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

Welcome to the conference call. [Operator Instructions]. Now I will hand the conference over to the speakers. Please go ahead.

Good morning, everyone, and welcome to Gubra's conference call covering the Third Quarter of 2026. My name is Adam Lange, Head of Investor Relations at Gubra. And joining me today are members of Gubra's leadership team, who will walk you through the key developments during the quarter and discuss our financial performance. We'll do a presentation expected to last approximately 20 to 25 minutes, and we'll then afterwards open the call for questions. Now on Slide 2, I just need to remind everyone that today, during the presentation and the subsequent Q&A session, we may make forward-looking statements that are subject to risks and uncertainties. And with that, I will hand over the call to our CEO, Markus Rohrwild, for opening remarks.

Good morning. Welcome from my side. Q3 has been very strong for Gubra. We have significant advancements in our R&D pipeline, and we have also seen strong CRO performance. On the biotech side, our 2 partner obesity programs advanced to Phase II, a great achievement for Gubra. And also, we are excited to see our GUB-UCN2, Urocortin-2 analog entering Phase I clinical development. Overall, the CRO has shown 6% growth year-on-year, and our EBIT margin has significantly improved to 25%, which is great. On top of that, we are actively evaluating multiple opportunities on the venture side to augment our innovation pipeline. You have probably participated in our recent R&D investor event. And I'd like to again summarize our ambition for 2030. As we are scaling our differentiated drug discovery and development platform by 2030, we would like to see 8 to 10 clinical assets in our pipeline as well as also bringing forward 1 to 2 drug development candidates from our internal drug discovery unit every year. Moreover, we will be expanding our therapeutic flagship areas from our stronghold in metabolic diseases and obesity towards functional decline as well as inflammation and immunology. In addition, the company will create value by launching 2 to 3 ventures as well as continuing operating a growing specialist preclinical CRO on the high profitability. And with this, I hand over to the biotech unit, Louise.

