Nxera Pharma Co., Ltd. (4565) Q2 2026 Earnings Call Transcript

Now, it is time to start Nextera Pharma webinar for first half FY2026 financial results. Thank you very much for joining, despite your very busy schedule. My name is Nomura, CEO of the company serving as the MC. Today we have CEO, Chris Cargill, COO and President of Nexera Pharma Japan, Toshihiro Maeda, CSO and President of Nexera Pharma UK, Patrick Forge with us. We have simultaneous interpretation. Please click the icon of language and select either Japanese or English for interpretation. If you turn it off, you can hear the original voice of the speaker. As for today, we will have the explanation of the materials, and in the latter half, we will have the Q&A session. Presentation slides are available on the screen, but they are on the company's homepage as well. If you need them, please enter from Investor Relations, IR Library, and Presentations to access the materials. As for the Q&A, institutional investors, analysts, and media people, when the time comes, please ask questions by raising hands. The others, please submit the questions from Q&A button. During the webinar, you will be able to submit your questions, and we would like to respond as long as the time permits. Without further ado, we would like to move on to the presentations. First of all, Chris will talk about operational highlights, then I will talk about the summary of the financial results, Maeda will speak about Japan APAC commercial, and Patrick will talk about UK R&D, and lastly, Chris will talk about the road ahead. Now, please turn to page 5 of the materials. Chris, over to you.

Thank you very much, Nomura-san. And just a quick disclaimer, please note that today's presentation does contain forward-looking statements, and the actual results may differ from them. The details are here on slide number two. So welcome and thank you for joining us for Nexera Farmer's results for the first half of financial year 2026. I am Chris Cargill, President and Chief Executive Officer of Nexera Farmer. This is the story of a company that is moving rapidly from investment to delivery, and I'm very pleased to take you through it. You will see growth of revenue, a return to profit, and a clear external validation of our science. Now, the next slide brings the whole half together on one page, so please turn to it now. So, in the first half, we grew revenue, returned to profit, and saw our partnered signs validated in the market. On financial performance, revenue grew 25% to 18.9 billion yen. Operating profit moved from a loss of 2.8 billion yen to a profit of 1.9 billion yen. And core operating profit increased from 364 million yen to 6.5 billion yen. Now, both our commercial products business and our platform business turned profitable. In commercial products, Pivla's sales reached 6.3 billion yen, up 9%, and Kivivik sales reached 3.6 billion yen, up 127%. On the platform side of our business, we achieved multiple revenue-generating milestones from Eurocrine. AbbVie, Sentessa, and Lilly, and we created the new company for a GPCR-targeted program with up to $275 million in potential milestones, plus royalties, and a significant minority equity ownership stake. Our Erexin agonist science was validated in the market. Lily's acquisition of Sintessa, whose Erexin portfolio was generated on our platform, valued that business at up to $7.8 billion. Now, this is an external arm's length reference point for the value that our platform creates, and it highlights just how serious Lily are in making brain health and broader neuroscience the next big category beyond obesity. Our muscarinic science is also advancing on its own terms. Our partner, Neurocrin, continues to progress directly in the differentiated M4 program, which is moving towards a phase three data readout in the second half of 2027. And we regard this as a distinct source of value within our partner portfolio. Now, let me turn now to how this progress maps against the objectives that we set out at the start of the year. Please turn to the next slide. So, against the five priorities we set for this year, we are on track or ahead on every objective. On net product sales, we've reached 9.9 billion yen, which is 51% of our 19.5 billion yen plus target for the year. On adding late-stage assets for Japan and Asia-Pacific, we have multiple discussions ongoing. And on new high-value partnerships, we are in active term sheet discussions. On partner-sponsored trials, we achieved our goal with the start of a Phase 2 study of NBI 570. And on cost and profitability measures, we set out to reduce total costs by 10% and to reach full-year profitability on an IFRS basis, and we achieved profitability in the first half following Q1. Now, to take you through the financials in detail, let me hand over to our Chief Financial Officer, Nomura-san.

