Nxera Pharma Co., Ltd. (4565) Earnings Call Transcript & Summary

Good morning. My name is Chris Cargill, Chief Financial Officer at Sosei Group Corporation. Today, I will give you a brief overview of our technology, platform, core capabilities, business model, pipeline programs and an insight into our strategy. Please turn to Slide 3. Now firstly, a quick introduction for those that are new to our company. We are a world-leading team of drug hunters, and we're specifically focused on G protein-coupled receptors or GPCRs. We apply a proprietary technology called StaR, which stands for Stabilized Receptor, and leverage our structure-based drug design platform infrastructure to discover novel and best-in-class small molecule therapeutics. We are an Anglo-Japanese company, publicly listed in Japan. However, our main R&D campus is located in Cambridge, U.K., and this is where 80% of our R&D employees are based. Our ambition is to become one of Japan's global biotechnology and drug discovery champions. We are a science-led organization. Over 75% of our staff have a science background, and the vast majority hold PhDs. Our expertise in the GPR system is unrivaled. To date, our team has sold over 340 molecular structures from over 40 GPCRs and more than 70 stabilized proteins. We've been published in over 180 publications, including 7 prestigious Nature Papers. We've had over 500 global patents granted, and we've worked with over 20 major global pharma and biotech partners. Our pipeline today has over 40 active programs with an evolving and narrowing focus across 3 therapeutic areas, those being neurology, immunology and gastroenterology. Please turn to Slide 4. Now there are over 400 GPCR targets believed to be active in human disease, around 100 being drugged to date and the remaining 300 have not. And this is the significant untapped opportunity that we are focused on. Our technology can unlock the full potential of GPCRs, driving a new era of structure-based drug design with surprising insights into ligand-binding modes. Now our approach involves introducing point mutations into the GPCR, leading to increased thermostability. The receptor is entrapped in a relevant confirmation to match the drug product profile. And the stabilized receptor, as we call it, can be extracted from the membrane and purified with function retained. Now there are several GPCR type of drugs that truly change the lives of patients living with high unmet medical needs. And our plan is to target the significant untapped opportunity in the GPCR system to bring many more programs forward in the years to come. Please turn to Slide 5. Now to remain focused and deliver on our goals, we focus largely on 2 activities: drug discovery and early development. And our core capabilities can be seen here in the green on the left-hand side of this slide. 75% of our human capital is focused on these R&D activities, up to and including early proof of mechanism Phase Ib patient studies. Now this is our sweet spot. We move many and multiple discovery, preclinical and early clinical programs forward. And we are maintaining a pipeline that has the diversity of a big pharma pipeline whilst retaining the upside opportunity of a biotech pipeline. Now we seek to develop programs through certain value inflection points before executing high-value partnerships or seeding those programs into co-owned investment vehicles. And for Phase II programs and beyond, we generally elect to partner with a major pharma or biotech because we see them as much better equipped to manage the sizable costs, the risks and the binary outcomes that are associated with late-stage clinical development. Now please turn to Slide 6. Now in line with our preference for partnering, you'll see here that we've built a track record of working with world leaders on a variety of GPCR-targeted candidate programs. We have numerous active collaboration programs and co-investments and have been recognized most recently as the 8th largest licensor of drug programs globally, having executed numerous and sizable deals with 8 of the top 20 pharma companies globally over the past decade. Over the past 18 months in particular, we have added Neurocrine, AbbVie, GSK and Biohaven as new major license and development partners. We also partner with innovative early-stage investors to create asset-centric spin-off companies, including our recent venture Tempero Bio, which is a new co-owned company formed together with Joe Jimenez and Mark Fishman's Aditum Bio. Now all told, over the last 10 years, this activity has generated over $800 million of revenues in the form of upfronts, milestones, royalties and research funding, much of which has been reinvested into the platform and into bringing new programs forward that are designed to address unmet medical needs. However, it's over the next 10 years where we think the real value for our company will materialize with up to $7 billion of outstanding potential deal value to come as our pipeline progresses deeper into the clinic. Please turn to Slide 7. Now one of the things we have been most proud of is not only the technology in the platform but our productivity that we've been able to extract from it. Now we believe we are 2 to 3x more productive than the industry standard when it comes to the discovery of new drug candidates. We have generated 25 preclinical candidates in the last decade, 10 of which have entered human clinical trials over the past 7 years. Now our goal over the medium