Theracryf Plc (TCF) Earnings Call Transcript & Summary

Hello and a warm welcome to the Theracyf webinar featuring CEO, Dr. Huw Jones; and Dr. Alastair Smith, who has recently been appointed as the company's Non-Executive Chair. This webinar is brought to you by Turner Pope, a firm that offers corporate broking services to public key listed companies as well as investment services to high-net-worth private investors and family offices. So I have here with me investor questions that have been sent in by you. So thank you very much indeed, all very detailed. People have gone to a lot of trouble. So thank you very much indeed. We are going to get to those. But first of all, we're going to have a bit of a chat to get the ball rolling between the 3 of us. So let's get started -- start with Huw, maybe let's start with you. How did you meet Alastair and why him take it away?

Well, Katie, we run a process using our advisers. We met some really excellent people. But without embarrassing in too much, Alastair stood out on track record, on reputation with investors, integrity. And as ever, chemistry because the relationship between a Chair and CEO is a really critical one, particularly in a public company. And certainly, the chemistry between Alastair and ourselves as the senior management team was excellent from the start. So couple that with its proven ability to raise capital, and it became quite an easy decision in the end.

And Alastair, what convinced you to take this position?

Well, a few things, Katie. And I've been looking for strong growth opportunities that are obviously undervalued. Management teams with honesty and integrity, and there's absolutely no doubt in my mind that Theracyf has all of those in spades. It presents quite a significant growth opportunity in the relatively near-term because it's within touching distance of a major value inflection point with the Orexin-1 antagonist program. Typically, a Phase I or Phase I-ready asset is going to be valued up to USD 100 million. So from where we sit today, there's clearly a massive upside. So all in all, lots of reasons to believe that there's a very significant rerating of the company in the relatively near-term.

All right. Maybe tell us a bit more, Huw you can, about the portfolio and the addiction program.

Yes. Well, the legacy program at SFX-01 is sort of taken care of in glioblastoma, the most fatal of the primary brain cancers with a 14-month survival for the patient. We've got that funded with nondilutive funding through the Dutch government in the Netherlands. And that will be going into patients about this time next year, 2026 following some more experiments and the regulatory permissions we needed. And then we acquired a program, which is 2 programs, actually, which are very exciting in the acquisition of Chronos Therapeutics about 10 months ago. We acquired an Orexin-1 antagonist, which is now fortunately has some funding behind it. It's probably the one with the highest potential in our portfolio, to be honest. The lead indication with the data that we acquired is in binge eating disorder. We can tell you a lot more about that because it's more common than anorexia and bulimia combined, but it's a sort of hidden pandemic. And we have, we believe, the best molecule so far discovered in this space of the Orexin-1 blocker world. And there are deals in bio dollars in the hundreds of millions done for this class of drugs. And that sort of backs up our claim really that we think we've got a very valuable asset in our portfolio.

And Alastair, how would you say it's all going?

Very well indeed. I enjoyed working with the team immensely over the last couple of months. Our immediate strategic objective when I came on board was to raise the capital, as Huw just mentioned to get to that huge value inflection point of an IND filing for the Orexin-1 program, and we completed a raise of GBP 4.25 million gross very recently with Turner Pope Investments. And that's going to allow us to advance the Orexin-1 program towards clinical readiness. So I think the other thing to say is alongside that IND-enabling work, we're going to be putting a lot of effort into communications, really just to get this opportunity much more broadly understood by the market because the scale of the potential here is very interesting for investors, I think.

All right. Sounds good. Well, let's dig into more details. It's over to the pair of view now for your webinar.

Thanks, Katie. And now it's a pleasure for us to give the audience a corporate update, and I'll hand over to Huw.