Thank you, Chris. Here, I will explain the summary of financial results in first half FY2027 by segment and the historical trend. Please turn to page 8. As Chris mentioned, the revenue. Against 15.5 billion last year increased by 25% to 18.9 billion yen. The milestone revenue grew from 5 billion to 8 billion yen and product sales in red from 7.5 billion to 9.9 billion yen respectively. These are the major drivers. We received milestone from our key partners, NeuroKline, Lilly, Abby, Sentesa, and once again, since this was acquired, Lilly, and with these whole partners, saw progress in development resulting in milestone payments. I will skip the numbers as they were mentioned earlier, but both products grew steadily. In terms of profit, core OP was 65 billion yen, 1.9 billion yen on IFRS basis. Although it slightly declined compared to Q1 where milestone was concentrated, the progress is in line with the full-year forecast for both revenue and cost. On the next page, I would like to show the breakdown. Turning to page 9, as usual, It shows breakdown by business domain and consolidated P&L core and IFRS. The far-left blue platform business is so-called bio-venture type business model, as you know, and next to it in red is the commercial business, so-called pharma type business model. The profit of the platform business is heavily dependent on milestone from partners. While it is difficult to control by the company, we aim to stabilize revenue in red by driving commercial business. We achieved steady progress on milestone during the first half of the year, the platform business secure profitability on a core basis, and the commercial segment saw significant growth in both revenue and profit regarding costs, specifically SG&A and R&D expenses, which have been working to reduce since last year's spending is tracking in line with our full year forecast. Standing at 49% and 50% of the projected amounts despite some minor fluctuations in specific areas. Thanks to, in part, to these efforts, the commercial business in particular is shifting toward a higher profitability structure with profit growing by 38% against sales growth of 11%. That concludes my brief explanation on first-half financial results. Next, Maeda will cover Japan APAC commercial. Over to you.

I will now provide an overview of our Japan and APAC operation. I am Maeda COO. Thank you very much for today. I will explain the current status for our three main products. First is PIVLATS. It is an endothelin A receptor antagonist for prevention of cerebral vasospasm after aneurysmal subarachnoid hemorrhage, and it's our first in-house product to be launched. The graph on the left shows quarterly sales. As you can see, there's a seasonal pattern with higher sales in Q4, but if you compare the same quarters across different years, you will notice that sales have grown year on year. In Q2 of 2026, total sales totaled 3.4 billion, and cumulative sales for the first half reached 6.3 billion yen, showing steady growth compared to the same period last year. As our market share exceeds 70%, it stands to reason that our future growth drivers will shift from securing new sites to optimizing dozing and expanding the patient segment receiving perceptions. From this perspective, a key initiative is the Practical Guide to Clasocentan Administration, published by the Academy Society in March of this year. These guidelines systematically organize insights regarding the administration of pivlots in real-world clinical practice, and we believe they will lead to appropriate treatment for a greater number of patients. Next, I will explain QVVIC, a medication for treating insomnia. It is a novel drug belonging to a class known as Dual Oryxin Receptor Antagonist, or DORA. First, please look at the graph on the left, which shows the structural changes in the market itself. In the field of insomnia treatment, DORA is rapidly establishing its position, replacing traditional benzodiazepine. The DORA market share, based on the number of tablets, is projected to reach 40% by 2026. In terms of market size, the total DORA market has expanded to 83 billion yen. We believe this structural shift is still underway and that there is significant room for growth. The graph on the right shows Kuvivik's position within this context. Revenue in 2024 was 1.3 billion yen, while in 2025, it reached 4.3 billion yen, a significant increase of 224% year-on-year. For the full year FY26, we project revenue of 5 to 6 billion yen, representing 30% increase year-on-year. As of the first half, revenue stood at approximately 3.6 billion, indicating steady progress. As of June 26, Kuvivik's market share within Dora class stands in the low 9% range. Although the market is still dominated by leading drug, Lebrexant, the growth is driven by two concurrent tailwinds in the fact that this product as a latecomer is steadily gaining market share and the fact that the class itself is expanding. We will continue to work with Shionogi to carefully communicate this drug's key features, such as minimal carryover to the following morning and improve daytime function and expand the base of prescribing physicians. Next, please. Finally, let me explain. Vamilarone, a new product we launched in early 26. The drug is indicated for the DMD. For many years, corticosteroid have been standard of care for treating this disease. However, adverse events such as growth suppression, decreased bone density, fractures, and cataracts have been main challenges, and it's not uncommon for a patient to find it difficult to continue the treatment. Vamilarone is a drug that directly addresses the challenge of strong effects but side effects that are too difficult to tolerate. Top-line results from the recent Guardian trial demonstrated that compared to standard costeroid, Vamilarone significantly improved safety while maintaining efficacy. I'd like to highlight three specific features. First, regarding growth, normal growth was maintained with an average height difference of 12 centimeters at the five-year mark. Second, regarding bone health, the vertebral fracture rate was 8% in the vomulurone group compared to 42% in the deflazacort group. Third, regarding eye health, the incidence of cataracts was 5% in the vomulurone group, and there were zero cases of glaucoma. All three factors determine whether patients and their families can continue treatment over the long term. We believe that the reduced side effects, which enhance treatment adherence, represent the greatest value of this drug. The chart on the right shows the consensus sales forecast for Bemaluron in other countries. According to Evaluate Pharma's forecast in September 25, which combines data from Catalyst in North America and Santera in Europe, the market is expected to grow to $670 million. We believe that this level of international recognition serves as an important reference point when considering the potential of this drug in Japan and the APAC region. Based on this clinical differentiation, we will steadily proceed with preparations for our regulatory submission. This concludes my presentation on our Japan and APAC operations. Nomura-san, over to you.

