Arecor Therapeutics (LSE:AREC) — Results

0:01 Good afternoon, and welcome to the ARECOR THERAPEUTICS PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand

0:31 you over to Sarah Howe, CEO. Good afternoon. Great. Thank you, Lily. Good afternoon, everybody. Thank you for joining us today. So we'll be talking through ARECOR's full results for the year ending 12/31/2022. So I draw your attention to our customary legal notice. So today, it's myself. I've got Sarah Howell. I'm the CEO of ARECOR, and I'm joined by Susan Louth, our CFO. But just by way of summary of ARECOR for those of you joining us for the first time today and and for those joining us again, thank you. And just a recap, really. So we're very much focused on transforming patient care by enhancing existing therapeutic medicines so that they're safer, more effective, and convenient to use for patients and the end users.

1:28 And we do this by leveraging our innovative and proprietary formulation technology platform, ARISTAT. And we use this platform to enhance the properties of those existing therapeutic products or medicines and very much focused on improving performance and ultimately patient outcomes and quality of life. And as a, technology platform company, intellectual property is absolutely key to us, and we have very broad and robust IP protection, both of the Aristat technology platform itself and also of the enhanced versions of therapeutic products that we develop using the technology. We are a clinical stage company. We are, in clinical development for our two lead diabetes products. They're both insulin based, products where we're developing much faster acting and more concentrated rapid acting insulins. And I'll talk about those in more detail through the presentation today. And we also have a portfolio of what we call specialty hospital products. So this is where we're taking medicines that are used within the hospital setting, often for chronic care or emergency use where there's only lyophilised powders that require a complex mixing procedure prior to use available today.

2:42 And here we're able to use the Arostat technology to develop stable liquid, ready to use versions of these products. And, again, I'll talk about these in a little bit more detail. So alongside our innovative internal portfolio of products where our strategy there is to develop those closer to market to a higher value inflection point prior to partnering for late phase and commercialization, We also partner with leading pharmaceutical and biotech companies on their proprietary products. So this is where these partners are coming to ARECOR, and they're looking for an enhanced or differentiated version of their own pipeline or already on the market products that they've been unable to achieve themselves. Now this is revenue generating. Our partners pay ARECOR THERAPEUTICS our expertise and ARRESTAT technology platform to develop these enhanced novel formulations of their products that bring enhanced properties to the table.

3:40 And then at the end of those studies, if our partners want to take those novel formulations further forward into development and through to commercialization, they can do so, and that's under a technology licensing model. And these tend to be milestone and royalty bearing. So overall, we're very much a commercially focused business. We have a revenue generating license model, and we have existing licenses again that I'll talk through in more detail. And, obviously, the opportunity to convert new licensing from our own proprietary pipeline and also those pre licensed partnerships with leading pharmaceutical companies. We have a derisked product development portfolio in that we're taking existing medicines. So that means the safety and effectiveness of these products is already proven, and we're looking to further enhance these.

4:26 And back in August of last year, we acquired a company called Tetris Pharma, who have a sales and marketing and distribution platform across The UK and Europe and also now bring commercial products to our portfolio. And, again, I'll talk about that in a little bit more detail. And our vision here and our ambition is essentially to build a significant self sustaining biopharmaceutical company.

4:53 So if we just look at the operational highlights for financial year '22, including some post period events here, we've made very significant progress across our in house proprietary pipeline. So for our diabetes products, we've initiated a second phase one clinical study for an a t two seven eight. So this is very concentrated, very rapid acting insulin, and we started dosing patients in March of this year. And also in the final quarter of last year, we're able to report very positive headline results from a phase one clinical study for a t two four seven. And this is our, ultra rapid acting insulin where we're really targeting an improved insulin for type one diabetes when using via an insulin pump.

5:40 In terms of partnering progress, again, we've made, significant progress across, this portfolio as well. We're able to announce earlier this year that our partner Hikma Pharmaceuticals has made a very positive decision to, take on full development and commercialization responsibility for a licensed product, a t three zero seven. This is a ready to use medicine that's been developed by ARECOR and subsequently licensed to Hikma, and we look forward to further working with them to bring this product to market. And, that's under a milestone, royalty bearing agreement. And in terms of our prelicensed partnerships, so these are collaborations, revenue generating collaborations with leading pharma and biotech companies. We've added a further three collaborations to the portfolio, so we now have eight that we've entered into since the IPO.

6:30 And two of those are the top five global pharmaceutical company, which really shows the strength and the need for the ARRESTAT technology platform. As I mentioned, intellectual property is critical to us, and we've made great progress across the portfolio. During the period, we've had further nine patent grants across that's protecting both the Aerosat technology platform itself and also enhanced therapeutic medicines that we're developing with the platform. And that includes important US grants of IP protecting our lead insulin products, a t two four seven and a t two seven eight. And as I mentioned in the period, we acquired Tetris Pharma back in August last last year. That was a share for share deal there in a £6,000,000 placing as well, as part of that acquisition. And Susan will talk about that in a little bit more detail, later.