Yes. Thank you, Markus. So let's take a look at the biotech. And starting with the pipeline, what you see here is an overview of the Gubra R&D pipeline. And this growing pipeline is a direct result of the power and efficiency of a streamlined drug discovery platform. It covers both our internal proprietary, not yet partnered assets and assets that are being progressed through strong partners. So starting with the internal proprietary assets. Our most advanced asset is the long-acting UCN2 analog currently in Phase I for treatment of obesity. And at the same time, we continue to advance the next wave of future opportunities for Gubra. So turning to the partnered programs. This is assets that are being progressed through strong partners with Gubra collecting milestones and royalties as they progress. We now have 2 assets within obesity in Phase II clinical development. The long-acting amylin analog with AbbVie and the triple agonist with Boehringer Ingelheim. Both companies have initiated Phase II this quarter. And at the same time, we continue to advance the next wave of future opportunities for Gubra with the leading biotech companies. This is assets that are being progressed by Hemab, Amylyx and Camurus, and they really illustrate the platforms for producibility and track record of consistently generating differentiated assets across a broad range of therapeutic areas. But now let's take a look at some of these assets, starting with the triple agonist. This asset is a long-acting first-in-class assets targeting the GLP-1, the GLP and the Y2 receptors to engage in complementary mode of action involved in body weight regulation. The program was discovered in collaboration with Boehringer Ingelheim, and they are now sole responsible for advancing it through clinical development. And after having seen encouraging Phase I data showing a favorable safety profile and an encouraging weight loss profile, Boehringer Ingelheim has now initiated the Phase II study. The study enrolled approximately 350 participants at 6 active dose groups and primary endpoint is body weight reduction after 42 weeks of treatment. We really see this as further validation of the asset's potential and of Gubra's discovery capabilities. So next, let me turn to Amylin. And Amylin offers an attractive treatment alternative compared to current standard of care. And the class of amylin has been shown to deliver clinically relevant weight loss with a favorable tolerability profile. And that is exactly why we find this biology so compelling in context of ABBV-295. ABBV-295 is a differentiated long-acting amylin analog discovered at Gubra out-licensed to AbbVie. And 295 has consistently demonstrating competitive clinical data throughout a comprehensive Phase I program. Early signs were seen already in the SAD study and further substantiated in the 6-week MAD study, where 6 weeks treatment with 295 delivered almost 8% reduction in body weight. In the 12/13-week MAD study, 295 delivered almost 10% reduction. And across all studies, 295 were well tolerated. AEs were predominantly mild GI-related and transient. There's currently another Phase Ib study ongoing with 295, and the study will enroll a higher proportion of female participants and a broader BMI rate and this to get data in a more representative patient population. Top line data here is expected in the first half of '27. But now let's take a look at some of the data. So this graph shows a detailed overview of the data from the 12/13-week MAD Phase I study presented recently by AbbVie at EASD. What you see is body weight reduction versus time, and you can see that 295 delivers a dose-dependent competitive body weight reduction of almost 10%. I also want you to notice the yellow and the green dose cohorts here. Here, 295 are being injected every second week or even monthly. And here, we also see a very competitive body weight. And remember that this is in a patient population being predominantly male with a lower BMI range. So collectively, what we see is that 295 delivers a competitive body weight reduction. It has a favorable safety and tolerability profile and pharmacokinetics support even every second weekly dosing or even monthly dosing. And based on these encouraging results, AbbVie has now initiated the Phase II trial with 295. This is a comprehensive study, enrolling approximately 360 participants with 6 active dose groups and primary endpoint is body weight reduction after 32 weeks of treatment. And this is to support timely dose selection for a potential Phase III study, while treatment will continue through week 52. So beyond obesity, we also have 3 other highly interesting programs with strong partners. The Hemab collaboration centers around the long-acting plasmin inhibitor discovered in collaboration with Hemab. This is the treatment of bleeding disorders, and Hemab has now initiated the Phase I study with this asset. In the Amylyx collaboration, we have discovered a long-acting GLP-1 receptor antagonist for treatment of post-bariatric hypoglycemia, and Amylyx is currently running the IND-enabling activities here. And finally, we have the Camurus collaboration. Here, a PTH analog is being formulated in Camurus FluidCrystal technology to develop long-acting treatments for patients with hypoparathyroidism. So collectively, these programs demonstrate the versatility of a platform to generate differentiated assets across multiple disease areas. And with that, I'm happy to turn over to Thomas, our CDMO, who will provide further details on our UCN2 program.