Thanks, Alastair. As you know, we're a public company. So the usual disclaimers apply. But the main part of this corporate update is to give you a bit more insight into our current plans after the raise of GBP 4.25 million, which was effective last quarter. So in summary, we're building a drug development powerhouse. And what do we mean by that? We mean we specialize in identifying profitable segments in oncology, particularly brain cancer and in behavioral brain disorders starting with our addiction program, which is now funded. The business model is to develop assets to really develop shareholder value in parallel. And we do that by getting compelling preclinical and clinical data sets and then monetize these through commercial partnerships with larger companies for the larger trials and commercialization and loans. So we've got an opportunity now within the next year to 1.5 years to take our first neuropsychiatry asset to clinical readiness in the next year, 1.5 years, that clinical readiness means readiness for work in volunteers first, healthy volunteers in Phase I as it's called in our trade and then partner or advance to Phase II in patients. Now Orexin-1 is a relatively newly discovered system in the brain. It's very relevant in addiction, which is a market in excess of $40 billion, and that's validated number. Neuropsychiatry is enjoying a bit of a renaissance in big pharma. There's a lot more attention to it from became biotech. There are some other Orexin-1 antagonist or blockers in development, but we believe we've got, as we said before, the leading profile of an Orexin-1 blocker thus far discovered. So the raise to advance this Orexin-1 blocker in GBP 4.25 million gross, and we are advancing this program now essentially.

Okay. Thank you. So we've already talked about the experience and the integrity of the Board. It's an absolute pleasure to have joined the Theracyf management team and Board. The reasons I joined, I made clear earlier on with Katie's question, but I think it's worth sort of reiterating that here we have an experienced team with a class-leading asset, as Huw has just described and within touching distance of a very major value inflection point. So clearly, highly undervalued for the potential this company has in the relatively near future. So I think those sorts of undervalued assets with a strong reason to believe there will be a rerating of the company value in a fairly short order are very exciting to get involved with, and it's a privilege to be part of the management team. I won't say any more to sort of preempt Huw's presentation. So we'll just move on. Thanks, Huw.