7:26 If we move on really to looking at ARECOR's portfolio here and our pipeline of products. So if we start with our in house proprietary products here, in terms of our lead diabetes products, a t two four seven and a t two seven eight, as I've just mentioned, we've made significant progress across this portfolio. And for AT two seven eight, that's initiated phase one clinical study is important to us because it is in the target patient population, primary target patient population for this product being type two diabetics. It will be a first clinical study for ARECOR in the type two, patient population. And it's also comparing a t two seven eight against the two gold standard treatments that are available for that patient population, very much targeting those high insulin users.

8:15 And all being well with, recruitments, we've started dosing in March. We'll be looking forward to reporting headline results in quarter four of this year. And our strategy there very much remains unchanged with building clinical and nonclinical data packages, which demonstrate the superiority of these products to position these for partnering for late phase and commercialization. With our partners, we'd be looking to take market share within that existing greater than $6,000,000,000 market segments. And if we move on to our specialty hospital programs here, so this is where we're developing ready to use and ready to administer versions of existing hospital based products. Now since time of our IPO, which was back in June 2021, now we raised some of these proceeds that we raised there was to support the specialty hospital portfolio to support the selection of products and then the application of the ARRESTAT technology to develop these ready to use products.

9:16 And I'm happy to be able to, report that we've made significant progress across that portfolio, since the IPO. So we've been very busy selecting products, implementing them into r and d here, and we've been able to demonstrate that the technology itself is applicable to these products. We've developed a number of ready to use, formulations of the selected programs, and we've been very busy filing IP as well. So we're very much moving that portfolio and certainly the first wave of products within that portfolio towards those partner partnering value inflection points, and that will certainly be a focus for us through, the last parts of 2023 and moving into 2024. And it's important to note here that for these products, we're developing these under what's called a five zero five b two, regulatory pathway, which means that there'll be limited or no clinical development required for commercialization here.

10:15 Hence, the estimated launch dates of 2025 onwards for these programs. And then moving on to our licensed partners. So these are products where this are incorporating the ARISTAPEUTICS technology, which have been licensed licensed, to pharmaceutical companies. AT 02/20, we still anticipate will be the first product, to come to market incorporating the Aristat technology, and we anticipate this product being launched, later this year. And this is an important milestone for ARECOR, not only because it demonstrates the technology itself is approvable, by the major regulators here, But this is also under a royalty bearing agreement, and we'll be looking forward to our partners' progress in gaining market share within that existing multibillion dollar market segment, which, of course, in return will bring a recurring royalty stream to ARECOR, and that's really part of our strategy there for building, a growth and a self sustaining biopharmaceutical company.

11:18 Then for a t two nine two, this is a partnership with INHIBRIX and for their products Inhibrix one zero one. And, you know, Inhibrix have made significant progress across this program through the period. And most notably, they recently announced some very positive interactions with the FDA. That's The US drug regulator there where they've agreed an accelerated approval pathway for this product. So Inhibrix has publicly announced that they anticipate the next clinical study, which they plan to initiate imminently within 2023 and could be at the pivotal registrational study for this product, which means it would be the last clinical study required prior to filing for approval.

12:03 Hence the estimated 2026 launch that we have within our pipeline here. And then finally, Hikma Pharmaceuticals, as, I just mentioned on the previous slide, Hikma have made the decision earlier this year to take on that full development commercialization responsibility to a g three zero seven, which is a ready to use medicine. And this, will be developed under this five zero five b two regulatory pathway. And depending on now, speed of development by HICSMA and also interactions and data requirements from the FDA, we estimate, that launch will be in the region of 2025 to 2026. And, again, this is under a milestone and royalty bearing agreements with ARECOR THERAPEUTICS. Then on those pre licensed technology partnerships, so this is where we're working on our partner's proprietary products, which are either in development or already on the markets as life cycle management.

12:59 As I mentioned, we've entered into eight of these since the IPO, and we'll be working there to develop these enhanced formulations and formats of our partners' programs and looking to transition some of these partnerships through to those value building licenses there, which we'd anticipate again following our generally following our milestone and royalty bearing, agreements. And then on the commercialization, side and the commercialized products, these are essentially under Tetris Pharma. So really part of the well, really the main two reasons for the acquisition of Tetris Pharma was firstly, they had license rights to a product called Gluo. This is a ready to use glucagon pen.

13:44 So it's it's an auto injector very much like an EpiPen here for diabetes for treatment of severe hypoglycemia. So severe hypoglycemia is essentially classified as dangerously low, blood sugar, which needs to be treated with glucagon to bring that patient back up into a healthy blood glucose range here. So we very much believe in this product, and we also really understand this patient population. This is indicated for people with diabetes who are taking insulin. So the same patient population is at eighty two four seven and eighty two seven eight. And now under, ARECOR, we'll be looking to gain market share within that existing £100,000,000 market segment within our licensed territories, is The UK and Europe.

