Gubra A/S (GUBRA) Earnings Call Transcript & Summary

So good morning, and welcome to this quarterly update calls from Gubra. I'm Henrik Blou, I'm the CEO of Gubra. So are we running. Seems like we are. So with me today, I have our CSO, Louise S. Dalboge, and Kristian Borbos. Gubra has a hybrid business model. We are experts in preclinical research within metabolic and fibrotic diseases. And over the years, we've built a core research engine, we have all the laboratories, all the test facilities and all the technologies needed to conduct these preclinical research studies. And we use this core engine to deliver or to progress our own pipeline programs, that's the Discovery & Partnership business and also to deliver services to external clients, could be small biotechs and large pharma companies. We have a whole range of customers. And we are actually serving 16 out of top 20 pharma companies in the world. And also, as mentioned, a range of smaller pharma companies and biotech companies as well. So today, we are approximately 250 colleagues here at Gubra, all gathered at 1 site in North of Copenhagen in Denmark. However, we also have a sales office in Boston as we have more than half of our revenue in the services business from customers located in the United States. And recent highlights, we continue to show strong progress across Gubra. So our Amylin program has progressed nicely in this quarter. We have completed the SAD part of the program, the 2 optional cohorts were dosed in July and August, follow-up visits continued until early October and we are now expecting to release data from this part of the Phase I trial later this November. Also, we were able to start up the multiple ascending dose part of the study and the dosing started in September, so a couple of months back. Our high-quality weight loss program, the UCN2 program, we've also progressed and we are planning for entering this program into the clinic late next year or early 2026. And yes, that program is also progressing as planned. We have 4 collaborations with Boehringer Ingelheim, but we have also seen some development this quarter here. So in July, we could announce that collaboration number two, a new-in-class triple agonist for anti-obesity treatment was started in a Phase I clinical trial. And a few days back, we also announced to the market that Boehringer has told us that they would discontinue the clinical development of this collaboration, #1, the NPY2R agonist, no further data available at this point in time. However, we will communicate as soon as the future of this program. In this quarter, we continued to see strong growth in our service business and looking at the first 9 months of the year, we have seen growing by 31% compared to the same period last year. So all in all, very satisfactory first -- third quarter of the year. To dive a little bit more into Gubra's core business. We've been working with metabolic and fibrotic diseases since 2008 and it started out with a key focus on diabetes and obesity. And since then, we've gradually moved into other disease areas, all in one way shape or form related to the original onset of our scientific focus. So we are quite active in the mass space, quite actively in the kidney space, we have also models in the lung space with regards to CVD, intestine, the brain and so on. So a quite sophisticated setup of models where we are delivering end-to-end services, either to external clients or to the internal pipeline programs. And that means because we control all the paths of these studies that we are controlling quality, we're controlling speed and that is of high value, both to ourselves when we are maturing our progress, but also to our clients throughout the world.

Thank you, Henrik. And as Henrik said, we had a great start to the year. And the first 9 months were up in revenue for the CRO business by a little bit more than 30%. The main drivers has been the same as we've seen in the previous quarters, obesity, but we also see a good take-up within our kidney services. So all in all, a great 2024. And of course, the obesity space now the momentum is substantial, and Gubra has been in this space since the company was formed in 2008, and we're really benefiting from new compounds being tested in our models. And with the strong revenue, we also delivered very solid earnings and EBIT was up by 55% compared to the same period last year for the first 9 months, and we also have an EBIT margin in the area of plus 30%, so 33% for the first 9 months and 35% for the quarter in isolation. So all in all, this sound and very good development we've seen in the first 2 quarters continued in the third quarter. And all in all, a better satisfactory performance throughout 2024.

Thank you, Kristian. Now we are looking into the pipeline of Gubra or our pipeline programs based on peptides and we have the streaMLine peptide platform as some of the foundation underneath our pipeline. We build this platform. It's AI-assisted discovery of peptides. And we can use this platform to deliver clinical candidates at a much higher speed than we were previously capable of doing prior to development of this platform. So it really comes down to using AI to guide our peptide development, to guide the design of the peptides to do a systematical -- so systematical variation all throughout the back backbone of the peptide and thereby impel being able to optimize for several parameters such as potency, selectivity and physical stability and clinical stability and so on. So using this platform, we have developed these 11 pipeline programs, the top 4 here are in collaboration with Boehringer Ingelheim. And you may recognize the small asterisks for the TOP program, the year that this has been discontinued by Boehringer. And as mentioned, we are awaiting further information before we can reveal more info about this program going forward. We also have a collaboration program with Hemab, a biotech company that's within bleeding disorders. And then we have a range of unpartnered programs 6 of these are on this pipeline, 4 of them are within obesity. The most progressed one is our group -- Amylin program, and we will be able to release SAD data later this month, we're eagerly awaiting that. We also see the UCN2 high-quality weight loss program and, as mentioned, a range of other programs in the pipeline. But now let's dive into the -- some of these programs and Louise, please go ahead here.

