Pila Pharma AB (publ) (PILA) Earnings Call Transcript & Summary

Welcome to this report commentary of H2 and year-end of 2025 with Pila Pharma, a clinical-stage biotech company, pioneering development of first-in-class oral treatment for obesity and related disorders such as diabetes type 2. Viewers can ask their questions in the live chat, and I will raise them for you. And I'm pleased to welcome CEO, Gustav H. Gram to the studio. How do you do?

Thank you, Mattias. I'm very well. How are you?

Fine. Thank you. And before we penetrate the report of 2025, how would you describe the year in brief?

Very eventful, I would say. I mean we started off the year coming up with a new clinical development plan where we would assess our drug's capability in obesity. That came at direct recommendations from some dialogue with big pharma companies. It eventually led us to having a rights issue of units in the summer that was very well oversubscribed to almost 300%. And from then on, in the second half of the year, we've really started to get the train in motion. We signed agreements to conduct some preclinical trials, and we've signed an agreement with a clinical partner that would help us for the next stage, which is, of course, the clinical development in people living with obesity as well as diabetes. So very eventful. Of course, there's been a lot to take note of as well. My CEO report is quite long as well. But overall, we're quite happy. We think we're on a very good path and trajectory. And so we're going into 2026, very confident and, of course, very hopeful that we can continue to progress.

Yes. And like you said, it's like -- it's been a very eventful year, and it is the event that is most interesting with you. But the financial results of H2, how would you comment the financial outcome and the status of the company right now?

I mean I would say the status is pretty good. We, of course, got a big capital injection in the summer. We had this rights issue that was very much oversubscribed. And we also had an overallocation in this rights issue. And that, of course, allowed us to really boost the cash position of the company to enable us to take more strides if we can say so. And so now here at the year's end, we have more than SEK 19 million in the bank for the group combined. And we feel that's very comforting. We can also see that our cash burn rate has actually been lower than it was previously estimated to be. So all in all, we continue to run a very prudent operation where we are allocating our expenses to where it matters the most, which is in the clinic.

All right. Let's move over to the full year then. Like you said, you had the rights issue that was highly oversubscribed by 300%. How did you participate yourself?

Yes. Myself as well as our -- the whole Board of Directors and of course, our founder, Dorte, we have all participated and bought in. So we, of course, also hold quite a lot of warrants that are due now here in February.

And what kind of message do you read out of that oversubscription?

For me, it was a big indication that there's a lot of interest, of course, in the obesity space. We know that from other companies as well. And I think people have really started getting the notion that it is indeed possible to make oral medication for treatment of obesity as well as related disorders such as diabetes or cardiovascular disease. So for us coming with something that is very different, for example, to the current generation treatment that focus a lot on, let's say, GLP-1, I think a lot of people found that to be quite interesting. And of course, as a small biotech, there's a huge amount of risk involved, but there's also a huge upside if we get it right. So I think that was partly to -- yes, to conclude for why we got such a big interest in the summer.

And you also have a TO warrants, TO2 that closed on Sunday. Do you have any insights regarding participation here?

I mean we have some insights. Of course, we are in close dialogue with most of the, let's say, pre-subscribers as well as underwriters as well as people who were in the overallocation issues in the summer because they all have quite a lot of warrants. And we have gotten quite a few indications from people here that they would exercise their warrants, even if it is unfortunately currently trading -- the common stock is trading below the warrant price. So that is, of course, a big sign, we think that there's continued belief in us and in the story and that people ultimately think that even paying at a premium could constitute a potential good deal. And I can say so much that myself as well as, of course, Daughter as well, we will also be exercising warrants. So -- it remains to be seen how much the company will be funded. But all in all, and like I mentioned in my CEO word, given that we had the overallocation in the summer, we do have the means to continue our progress into clinical trials regardless of what happens.

Thank you. And the obesity rat studies returned inconclusive results due to formulation challenges. How does this impact your time lines and next steps?

It doesn't necessarily impact the next steps. But of course, it has made a drastic impact on the common stock price. And of course, it has meant that we could not deliver the proof of concept that we had set out to produce in time for the warrants. So that has been unfortunate. But that being said, we have made it pretty clear from the start as well as in December when we communicated that the study has started that we do intend to continue 2 clinical studies regardless of the outcome in these. As of now, we still don't have the final data set. We don't have the full analysis as to know whether the rats got exposed to the drug or not. And as such, it is, as we call it, inconclusive, and it is not prudent or good style to draw any conclusions on the results based on this.

So we need to follow upcoming studies.

Yes. As soon as we have any data to share, of course, we will come out to the market, and we will, yes, communicate it. And then of course, we also understand that for many investors, this is a tricky point, and it's, of course, something that may not make it especially enticing necessarily to invest further for now until there's more certainty around this. So we are also eagerly awaiting the data to have some sort of confirmation and conclusion.

Of course. You entered a new CRO partnership in January. What criteria made this CRO the right partner for the obesity program?

Well, we've been in dialogue with a few different CROs, not just over the autumn, but throughout a couple of years. And what stood out with this particular CRO was not just that they had a profound understanding of how to run clinical trials and especially understanding the safety elements of escalating in clinical trials like we have to do now, both in obesity and in diabetes. So that makes a big difference for us. We know that they have -- that much -- many of their employees have, let's say, experience from a big pharma background. So they do things by the book, as we say. And I know that our Chief Science Officer, Dorte, she's very much enjoyed working with them, and she's very happy and she's very confident that this partnership will be great because now we will have a partner that can really support us with the expertise and the manpower so that we can keep things moving.