14:34 And the second, reason and the rationale behind, the acquisition of Tetris Pharma is that it provides us with optionality, with our own specialty hospital portfolio. These are ready to use medicines sold within the hospital setting here. So it gives us that opportunity to retain rights to The UK and Europe where it makes sense and certainly leverage it within negotiations with partners as we're looking to, commercialize and partner products within that portfolio.

15:07 So just really talking around a long term value here, partnerships are absolutely critical to ARECOR. We do enter into partnerships with major pharmaceutical companies, some of whom you can see named here, others who prefer to remain anonymous at this point. And it really validates the strength and the need of the technology, but also for ARECOR, allows us to build the business, allows us to build that future revenue growth as well as we convert some of these partnerships through to value generating and licensing agreements. And overall, across both our internal proprietary portfolio as well as our partner programs and pre licensed partner programs as well, we have a really strong pipeline of opportunities to drive future growth. And on the back of this, we made decision, and we're really pleased to be able to announce, earlier this month, the appointment of, Manjit Rahulu, who's joined us as chief business officer.

16:05 And Manjit really brings significant experience, around deal making within the pharmaceutical industry both in and out licensing, and we'll be very much focused on that partnering and the commercialization of our existing portfolio. Okay. So I'm just talking a little bit more around our diabetes products. I think, anybody that's tuned in previously, we've talked around, diabetes and the pandemic levels essentially and the crisis essentially for health care systems and patients and individuals themselves that's, brought with this, disease. It's now considered to be around five hundred and thirty seven million people living with diabetes, and the cost of treating diabetes and its complications is just shy of a trillion, dollars worldwide. And really sadly, due to the complications associated with diabetes, it's just under seven million premature deaths due to the disease, annually.

17:10 So really, ARECOR, what we're focused on here is developing improved treatment options, improved insulins that can help people with diabetes better manage their blood glucose and ultimately, improve their outcomes and quality of life. So we're focused on a very, specific segment of insulin. We're focused on mealtime insulins. And the reason for this is that for a person with diabetes who needs insulin to manage their blood glucose, their daily challenge is to try and keep their blood glucose within a healthy target range. And they can do this through most of the day and night, but the real challenge becomes around meal times because when we eat food, our blood glucose rises very rapidly. And the fact is that current gold standard insulins that are available today is still not fast enough. Acting. There's still more improvement that can be brought to the table to bring that blood glucose down into the healthy target range fast enough.

18:07 So at ARECOR, we're focused on developing much faster acting insulins and also more concentrated, very fast acting insulins to help people with diabetes better manage their blood glucose and ultimately then to better manage their outcomes by staying outside of that hyperglycemia and hypoglycemia, which lead to the severe disease complications associated with diabetes. And this market is a a current growth market. It's around $6,400,000,000, currently. And, again, with a partner, we'd be looking to gain market share in that market segment by bringing improved and superior insulins to patients. So starting first with AT two seven eight, I thought it'd be good to cover why. Why are we developing a very very concentrated rapid acting insulin?

19:00 Well, the need here is very much that there's a growing number of people with diabetes, particularly type two diabetics who require high daily doses of insulin to control their blood glucose. There's been primary research conducted in The US here, which is now showing that around thirty five percent of type two diabetics in The United States now require more than a 100 units of insulin a day to manage their blood glucose. And, interestingly, increase in type one diabetes also needing greater than a hundred units a day. It's around eighteen percent. And this is really going hand in hand for certainly for type two diabetes with the obesity pandemic as well. It's also estimated by 2030 that over fifty percent of US adults will be considered to be obese.

19:49 And that really drives as your BMI goes up, you tend to need more insulin to manage your blood glucose. And for type one diabetics, it's a combination of insulin resistance as their disease progresses and also, increasing number of high BMI type one diabetics. And currently, there are two treatment options available to these high insulin users. They can either use a current gold standard rapid or ultra rapid acting insulins. These are insulins from Novo Nordisk, Eli Lilly, Sanofi, Aventis. However, these are only available at lower concentrations, so hundred units per mil and one insulin from Eli Lilly at two hundred units per mil. So this means to get their high insulin doses on board, it requires high injection volumes, which can be painful and multiple injections multiple times a day.

20:44 Or they can select the only highly concentrated insulin that's available. It's a product from Eli Lilly. It's called Humulin r u five hundred. So it's five hundred units per mil, the same concentration as a t two seven eight, but it has an intermediate acting profile there, which means that the patient gets the benefit of lower injection volumes and fewer injections a day, but there's a compromise around blood glucose control, particularly around meal times. And we know that you need those faster acting insulins to control your blood glucose around meal times and improve your outcomes. And then the secondary need and really an opportunity to really disrupt, the market is that we're very much seeing, for insulin pump users a drive towards miniaturization of these insulin pumps, so they're much smaller body worn pumps, and a drive towards longer wear time, so seven day, use. And actually, first seven day infusion set has also been approved from Medtronic.