Thank you. Thank you, Patrick. Can you move on to R&D?

Yes, thank you. My name is Patrick Fauche. I'm the CEO of Neuxera. Can you move to the next slide, please? The first half of 2026 was a period of strong execution across the portfolio. We achieved multiple milestones spanning discovery, clinical development, partnering, and regulatory process. In discovery, our collaboration with AbbVie and Lilly generated further milestones, reinforcing the value of the NextWave platform. In the clinic, Neurocrine initiated a Phase 2 development for NBI 517 schizophrenia, triggering a 22.5 million milestone. We also continued to build value across the OREXIN portfolio, receiving milestones linked to the progression of OREXIN 142 and 489. Beyond this part of the pipeline, we advance our broader strategic portfolio through the licensing and approvals in Japan and selected Asia-Pacific regions. More importantly, these milestones underline the exceptional commercial potential within our portfolio, and particularly our neuroscience portfolio is very compelling. With Neurocrime, we now have the world's broadest muscarinic franchise covering M1, M4, a dual muscarinic agonist. Direcline is the most advanced and the first selective M4 agonist currently in phase 3 trials, together with a wider muscarinic pipeline across schizophrenia and Alzheimer's disease. And we believe directly in its competitive position has become even stronger following MapLite's recent Phase II readouts for their M1 and M4 program that only achieved a modest placebo-adjusted benefit dosed once daily. For Orexin, the acquisition of Sentessa by Eli Lilly provides a powerful validation of the quality and the strategic importance of the three Orexin agonists discovered through the collaboration with Nixera. We're very excited that Lilly indicated progressing all three Orexin programs and that they are benefiting from Lilly's global capability. That substantially increases the potential of the rexin molecules across sleep, neurological, and wider neuropsychiatric disorders. The key message for the first half is not only that we delivered a strong series of milestones, but that the underlying clinical pipeline is becoming increasingly valuable, increasingly validated. And increasingly capable of generating significant future return for shareholders, as well as value for patients. Can we please move to the next slide? Along these partnered assets, our internal portfolio includes three differentiated clinical stage programs in schizophrenia, IBD, and immuno-oncology, each with a clear upcoming value creation opportunity in the second half of 2026. The first program is MXE149. Our GPR52 agonist for schizophrenia, and that represents a generally novel approach to the disease by addressing positive symptoms, improving negative symptoms, and cognition, areas where current therapies remain inadequate. NXE 149 has completed Phase 1 development with a strong data package and is fully Phase 2 ready, and we are in an advanced discussion with several parties to partner that program. The second program is NXE 744, a gut-restricted EP4 agonist for IBD. The program has delivered strong Phase 1b data. By proving pharmacological activity in a human in the messaging challenge model, and therefore showing that it's promoting mucosal healing. As the exposure is got restricted, we see minimal systemic exposure and an excellent safety profile. As this mechanism is applicable as a monotherapy, as well as an add-on to biologics, we do see great interest in the program and have selected a number of major players in the INI space for advanced negotiation. The third program is NXE734, an EP4 antagonist for immuno-oncology. Finally, the ongoing Phase 2A study is sponsored and operationally delivered by CAUK. Allowing Nexera to generate an important clinical proof of concept in a capital-efficient manner. Importantly, ONO's EP4 antagonist data 4578 recently produced positive randomized phase 2 results in first-line HER2-negative gastric cancer. And these ONO data provide strong independent clinical validation that inhibition of EP4 can enhance antitumor activity in combination with checkpoint inhibition. And this meaningfully increases our confidence in the therapeutic relevance of the EP4 mechanism as we approach our own Phase 2A interim readout. Hence, we are very excited about this recent data and looking forward to our interim Phase 2A results in the second half of this year. If we can move to the next slide, please. This slide captures one of the most important elements of our R&D strategy, building a differentiated, high-value franchise in obesity, metabolic, and endocrine disease. The market opportunity is substantial, with the next generation of medicine moving beyond maximum weight loss, especially combining strong efficacy with better tolerability. Improving body composition, durable comorbidity benefits, and allowing broader access and long-term adherence. And this is where Nexera is particularly well positioned. Our NexWave platform allows us to design oral small molecule against highly valuable but technically challenging GPCR targets. Our lead metabolic programs We