Yes, definitely. So now to GUBamy, our Amylin program, where we're very pleased with the recent development. But let me just start to give a short introduction to amylin and explain why we're really excited about this asset and see the key competitive this year. So amylin is an endogenous peptide hormone and is released from the pancreatic beta-cells. And it's well expected that amylin biology plays an important role in [indiscernible] regulation. Amylin agonist has also been shown to facilitate a clinically relevant weight loss. Importantly, amylin is not an incretin. It activates a different set of receptors and mediate effect by complementary and distinct mechanisms of action compared to GLP-1. This means that there is a substantial potential of combining amylin and GLP-1-based treatment. At Gubra, we have developed a long-acting amylin analogue GUBamy. It has been designed to be compatible with once weekly subcutaneous dosing in humans. GUBamy has a similar receptor potency on the amylin and calcitonin receptor as a native amylin. Importantly, GUBamy has been designed to chemically and statically stable at neutral pH. This allows co-formulating with other anti-obesity compounds. So the weight lowering potential of amylin is also reflected with GUBamy. This is clearly shown here in a study conducted in diet-induced obese rats. Here, you can see that amylin by itself induces a very nice body weight reduction. You can also appreciate once we combine it with an incretin-based therapy, we see a very nice additive weight loss. Again highlighting the competitive edge here of the amylin. So GUBamy is currently being tested in the clinical Phase I study. The primary objective here is safety and tolerability. As also reported previously, the key highlights from the SAD study here we had from the first cohort seeing a favorable safety profile. This allowed us to extend to also include the 2 higher dose optimal dosing cohort. We completed the last cohort, Cohort 6 in August. This means that we are very much looking forward to present top line results this month. Additionally, we are simultaneously started up the multiple ascending dose trial. This study is being conducted at the same research site in the Nottingham as the SAD 12. We expect to have completed enrollment of the 52 participants by the end of next year. So moving on to another very exciting program in our pipeline, and this program builds a new mechanism where we're using long-acting UCN2 analogue to induce a muscle sparing weight loss. And this is interesting because if we just take a step back, I want to explain why these assets will be competitive in the highly competitive obesity market that we have today. Because although it is well established that with current weight loss strategies, patients loses substantial weight. It's also established the 20% to 40% of the waste loss is lean mass. And lean mass, it's muscles and it's bones. Therefore, we think it's time now to focus on the quality of the weight loss rather than just the quantity. But this means we want to maximize the loss of fat mass while for setting or even increasing lean mass. And then we also want to see a potential cardiorenal upside. In preclinical animal models, we have shown that we can obtain all this with a long-acting UCN2 analogue, which holds potential to become the next generation of anti-obesity pharmacotherapy. So we have designed a very nice molecule here. It has a selective receptive profile, and it has excellent physical and chemical properties. Additionally, allometric scaling using data for mouse, rat and minipigs supports a once-weekly dosing profile in humans. So if we look at the data here conducted in a study again in diet-induced obese rats, you can see that by itself UCN2 doesn't do much on body weight. However, when we start to look at the body composition, that's when it gets interesting. You can see that UCN2 substantially increases lean mass and decreases that fat mass. Basically, you can say that we're converting fat into muscles. You can also appreciate that other weight lowering strategies such as semaglutide decreased both fat and lean mass. So when it starts to get really exciting is when we combine UCN2 with compounds such as semaglutide. You can see that we can completely eliminate the lean mass loss induced by semaglutide and other obesity agents and we can drive the fat mass loss even further. So we are planning for a clinical testing with a UCN2 analogue. We have initiated API production and plan to start the nonclinical tox program later this year. This allow us to plan for a Phase I study to be initiated late '25 early '26. So moving on to update on the clinical obesity collaboration projects with Boehringer Ingelheim. So as previously mentioned, we have developed a first-in-class triple agonist peptide for treatment of obesity. And Boehringer is responsible for the further development. This project with a significant milestone in July with the initiation of the [indiscernible] clinical study. And the study is designed as a typical Phase I study starting with a single ascending dose followed by multiple ascending dose part. Study completion is expected in the second half of 2025. Additionally, Boehringer Ingelheim has decided to discontinue the development of the long-acting Y2 receptor agonist program. So we do not have additional information right now. But as Henrik also alluded on, we will communicate once we know more.