Thank you, Louise. I'm happy to provide more information about the UCN2 program. Obesity treatment is entering a new era. Incretin Therapeutics demonstrated how much weight is really possible with pharmacological therapy. However this is driven by loss of fat mass, which is desired, but also by loss of lean mass which is undesired. The new opportunity is to really improve on what patients lose, what they maintain and how they function. GUB-UCN2 has the opportunity to address exactly that gap through improvement of body composition, reduction of body mass, reduction of fat mass and maintenance or actually increase of lean mass. So let's have a look at the biology of UCN2. So UCN2 is an endogenous peptide that signals through a receptor called CRHR2, and the downstream biology involves target tissues that are relevant for the therapeutic strategy, in particular, the adipose tissue and the muscle tissue. In the adipose tissue, UCN2 reduces fat mass and results in a reduction in serum triglycerides. In the muscle, UCN2 drives antibiotic processes inhibit muscle catabolism and improves oxidative metabolism. And that together is the biological basis for thinking about GUB-UCN2 in the context of obesity treatment and improvement of body composition. If validated clinically, this biology also opens up to explore other indications related to loss of muscle mass and muscle function, which includes muscle wasting conditions such as sarcopenia, but also functional aging where we know that loss of muscle mass and function is relevant. The biology also extends beyond adipose tissue and skeletal muscle into the heart and into the kidneys. In the heart, UCN2 improves cardiac output and cardiac function. In the kidney, UCN2 improves renal function, for example, diuresis and natriuresis. And these are biological processes that open up indication expansion opportunities into the cardiorenal space as well. On the right-hand side of the slide, you see key features of GUB-UCN2, which is our drug product candidate. GUB-UCN2 is a 38 amino acid peptide. It's highly selective for CRHR2 receptor and has excellent physical and chemical properties. It is designed and formulated for once-weekly subcutaneous administration. So we have explored GUB-UCN2 in a number of pharmacological studies, of which we have really quite a few discussed at our recent investor R&D event last month. But I would like to explain a few key highlights from these experiments. On this slide, you do see the experimental results from a study in obese rats were tested GUB-UCN2 as a monotherapy and in combination with tirzepatide. And as you can appreciate, monotherapy with GUB-UCN2, which is represented by the green bars, results in significant loss in fat mass as shown in the middle panel and a significant increase in lean mass, which is shown on the right-hand side. This effect was overall weight neutral, but it tells you that even if you don't have an effect on body mass, we have a substantial improvement in body composition. Tirzepatide alone results in the desired and expected reduction in body weight. These are the turquoise bars, and it is driven by a loss in fat mass predominantly. We do see, however, no effect or a slight trend towards reduction of lean mass, which is really undesired. If we now combine both treatments, as shown by the dark blue bars, we do see that we can maintain the body weight loss that has been achieved with tirzepatide alone, but we have a significant improvement in body composition through further reduction of fat mass and an increase in lean mass. We have tested the concept in combination with other incretin-based therapies such as semaglutide and also with Amylin analogs and the picture is exactly the same, which suggests that GUB-UCN2 might be a useful addition to available obesity treatments. We have also asked the question whether the muscle mass is actually an important part of the improvement in lean mass. And to that end, we have demonstrated that the muscle wet weights increase substantially in this particular model. And we have demonstrated that muscle volume increases through measurement using Gubra's three-dimensional light sheet imaging technology. And this really tells us that, yes, muscle mass is really a part of the improvement of lean mass that we are observing. So overall, the data that we have generated across preclinical models demonstrate that GUB-UCN2 has the potential to be used as a monotherapy as a combination partner with other obesity treatments and potentially as a follow-on treatment once patients have achieved the desired weight loss with available obesity treatments. So how do we now test that in the clinic? We have initiated a comprehensive Phase I/IIa trial in the clinic with the Phase I SAD component currently ongoing. This is a trial that assesses the safety, tolerability and PK, but also goes beyond that and will deliver early efficacy signals that are relevant to determine the further development strategy for GUB-UCN2. The trial aims at the enrollment of approximately 188 participants. These will be healthy participants in the SAD portion of the trial and participants with obesity in the MAD and 16-week multiple dose portion of the trial. These participants will have comorbidities or only obesity. We will test GUB-UCN2 as monotherapy and in combination with incretin-based therapy to test how GUB-UCN2 performs in different therapeutic setting. And as I indicated earlier, the treatment regimen will be based on a once-weekly subcutaneous administration. What is very important is that we will be looking at body composition and functional endpoints. Body composition will be evaluated based on MRI whole body scanning and functional endpoints will include a short physical performance battery but also strength of time muscles. And this is important because it will help us to understand what part of the biology really translates from preclinical species into the clinic and will help us to inform the further expansion beyond obesity into age-related functional decline and potentially also cardiorenal indications. With that, I would like to hand over Trine our Head of CRO.

Thank you, Thomas. The CRO is Gubra's core value enabler and the vast synergies between our 3 business units. The CRO provides deep scientific and translational expertise, reproducible preclinical disease models and advanced technology platforms, and we deliver reliable, high-quality data and execution. And in this way, we enable our customers, internal and external customers to progress their drug discovery projects with speed and certainty. After a period of volatility and uncertainty in the market, the preclinical market is evolving in Gubra's direction again. Biotech funding has rebounded strongly in 2026 and more preclinical R&D has been outsourced, and we see that trend towards 2030 and beyond. And the scientific complexity in drug discovery projects really increases the value of the differentiated services that we deliver in the CRO. In Q3, the CRO has delivered a solid external revenue of 6% sequentially and year-on-year. Also services delivered to our internal customer, the biotech business has increased significantly in Q3 and growth in both customer segments has contributed positively to a substantial improvement in the EBIT margin that we've seen in Q3. Throughout 2026, seen growth in our services delivered to large pharma companies. Obesity is still our largest segment. However, revenue in services related to diseases is up more than 60% for the first 9 months of 2026 compared to 2025, and it's now our second largest segment. We have a healthy order intake in Q3 or Q4 and the commercial outlook for the remainder of the year is increasingly positive, and we are excited about that. I will now hand it over to Kristian, our CFO.

