Vivoryon Therapeutics N.V. (VVY) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Vivoryon Therapeutics 2026 H1 Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Julia Neugebauer. Please go ahead.

Thank you, Marilena. Good morning or good afternoon, everyone, and thank you for joining us today for Vivoryon's first half 2026 results call. Earlier today, we issued a press release reporting our first half 2026 financial results and business update, which can be found on Vivoryon's website at www.vivoryon.com. On the call with me today are Frank Weber, our Chief Executive Officer; Marcus Irsfeld, our Chief Financial Officer; as well as Michael Schaeffer, our Chief Business Officer. Before we start, I would like to remind you that during this conference call, we will present and discuss certain forward-looking statements concerning future transactions, the development of Vivoryon's core platform, the progress of its research and development programs and the initiation of additional programs as well as results of operations, cash needs, financial conditions, liquidity prospects and strategies. Should actual results differ from the company's assumptions, ensuing actions may differ from those anticipated. You are therefore cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. As you can see on the agenda for today's call, I will begin with an overview of our progress throughout the first half of 2026 as we continue to advance our strategic priorities and strengthen the body of evidence for varoglutamstat in kidney disease. I will then hand the call over to Michael, who will share some new preclinical data, which provides further insights into the mechanism of action underlying the compelling data we have seen with varoglutamstat in clinical studies. Frank will then share details on the growing momentum behind our strategic partnering discussions. He will be followed by Marcus, who will review the first half 2026 financial results before we conclude with Frank. Following the prepared remarks, we will open the call, and we'll be happy to take your questions. I would like to start by providing a high-level overview of our progress throughout the first half of 2026. Throughout the reporting period, we have seen growing momentum and increased strategic interest around varoglutamstat from a range of external parties, and we are aware of the market's focus on latest developments. We obviously can't go into too much detail, but what we can share is that there are multiple strategic discussions progressing, including advanced term sheet negotiations for a potential licensing agreement. Frank will provide a more detailed strategic update in a few minutes. On the R&D front, we continue to present and generate interest at important international medical conferences in the kidney space. In March, we presented a poster at the World Congress of Nephrology in Japan, further validating glutaminyl cyclases as promising targets in diabetic kidney disease, in short DKD. We previously showed in the Phase II VIVIAD and VIVA-MIND studies that varoglutamstat had a greater beneficial effect on kidney function in elderly participants with diabetes than in those without diabetes. At WCN, we built on these findings by showing that the effect was maintained or even higher in participants with diabetes who had lower baseline kidney function. This is extremely important because it shows that varoglutamstat has a beneficial effect in those patients with the highest risk of or already impaired kidney function. These data continue to support our rationale too as a next step in development, pursue a dedicated Phase IIb study in advanced DKD, where there remains a significant unmet need for therapies that can stabilize or improve kidney function. As many of you know, varoglutamstat is differentiated from other approaches in development in spanning multiple pathways that underpin inflammation and fibrosis, key drivers of kidney disease progression. Throughout the first half of 2026, our science team has continued to expand the preclinical data set around varoglutamstat's mechanism of action in kidney disease. Previously, we had shared work that we have done to better understand the molecular mechanism, including data highlighting varoglutamstat's role in collagen maturation, and in reducing reactive oxygen species. As a reminder, if you would like to learn more, there's a detailed scientific webcast on our website under the Our Approach section. In a pathway analysis, we have now investigated the effect of varoglutamstat on endothelial cells. These cells are a crucial important part of the kidney filtration barrier and their integrity is an essential factor in maintaining proper kidney function. Michael will highlight some of the key findings, which we believe further support varoglutamstat's potential to be a game changer for kidney disease. The target molecules of varoglutamstat, that glutaminyl cyclases play an important role in a number of pathways related to diseases of the kidney. Our continued progress in understanding how varoglutamstat supports and potentially restores kidney function further strengthens the link between its mechanism of action and the exceptional clinical results observed to date. And we have already seen this deeper understanding support our discussion with potential partners. Finally, based on our current planning, we maintain the expectation that our cash runway will extend into the fourth quarter of 2026, and we continue to actively explore strategic and financing options to strengthen our financial position. Overall, we believe we are in a strong scientific and strategic position to advance varoglutamstat and to realize the next phase of value creation. And with that, I would like to hand the call over to Michael. Michael?