Thank you, Louise. And just a few words on the financials for the D&P segment. And we see an increased revenue in the first half and also the Q3 in isolation that probably due to milestone payments from a collaboration partner. We'll see increased cost within this business segment, and that's very natural as we are moving a number of projects forward in parallel, not least the amylin where we also run the MAD study now. Let me just round off with the financial outlook for '24. We have narrowed the outlook for the CRO business segment and move it upwards. So now we expect growth of the -- revenue growth of the CRO business of 26% to 28%. Previously, we expected 23% to 28%. And similarly, for EBIT margin, we have also narrowed upwards our expectations now being 30% to 32% for EBIT margin compared to 29% to 32%. So a slight improvement there. All other outlook parameters are being kept unchanged. With that, we conclude our presentation, and now we open up for questions. Operator, please?

[Operator Instructions] Your first question comes from Martin Parkhoi from SEB. Our next question is Morten Larsen from ABG.

Morten here from ABG. A couple of questions from my side. First of all, you provide us with FTE count and that continues to move up. Can you talk about how we should think about that if your ability to continue to drive that FTE into 2025 as a support for the organic revenue growth in the CRO business and how we should think about that. I wouldn't call it disconnect, but between the midterm guidance of 10% annual growth versus the growth -- super growth we're seeing now. That's the first. And the second on the Discovery & Partnership. You continue to put a lot of money into this, but we are struggling a little bit with seeing sort of the inflow of many partnerships being signed. And I was just wondering how you will phrase sort of your continued support for this business to the same extent that you put the money into it right now. Let's start with those 2.

Thank you, Morten, and I can start up here. So with regards to partnerships, we maintain our guidance for the year, the outlook 1 to 2 new partnerships for this year. So you're right. So far, we have not signed a new partnership this year. However, as mentioned, we may thereafter. So this we are investing in our pipeline. We believe that we are to build a massive value here and driving programs into the clinic and for what in the clinic is, of course, costly. So that is all part of the plan. And eventually, when we partner these programs, we will be seeing the fruits of these investments that I'm quite certain of. With regards to the manning, we have been manning up this year quite a bit. And of course, it has to do with the massive growth that we've seen in activities. That would be both across the service business as well as in the internal pipeline programs. So it's quite natural. I think we received some very good influx of talent and experience which is needed for what we've been through this year. So going forward, we will be, of course, eventually presenting the outlook for next year. And in that point in time, we will also do our estimates, of course, for when we do the budget for the manning development next year.

Your next question comes from Martin Parkhoi from SEB.

Martin Parkhoi from SEB, I will try again. It was a little bit of a long, so I forgot to unmute. Just back on the -- a couple of questions on the partner income that you have booked, I guess, milestone income that you booked in Q3, I guess, related to the Phase I initiation of triple agonist. This milestone you get for this for this change, is that solely booked in Q3? Or could you also see some additional from that split to Q4? And then just to come back on Morten's question. So as I hear that we will get a partnership more with it before the end of this year at least? And then a third question is just on the on the very soon upcoming data from the single ascending dose study. Can you talk a little bit about how much you will reveal in these headline data? Will we get short-term efficacy data? And what kind of headline numbers should we expect?

So let's start up, on the milestone question, Kristian, please head up.

Yes. So that is the milestone for this particular event the assets is being moved to clinical Phase I. So in isolation, we will not expect for that particular event to generate additional milestones in Q4, but we, of course, have the potential for additional milestones as the program moves along.

Then you had a question with regards to another partnership this year. And yes, we maintain our outlook for the year 1 to 2 new partnerships. And as we have not signed new partnerships this year, that, of course, means that we are still anticipating to sign 1 to 2 partners in the remainder of the year. So in the next couple of months. And then you have questions with regards to the SAD data and Louise, will you comment on that?

Yes, definitely. So as I also mentioned, we are looking forward to present the SAD data this month. Again, the key focus on the study is safety and tolerability. But of course, we will also be showing some target engagement biomarkers.

So Martin, to add Kristian, it's -- there will, of course, be information about adverse events and also the key elements describing early time engagement. So weight data, as you are asking to is part of that, yes.

Your next question comes from [ Latisha Leary ] from [ Kampton ]. [Operator Instructions] Your next question comes from Martin Parkhoi from SEB.