term is to deliver at least 4 new discovery programs to lead optimization stage every 2 years and, on average, 2 new preclinical candidates every year. And in fact, we will better that over the next 2 years with 6 preclinical candidates expected. Please turn to Slide 8. Now here is a snapshot of our pipeline, which we expect to fuel significant upside potential over the longer term. And there are a few programs that I'd like to point out as the ones to watch over the next 12 to 24 months. On the top half of the slide, the programs that are shaded in blue with the green stars, these are our newly partnered muscarinic agonist programs with Neurocrine. These programs were regained from Allergan at the beginning of 2021 following its acquisition by AbbVie, and we successfully re-out-licensed them again to Neurocrine a few weeks ago in December 2021. Now each of these programs itself has the potential to generate pipelines in a product, delivering transformative new treatments for patients living with schizophrenia, dementias and other neurological disorders. Now on the bottom of the slide, the programs shaded in orange with the orange stars, these are our prioritized in-house programs that we intend to take into the clinic, test certain hypotheses and build data before hopefully executing a series of new partnerships to take these programs forward thereafter. These programs include a GPR52 agonist for neuropsychiatric disorders, a H4 antagonist for atopic dermatitis, an EP4 antagonist for immuno-oncology and finally an EP4 agonist for IBD. Please turn to Slide 9. As I mentioned, in December 2021, we completed a major license and development agreement with Neurocrine Biosciences. We picked up the rights to a portfolio of potential best-in-class selective muscarinic receptor agonist in development for the treatment of major CNS disorders, and these were discovered and developed by Sosei Heptares. Importantly for us and in line with our strategy, these programs are now with a specialist, neuroscience-focused partner who bring a highly motivated and dedicated team of experts and capabilities. And we received $100 million upfront plus up to $2.6 billion in future milestones and royalties. The lead program is a muscarinic M4 agonist indicated for schizophrenia and other neuropsychiatric disorders, and we anticipate a Phase II start to the program this year in 2022. Looking a bit further forward, Neurocrine may also advance IND applications for further programs, namely the dual M1/M4 agonist and/or M1 agonist programs over the next 24 months. Please turn to Slide 10. This slide shows important aspects of efficacy and safety for current treatments in schizophrenia and is a slide that we put together for our half year results in November last year prior to completing the license agreement with Neurocrine. Important areas of efficacy are positive symptoms, traditional signs of mental disturbance with hallucinations and delusions. Schizophrenics also suffer from negative symptoms, with withdrawal from engagement with other people and disturbances of thinking affecting ability to work, et cetera. Clinical data on M4 agonist is now becoming available, which show this to be the first major advance in the treatment of schizophrenia for 30 to 40 years. A combination product of Xanomeline and the Cerevel compound have reported results from initial studies in acute psychosis, which showed that these agents, which act through the M4 receptor, are strongly effective in positive symptoms and also improve negative symptoms due to the acute illness. It is early days yet, but they also show some benefits in acute effects on cognition. They are also much better tolerated by patients than the existing older agents. We believe that the M4 compounds that we discovered and that announced with Neurocrine are the optimal approach to stimulate the M4 receptor and will potentially be effective in psychosis and perhaps even better tolerated than the other agents acting through the M4 receptor. We expect them to show similar strong efficacy, but importantly, we expect better tolerability, which is extremely important in allowing patients to continue taking their treatments. Please turn to Slide 11. As I mentioned earlier, we have prioritized our next wave of high-value programs to target a range of CNS, inflammatory and immune-mediated disorders. We have committed to enhanced levels of investment toward these 4 wholly owned programs over the next few years, and we look to move them forward rapidly into the clinic. The programs represent a balanced mix of normal first-in-class and best-in-class targets, with all programs being potential treatments for patients living with serious illnesses and high unmet medical needs. The target product profiles are designed to be convenient, once-daily oral small molecule treatments. We look forward to sharing more information on the specifics of these programs as they move forward this year and beyond. Please turn to Slide 13. We're shifting the focus now to our strategic growth plan, which was launched in 2020. The strategic growth plan is largely focused around new initiatives and future innovations, and we successfully raised $200 million in 2020 and a further net $100 million in 2021 to fast-track this plan. The strategic growth plan is focused around 4 growth areas of interest to us: one, seeking out revenue-generating acquisitions; two, investing in or collaborating with normal drug discovery technologies; three, taking