It would be an underestimation to say that obesities and diabetes have been hot. There's been a lot of competition from the big pharmas. There have been a lot of bids and all that, huge interest and now also in oral obesity treatments. How would you say that your drug differentiates from GLP-1 competitors?

Well, first and foremost, it's a completely different mechanism of action, right? We're targeting something completely different in the body. And so we also expect to have potentially different effects, of course, a different safety profile. We will likely not have the same gastrointestinal side effects that GLP-1 and other gut hormones have been known to potentially have in some patients. So from our point of view, I mean, we're developing something that is quite different, and that could potentially have a relevance in the future market. Now we see that the oral segment for obesity treatments is really getting established. And I think going forward, we will only see more products coming to market with different profiles. And so we remain confident that we have something that's interesting. But of course, it remains to be seen, and we still need to produce data in the clinic in humans where we show that it's not just safe to ingest at higher doses, but also can produce effects at these doses.

Yes. You're also Well, you have communicated that you have a potential of more near-term revenue when it comes to erythromelalgia, and let's call it EM. You highlighted EM as a potential faster route to revenue. How soon could a partnership or commercialization emerge?

Partnership is difficult to say because, I mean, it really depends on the data. And of course, there's a lot of elements that a partner needs to like in a project. But what we are looking at is it's a rare disease. So it's not a huge patient population. That means you do get some incentives, you get shorter time lines. You don't need to go through as excessive clinical trials as you otherwise would have to do. So the estimates that we have is that you could potentially get to market launch in almost 3 years. So that's a very short time line within biotech and pharma, of course. And that we think is worthwhile pursuing now also to -- as our CSO has previously commented on to have another leg to stand on to not be dependent on the obesity story alone. The target -- or like the disease is a painful disease. And as you may remember, the target that we work with is a key regulator of pain and inflammation. So there's a lot of scientific rationale to suggest that it should work. But of course, we still have to prove it in the clinic. So that's what we're preparing now. We sent out a press release yesterday announcing that we will start to work on the clinical trial application. And as soon as that is approved, we could potentially start a clinical trial where we would assess our drug's capabilities in this rare disease. And how much it's worth and when you could expect revenue, that's something we can comment on a little bit down the line, I think.

I've been scrolling through some of the investor communities. And one of the most energetic discussion is, of course, when it comes to partnership and what type of pharma partnerships are you targeting? Is it co-development, licensing or full out-licensing?

Well, it could be any of those, right? I mean we keep the options open. We're open to regional partnerships for individual diseases. We're open to full package acquisitions. I think for any kind of partnership, we need to still build on our data set. That's what we have communicated since the summer as well, and that is what we continue to do. And so we have good dialogue with quite a few different potential partner companies for obesity. We have some that have previously expressed interest in the EM. And so now it's up to us to continue to progress and generate data that can convince them to a higher degree. So co-development could be full out-licensing global terms could also be or a full acquisition. There's many options, but we keep all the options open for now.

Yes. Of course. And here's another question from a viewer that I have not seen before. Have you considered delisting and save the annual cost of what is it, DKK 1 million listing fees while you're listing in Sweden, but maybe another DKK 250,000 to DKK 500,000 for issuance.

I think -- I mean, I think for many small companies, they have considered delisting in the past couple of years because the financial markets have been a bit difficult sometimes to maneuver in. What I can say is that we, as such, don't have anything ongoing as to discussions in our Board on delisting. I think it would also require that you have some private investors that would continue the company outside of the stock exchange. But of course, I can never say never. And I mean, we are, of course, always looking for the best path forward for the company. And if that path is to go private again sometime, then we will take it from there.

Thank you. If we have a look ahead for 2026, there are a bunch of interesting milestones in clinical trial applications in obesity, diabetes and EM. What would you say are the most interesting milestones 2026 that investors should look out for?

I mean, for now, we've only communicated that we have -- we started the preparations for a clinical trial application in obesity and in erythromelalgia. Of course, if you go back a little bit to our prospectus for the rights issue, we, of course, also mentioned that we would prepare a clinical trial application for diabetes. And that we will communicate in due time when it's ready. So yes, I think in the short term, we have communicated that obesity CTA will be submitted before the end of Q1. That's still the ambition. From you get -- from you submit, it's likely 45 days until you get an answer, like whether it's an approval or rejection. But if it is an approval, then you're actually able to start to start recruiting straightaway. And then we could potentially be in a position where we can start a clinical trial already in like middle of Q2. And so of course, pending outcomes in the warrant as well as, of course, the data set that is coming from the preclinical studies, we're not going to outright announce or declare it yet as to how far our clinical development is going. But we do feel that this is a very interesting milestone. And of course, the EM as well could be very interesting to assess, but it may be a little bit harder to recruit patients here given that it's a rare disease.

Yes. And if you were to address investors the main reasons in why to invest in Pila Pharma, what would be your major reasons to that?

Well, I mean, first and foremost, we still have plenty of cash in the coffers as of end of last year. We are on an interesting trajectory towards clinical trials now in obesity. Of course, there's some uncertainty in the investor community around the last trials that we ran, and we understand that. However, we also think that the real value lies in the clinic. And so if you believe in that notion, then of course, it could be a very interesting opportunity to buy in at the current price. As well as that, I mean, myself, the Board, the management like Dorte as well, our CSO and founder, we all have a lot of shares. We all have a lot of warrants. I also bought extra shares in Q2 -- sorry, in Q4. And so we're very well invested in this ourselves, and we will continue to be so because we do think this is only going to be more and more interesting going forward.

Okay. Pilla Pharma, CEO, Gustav H. Gram, thank you so much for joining us today.

Thank you, Mattias.