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

Thank you for standing by. My name is Gail, and I will be your operator for today. At this time, I would like to welcome each and every one of you to the Gubra First Quarter 2025 Earnings Release. [Operator Instructions] It is now my pleasure to turn today's call over to Gubra to start the presentation. Please go ahead.

Thank you very much, operator. It's our pleasure today to present first quarter results for you. Starting out, Gubra is a hybrid business model company. We are experts in preclinical research into metabolic disease and neighboring scientific areas. We have built a core research accelerator, meaning we have all the labs and testing facilities in-house in order to progress preclinical programs. And this core research accelerator, we use to provide services to external clients as well as to mature our internal research programs. So that is the CRO business, the external clients and the pipeline business, the D&P business for the internal programs. Today, we are roughly 270 colleagues. And in the service part of Gubra, we're working with a long list of various clients, 16 out of top 20 pharma companies in the world either have been clients of Gubra. So diving into the update from the recent quarter. The biggest piece of news was, of course, our landmark agreement with AbbVie on the GUBamy Amylin program. According to the terms of the agreement, we are granting AbbVie a global right to develop and commercialize GUBamy for various treatments, but of course, especially with a focus on obesity treatment. For the economics of the deal, they are quite significant and they are giving substantial economic freedom to Gubra. We have received USD 350 million in the upfront payment, and there is a milestone package of $1.875 billion as part of the deal as well as tiered royalties on net sales. Also in early April, we presented interim data from the ongoing multiple ascending dose trial. And there, we could present the top line data from the first 2 cohorts. They confirmed what we did see in the single ascending dose part of the trial. Generally, GUBamy was very safe. It was well tolerated. We saw only expected mainly GI-related adverse events, and they were generally mild. Also, we did see a very interesting weight loss when we treated with GUBamy for 6 weeks. And the weight gain in the placebo group was approximately 2%, whereas the weight loss in the 2-milligram treatment group was approximately minus 7.8%. So almost 10% difference between placebo and active. Also, we have new data in the UCN2 program. That's our next in-line obesity treatment. And the data set that we now have is confirming the previous findings that using UCN2, you can actually alter the weight loss that you get with current weight management treatments so that it is a loss of pure fat mass and no longer a loss of lean body mass. Furthermore, we saw in this data set that if you have been on one of the current treatments and lost some lean body mass, we can actually restore the lean body mass that was lost. So a super exciting data set, and we will also be presenting some more details from that today. Also today, in the quarterly update, we give numbers for the service business, the CRO business. We saw a revenue in the CRO business of DKK 51 million, which is slightly below the revenue that we saw in the same period last year. We generally experienced solid interest from our clients. So especially in Europe, that is the case. Going on to -- the pipeline, just a brief look at the pipeline. Currently, we have an impressive 7 partnerships ongoing with the last addition of the AbbVie partnership. Also, we still have 5 unpartnered programs, as you can see, UCN2 being the most advanced of these. And also, we are preparing this for first-in-man study, which we expect to start late -- sorry, early next year. And just a slide here on the AbbVie licensing deal. As mentioned, according to the terms of the agreement, we grant a global license to AbbVie for the further development and commercialization of the group amylin program. In the deal terms, we received USD 350 million upfront, we have received that. And also, there is a milestone package, which can amount to USD 1.875 billion. On top of that, we will be receiving tiered royalties on net sales. So with this, I will hand over the word to Gubra CSO, Louise Dalboge.