21:47 Now if we want to have much smaller pumps and for the patient to be able to wear them for longer, it means that you need to get more insulin onboard in a smaller injection volume. But we can't compromise here on blood glucose control, So these need to be very highly concentrated and very rapid acting insulins, which is the, profile of a t two seven eight. And the challenge here essentially that we've been able to overcome is that as you concentrate insulin up, it slows down its time action profile, I. E. It comes becomes slower acting. And we know that we need those faster acting insulins for that improved blood glucose control. And ARECOR remains the the only company that we're aware of today that's been able to meet this challenge and overcome this challenge and develop a very highly concentrated rapid acting insulin. So we have a market leadership position with AT two seventy eight.

22:42 And just to talk a little bit more as well about the market, there, as I was talking about, there's an increasing number of people with diabetes, particularly type twos that are requiring these, high daily volumes or daily units of insulin to control their glucose. And we can also see this through for through prescribing of insulin. So, again, this data is available for The US here, and you can see that in The United States, the number of prescriptions for the concentrated insulin, so u five hundred. This is Lily's Humulin R u five hundred. It's got a CAGR of just over 8%. And u two hundred, which is a rapid acting insulin two hundred units per mil, also Eli Lilly product has a growth rate of over 10% here. So we can see that patients are requiring these higher injection volumes and moving towards those higher insulins, although there are some of those compromises that we spoke about here. And this market, so the concentrated insulin market is worth up to around a billion dollars today. So, again, we'd be looking to take market share with a partner for a t two seven eight, with an insulin that's best of both worlds essentially.

23:56 Lower injection volume, fewer injections a day, and, a best in class, PKPD profile, so good glycemic control. And then from the disruptive element, this opportunity to enable more concentrated more concentrated enabling miniaturization of insulin pumps and longer wear time. Again, very much seeing markets moving in patients, both type twos and

24:19 type ones, moving over to insulin pump therapy to improve their outcomes here. So there's real opportunity in the remainder of that market. So over a billion, $5,000,000,000 there to convert from those existing rapid acting and ultra rapid acting insulins to a t two seven eight. And I'll really talk you through some of the clinical data now that gives us, increased confidence of the superiority of a t two seven eight. So what we're looking at here is our, phase one clinical results from our first phase one clinical study. This was conducted in type one diabetic patients, and we were comparing eighty two seventy eight at five hundred units per mil compared to Novo Nordisk gold standard rapid acting insulin, NovoRapid, as a hundred units per mil. So what we're seeing here on the graph on the left hand side, is the pharmacokinetic data.

25:11 So this is essentially, insulin appearance in the blood and insulin on board post injection. So the injection's at time zero here. And what we were looking to achieve with this study was non inferiority to NovoRapid. So we wanted to show that despite that fivefold increase in concentration, the a t two seven eight, that it's that we were able to get the same amount of insulin on board at this over the same rate as NovoRapid. But what we actually showed in this study that we we met all of those primary endpoints for noninferiority, but as you can see from this graph, there's a shift to the left of the yellow curve. This is a t two seven eight, which shows that we'd I had indeed accelerated the absorption of a t two seven eight compared to NovoRapid, and we were getting more insulin on board faster in that first sixty minutes post injection.

26:04 So despite that fivefold increase in concentration, we were actually showing superiority here, which was at the very high end of our expectations for this product. And then if we look at the graph on the right hand side, this is pharmacodynamic profile. So effectively, effectively, this this is is our our glucose lowering effect here. And, again, we saw the PK results, translate over to the PD. And what we're seeing here is that we accelerated the absorption of insulin post injection, and this translated into a greater glucose lowering effect. So we saw a faster and more pronounced glucose lowering in that first sixty minutes post injection, which demonstrates that a t two seven eight has the potential not only to lower injection volume and fewer injections a day, but also to better manage blood glucose around meal times even compared to those gold standard lower concentrated insulins that are available.

27:00 Now in terms of the the clinical study that we have initiated and started dosing in 2023, as, I mentioned earlier, we're anticipating results, in quarter four of this year, and we're very much looking forward to reporting those. This is a phase one clinical study in, adult type two, patient populations. They will receive eighty two seventy eight and NovoRapid, so that's Novo's rapid acting insulin, and also human RU five hundred. So this is this head to head comparison against those two treatment options that are available today. So this is really key, data for us. It's in the target patient population. It's compared against their two treatment options, and we'll be looking to, demonstrate that superiority of a t two seven eight, within this clinical study, which will be important data as we build out our data package for partnering, for this product as well.

28:00 Moving on to a t two four seven. So a t two four seven is a 100 unit per mil, so standard concentration ultra rapid acting insulin. And what we're looking to achieve with a t two four is the fastest acting insulin available to patients. And the reason for this is that we see the potential for AT247 to enable a fully closed loop artificial pancreas system, which would be really transformational for patients today. So these are systems whereby the patient wears a continuous blood glucose monitor, which measures their blood glucose at any point in time. These measurements are transferred to a algorithm which calculates based on their blood glucose reading how much insulin do they need to keep their blood glucose inside that healthy target range, which is then automatically delivered via the pump.

