Cinclus Pharma Holding AB (publ) (CINPHA) Q4 FY2025 Earnings Call Transcript & Summary

Welcome to Cinclus Pharma Q4 report 2025. [Operator Instructions] Now I will hand the conference over to CEO, Christer Ahlberg. Please go ahead.

Thank you very much, and hello, and welcome to Cinclus Pharma's Fourth Quarter and Full Year 2025 Earnings Call. As you already heard, I'm Christer Ahlberg, I'm the CEO of Cinclus Pharma. And with me here today, I have our R&D Director, Margit Mahlapuu; and our Interim CFO, Patrik Norgren. And we will present the latest developments from the Q4 2025 and the upcoming news flow, after which we will be happy to answer any questions you might have. Okay. Let's go to the first. And as you know, we are a public company. So be aware of the disclaimer. I will not read it through for you, but nevertheless, it's good to have there, so you're aware of that. And going to the first slide then. Just a summary of Cinclus Pharma and our lead candidate, linaprazan glurate. This substance represent the new class PCABs within the gastric acid-related diseases. This substance have a unique -- this belongs to the next generation of the PCABs and have a unique possibility to deliver 24-hour acid control. And that's the first of all PCABs that actually have a chance to do that with 96% acid control over the 24 hours. And with that, we also can address the high unmet medical need still exists within this area, in this class, among especially the severe erosive GERD patients. They require and they need full acid control actually to be healed and to be within -- to get symptom control. And within this target population, we are targeting approximately 10 million patients in U.S. and in Europe. And globally, the same number, approximately 19 million to 20 million patients. So it's a huge blockbuster potential also in this target population and in this specialty pharma position of this product. We have delivered a very good Phase II data, good healing data. And now we are going to repeat this data and the outcome of the Phase II, showing superiority in the first -- the ambition is to show superiority in the first Phase III trial called HEEALING-1, and we expect to have the results of that in the end of this year. Beyond our core market, PCABs are also gaining global momentum. That's clear. We can see now that they are launched and available in more than 30 countries across the world. And actually, the growth is growing quite significantly, and they are taking over after PPIs, I would say, in the markets where they have been launched. They are also incorporated in many guidelines. And definitely, we can see that this is further validating the mechanism of action and the safety and efficacy and also the commercial opportunity for linaprazan glurate going forward. If we look into the -- I mean, different territories, if you go to U.S. first, where we have launch of vonoprazan by Phathom. They have -- this 2025 was the first full year of launch, and they recently announced a revenue of approximately USD 175 million over 2025 with more than 1 million prescriptions filled during the year. So that's very encouraging. And also, it will be interesting to follow this forward. And they have also guided that they will reach profitability in the second part of 2026. We also see in U.S. that the second PCAB, the first-generation PCAB is on its way. We have a submission earlier this year or where tegoprazan most likely will be launched by Sebela in 2027. Going then further to the other markets across Asia, we can see that in Japan, we have already seen that Takeda launched vonoprazan some years ago, 2015, and they have now 44% market share in value of all the reflux treatments available in Japan. In Korea, the same market share is approximately 23% and with a high growth rate, double-digit year-on-year growth. In China, plenty of PCABs now are approved and are launched and our substance linaprazan glurate is also approved and will be launched during this year after we have received price and reimbursement approval, from 1st of January in 2026. Beyond Asia, we can see also in South America, PCABs taking market shares. And in Mexico, for instance, PCAB, the first PCAB reached #3 in the market position within 2 years with also very good pricing, outpricing the PPIs. So taking this together, these trends underscore a clear global shift towards PCABs and reinforce the significant commercial opportunity for the next-generation agents such as linaprazan glurate. Also a little bit about the treatment and the differentiation with our substance compared to the other PCABs. We have been discussing this many times before. The bio market, the importance of the bio market, which is very much established within this area, where you can see a linear correlation between the percent of reaching pH above 4 in the acidic content in the stomach. If you can reach that close to 100%, the longer you can reach that during the 24 hours, the more patients you can heal. And that correlation is totally linear, as you can see. If you -- I mean, as we have delivered 96% acid control, we definitely will come very close to 100% in HEEALING. And you can also put that -- these kind of figures into this curve, and you will see the correlation thoroughly and robust versus the HEEALING rates we have -- every PPIs and PCABs has delivered in the past. So with that said, I think it's interesting to look into the comparison here between and the evolution of