Thanks Alastair, and great to have you on board. Actually, I mean enough, very sincerely. The pipeline now is really heavily focused and refocused is shown on the next slide. So we are focusing on SFX-01 on glioblastoma that's the fatal brain cancer with a very poor prognosis for the patient. We've worked extensively with a number of academic institutions on that slide, we're currently busily working with the Erasmus Medical Center in Rotterdam to get this ready to give it into real patients with glioblastoma at the early part of 2026. We have an out-licensing deal with Stalicla, a private Swiss company in neurodevelopmental disorders, starting with autism. And then we get to the CNS portfolio or the neuropsychiatry portfolio. The Orexin-1 antagonist program is restarting, and we're focusing that, as we said, on substance use disorder starting with food and binge eating disorder. It also has potential in anxiety. There's a general anxious impulsive personality type that blocking the Orexin-1 receptor is designed to help. We have a second asset in the cupboard called dopamine active transport inhibitor, and that has preclinical data in fatigue and narcolepsy, which are 2 other areas of high unmet medical need. But what we really want to focus on in this presentation is the recently funded through GBP 4.25 billion gross raise, our Orexin-1 program. It's late preclinical. It's a class-leading profile, which we have firm data confirming that. And it's got potential for the first regulatory submission in 2026. That is a permission to give it to humans. We're finishing the last stages of preclinical development in this program in the period between now and 2026, and then we will apply for permission to give it to man. It's got utility in addiction and anxiety, as we mentioned a minute ago, GBP 40 billion market in total and the forecast make it a nearly GBP 70 billion market in the next 9, 10 years. Patents granted with long patent life left, that's 2038 in Europe and 2039 in the United States. So the next steps that we're now working on after the raise is manufacturing, making it simpler and more efficient to make scaling it up making kilogram quantities of this to get ready for the next series of experiments and doing chronic toxicology with that newly manufactured supply to enable first-in-human trials after the end of the preclinical program. So entering to Phase I in 2026, second part of the year and subject to separate funding, early clinical proof of concept in the couple of years after that. So that's Orexin-1 blocker. I think we've already covered SFX-01 there on the right-hand side of that slide. It's got good IP, orphan drug designation in glioblastoma and the glioblastoma program will give us a readout in 2026 in patients with this devastating brain cancer. So back to the opportunity that we focused on with our Orexin-1 antagonist. There are a lot of opportunities now in brain disease that enjoyed a renaissance over the last 1.5 years or so having been quiet for a decade. There are some very large deals that you can see on that slide, sort of between $2, $3 billion, $9 billion and $14 billion for acquiring public companies with late clinical stage assets. So you get to the right part of clinical development and the price gets very, very much larger. There are deals in the hundreds of millions of bio dollars even at fairly early stages in development of these neuropsychiatric assets. So I think this exemplifies what we mean by a resurgence in interest in CNS and neuropsychiatry. So Orexin-1 -- so a bit more about the Orexin-1 blocker. And I'll preview perhaps a deeper dive that we're doing into the Orexin-1 program, led by Dr. Helen Kuhlman, our Chief Business Officer. That's the next webinar in this series. So look out for it. We'll put a reach out before the webinar goes live, but we'll be diving deeply into the Orexin-1 market, the Orexin-1 opportunity and some of the technical details around this program. So briefly another surface, this agent in the brain has a role in reward feeding behavior and when it's overactive in addictive behaviors and anxiety. So blocking the receptor when it's overactive or the system is overactive is designed to reduce those impulsive and anxious behavior. It's a valid drug target. We have a candidate level drug. And the most important thing about it, as I've said repeatedly, is it's the most selective yet discovered against the Orexin-1 versus the Orexin-2. This is essential if you're going to avoid sedation, somnolence or sleepiness as a side effect. And it's got the best potential of any agent yet discovered to produce minimal side effects in the sleep area and maximal effectiveness against the receptor that we're trying to block. So class-leading profile, we agree and others agree that this is a class-leading profile based on the work that Chronos did before we acquired them. Market opportunity is growing. Even the anxiety market is over $1 billion in the U.S. alone substance abuse can be very large indeed. And we're starting there with binge eating disorder where there's already some preclinical proof-of-concept work done for this program. So there's a quick run-through, addiction and anxiety. And as I said, more of that coming in the next webinar in this series.

So, I think just to add to that point about this being a Orexin-1 being a validated drug target. I think that's enormously important as well because that considerably reduces the biological risk of taking that program forward. There are already programs in the clinic, which are strong validators for the targets and any success in the clinic by any other player just opens up the market to our class-leading better Orexin-1 antagonist. So just in summary then, I think it's very clear that there is a huge potential for a significant shareholder return over a relatively short period now driven primarily by Theracyf advancing its class-leading Ox-1 antagonist through to the stage of clinical readiness. It's a compelling validated drug target, as we've said, in an area of CNS that is, let's say, reemerging after some areas of lower interest by pharma, but certainly now very much an area of hot activity. And many of those large pharma are looking for new candidates, new drug candidates to get into their pipelines and grow those pipelines. So now for us, the successful submission of a regulatory filing and getting to that point of clinical readiness is a major value inflection point and a time when I'm sure even before that as we approach the clinic, the value of the company, I think, will be rerated in anticipation of that success. And our recent work over the past few weeks to raise the capital to be able to do that with the support of Turner Pope Investments has been obviously extremely helpful to unlock those potential commercial opportunities and the growth that shareholders are looking for.

So that's a quick run-through of our current corporate presentation. Katie, we will hand back to you now.

Thank you, both. Let's get started with the investor questions now shall we. So the first one has written in and said, how does the Board plan to prioritize and allocate resources between the expanded oncology and the neuropsychiatry pipeline buying the Chronos Therapeutics acquisition.