28:54 These systems are, in use today, but they're called artificial they're called hybrid closed loop systems. And the reason that they're hybrid is that around meal times, because those insulins that are available today are not fast enough acting to counteract that swift rise in blood glucose at meal times. Instead, the patient, requires a bolus dose. So he needs to instruct the insulin pump to, give it one single larger dose of insulin to manage that blood glucose around meal times. So what we're looking to achieve with AT two four seven is the fastest acting insulin which will allow the patient to stay in that closed loop mode even around meal times and to better manage their blood glucose and outcomes. And very importantly, to reduce the burden of the disease for that patient because it will be automated and managed for them so they don't need to intervene around mealtimes.

29:55 We're very much seeing again, as I mentioned, patient populations switching over to insulin pump therapy. And you may have seen recently in the news, around NICE approving, access to artificial pancreas systems to type one diabetic patients in The UK. So about twenty five percent of those type one patients in The UK now will have access to these systems, to that hybrid closed loop systems. We're looking at enabling that next generation then fully closed loop system.

30:26 So in terms of the data, I'll I'll run through this, quite quickly because this, has been in the public domain and we we've spoken about this previously. So on the left hand side, you've seen the data from our first phase one clinical study, in type one diabetic patients. So, again, what this data showed is eighty two four seven is in the green and FIAAS, which is Novo Nordisk ultra rapid acting insulin, so, you know, the fastest insulin that they have out there available to patients. And what you can see from the top left hand graph is this is pharmacokinetic data. So we accelerated the absorption of insulin, and we got more insulin on board faster compared to gold standard FIAS and also NovoRapid, of course. And then in the bottom right hand side, this is pharmacodynamic data. And, again, we saw that increased and improved blood glucose lowering impact of that faster absorption of insulin.

31:23 And then back in quarter four of last year, we were able to report headline results from our, second phase one clinical study. This was performed in The US, again in type one diabetic patients, but this time when they had the insulins delivered over three days via insulin pump, which is important because we see the insulin pump patients as the primary, patient population who will receive the most benefit from AT two forty seven. And again, the study, demonstrated that we significantly accelerated absorption of insulin and early exposure. So this is a PK profile getting more

31:59 insulin on board faster compared to those gold standard insulins. Now NovoLog is the same as NovoRapid. It's The US, name for the product and FIASP. And, also, we saw this, superior glucose lowering effect compared to to NovoLog and very similar profile there for FIASP. So this data now gives us confidence that a t two four seven does indeed accelerate absorption, we get more insulin on board faster, and has that potential to enable that fully closed loop artificial pancreas system. So moving on to, Tetris Pharma. As I mentioned, we acquired Tetris in August of last year, which is brought into the group now as sales, marketing, and distribution platform across The UK and Europe for hospital based products as well as ready to use glucagon here. So we're really pleased with the progress under Tetris Pharma and the integration there into the group.

32:58 At the time of the acquisition, Tetris had made available the products in The UK. It was relatively soft

33:06 launch there due to funding. And since the acquisition, we've continued to roll out the products in The UK and build awareness and obviously then sales of the product within The UK. But also, we've launched in Germany in November of last year, and then in January of this year, launched the product, in Austria. And moving forward, we plan to, launch the products in additional key territories across Europe. And when we talk about key territories here, this is where in territories where there is a sufficient prescribing population, a sufficient number of patients, a history of prescribing glucagon, and that's the market we'd be looking to switch, And that there's favorable pricing reimbursement.

33:54 Of course, the margins of this product would be important as well. So our next focus territories will be The Nordics, which meet all of these criteria. And again, then we're looking to really build, the awareness of that product and obviously build the availability of the product to patients for the use of the treatments of severe hypoglycemia. And in turn then taking market share within that existing 100,000,000 markets across The UK and Europe. So I'm just going to hand over to Susan now to talk you through the financials. Thank you, Sarah. And I'm very pleased to present our first full year of financial reporting as a public company following our IPO in June 2021.

34:41 Financial highlights slides for 2022 reflect our progress in that year and our focus on strategy that we set out at our IPO. Total income doubled year on year from $1,800,000 in 2021 to $3,500,000 for the year just ended and both revenue and grant income increased over 2021 levels. Our revenue base expanded to include revenue from Tetris Pharma product sales in the five months post the acquisition in August 2022. And this performance was in line with our expectations. And I'll go through our revenue in a little bit more detail on the next slide. We expect this expansion and growth in our revenue base to continue, including as you've heard from Sarah earlier, potentially our first recurring royalties later this financial year.

35:32 We had an increased investment in r and d in the year, which was as planned, and that was for clinical studies for both 247 and for 278. Tetris Pharma required in the year on a share for share exchange, and we also raised 6,000,000 of new working capital from existing shareholders. So we ended 2022 with cash and short term investments of 12,800,000 sterling, and our cash runway underpins our value inflection points and our diabetes programs and also potential deal points for our specialty hospital franchise. Thank you, Sarah. Next slide. So just teasing out some key financials, particularly the this growth in revenue that we talked about. The doubling of total income included growth in formulation development revenue from technology partnering projects, of which we have signed eight new agreements since our IPO.