Thank you, Julia. So welcome, everybody, also from my side. Yes, well, as we have been reporting in the past, we are continuously analyzing data from preclinical activities to deepen our understanding of molecular mode of action of glutaminyl cyclase inhibitors. And we have informed you also in the past about the comprehensive scientific validation showing that the downstream actions of our glutaminyl cyclase inhibitor, varoglutamstat are predominantly mediated by reducing the activity of pro-inflammatory and pro-fibrotic molecules ultimately resulting in reduction of inflammation as well as tubulointerstitial fibrosis and glomerulosclerosis. And now we report here a new finding. The further analysis and RNA profiling from CKD animal models showed that in addition, varoglutamstat is improving endothelial cell function via the HIF pathway activation. HIF or hypoxia-inducible factor is a transcription factor that when activated kicks off a cascade of events, including metabolic reprogramming and modulation of innate and adaptive immune cells, both resulting in cellular protection and metabolic integrity. So let us get this all into the framework of our current MOA overview. Next to the downregulation of inflammatory and fibrotic signals reported earlier, we now must add a third layer here for varoglutamstat effects, which is the activation of the protective HIF pathway. Some of the expected benefits of HIF pathway activation include reversal of capillary rarefaction by promoting the growth of new and healthy endothelial cells to rebuild the capillary network in the kidney, improved oxygenation and survival by activating the vascular endothelial growth factor, VEGF and its receptor, supplying starving renal cells with necessary oxygen and nutrients, reduction of interstitial fibrosis by relieving chronic tissue hypoxia and breaking the cycle of inflammation and extracellular matrix protein deposition, which otherwise would lead to permanent kidney scarring. So to sum up, it is really worthwhile to note that in the entire scientific community, the full understanding of the HIF pathway-induced changes on immune cell metabolism and associated changes in cell function is still somewhat in its infancy. However, at the same time, it's true that HIF is a rather new but already validated therapeutic drug target. GSK's Jesduvroq and Akebia's Vafseo are just 2 examples of FDA-approved HIF activators, which are prescribed for anemia associated with chronic kidney disease. And with this, I'd like to close and now on to Frank for an overview on current activities.

Thank you, Mike. Thank you, Julia. So I will talk about the strategic imperatives and priorities of Vivoryon. It will be a very concise and short presentation. The objective is to give you a correct update where we are as a company, but also keep the confidentiality of the communications and negotiations with other parties, which is in the best interest of Vivoryon and the other involved parties. So let's go into details. Vivoryon follows multiple tracks to secure development of varoglutamstat in kidney disease. The company, Vivoryon is currently in advanced term sheet negotiations for a licensing agreement for varoglutamstat with the pharmaceutical biotech company. We hope and expect that these negotiations will continue and be successfully completed in the upcoming weeks. We also are evolved with a specialist kidney investor who is independently assessing varoglutamstat's potential in kidney disease for a potential investment. Also here, we expect updates and the conclusion within the next couple of weeks. Additionally, further discussion at various stages with additional strategic parties are ongoing to maximize the full potential of the QPCTL platform in kidney diseases. While we expect, hope and believe that we can conclude those negotiations successfully in the next couple of weeks, I want to remind you that there is no guarantee that there will be success. With that, I will hand over to Marcus.

Thank you, Frank. I will now walk you through the financial figures for the first half of 2026. Research and development expenses in the first half of 2026 amounted to EUR 1.7 million compared to EUR 2.8 million in the first half of 2025. The reduction of EUR 1.1 million was largely attributable to a decrease in clinical development costs of EUR 0.6 million related to kidney research and reduction of associated patent and consulting fees of EUR 0.2 million. We have seen a decrease in G&A expenses with costs of EUR 1.7 million for the first half of 2026 versus EUR 2.8 million for the first half of 2025. The decrease of EUR 1.1 million was largely attributable to lower noncash effective share-based personnel costs and a decrease in legal costs. All of this resulted in a net loss for the first half of 2026 of EUR 3.4 million compared to EUR 5.5 million for the first half of 2025. The company has EUR 2.4 million in cash and cash equivalents as of June 30, 2026, compared to EUR 5.6 million as of December 31, 2025. We have maintained our cash runway into Q4 2026, which does not include any funds from the standby equity purchase agreement. Our spending plans continue to support the kidney disease strategy, and we continue to actively pursue additional financing and partnership opportunities. Before we come to the Q&A, I would now like to hand the call back to Frank for wrap up.