I'll take that, if I may. We have nondilutive funding for the oncology program. We focused SFX-01 entirely on glioblastoma, this fatal brain cancer with an average life expectancy after diagnosis of just 14 months. So that's catered for by nondilutive funding in the Erasmus Medical Center in Rotterdam, with a grant from the Dutch government. So our contribution to that is tablets, which we're making and the know-how. So a bit of management time and nothing else really because the external funding is coming from the Dutch government directly into the clinicians in Rotterdam. So that's the oncology program essentially taken for. And fortunately, through Turner Pope, we've raised gross GBP 4.25 million in the last quarter to fund the restart of development on our Orexin-1 antagonist program, which gets it to approaching clinic readiness that is to the last stages of preclinical development, which then allows us to apply for regulatory commissions to put it into man. It's a key inflection point in any development program. So we've got 2 very clear programs with 2 very clear groups of funding. And we're very confident that management team we have can cater to both of those programs simultaneously.

All right. So we move on to this. So this person wants to know, your January 2025 investor presentation suggested second quarter activity was likely to include further generation in the vivo data from the Erasmus collaboration and commencement of the Ox-1 bulk manufacturing. Are these considered to be announceable events? And have you fixed a date for the sort of the full year result as yet?

So 3 questions there, really. The Erasmus collaboration is going to plan. So the in-vivo work that the questioner asked for has started. It will be announceable I suppose, when it finishes, which will be much later on this year when we have results. So the collaboration is ongoing. It's continuing. Our key development staff are interacting on a weekly basis with the Medical Center in Erasmus, Rotterdam, and those experiments are ongoing. So that one is happening. We are in the process now of restarting the Orexin-1 program. And to do that, we start with manufacturing and we are currently in that process of looking for the right partner to restart manufacturing for us. When we have finished that negotiation with manufacturing partners, yes, we will, of course, announce it. And the third part of that question, yes, I mean, look out for an RNS on annual results. We have a schedule, which we will publish in due course, for the full year results. And that will be published in June of this year, date to be finally defined.

And just to add to that, Huw, as I mentioned earlier, I think it's extremely important that we provide frequent and detailed updates on progress as well as obviously making the announcements that are required from a compliance perspective. So we'll be certainly very proactively updating the market as we move along through the preclinical development of Orexin-1 and SFX-01.

Okay. That's what we like to hear. I might be speaking to you again then at some point. So keep your eyes peeled for [ June ]. Right. The business strategy is to seek partnering or licensing to, hopefully, midsized to large pharmaceutical companies. So how do you intend to attract such interest and differentiate your offering given that there are a number of clinical stage players already working in the same areas and competing for similar opportunities.

And it's really about competitive advantage, Katie. So we acquired these programs after extensive due diligence. And the Orexin-1 program is the most selective yet discovered. By that, I mean there are 2 Orexin systems in the brain. They're called 1 and 2 conveniently enough. If you block 2, you go to sleep. And there is sleep aid out there, which does block Orexin-2 on the market, actually, 2 of them. So the trick is to -- if you want to reduce impulsivity, which is what we're doing, these impulsive disorders like binge eating disorder, you need to block Orexin-1, but you don't want sleepiness as a side effect. So the selectivity of 1 versus 2 is critical. And we have the most selective blocker yet developed in our Orexin-1 program. That is it's nearly 2,000x more selective for Orexin-1 reduce impulsivity versus Orexin-2 cause people to be sedated or sleep. So the chance of getting sedation as a side effect on this program is about the lowest in the whole Orexin world subject to getting through to the clinic. So pharma will buy, I think, selectivity as a key argument because we've seen in some of the less successful Orexin-1 blockers that sedation does come out as a side effect. If you don't get this selectivity of 1 versus 2, absolutely right. But we believe that the Chronos acquired asset has that high, high level of selectivity to minimize any chance of getting sedation as a side effect.

Okay. This next person here is intrigued to know about partnering opportunities. So they say, the previously mentioned early partnering opportunities, have you any active discussions starting around licensing or collaboration of Ox-1 or SFX-01. That's what they want to know.