have covered several of the most strategically important mechanisms in the sector, GLP-1 agonism, amylin agonism, and the JIP receptor, alongside different sets of endocrine opportunities. The commercial and scientific validation for this mechanism continues to strengthen. Lilly's oral small molecule, GLP-1, orthoclipuron, demonstrated that an oral non-peptididic can achieve meaningful efficacy without the administrative restrictions of peptides. Importantly, our GLP-1 chemistry is structurally distinct from the described small molecule scaffolds that we know are primarily based on danoclipuron and orthoclipuron. Similarly, for our AMELIN program, we have generated multiple propriety series. We achieved a 10,000 fold improvement in potency in just three months. And most importantly, our chemistry is completely distinct from any chemistry described, and we are on track for IND studies next year. Execution is critical, and Nexera has the platform, the chemistry, and the portfolio brass to become. A meaningful next-generation player in the metabolic and endocrine disease, and we remain on track for four IND-enabling studies in 2027 and subsequent clinical starts in 2028. In summary, our R&D portfolio has made substantial progress in the last six months, strong delivery of mild zone in the first half, progression of the muscarinic portfolio with neurocrime. The Orexian portfolio attracted a multi-billion-dollar strategic investment. We have two phase two radio assets at advanced partnering stage, and our discovery pipeline is progressing to deliver multiple IND-enabling studies in 2027. And with this, I'm handing over to Chris.

Wonderful progress. Thank you, Patrick. Let me now take you through the road ahead at Nexera. Can you please turn to the next slide? So we are moving from an investment phase to a delivery phase, and I want to show you how all of the pieces fit together. So we run our business as four value engines, and each one is now substantial and independently valuable. And each engine, as you can see, fuels, de-risks, funds, and accelerates the other engines. So let me show you how they compound. Here are the four engines on one page. Please turn to the next slide. Of the four value engines are products, platforms, pipeline, and partners. And as I said, each is substantial and independently valuable. Products is a profitable and growing commercial platform in Japan. We're targeting 40 to 50 billion yen in net product sales and an operating profit margin above 30% by 2030. Our NexAQ and NexWave platforms pair artificial intelligence and quantum-level simulation with a proprietary GPCR data set, and this engine is targeting five AI-led discovery projects by 2028. As Patrick just mentioned, Pipeline is our emerging metabolic and rare disease biotech, and we're targeting four clinical-stage programs for the U.S. market by 2028. And our partnerships represents more than $4.5 billion of partner-funded milestones and royalties, and we have a goal of executing a new partnership above $1 billion in total deal value later on this year. So let me take each engine in turn, starting with products, and now we can go to the next slide, please. So, our commercial products engine has more than doubled its sales since 2023, and it is profitable and it is cash generative. Since we acquired this business from Edorsia Pharmaceuticals Japan in July 2023, we've scaled revenue 2.6 times, and we've removed 20% of the cost base. PivLaz is the market leader with 74% share in the prevention of cerebral vasospasm. Kivivic is growing in triple digits with Shia Nogi as commercial partner, and our forthcoming Taiwan launch is secured for the second half of 2026. Vomoralone is moving forward in clinical development, and note the product is now broadly approved for Duchenne muscular dystrophy across the US, Europe, UK, and China. We see substantial peak sales opportunity across all three products, with PIVLAS at 15 to 16 billion yen, QVIVIC at 15 to 20 billion yen, and Vamoralone at 10 to 20 billion yen. Every well-chosen medicine that we add from here lands on this lean, highly focused commercial infrastructure. Now, we plan to extend vomoralone into further rare disease areas as well. Please turn to the next slide. So we plan to take vomoralone beyond Duchenne muscular dystrophy, or DMD, into at least three further rare diseases. We are evaluating vomoralone in Fukuyama congenital muscular dystrophy, FCMD, a disease found almost only in Japan. We're also evaluating it in pediatric nephrotic syndrome and in juvenile dermatomyositis. In each of these, the current standard therapy relies heavily on glucocorticoids, where a more tolerable steroid, such as vermoralone, can make a real difference to patients. And this keeps us highly focused on serving more rare disease patient populations, particularly in our home market of Japan. Now, let me turn to our platforms and the new company that we recently created to drive them. Next slide, please. So, on the 1st of July, 2026, we created a dedicated company for our NexAQ platform, and our starting five all-experienced drug hunters have now initiated the first AI-led research project. It's led by an experienced team spanning computational sciences, data science and engineering, AI and machine learning research, platform engineering, and computational engineering. And these are people who have built and applied AI drug discovery techniques at leading organizations. So let me explain what makes this platform different. Please turn to the next slide. So the NexAQ platform pairs fine-tuned AI models, large-scale virtual screening, and quantum-level simulation with more than 15 years of our proprietary GPCR data sets. And this data set includes... 