the different drugs over the years. On the top row there, you can see the acid control, 24-hour acid control over pH 4, which is the biomarker and important to reach, to have a chance to heal patients, especially the severe patients. And as you -- from the left side, you see the evolution, 33% acid control over the H2, 40% to 70% for the PPI, and then 70% to 85% for the first-generation PCABs, including tegoprazan and vonoprazan and then our substance linaprazan glurate with 96%. So if you flip the coin then and look into how many hours actually that means for patients having pH below 4 during the 24 hours, which actually have -- then actually the acidic content has a chance actually to fry the mucosa in the esophagus and also stop potential healings. So with H2 blockers, you can see 16 hours below pH 4, which is -- I mean, the majority of the time of the 24 hour. And that's the reason why PPI became the most sold drugs in the world later on when they were introduced to the market because you see the giant leap, the development in the incremental benefit here. You improved acid control to 7 to 13 hours below pH 4 instead of 16 hours. And now you can see that's another reason and history repeat itself again, you see that 4 to 7 hours PCAB, first-generation PCAB deliver, and that's, of course, an improvement compared to the PPIs, as you can see. And this is the reason -- a reason to believe why they actually have succeeded so well in the markets where they have been launched. And you can see now, we have reached, I mean, the -- how to solve this acidic issues. We are now down to more or less a complete acid control and only 1 hour left below pH 4, which is unique. No one is close to that. And you can see the incremental benefit that we deliver compared to the first-generation PCABs, is actually similar compared to what they deliver versus PPIs and also similar difference compared to what PPIs deliver to H2 blockers. So this is definitely a chance to actually deliver this again. And this is, in a nutshell, the differentiation we are looking into versus the first-generation PCABs in the future. Okay. Also I wanted to give you a little bit of updates on our partnerships. As you know, we delivered during 2025, a very good partnership deal together with Zentiva, which definitely validate the substance since definitely Zentiva had the possibility -- this is the first partnership deal in Europe, and we have the chance to become the first in Europe. And we also -- this is interesting to see because, of course, Zentiva could have gone with any other PCABs, but they choose to go with our because we, as you saw now, deliver the best chances actually to differentiate versus PPIs and have the best chances to deliver a very good price in Europe. So with that said, we have now ongoing this work together with them, both in price and reimbursement development, but also when it comes to manufacturing and preparation of the commercialization. So the start of this partnership looks very promising and it works very good. As I also mentioned, we have the partner in China, Sinorda. I mean, they have now an approval of the price and reimbursement and they, together with HuaDong, preparing the launch for 2026. Let's go in then to the quarter and what we have delivered during the quarter. During the fourth quarter, we dosed the first patient in our first Phase III trial, HEEALING-1. And that is designed to confirm the efficacy of linaprazan glurate in patients with erosive GERD. So this is definitely a really big and important key milestones for us and as well as for the program. We also presented positive data during the UEGW in Berlin from optimized commercialization ready tablet formulation. And that's selected for both Phase III, but also for the future commercial product as well. Looking into the -- in addition to this, we have also received positive feedback from FDA and alignment on our proposed CMC strategy following on a meeting in October, and that further supporting our NDA preparation plans there. And beyond clinical and regulatory progress, we strengthened our commercial position through the presentation of our sponsored abstract at ISPOR Europe, highlighting the clinical and economic burden of PPI treatment failures. And we also hosted a virtual event in December focused on real-world clinical practice in erosive GERD, which was very popular as well. We also announced key corporate developments, including the recruitment of Magnus Christensen as CFO. And also, as I mentioned now, the granting of China's national reimbursement listing for linaprazan glurate, supporting broad access ahead of an expected 2026 launch. Going into the -- what happens after the period? In January, we received a positive assessment from the FDA regarding our non-clinical development plan for linaprazan glurate. Importantly, the agency confirmed that no additional tox studies are required ahead of the future NDA submission, reinforcing the robustness of our development package. We also received positive feedback from EMA, European Medicine Agency, on our planned Chemistry, Manufacturing, and Control strategy, the CMC strategy. EMA confirmed alignment with requirement for the upcoming marketing and authorization application, further strengthening our regulatory readiness in both Europe as well as in U.S. So with that, we also now -- I will pass over this now to Margit to present more updates on the HEEALING-1 study, the Phase III study, ongoing.