So let me summarize where we are today. And the strategy is to developing new therapies with aim to preserve kidney function and prevent progression of kidney failure. There is an important significant unmet medical need in diabetic kidney disease, and that includes the latest portfolio events in other companies where we are sure that nobody is ahead of us with a similar or competitive data. There are many millions patients in the U.S. and Europe with diabetic kidney disease Stage IIIb and IV. And the primary goal of our new treatment is to stabilize and improve kidney function long term. We have compelling data with our lead program, varoglutamstat, both clinical and preclinical. We have a differentiated mechanism of action targeting pro-inflammatory and pro-fibrotic pathways, and we showed today a new avenue of a pathway where we also positively affect endothelial function in kidneys. We are targeting to be the first oral agent to show improvement and long-term stabilization of kidney function. Altogether, Vivoryon and varoglutamstat is an attractive opportunity with defined value creation steps. There's substantial market creating a blockbuster potential. And we are in advanced partnership negotiations, which are ongoing. And I have already commented about how things are and how they go forward. And due to the confidentiality also in the Q&A, we cannot further elaborate on this, and I'm sorry about this. Thank you.

[Operator Instructions] And this question comes from the line of Sushila Hernandez from Van Lanschot Kempen.

So this is [ Anna ] on for Sushila. So you further elucidated the mechanism of action of varoglutamstat. And it would be great if you could just give some color on the mechanics and specifically on whether the HIF-VEGF activation acts as a direct driver of the endothelial benefit or more of a downstream consequence of the broader effects? And also related to that, do you have any early data or expectation on whether this is localized to the kidney or whether it could also be showing up systemically?

I did not get all of your question, unfortunately. So it is localized in kidney, yes. And there are, of course, multiple factors in the HIF pathway, VEGF, the VEGF receptor, [ HIV-2 ]. There are other molecules we've been looking at where we found activation of those molecules. Again, this is pretty new findings also, so we are still about to elaborate this further. I don't -- I'm not sure now whether this answers your question because I didn't get really the first part or if you have further needs for information.

And just to circle back to the cash runway into Q4. How confident are you that the licensing deal or the financing from the kidney-focused investor will materialize? And would you draw the SEPA deal to extend your runway?

Yes, maybe I take this one. So we are confident, and I think we have good progress in advance, but there is never certainty because these events are in the future, and nobody can predict the future. So there can always happen a thousand things. But the strength of our approach is that we are working on multiple layers and multiple opportunities. And we believe that at least 1 or 2 of those should bear success in the next couple of weeks.

We are now going to move to our next question, and this one comes from Joseph Hedden from Rx Securities.

It's exciting to see you talking about advanced negotiations on a potential licensing deal.

Joseph, you are very faint. We can barely hear you. Sorry.

Can you hear me now better?

A little bit better.

So it's exciting to hear you talking about advanced discussions regarding a potential licensing deal. Appreciate confidentiality prevents you from saying too much. But just broadly, in terms of structure, is this a deal that would allow you to conduct the Phase IIb study as planned? Or would it then be completely in the hands of the partner? And just on that, is the potential partner experienced in the kidney disease space?

So we will not do any further comments on those because from all those can be drawn conclusions. And I think these are good and valid questions. In the interest of the company and the shareholder and the agreed confidentiality with other companies, we do not comment further. Yes. Sorry about this. But I think it is a very favorable setting for the company overall. So we try to preserve shareholder value and create shareholder value and company value with such an agreement, but I have to stop here.

We are now going to move to our next question, and this one comes from Tom Rosenfeld from Intron Health Research.

A couple of questions from me. The first on the licensing negotiation and the equity investment. Do you view these things as mutually exclusive? Or is one likely to be contingent on the other?

I mean we -- mutually exclusive means, well, we will only do one deal for varoglutamstat. I mean it's clear that we will not license the drug to several companies, at least not in the same region. There may be regional considerations, but one drug for one company. But we thinking about financing and other strategic collaborations, which then would not include varoglutamstat directly but more the QPCTL platform or our company, and that can be different parties.

I think I was maybe not quite clear there. So I'm more asking whether you see any future fundraising being contingent on you having signed a licensing deal?

We haven't decided on this because we are still negotiating the deal. So there have been no planning for future fundraising, capital increasing. This is neither yes nor a no. It is just not decided yet.

Sure. And then one on the specialist kidney-focused investor. You mentioned that he's conducting or they're conducting an independent assessment of selected aspects of the program. Could you give any more color as to which aspects? And if they were to make an investment, would you expect it to allow you to fund the full Phase II program yourself?