Clearly, if you're negotiating a deal, you don't do it in public. The short answer to the question is yes. We're talking to pharma fairly constantly, to be honest, as most biotechs do. It's fairly normal in our trade to be quoting a partner over a long period of time, sometimes years. So that activity led by our Chief Business Officer, Dr. Helen Kuhlman, is of course, ongoing, and it's a more or less constant activity. And obviously, we'll announce something when there is something to announce, but we reassured that early partnering is in discussion with other companies and always is in biotech.

All right. So let's move on. Is there any light at the end of the tunnel in regards to the Stalicla tunnel? What might an acceptable settlement at this stage look like? If talks stall, might your option to be taking legal action be there?

Well, the talks are not stalling. They're ongoing actually, and on a fairly frequent basis. And the 2 CEOs, myself and the Stalicla's CEO are talking pretty frequently about getting to the end of this process. The contract does have some fairly well-defined things. The first thing we've got to do is agree between the 2 CEOs. And there are a couple of other steps contractually and amicably that can be done to resolve any dispute. So there's a clear dispute resolution process there. And we're at the sort of talking stage about how we get through this process on a really very amicable basis. And of course, we'll announce it as soon as we've got through the process.

Okay. Let's move on. Now this next bunch of questions is just in regards to the SFX-01. So regarding SFX-01 GBM timeline, how confident is the team in the second half of the year readout timeline for the Erasmus GBM trial?

Yes. So what's happening by the second half of this year is the preclinical work, the in-vivo preclinical work that's before it gets to patients, and that will read out at the tail end of this year. In parallel to that, there will be regulatory permissions, manufacturing activities and the trial, the clinical trial that is going into patients with glioblastoma in the Netherlands will start at the beginning of 2026. Just to be clear on timelines for everybody. And that's what we've consistently been saying about this trial. And essentially, we're on track for the first quarter of 2026 for administration to the first patient.

Okay. So first quarter 2026, right. Given that the recent promising data of SFX-01 and glioblastoma models, what are the next steps and timelines for addressing this lead oncology asset through clinical development and how does the Board assess its potential for partnering or monetization?

Yes. So the clinical data is key, I think, for monetization of this particular asset in this particular indication. So it varies really in the world of biotech as to when partnering is most appropriate or most attractive. In this one, with the crowded space in oncology, many, many, many interventions in the cancer world, I think clinical data trumps everything. So when we have the first clinical data, assuming some positivity, of course, that's really the partnering window. So getting a good set of clinical trial results from the Erasmus will be the papering window for SFX-01 in primary brain cancer. So we've got a year or more to wait.

Okay. I see. All right. Okay. This person here is asking it, can you talk through any means by which value might still possibly be captured from the SFX-01, the [ H2 ] breast cancer intimation. And the University of Manchester, the Christie Foundation Trust continuing involvement as well.

We're still talking to the Christie. We've costed at the next stage of the breast cancer development plan. And probably it's unaffordable for a small biotech. It's in the tens of millions of pounds the next clinical trial. The breast cancer, the metastatic breast cancer space has become a lot more complicated since that positive Phase II trial reported. So because of the increasing complexity in the area, the huge cost of getting the definitive experiment done, we parked that program this year. And if anybody comes to us, of course, wishing to take it forward, we would. But SFX-01 is now 100% focused on glioblastoma. This is an area of the most unmet medical need, only one drug ever made it to the clinic and to approval in glioblastoma. It's the highest medical need in all the brain cancers. So we are focusing on an area where we have already great preclinical data and that somebody else is paying for us to get into the clinic next year.

Okay. Let's move on because there are plenty of questions as well about Ox-1. So we'll move on now to on these ones. Thank you very much, indeed. And hopefully, everyone's got their questions answered today. That is aim of the game, right? Is the West dramatically expanding list of unmet needs in the area of neuroscience making it the hot new therapeutic opportunity for big pharma?