Thank you. So I will provide update on HEEALING-1, which is our main operational focus at this point in time. First patient in HEEALING-1 was dosed in October 2025, and we aim to recruit about 500 patients in up to 100 clinical sites in 8 European countries. So treatment period is 8 weeks, and our primary endpoint is superiority compared to comparator in healing of patients with severe erosive GERD, which means an LA grade C/D subjects at 4 weeks of treatment. And secondary endpoints is healing and symptom relief, both at 4 and 8 weeks of treatment, which is recorded both in C/D patients, but also in all patients, which means then LA grade A/D patients. Patient recruitment is proceeding according to the plan. On your right side of the slide, you see the recruitment diagram when the actual recruitment is shown in yellow and recruitment projection is shown in green. And as you see, we are currently a little bit above the projection line. And in total, we have randomized about 1/3 of the total study participants. Top line results are anticipated the second half of this year. And after the top line results are available, we are planning for the second HEEALING study and also for the maintenance study. And this will proceed both in Europe and in U.S. Thank you.

Okay. Thank you, Margit. Thank you. Let's go in then to Patrik Norgren to present the financials. Patrik, please go ahead.

Yes. Thanks. Turning to our fourth quarter results. We ended the quarter with a cash position of SEK 487 million, providing continued financial flexibility as we advance the Phase III HEEALING-1 study. Cash flow for the quarter was minus SEK 53 million, reflecting ongoing investments in the Phase III program. R&D expenses amounted to SEK 61 million in Q4 as the study is now fully underway. R&D represented 80% of total operating expenses compared to an average of approximately 82% over the past 8 quarters, clearly demonstrating that the majority of our spend continues to be directed toward clinical development. Operating loss for the quarter was SEK 62 million, consistent with the expected increase in activity following the initiation of Phase III. We also saw a continued increase in the number of coworkers, now totaling 45, primarily driven by additional consultants supporting clinical and regulatory execution. Overall, our cost base reflects disciplined investment in our pivotal program while maintaining strong financial control. Now go to the year-over-year. Looking at the year-over-year comparison for Q4, net sales totaled SEK 13.6 million compared to SEK 4.6 million in Q4 last year. Revenues primarily reflected licensing income from Zentiva's partnership for Europe as well as contributions from Sinorda in China. As previously communicated, the EUR 13 million upfront payment from Zentiva is being prioritized over the Phase III program. Operating expenses increased year-over-year, mainly driven by higher R&D spending as patient enrollment and trial execution progressed during the quarter. EBIT for Q4 was minus SEK 62 million compared to minus SEK 56.9 million in the same period last year, reflecting the higher Phase III activity level. Financial net was SEK 0.9 million, primarily related to interest income on cash balances. Net loss for the quarter was SEK 61.2 million compared to minus SEK 54.3 million last year, also again, reflecting increased clinical investment. And on the balance sheet, cash at year-end was SEK 487 million compared to SEK 566.7 million at the end of 2024, which reflecting planned Phase III expenditures. Non-current assets increased to SEK 9.7 million, mainly due to leasing of new office premises. Other current assets increased to SEK 49.6 million, primarily driven by CRO prepayments in line with the clinical program. Non-current liabilities rose to SEK 40.4 million, largely reflecting the long-term portion of the Zentiva contract liability. Current liabilities increased to SEK 136.8 million, primarily representing the short-term portion of the same deferred revenue. Overall, our financial position remains solid and well aligned with our Phase III execution plan. And now over to the shareholder slide. This slide presents our shareholder structure as of December 31, 2025. The 15 largest shareholders together hold approximately 55.3% of total shares, reflecting a stable and long-term oriented ownership base. Our IPO cornerstone investors together account for approximately 24.6% of total shares. And our founders collectively hold approximately 16.4%, maintaining strong alignment with shareholders. In total, cornerstone investors and founders together represent 40% ownership, providing strategic continuity and long-term commitment as we advance linaprazan glurate through Phase III and toward commercialization.