Thank you, Trine. And as everyone has seen, it's been a great quarter for Gubra in Q3. It is the second best quarter in Gubra's history. So we are, of course, very pleased with that. I will provide just a few words on the Q3 results on divisional level, and then I will take you through the outlook. Looking at the biotech business, again, Q3, strongly driven by the milestones from AbbVie entering Phase II and similarly, Boehringer Ingelheim also entering Phase II, bringing milestone to Gubra. And that, of course, also impacts that we have a very solid earnings in the biotech business in Q3. Of course, if we compare the full 9 months this year compared to last year where we had the upfront payment from AbbVie, it is, of course, down. But again, a very strong biotech year in '26 and coming on from also a very strong year in '25. The CRO business, as Trine said, improving in Q3, both compared to previous quarter and the same quarter last year. We also have solid sales to the biotech unit. So all in all, we see a strong performance and earnings going up quite significantly. And we are at an EBIT margin in Q3 of 25%, which is a sound and good level for Gubra. And I think it's important to understand this CRO business is, it has a lot of fixed costs. So whenever revenue goes up, it filters down to earnings quite immediately. So very good to see the momentum currently. And as Trine said, a sound order book. Look at the outlook, just taking the biotech first at the top, we've reduced cost slightly, and that is mainly due to timing, so -- but a very mild reduction. The external revenue we've narrowed the range as we're now approaching the full year, so we guide of 2% to 6% external revenue growth and an EBIT margin of 10% to 30%. So remember, Q3 had 25%, and we were just having a small profit in the first half of the year. Just looking at the anticipated news flow, and I think we covered most of the second half already, including very important messages from our biotech partners initiating Phase II and Phase I studies. And looking into the first half of next year, we have, of course, have UCN2 and also AbbVie where there's potential for release of 1b data and similar for Hemab, the initiation of the Phase I trial. So all in all, repeating myself again, a very strong quarter. And with that we open up for questions.

[Operator Instructions] The next question comes from Romy O'Connor from Kempen.

Congrats on strong quarter. . Sorry, I think I am getting some loop feedback, but I will continue. Yes, congrats on the quarter. So the first question on the CRO EBIT margin improvement versus Q2. I was wondering if you can help us understand how much of that improvement was driven by the higher external customer activity versus better utilization of internal biotech projects. And how sustainable do you see this going into Q4? Because you also mentioned a healthy order intake supporting future growth. And with the kidney-related studies being a strong driver of Q3 growth, is that coming from existing customers? Or is this new area you expect to demand to remain strong?

So Trine, with regards to this question, maybe you take a start.

Sorry for that. We had that technical issue here. But there were 2 questions from Romy. Thanks a lot for those questions. The first one related to the EBIT margin, we will go to CFO, Kristian. And then afterwards on the question related to kidney studies and whether that mainly comes from new or existing customers, we will have the Head of CRO, Trine provide some color on that. Go ahead, Kristian.

Yes. So the EBIT margin, so it is contribution from both growth in external studies and growth in internal studies. And again, as I mentioned, it is, to a large extent, the fixed cost business. So whenever we see both sound growth in external studies and internal studies, that has an impact on our EBIT margin. So how we look on the -- in Q4, I think you can do the math yourself. We quick guide for an EBIT margin. And so I think you can do the math yourself without disclosing it.

Yes, clear.

Yes. And thank you for the question on the customers. The customer segment within kidney diseases. We have seen growth over the last couple of years in this segment. It's a segment where we have a broad variety of different services servicing different customer segments, subsegments in this segment. And we do see the increase in services this year from both the new customers and existing customers ramping up. It's also both biotech companies and large pharma companies that are increasing their activity in the kidney area. However, it's relatively small numbers, but still it is a significant growth in this segment.

Great. Thanks a lot. So we are ready for the next set of questions.