Yes. I will continue then. I thought that I should leave the floor to Morten. We need follow up questions, but he became shy apparently. Just more -- some more questions on the amylin side. What do you actually speak because we have a lot of comments out there on potential long-term weight loss on for the amylin or DACRA or what we should call it in immunotherapy, what kind of weight loss do you actually think this kind of compound or these kind of -- can generate in a long-term Phase III trials, just ballpark things. And then another question is that if you look at clinical data from other companies, do you believe that we will see a plateau effect of the amylin earlier than we see on the GLP-1s.

Yes. So regarding the first question of long-term effects of the amylin, I would say there's a lot of clinical data emerging out there and it's all validating amylin as a very nice target inducing clinically relevant weight loss. I think what it will come down to in the end, that will be for the larger clinical trials to actually explore.

And then yes, I guess you covered both questions here. Martin, do you have a follow-up coming on?

Do have follow, I could come with 1 more follow-up question. Then just on the MAD study, I know you have put down the timeline, but are there anything you can do to progress it even faster? Although it will cost you more.

So it's not a matter of cost. We are pressing it as possible. And part of that exercise is -- so on a continuous basis, analyze is there anything that we can do in order to speed up the process. So it's an ongoing exercise. And if we see an opportunity for doing that, we will communicate it from now -- we started in September, and we will continue dosing until this year.

Your next question comes from Morten Larsen from ABG.

Thank you for taking my follow-up, and happy to hear Martin took so many of those, but a couple of them. First, on M&A. We still only have the minipig M&A. I was wondering if you can talk about your continued appetite and what kind of timelines we may look for the next set of M&A? That's the first one. The second 1, I believe I heard you say you're now working with 16 of the top 20 of big pharmas. Is that another one added here during the quarter. And third, also back to Martin's question on the partnering. We did see some early indications of the size of the partnership deal that Nordics signed with Lilly on DACRA. Could you talk about how you would see those kind of deal terms versus how you would expect the deal to be structured for your amylin molecule once we get there?

All right. Thank you. So starting from one end with regards to M&A. We likely we did buy the MiniGut, the minipig facility testing and that we are using. We are specifically for the internal programs at this point in time. However, also we're delivering it as a service. So where we continue to investigate and look into the M&A opportunities where a focused approach is centered around technology, supporting our activities could be in the peptide space, could be within some other areas where we are active, but a very focused approach and then we continue to evaluate various opportunities. We are in no hurry and we will strike a deal there once we see something we think is a strategic fit. You are right in regards to the second point, we have now added more and more trading partner on the client list. So yes, we are now servicing 16 out of top 20 pharma companies in the world, even right now or have been in the past. And then you had a third question and that -- oh, yes, that was with regards to structure for potential collaboration -- sorry, on the GUBamy and we have not disclosed any details here with regards to what kind of deal that we are pursuing. We are continuously discussing with various parties. We have an opportunistic approach. And when we think about terms on the table, we will strike a collaboration deal for that program.

Follow-up to that, Henrik. Are you saying you are discussing deal terms for a potential partner? Or did I mishear you?

At all times, we are discussing our various pipeline programs with various potential partners. And we also, for the GUBamy program continue to keep the parties updated. So I'm not sort of disclosing any news here. I'm just saying that we have all times having an opportunistic approach ensuring that potential partners are informed and eventually when the right deal terms are on the table, we will strike a deal.

Maybe just a follow-up on that. When would you expect the partner to be more interested in partnering? Do we need to await the MAD trial first? Is that what you hear from your partners -- potential partners?

So a deal could be based on SAD data, it could be based at MAD data, it could be when a [indiscernible] Phase 2. So our strategy is that we go and Gubra goes no further than Phase IIa. And -- but it could be very well that we are striking a deal prior to that. So I think that's in line with what we've communicated previously. So I'll stick to that.

Your next question comes from [ Latisha Leary ] from [ Kampton ]

Can you hear me?

S Yes. We can.

Perfect. Sorry for a drop-off last time. Sorry if I missed it, but could you provide more color on the NPY BI discontinuation? And also, if you could provide your view on the future of the asset going forward? Will you develop this in-house to generate more data and pursue a new partnership? Or what is the future of the assets.

Yes. So at this point in time, we are gathering better our information. And eventually, we will communicate what the clients are going for. But for now, we can only communicate that Boehringer Ingelheim has decided to not pursue it further into the clinic. And then later on, we will have more information more clarity and then we will on communicate.

That's all that we have for our conference questions. I'd now like to hand back over to the Gubra team for further remarks.

Okay. Thank you very much for the questions, and also thanks for participating. And we hopefully speak again soon, not least when we have the next quarter results. Thank you very much, and have a good day.

Thank you for attending today's call. You may now disconnect. Have a wonderful day.