It is one of new hot spaces. There are a number of hot spaces in pharma, of course, because there are another expanding list of diseases that need good interventions. And neuroscience is one of them. We know in the last 18 months, there's been a resurgence of deals and a feel for neuroscience assets. And there are a number of reasons for that. R&D has progressed substantially in knowledge of brain diseases, the ways of measuring neuropsychiatric endpoints, in particular, have become more sophisticated. And people are waking up to these unmet needs that the questioner refers. So yes, we agree. It's one of many hot new spaces after a quite decade for neuroscience, it's come back in the last 1.5 years or so in a big way. And we are riding that way, to be honest, Katie.

Yes. Quite right. Lots of opportunity for you then. So this next person is asking about your competitors, for example. So several large players like Indivior they're saying are already in the clinical trial with Orexin antagonist. What differentiates your compounds, both scientifically and commercially, they're asking, including evidencing your claims regarding selectivity?

Yes, the claims on selectivity, it's not just a claim, actually, it's hard data from experiments. So we are confident and that's confidential data, of course, because of the intellectual property piece. And by the way, on intellectual property, we are patents awarded on our Orexin-1 program in most territories of the world. Now we've got a U.S. patent until 2039 and the European patent, which was granted just last December till 2038. Other territories are coming through. We've got 2 major countries still to come, and we're very confident that those patents will come in the near future. So we've got strong IP. That's critical for partnering. The claim on selectivity is true and it's evidenced by hard data, which we make available to potential partners under confidentiality agreements. This nearly 2,000-fold selectivity, I mentioned earlier, of Orexin-1 against Orexin-2 minimizing the risk of sedation in the clinic when we get there is a real hard validated number. So we're entirely confident about that. And it is the best yet. So relative to our competitors, they've got good assets. We're not decrying them. We just happen to think that our Orexin-1 antagonist albeit a bit earlier in development is the best yet.

And just to add to that, Katie, it was the -- those data that you were just talking about that got me over the line in terms of joining the company. We've clearly got a class-leading Orexin-1 antagonist, and we are a stones throw from getting that to be clinic ready. So that presents it. I mean, we've talked about the market because of the questions that you've asked, there are big players in there. It's a hot area. And we have the class lead in Orexin-1 antagonist. So that makes for a very interesting opportunity.

just to add to that, if the Orexin-1 antagonist succeeds in the clinic in the short-term, that's good news for us too.

Absolutely.

Yes, good news for everyone. We have a final question now. It's the last one. So assuming Ox-1 receives the MHRA FDA clearance in 2026. What is your commercialization plan? So would you pursue Phase II independently or would you seek a partner immediately post Phase I?

As we said earlier, our partnering discussions are pretty much constantly ongoing. I think the Board would take a view at that point in the future as to what's in the best interest of the shareholder. Is it to take some cash now in a deal or refinance the program again and take it further down the line to get more cash later. So it's a decision that's not made of course. If somebody offers us a large check for this asset, of course, we take it because that's in the best interest of the company and its shareholders.

And generally speaking, a clinical stage biotech is going to be valued in terms of share price and market cap much more highly than a preclinical. So exactly as you said, it's a strategic decision at the point in time. Do we refinance in order to take assets into the clinic ourselves, in which case, deliver much greater value for shareholders. But of course, we have to raise capital to do that. Or do we look for a commercial out at that point. So that will all become apparent, I guess, as we reach that point in time.

It's a very nice problem to have at that time.

It certainly is. Thank you. So that's a wrap. That was our last question. We've covered a lot of territory today, and we very much appreciate these questions that were sent into us covering a lot of ground very detailed. They were from investors, potential investors, supporters of you, followers as well. And thank you to both to Huw and Alastair. Goodbye.

Thank you. Thanks, everybody.

Thank you very much.