugs and servicing the unmet needs of these orphan drug patients. A little bit of highlight into our market-leading product. Our 2025 achievements is in our vigabatrin franchise, led by our VIGAFYDE, our ready-to-use formulation, for the vigabatrin franchise. And it's a drug of choice now for all the doctors, and it's a true game-changer for this market in infantile spasm. Combined, we have 3 dosage forms, but the ready-to-use one is our strongest growth one. Our market share grew by 15% in just Q4 alone and 85% since the launch of VIGAFYDE, and we continue to invest in VIGAFYDE. Some of our 2025 highlights. We're pushing to enhance customer segmentation, increased sales force effectiveness, life cycle management is really important for us as well to enhance product profile. We're continuing to invest in key commercial functions, including marketing, sales to grow the business and to grow with the business as the business continues to be more complex. And we continue to allow patient access via selected payer engagement. On the generic side, we continue to focus on more stable generics, and that means more complex generics, hard-to-make generics and more niche generics as well. We continue to refill that pipeline from internal and external resources and more aggressive investment into differentiated branded portfolio. Some highlights in our generic business. We have 10 generic launches planned for 2026. We have 7 confirmed launches so far. Total market for those products on the branded side are about over USD 1 billion in market sales. Two approved PIV pending launches. We have 8 pending approvals, including a blockbuster. And then we have one product in discussion for investment in M&A. So we had a strong 2025. I'd like to share a little bit on the vision of where we want to go in 2026 and what we see exciting and what we view as some high potential things happening in 2026. Our blueprint 2026 is very simple. We want to have 3 big focuses. Number one, we continue to grow in CDMO scale and increase the global awareness of Bora and the CDMO business. We're maximizing our large molecule opportunities and commercialized projects with single-use bioreactors in the U.S. We're seeing increased investment into biologic companies now and into these new biotech companies. And so we see that market growing. There's been told of a cold winter for biotechs for a while, but definitely Q4 last year was one of the strongest years for investment into biotechs and being a CDMO provider for biotechs, we see a good potential for us to grow with that industry in 2026. We continue to invest in increased capacity utilization and realize operational efficiencies as we grow and scale. We are continuing to invest in our brand awareness, as we are now a more scaled CDMO. We're investing in our brand awareness and also the quality of our pipeline, increasing revenue per employee. Also, we continue to see opportunities in the M&A sector as well for the organic -- to add on to our organic growth. On the rare disease portfolio, we definitely are continuing to grow that business in the high-value generics. We continue to be 200% focused on the vigabatrin franchise and drive a stable margin-accelerated growth, especially the growth in the VIGAFYDE brand. We're focusing on advanced high-value generics with favorable PIV prospects and also additional bolt-on investment, M&A investment or in-licensing opportunities as well to take advantage of our sales distribution network. We also want to grow the pipeline through R&D partnerships and in-licensing. Finally, to grow the whole company, we want to expand on our competitive advantages and in scale and in AI. We do have global scale now. So we're continuing to have operational efficiencies as they continue to improve. We're driven by increase in demand and capacity utilization; central procurement, which is a big one for us in 2026; and also advantages of our -- cost advantages and location advantages of our operations in Taiwan. Also, we are continuing to invest in AI. We see this is a big year for Bora to invest in AI. We established an AI council. We have multiple AI initiatives going from internal operations, sales and marketing and also production and manufacturing efficiencies as well. A little bit about Bora and community. We are a public company, so we definitely care about what we do in our community and also what we can contribute back to society. Some of our commitments to government, people and society, our MSCI ESG rating, we had an A rating from MSCI. EcoVadis, we have a committed level rating for EcoVadis. From the Taiwan Stock Exchange, we have a corporate governance evaluation. We are now in the top 6% to 20% of all the companies within the Taiwan Stock Exchange. And for the FTSE Russell ESG, we have a 3.5 rating out of 5. And finally, we continue our commitment to the governance, people and society. Our other achievements for the Sustainalytics, we are risked as medium risk, 23.8, moving towards the lower zone of medium risk. Industry PR value of 81 in the global pharmaceutical sector. For Business Weekly, we are 225 (sic) [ 2025 ] carbon competitive in the top 100, recognized as carbon reduction performance and decarbonization road map. Finally, Taiwan Corporate Sustainability Award. We got awarded a silver medal award, The Most Representative of Sustainability Award in Taiwan, recognized Bora Group as a strong ESG performance. And that's it for the small presentation for Bora. Thank you for your time and allowing us to share our year-end results for 2025 for everybody, and we are looking forward to a very prosperous 2026. I think we want to open up the Board -- or the room up for any questions from our listening audience.

I'll be combining because there are a lot of questions coming in. I'll be combining the questions. So people are asking, you were just named Overall Biotech Companies of the Year and Taiwan Government and press is citing Bora as a key player in national biotech strategy and also the San Diego facility expansion and NYPOZI partnership is putting us on the map of U.S. biologics. So overall, how do you view going forward the RFPs coming in our CDMO business? And eventually, how big do you think biologics for a large molecule CDMOs will be in terms of a group point of view?