36:27 It also represents a positive impact from Tetris Pharma for those five months period. And also a full year of grant income from an innovative grant, which we were awarded in 2021. That grant income, when you consider it, it really supports our investment in r and d for two four seven and two seven eight, and that grant income will continue at that level for a further fifteen months.

36:51 Our loss after tax reflects an increase in r and d over the prior year to 8,600,000 compared to twenty twenty one of five point four million. And just to comment that effectively, that reflects the cost of running two studies concurrently. And in 2023, we are running one study for two seven eight, so we will expect that R and D expenditure to decrease this year. Our SGA and A expenditure increased in 2022 compared to 2021, and that reflected effectively '21 was a very much a year or two halves because we became a public company in June 21. So we have a full year of being a public company in '22 plus the additional s g and a costs from Tetris Pharma who are now fully consolidated and reported as part of our

37:43 group accounts. So net assets at the end of the financial year was 17,500,000, slightly different mix from 2021, cash and investments of 12 to eight. We have an increased tax receivable. We receive R and D tax credits as a knowledge intensive company. And in 2021, we received just under 800,000 of tax receivable, and we expect that to be in the order of 1.3 to reflect that increased R and D expenditure in 2022, and we would expect that in the second half of the financial year. Our trade receivables have increased over the prior year, and our payables have also in increased. And and in effect, those payables reflect the timing of the closing costs for the two four seven study and the start up costs for '2 seven eight, which will continue. That study was initiated earlier this year, and those costs will continue during 2023.

38:41 Thank you, Sarah. Back to you. Great. Thanks, Susan. So really just to round off the formal presentation today, would be useful really to talk through, you know, what we see coming up actually within the business through 2023 and beyond. So, you know, as we talked through today, the clinical results from AT two seven eight, the current ongoing study will be key. This will provide key data set in the target patient population for this product, also comparing against those gold standard treatments that are available today. So we'll be looking forward to reporting those results later this year. And then I think from a, partnering and a revenue growth perspective here, clearly, the launch of a t two twenty, which then would move into recurring royalty streams is, key for the company, both validation of the approvability of the technology, but, of course, those very important recurring royalties as well. So we'll be looking forward to be able to provide more news around that program as we're able to. And then also as we've talked about, there's significant partnering opportunities here from our portfolio, both from, the transition of some of our specialty hospital products through to partnering and those value inflection points as well as those pre license technology partnerships as you're generating revenue today within the business. We'd anticipate adding more of those technology partnerships through 2023 and also, of course, guiding those through,

40:13 to value driving licenses. And then through Tetris Pharma, we see the increased rollouts of Agluo across those key European territories and also building market share within those markets that we're already in. So The UK, Germany, and Austria and start to step through that revenue growth of the business there. And I think this really puts us in a position that we've got a very solid base to work through and work on in terms of partnering opportunities and value inflection points that we then anticipate really building towards that building a self sustaining biopharmaceutical company as we go through 2024 and beyond. So that really concludes the presentation for today. So thank you very much for everybody for tuning in and listening, and we'd be happy to run through the questions that will be submitted through the the q and a. So if you do have any, there I can see some are popping up now. So there's some questions and we'll we'll talk through those.

41:16 But if anybody has any additional questions, please do ask them. Sarah, Susan, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via investor dashboard. As you can see, we have received a number of questions throughout today's presentation, and thank you to all investors for submitting their questions. Could I please ask you to read out the questions and give responses where appropriate to do so? And I'll pick up from you at the end. Great. Thank you. So, yeah, I'll just work through them in order. So, the first question is in the CEO's review, we had this statement. We believe that further investments in the diabetes program will take the products to a significantly higher value inflection point prior to partnering.

42:09 Did this indicate the intention to invest further after the current a two seven eight trial? So I think in terms of this statement, you know, essentially, it's referring to the current clinical study, that investment that we're making into the a t two seven eight study that's ongoing currently that we started dosing in March. And we do believe that that study for all of the the reasons that we've run through today will add significant value to a t two seven eight and then value to the partnering package across a t two seven eight and a t two four seven as a whole. And I think here, you know, we've always been quite clear on our strategy for our diabetes programs here is to develop data packages that demonstrate the benefits and the superiority to patients.

42:56 That's really crucial to us. Our mission here is to transform quality of life and patient care, leveraging the technology platform and to generate those clinical packages that obviously strengthen our partnering, opportunities there and really to take those closer to market to those higher value inflection points. So our focus at the moment is very much on the ongoing clinical studies. As we said with AT two seventy eight, the the first set of clinical data was certainly at the very high end of our expectations there, non inferiority, but also showing superiority. So we we believe very much believe in the value of a t two seven eight. And I think as we we come to reporting headline results, that will offer us with a data package to make those choices of of where that optimum value inflection point is for AT two seven eight. And in parallel to these studies will most certainly be, deepening our engagements with partners and the data and clinical data packages will provide further evidence of the superiority and further deepening those partnering discussions.