early steps to expand beyond GPCRs into other target classes; and four, in-licensing late-stage assets for our small tactical clinical development team in Japan. And we are already executing against a number of these objectives, most notably against items 2 and 4. And we have added many new technologies and taken early steps towards leveraging our platform outside our core areas of GPCRs. Please turn to Slide 14. As a company that's rooted in platform-driven drug discovery, we take great pride in always seeking to address and overcome the challenges that exist in our industry. And we currently see 3 big challenges and one in particular that represents a great opportunity for us, and that is choosing the right target, arguably, the key decision point at the very start of every campaign. And now the omics era and the generation of big data is significantly contributing to this decision point and may ultimately improve overall probabilities of success when developing new therapeutic agents. Please turn to Slide 15. So to capitalize on this omics era and support our efforts to identify novel GPCR drug targets, we created our new target ID and validation framework or TIV back in January 2021. The initiative called for us to establish strategic relationships that leverage top-end external company omics platforms and databases and validation capabilities to supplement these efforts. The objective, of course, is being able to maximize our chances of identifying and validating hot or novel GPCR targets with direct links to disease mechanisms and subsequently drive synergy with our SBDD platform and generate a new wave of data-driven programs. Please turn to Slide 16. And so in keeping with that thematic, we got off to a great start in 2021 by executing 2 key agreements, and we continue that momentum into early '22, and I'll cover more on the next slide on that. In July 2021, we entered into a discovery collaboration with Verily AI to access their AI-powered platform for target discovery with the aim to identify new therapeutic product concepts for immune diseases. Thereafter, in December 2021, we entered another discovery collaboration, this time with Twist Biosciences to access these synthetic antibody libraries and bioinformatics expertise to identify antibodies against GPCR targets that are of interest to us as part of our antibody platform build strategy. So we are leveraging some great technologies to make the most of our platform going forward. Please turn to Slide 17. Now as I just alluded to, last week, we executed the largest TIV framework-led partnership so far, a multi-target research agreement with Verily. Now the partnership brings together the complementary capabilities of Verily's immune profiling platform and our GPCR SBDD platform. The collaboration aims to advance the understanding of GPCR biology in immune cells, particularly in the fields of immunology, gastroenterology, immuno-oncology and other disorders with immunoprotective or immunopathogenic mechanisms. We aim to prioritize and validate GPCR targets with strong potential as drug targets and ultimately discover and develop novel drug candidates to modulate these targets. Now Verily's proprietary Immune Profiler is a next-generation immune mapping platform that combines high-resolution molecular phenotyping performed in Verily's labs and advanced computational analysis techniques to generate insights into immune system functions. It will be used to identify GPCR targets that represent new opportunities to modulate immune cell function and ameliorate disease pathology. Please turn to Slide 18. Lastly, with a view to a longer-term future of the platform that we are building, we have begun to apply our SBDD platform in areas outside of our traditional area of focus. On this slide, you will see that we have an exciting technology collaboration with Poland-based company Captor Therapeutics to identify novel small molecules that targeted GPCR for potential degradation to support therapeutic agents for GI disorders. And we are also venturing into ion channels via our partnership with Metrion Biosciences to identify drug bleeds for neurological diseases. And lastly, we have a largely wholly owned program targeting MPro that is now grant-funded by Wellcome through the COVID-19 accelerator. Please turn to Slide 19. So in summary, when I look at our priority objectives for the year 2022, we will be focused across 3 major areas of execution: one, progress of the organic growth plan, and as covered in today's presentation, you've seen we will continue to progress across all areas of the core pipeline with a view to delivering new treatments to patients as fast as possible; two, we will continue to build and execute on our strategic growth plan, and in 2022, we will ramp up the progress of our new initiatives and future innovations and investments; and three, our commitment to sustainable development goals. We will continue to promote ESG across our business, and this in 2022 will be led by the establishment of a new Board subcommittee. As part of this, advancing the MPro inhibitor program is important and will actively contribute to the race for better treatments for human coronaviruses. In conclusion, today, we are a world-leading drug discovery business focused on GPCRs, and we look forward to executing our plans over the medium term and to achieving our vision of becoming one of Japan's global drug discovery champions. Thank you. And this concludes my presentation for today.