Well, I think biologics, as far as Bora is concerned, it's our first full year into biologic. We made a very large commitment to invest in our biologics facility. We think the San Diego facility is a perfect location. It is an amazing facility. We have one of the best teams in Taiwan and in San Diego running those facilities. Our two 2,000 liters just got installed, and we are running batches through there literally this quarter. So we're excited about it. We think that, that site has the potential to be a multi-hundred-million dollar site. So within our group of sites, we see it as definitely a double-digit contributor. However, the market is still a small molecule, but we see the largest -- the fastest amount of growth in biologics, and we see definitely differentiation and specialization that we have over other competitors in that space. So we're excited about it. We've made the CapEx in it. It is a long-term investment, though. So the sales cycles are a little longer. The product approvals take a little longer, but we definitely see that as a much, much higher growth trajectory than small molecule CDMO as well. So I think that's really important for us in the future.

And then moving on to the product side or the Upsher-Smith side. People are asking the vigabatrin franchise is now the market leader in infantile spasms. How much further room do you see growth in this rare disease, not limited to vigabatrin, but overall rare disease portfolio and broader neurology portfolio?

Well, I mean, how do I say it? I think the -- if you look at SABRIL, which was the original brand, that capped out at about $250 million, which was about 5 or 6 years ago. So we see our ready-to-use formulation as a real game-changer. And also, we're seeing the doctors being able to -- with patient advocacy, we're seeing caregivers and doctors being able to recognize infantile spasm better. So we see that market as being growth -- a little bit of growth just because of the recognition of infantile spasm. We are the brand of choice and the drug of choice for that. So I think it has $200 million-plus potential just for that franchise alone. Also, I think in the pediatric neurology space, we do have a well-developed pipeline to continue to service and continue to treat the patients in pediatric neurology. I think in the long-term wise, we definitely like the neurology space. We are talking to multiple partners to expand our pipeline into the neurology space. So we're really excited about how big could it be? I think it could be one of our -- it could be very dominating for us as far as representing a percentage of Bora's revenue in the upcoming years, for sure.

Following the question more on CDMO North American resilience. So you now have a differentiated North American network across several facilities plus Taiwan cost advantages. How do you see Bora evolving into a preferred partner when we are talking about resilience or talking about onshoring? And also people are curious, are we seeing any attractions that the U.S. government provides to global pharma service providers?

I think we made a conscious effort to have a footprint in North America because of our clients wanted it, right? It was more getting closer to the patient. I think COVID created a supply impact to the whole market that I think it really communicated to our customers that they need to be closer to the patient. The supply chain need to be closer to the patient and they need to have more supply chain resilience. Most of our customers are in North America, so we -- in 2021, we decided to establish a larger footprint in the United States, while also giving our customers the option to have a fast, low-cost, high-quality manufacturing based out of Taiwan as well. So having a Taiwan and U.S. footprint allows us and allows our customers to -- if they want a quick, fast development; quick, fast research -- R&D; or if they want low-cost, large-scale manufacturing, they can have that in Taiwan and also the array of dosage forms available for them to be closer to their patient within North America. Now obviously, the current administration is encouraging our customers to invest in manufacturing in the U.S., have their products in the U.S. We are seeing a lot of increased request for proposals. We're seeing a lot of different modeling, and we're seeing a lot of different requests for all of our sites. I think that will take -- pharma takes a while. Like I said, the sales process is long, so pharma will take a while, but we're seeing certain commitments in a lot of our sites for -- just for that and sometimes even for a secondary supply source within the United States. So the United States footprint for us was a very key decision, and it's proven to be very beneficial for us in the short term. We also see it being a very important part of our strategy in the long term as well.

Great. I think we still have time for one last question. It's on our capital market strategy. So Bora now trades on OTCQX, and we are stepping up our U.S. investor reach. Do you expect greater U.S. visibility to lower your cost of capital to support a larger M&A or growth in pipeline? Or how do you view down the road cash generation baseline?

Yes. I think we've been growing by acquisition and organic growth. We definitely want to be on the main stage where we can have access to more capital, access to smarter capital or different variations of capital so that we can continue to invest with our customers. Our customers value us as a great partner because we're continuing to invest in high-quality CapEx for them. But also, yes, definitely to fund a lot of our M&A activities. We're definitely seeing a lot of potential acquisitions that in the next years -- upcoming years. As far as where we want to be as a company, yes, I think we are still at a high-growth stage. Although we're getting close to what I would consider economies of scale, I still think we are -- have a lot of room to grow. I also think the CDMO industry has a lot of room to grow as well. There's a lot of data out there that proves that we are still a not-maturing industry, but with an industry that requires a lot of high demand. So we're very bullish about outsourcing and the advantage of outsourcing for the biotech and pharma industry in the future. We're very bullish about the CDMO potential that we can offer to these pharma clients. So yes, having access to U.S. capital, you'll definitely be seeing us a lot more in U.S. capital markets. This is the only start for us and our foray into the U.S. and broader capital markets.

Thank you. And I think our time is up. [ Lilly ], back to you. Thank you.