Okay. Thank you, Patrik. Thank you. And this actually concludes the formal presentation. And before opening the line for questions, I would like to highlight a few important upcoming updates, not updates, but dates at least. And as you see there, we have the annual report in April and also the report for the Q1 and followed also by the AGM in May. So with that, I think I would like to open the line for questions, and I suppose you will have a description on that now.

[Operator Instructions] The next question comes from Arvid Necander from DNB Carnegie.

So the first one on the HEEALING-1 time line. Can you provide a little bit more detail on the expected trial progression from here and the milestones we should be tracking towards to support the H2 top line targets? So I guess mainly when do you expect to have all the patients randomized? And second one on pricing in tegoprazan. I guess, based on available data for tegoprazan, it seems like price would be the main lever for differentiation. So how do you expect the PCAB pricing dynamics to evolve following the launch of tegoprazan?

Okay. Well, let's start with the first question. I mean, of course, we will continuously report the progress of the HEEALING-1 study. And as we now saw, we have 1/3 randomized. And as you see -- and as you know, I mean, the recruitment time will -- the pace will speed up during the period of initiation of different sites. So it's a step-by-step approach. So it will be massive recruitment in Q2 and, I mean, close to summer. We then, of course, after the healing, after the patients are dosed and randomized, they will be part of the study at least for 8 weeks and then with some weeks follow-up, safety follow-up. And that means that after the last dosed patient, there are -- before we can close the study, we need to have 12 weeks in treatment. So that's 3 months. So -- and as we have seen here, the primary endpoints, of course, the outcome of that will be reported as well as a number of other secondary endpoints. We are in -- as we speak, discussing the different endpoints that we go in to report during the top line. But it's a little bit too early to announce that yet. We will come with that later on. And then, of course, after the top line results is presented in the public, we will also have a publication in the next coming Congress, DDW in U.S., that is in May 2027. And then on top of that, we will add, of course, other data into the European Congress, UEGW in the fall 2027, and combined with full publication of the trial as well. So it will be delivered step-by-step the information. And as you understand then, when we have already now said -- yes, so I think this is what I can say now and what I can give you for the time being. When it comes to the second question, that was based -- can you repeat that again, Arvid? Sorry. That was regarding. Sorry.

Yes. I guess, essentially, what -- how you think the PCABs pricing dynamics will evolve once tegoprazan is launched?

Well, I mean, that is, of course, is an important question. If you look at their data, I mean, of course, they have -- I mean, we -- if you look at the data, they have not reported the data. They have only reported the superiority and non-inferiority data. And when it comes to healing, it looks like that they are better than PPI and nothing else should be expected. When it comes to symptom relief, they are only comparing themselves versus placebo. So that's a little bit complicated -- that's a little bit complex to see whether they are better or not in symptom relief versus PPIs. With that said, I think they will be very much of a close in data compared to vonoprazan. So of course, it will be competition, both in data, of course, but also in pricing in the U.S. in one or another way. With that said, this is something that we have been -- we have seen all the time that all the first-generation PCABs are very similar, and they are delivering more or less non-inferior data versus the PPIs among themselves. And that's because, as you know, acid control of tegoprazan is less compared to vonoprazan. So this is no surprise that the data is not very big difference and actually maybe -- might be lower healing compared to vonoprazan. But that's the reason why we have put so much of effort into our development and actually to deliver a product that actually can meet, firstly, the unmet medical need for the severe patients and then also being competitive versus the first generation because we know that from the history, we know that acid control matter. And if you have a product that definitely deliver better acid control, that's a reason to believe that you also can help the most severe patients. And that is, of course, something that we will negotiate with the pricing authorities and the pricing insurance company. In U.S., we do not expect that we will have any other step through compared to the first generation of PCABs. So it will be most likely a step through via PPI to PCABs, but not within the PCABs group. And then it's, of course, a matter of negotiation with the different insurance company, how -- what layer you will be actually recommended to. That's the first. And in Europe, of course, here, we don't know whether we will be first or not, but the importance for us is to put as much distance between our product compared to the PPIs. So you actually have the chance to get a good premium price also in Europe. But in U.S., I mean, of course, it will be a discussion on -- but actually, we believe if we have better data, I mean, our ambition is to put it in parity with the first generation of PCABs. But of course, if the data is really good, as we expect, then why should we not ask for a premium compared to that? I mean that is definitely a possibility as well.