44:08 So next questions for you, Susan. The question is r and d and s g and a equals 14,000,000. Might need to get your calculator out. Next net current assets, 13,800,000. Will next year income increases outweigh growth in costs and rebuild cash? Thank you. Thank you, Robin, for that question. What I would say, and I think I probably touched on it in the presentation, is that we had a planned significant investment in r and d in 2022, which was reflected in our use of proceeds and our plans that we set out at IPO. What we would expect is that the r and d expenditure from a cost perspective will probably reflect closer to what we reported in 2021 during this current current financial year. So that'll be in the order of $55,500,000 this year. So that effectively managing our cash flow is a combination, as you quite rightly point out, some potential increases in our revenues that we've talked about today, but also managing our cost base.

45:16 And so next year, I think that from a cash runway perspective, we are confident that the revenue that we have plus our control of costs will support the cash runway that we have. Great. Thanks, Susan. So the next question from Chrisabel. Could you please comment on recent price reduction in insulin products by Lilly, Novo Nordisk, and Sanofi, and whether this would affect ARECOR pricing strategy? And a follow on from this, also, please comment on a Gluo competitive position versus Vaximi. So, you know, the first question around, insulin pricing, really good question. So recently, Lilly and Novo in particular announced, reductions in their list price that they'll be bringing in reductions in their list price for insulins up to around 75% here.

46:15 And, you know, we've we've obviously looked at this in in some detail, and there's some been a number of external analyses of this now. And we actually see this as a very positive, advancement actually, and I'll talk through why. You know, the first on on the list pricing, this is clearly, of benefit to patients. So if the list prices of insulin is reduced, that means the and and this is in The US. This means that the copay, so the amount that the patient has to pay themselves out of their own pocket is also reduced. And I think this has been, you know, part of the driver for these initiatives there. So it's good for patients, but it's actually, also not having the, detrimental effects as you would expect on manufacturers here, so those major pharma companies there. And and the reason for this, there's a number of reasons for this. The pricing and reimbursement landscape in The US is is quite complicated, but essentially, the there's the list price from the major manufacturers, so from Novo and Lilly and Sanofi, for example.

47:22 And then there is rebates of up to about 80% to pharmacy benefit managers. So there's this middleman in the middle there. And it's not clear how these reduction in list prices and and the impacts of that's going to be shared between the manufacturers and the, pharmacy benefit managers. But if we assume that it stays as it is today and it's just a sort of proportional reduction there, the reason why the impact, is expected to be minimal to no impact on the pharma company's revenues is that there's also in The US, new legislation has been brought in to incentivize the reduction of list prices, there. And, essentially, this incentivization is if they reduce their list prices below a certain amount, which is what happens with this 75% reduction, then the government are removing the cap on rebates. So rebates that the pharma companies have to pay into the Medicaid system. And and Medicaid in The US is insurance that covers, low income individuals.

48:31 And currently, the, the pharmaceutical companies don't make any profits in this area, but, with the removal of the rebates, that changes. So there's actually been a really nice analysis done by, Vida Partners where, they they did a full analysis of this landscape, and their, outcomes from that review was that they expect minimal impact and actually probably a slight increase in revenues and and profitability from the pharma companies as a a result of these list pricing. So from a pricing strategy, perspective for ARECOR, and ultimately, this would sit with our partner, we still we anticipate no changes there. The the value proposition that we bring to the table is that we because we're taking existing insulin and existing infrastructure and enhancing that that our insulins would be brought to market at the same price, so same list price as Novo, Lilly, and Sanofi here, and that we would be but we'd be bringing additional benefits to patients and in that way gaining market share.

49:42 Sorry. I know that was a long answer, but it's quite a technical, question and answer there. And on a gluocompetitive position compared to Baqsimi. So Baqsimi is a nasal glucagon. So it's also a ready to use glucagon product, but it said ministered, nasally. It's currently probably a slight update here. It's currently owned by Eli Lilly, but they announced yesterday, I think, day before yesterday, within the last couple of days anyway, that they are, that Amphastar are requiring full worldwide rights to vaccinate from Eli Lilly, there. But, essentially, you know, we'd expect it to remain on the market.

50:30 And what we can say there is, you know, so the patients have available to them today either the lifelike kit that requires a complex reconstitution process, Vaxinis, nasal glucagon, or Agluo, which is called Gvoke in The US. Same product there. And so it's essentially a patient choice. Some patients will prefer Agluo as in a, auto injector pen much like an EpiPen. Some patients will prefer nasal delivery. What we what we can say and what gives us confidence in terms of ability to gain market share is this is the same competitive environment as The US. And Zerus, own Gvoke. We've licensed rights from Zerus for Europe and The UK.