Thank you, Henrik. And now let's dive into some of our programs. Starting with the long-acting amylin analog, formerly known as GUBamy. And GUBamy is in development for weight management indication and could be positioned as both an alternative on addition to incretin-based -- of key differentiating features. GUBamy has a balanced receptor profile on the amylin and calcitonin receptors just like native amylin. It has an exceptionally long half-life of 11 days. And GUBamy has been designed to be chemically and physically stable at neutral pH. This allows co-formulation with other anti-obesity agents. So GUBamy is currently being tested in a Phase I multiple ascending dose study. The trial design is shown on this slide. The study is a typically randomized, double-blinded, placebo-controlled study enrolling both males and females. The study has 2 parts, Part A, consisting of 2 cohorts receiving once weekly treatment for 6 weeks. This part has now been completed. Then there's Part B, of testing higher doses during a longer treatment period. This part is ongoing and progressing as planned. From Part A, we announced strong interim clinical results here in April. The data confirmed the general picture from the SAD study with a high degree of consistency within cohorts. The study showed that GUBamy was well tolerated with adverse events being predominantly GI-related, mild and consistent with the SAD study. GUBamy demonstrated a remarkable dose-dependent weight loss. Mean weight loss in the 2-milligram cohort was 7.8% compared to weight gain in the placebo arm of 2% on day 43. The study also confirmed the favorable half-life of 11 days. So we are very excited about these positive results, which further supports the development of GUBamy for weight management indication and position GUBamy as best-in-class. So besides amylin, we're equally excited about a next-in-line internal obesity program. Let's focus on high-quality weight loss. And it built on a new mechanism using a long-acting UCN2 analog designed to promote fat mass loss while preserving lean muscle mass. And this focus is critical because current weight loss strategies, lean mass typically accounts for 20% to 40% of the weight loss. We believe that time has come now to focus on the quality of the weight loss and not just the quantity as a key differentiating factor for the next generation of obesity treatment. So here, we're talking about maximizing the loss of fat mass while preserving or even increasing lean mass. In preclinical studies, our UCN2 analog has shown the ability to deliver this improved weight loss profile, along with cardiorenal benefits. So we have designed a very nice molecule, a selective UCN2 analog excellent formulation properties and allometric scaling from animals supports a once-weekly dosing profile in humans. In earlier studies in obese rats, we have shown that UCN2 combined with other weight-lowering agents enhances fat mass loss while fully preventing the mass loss typically induced by these agents. We've now extended these findings using much older obese rats treated over a substantially longer period to better mimic an older obese population. The study aims to: one, confirm the potential of UCN2 to increase lean mass and reduce fat mass in older animals; and two, to assess if we can reverse lean mass loss induced by prior semaglutide treatment. And the results are striking. So UCN2 alone, as shown in green, modestly affects body weight, but significantly improves body composition. Semaglutide shown in dark purple, reduces both fat and lean mass. When combined with semaglutide treatment, as shown in blue, UCN2 fully prevents the lean mass loss. It even increases lean mass and it drives fat mass even further. And in semaglutide pretreated rats, adding UCN2 from week 3 as shown in pink, completely restored the lost lean mass and potentiated fat mass reduction. So this highlights UCN2's potential as both a protective and a restorative agent in combination treatment. So we're currently advancing UCN2 for the clinic. Initially, we discussed a 12-week study period, but we now are planning to extend it to 16 weeks. And the primary objective is, of course, as always, safety and [indiscernible] and we start -- expect to initiate the Phase I study early '26.

Thank you, Louise. And just a few words on the financials, starting with the Discovery and Partnership business. So the revenue was up slightly, but please bear in mind that the upfront payment that follows the closure of -- the successful closure of the transaction, which happened here in Q2. So that does not feature in the Q1 accounts. And that's -- and again, a very substantial amount with $350 million equivalent to DKK 2.4 billion, right? And you can also see that total costs are going up. That is as expected and it's that we're driving now 2 programs in parallel, both Amylin and the clinical preparations for UCN2 and the nonclinical study. So that is fully as expected. Turning to the CRO business, we saw a slight decline in revenue. And sometimes there are a little bit small differences between quarters. We still see a sound order situation, especially in Europe. And when you have a large fixed cost base as we have with salaries, that's the main cost component in the CRO business, then, of course, we also saw a decline in EBIT. Turning to the outlook for the full year, we maintain that. And again, to reiterate for the CRO business, we see a sound order situation and especially in Europe. And also for the D&P business where we have the cost guidance, that is unchanged. With that, I'll leave the word over to the operator, and then we can take questions.

Okay, so your first question comes from the line of [Suzanne van Voorthuizen] with Kempen.

This is Chiara Montironi on behalf of Suzanne from Kempen. So given the successful closure of the partnership with AbbVie, we were curious to know how you intend to use the upfront cash and potential milestone in the future? And if I may ask a second question, if you could provide more color on the Q1 numbers for the CRO business, if you see any seasonality or anything like that?

Thank you very much for the questions. Starting out use of proceeds from the deal and allocation of capital. So we are, of course, in a very lucky situation with significant freedom for the company. And we are currently evaluating carefully all these possibilities. And we are still investing resources, analyzing M&A opportunities. We are also using resources looking into various areas where we can expand our pipeline or our service offerings, our disease area focus and generally assessing the various opportunities for us to develop the company. So there's no specific new part to our communication at this point in time, we are still evaluating these new opportunities together with dose group. When it comes to the CRO revenue, we, as mentioned, still experienced solid demand, especially from Europe. We see a bit of longer decision times from U.S.-based companies. If that is just random or if it's a signal, it's difficult to say this soon, I would say. We are not expecting this to influence the full year result of the service business, and we maintain our outlook for the year where we are looking into a 10% to 20% growth.

[Operator Instructions] It seems like we don't have any questions now. And I would like to turn the call over to Gubra for the closing remarks. Please go ahead.

Thank you very much for listening in on this Q1 update from Gubra. We are looking forward to reconnecting again once we have the next quarterly update. Thank you.

Thank you, everyone. That concludes today's call. You may now all disconnect. Have a nice day ahead.