The next question comes from Joseph Hedden from Rx Securities.

Just on the potential second study that you will have coming up, as that's got a maintenance element, I was just wondering on what kind of duration you're expecting that to take? And then secondly, with the launch in China potentially happening later this year, I wondered if you could refresh our memories on the terms of the deal with Sinorda?

Okay. Thank you for the questions. Regarding the second HEEALING study that will study the same type of patients when it comes to healing as we have done now in the HEEALING-1. But it will also study maintenance of the patients. And what you have seen in the maintenance study, both for Sebela and for Phathom and what is standard these days is that you need to have a maintenance of 24 weeks measured. So a little bit -- yes, you can say 6 months then. So that is what will be evaluated and also submitted to the authorities. On top of that, we also, of course, will follow-up with long-term safety follow-up. And that will be more in for 100 patients needs to at least be delivered 52 weeks of safety follow-up. So that is what we need to deliver, but we submit the application with 6 months data. That was the first question. Second question was regarding China. What we can say there is that now, I mean, they are preparing the launch. They signed a deal with -- Sinorda signed the deal with HuaDong last -- in the end of last year. So now they are together aligned, preparing the launch. We have an agreement with Sinorda since many years, since 2015, with -- where they actually have developed their formulation and clinical development program in China. And we have developed and prepared our formulation and development program for the Western world. And when it comes to the terms, together with Sinorda, we have low double-digit figures that we will get on all the milestone payments, including both regulatory down payments as well as the sales milestones payments. And when it comes to -- based on royalty, we also have a royalty in China, which is on very low level of 1-digit royalty income for us on the net sales that actually HuaDong are selling for. So that is what we have communicated before, and that's still a reminder then on what we have there. In other markets like Japan and South Korea, for instance, which also is covered by Sinorda, we have a totally different setup where we have a profit share split between the companies. Okay. Other questions?

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any written questions or closing comments.

Yes. Actually, we have some written questions. What -- here is a question from one person. What are the -- what are your views of Sebela Pharmaceuticals' NDA submissions for tegoprazan? And how does an eventual approval affect the future market dynamics for linaprazan glurate? Thank you for the question. Well, that's an interesting question. I mean, most likely, they will be approved and they'll launch in 2027. This is not a big problem for us, I think. This is -- I mean, we need to remember, firstly, tegoprazan is very close in -- actually, they have less acid control compared to vonoprazan. It seems not being -- it's a little bit like a me-too product to vonoprazan, belongs to the first generation here as well. And we know also this market is so big. There are so many patients. They are focusing quite a lot on the symptomatic patients, but also, of course, on erosive GERD. But there will -- and it seems like tegoprazan might have a faster onset compared to vonoprazan. So that might be a position that they will grab. And that, of course, very good for symptomatic patients. So there will be definitely a room for different positions in this market. When we had PPIs launched, we were 6 different PPIs in the market and all of them became blockbusters. And I also need to remind you there, the price level of PPIs were approximately in U.S. [ 125% ] compared to what you have on the prices you have currently. And despite that, they became blockbusters. So we need to remember, number of patients are so many. I mean, we're talking about this most severe patients. We only in U.S. have 4 million patients. And if you add then 40% of patients still suffering from pain in U.S., we're talking about 40% of 60 -- more than 60 million. So it's so many patients suffering from this in the U.S. So the number of patients is enough for more than one player. And we expect that in U.S., we will be a handful of different PCABs in the end, and this is according directly to our plan. And there is another question also. How much of the upfront near-term milestone from Zentiva deal is yet to be realized, received? Well, we have received the upfront. That is received. We're still waiting for the near-term milestones, which will be part of the readout of the Phase III trial, the first HEEALING-1 study. So when we have the report there, then that intention is to come as a near-term milestone. Okay. I think that's it. I think that was the question we have. If no one else want to add anything more. Okay. Then I think I stop there, and thank you for your interest in Cinclus Pharma, and let's stay in touch. Have a nice day.

Thank you, and bye.

Bye.