51:15 They own this product in The US. It's called Gvoke. Same product as Aglua, essentially. And they've been gaining market share year on year now. So they Gvoke now has 23% of the glucagon market in The US. And, actually, in the last full year results, they reported a 35% year on year increase in market share of Gevo. So it's showing that the market is moving over to ready to use glucagons, but also importantly that there's a year on year increase in scent market share for Gvoke, which is showing that that move of prescribing and patients moving over to that ready to use glucagon. So we'd expect to see and, you know, that's what we'll be working with as well to see that same increase in market share across Europe. It's essentially it's the same patient population with the same needs there. So we would anticipate being able to also gain market share in the same competitive environment.

52:21 So next question from Robin eighty two twenty. When will partner be announced? It's a good question, and the honest answer is we don't know. So, you know, currently, you know, for under our confidentiality agreements, our partner doesn't want to be named at this time. I think as the product progresses to market and certainly on market, we'll be working very closely, with them in terms of announcing the product and the name of the company there. But, you know, we can't give a definitive answer, unfortunately, on that today. Question from Chris. How optimistic are you about the next twelve months? I think the answer to that is is very optimistic. I think as we've talked through today, I think we've got a derisk portfolio here both in terms of taking existing medicines and improving them, but also the breadth of the partnering and value generation opportunities that we have on the table. This isn't a single product asset.

53:24 You know, we we license it or we don't. We've got our diabetes products, specialty hospital. We've got existing licensed programs where our partners are taking those through developments and much closer to market. We see AT two twenty anticipated to be on market, later this year and also those prelicensed partnering opportunities. So I think across the board there, you know, we've we've got a a really solid basis for for growth and now, obviously, bringing CBO on board as well gives us that extra expertise and, capability to to move forward and realize those value generating opportunities that we have. So in terms of next question from Paul, Tetris, what's focus and progress expected on their non insulin products?

54:23 Is insulin focused pragmatic re resource, or is it about streamlining stroke pivoting Tetris to be an ARECOR aligned division rather than broader market business. So, you know, I think in terms of Tetris here are, you know, the two primary drivers for acquiring Tetris with Igluo as a product, as we mentioned, and being aligned with our therapeutic area of focus in diabetes and also a product we really believe in brings benefit to patients there and also that optionality across our own specialty hospital portfolio. So that's really very much our focus is to, you know, continue to, launch and build out Agluo across those territories and also moving forward then to assess opportunities for bringing additional products from our own internal pipeline through into commercialization in Europe. And that's very aligned with our taking products closer to market and retaining more of the value there. So that's very much our our strategy and our rationale for Tetris Pharma.

55:39 Just look in terms of these final. Sorry. My screen is frozen. Okay. A question from Paul. I think it's for you, Susan. In and you may or may not be able to answer this. Let me know if you can't because it's about the broker notes. In broken notes, there's assumed equity financing of 1,000,000 in 2023 and 1,500,000 in 2024. What drives that assumption? Thank you, Sarah, and thank you, Paula. I think it probably is a question we need to take offline because we are covered by three different analysts, so it's probably which one you're referring to. It isn't something I'm familiar with. It certainly isn't part of our cash flow modeling.

56:28 Just to add that our accounts and accounts that are published on a a going concern basis. And so we look at our cash outflows and inflows over a twelve to eighteen months period post signing the accounts. And as we have talked through the presentation, you know, we're looking at a step up in revenue in 2023 and actually possibly a reduction in r and d from prior year. So that's what we've been focused on in terms of modeling our growing concern and our operating cash flows. So the equity point is something I'll we can catch upon outside of this presentation. Great. Thanks, Susan. And Robin, there's a the question you've asked about the liquidity of the shares there and and actions around that. I think that would be a a question best placed to Pamela Gordon's there.

57:22 But, you know, what what I would say on that is, you know, as a sort of management team here and sort of leadership of the business, we're very much focused on delivering value. And I think as we've talked through today, you know, we've got significant opportunities, to, enter into and deliver on those value inflection points of the business. So our focus is very much in building a growth business and to, build those revenue streams to ultimately, meet our ambition of of building a large self sustaining pharmaceutical company. Obviously, there's no end to that. You know, we want to continue that growth and and continue, you know, the size and strength of the company. And I think in doing so, there, that will, you know, also support the company in terms of valuation, etcetera. But I, you know, I think in terms of the liquidity point, it's it would be best to talk to family or us about that.

58:21 So I think that's all of the questions for today. So if there's no additional questions, then I think we'll close. Sara Sara, Susan, thank you. And I think you've addressed all those questions you have from investors. And, of course, the company will review all questions submitted today, we and will publish those responses on the Investor Meet company platform. Before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, Sarah, could I please just ask you for a few closing comments? Yeah. Sure. I'd say thank you for everybody, joining us today and your, you know, continued interest in ARECOR. I think as we've talked around today, we're really looking forward to 2023 and beyond. I think we're in great shape as a business, and I think we've got significant opportunities to continue to to grow the value and and really execute on our what you know is a very commercially focused strategy that we have within the company.

59:17 So thank you for joining. And and as Susan said, you know, feel free to contact us outside of this format as well if you've got any additional questions. Sara, Susan, thank you for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of ARECOR THERAPUITIX PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.