493 experimentally determined GPCR structures, 59 receptors, more than 400 small molecule entities, and over 30,000 mutation data points across more than 100 projects. This proprietary data asset compounds because every program feeds it, With experimental outcomes flowing back in through the loop, so our predictions keep improving and sharpen the decisions on what to progress, what to make, what to test, and what to stop. All training data is private. None of it is available via public databases. This platform is cloud-based. It's built exclusively on AWS infrastructure. Giving us compute at an unprecedented scale to be structure-based and prediction-led and to materially accelerate the timeline to a development candidate and to scale our pipeline through automation and agentic orchestration. And the result is going to be a step change in speed and cost. Please turn to the next slide. So, the NextAQ platform compresses the time and the cost of early drug discovery dramatically. Traditionally, reaching a development candidate takes four to five years and maybe $10 to $15 million of investment. With NextAQ, we are targeting one to 1.5 years and less than $5 million of investment per program. That is around 70% compression of front-end time and a more than 50% cost reduction. So, Speed to Development Candid is going to be our core measure, and we are scaling to five AI-led research programs by 2028. And because every program continues to feed the data set, each one makes the next program faster. Our third engine is the pipeline that our platforms are building. Please turn to the next slide. So we believe the next generation of obesity therapies will compete on far more than just weight loss. We are designing for greater efficacy and for better quality of weight loss that preserves lean muscle mass. We are designing for access and adherence with oral small molecules and convenient dosing, and we are designing for greater tolerability. Gastro-intestinal side effects remain a major issue for current GLP-1 therapies. They drive high discontinuation rates, and they limit the maximum dose that can be reached in real-world clinical practice. So a gentler, better tolerated profile is central to adherence and compliance. And the goal is healthy weight reduction that protects muscle and organs, and weight reduction that lasts. Here is how that pipeline builds over time. Please turn to the next slide. So we are clearly aiming our next-generation metabolic and rare disease pipeline at the U.S. market. Our 2026 discovery pipeline spans GLP-1, GYP receptors, and amylism mechanisms alongside targets for rare endocrine diseases. Now, these discovery assets are designed to become clinical programs over the coming years. And our target is clinical programs for the U.S. markets in chronic weight management, muscle preservation, weight loss, and rare endocrine diseases. Now, our fourth engine turns all of this science into funded development in cash, and that is our partnerships. Please turn to the next slide. So we hold more than $4.5 billion of headline economics plus tiered royalties through partners, and the quality of these partners is being validated regularly in real transactions. As we mentioned earlier, Lilly's acquisition of our Erexen partners in Tessa valued that business at up to $7.8 billion, an external arm's length reference point that supports the value of the partner Erexen pipeline in which we continue to hold economics. We await further publications in 2026 regarding the future of orexin science, beyond sleep-wake disorders, and towards brain health and broader CNS, such as cognition, fatigue, and mood disorders. We believe this is the next big category beyond obesity. Our muscarinic partnership with Neurocrin is progressing towards a Phase 3 data readout for Direclidine, The M4 program in the second half of 2027, and we regard this as one of the largest sources of potential value within this partnership and within our partnered portfolio. So, the partnered economics turn our science into funded development and cash, and we expect new partners again in the second half of 2026. So, let me bring the four engines back together and what comes next for each. Please turn to the next slide. So, each of these four engines has a clear next milestone, and together, they all continue to compound. In commercial products, we expect new in-licensed products for Japan in the second half of 2026, as well as filing for the approval of a Moralone in Japan. In platforms, we expect the data readout from our first AI-led research program in the second half of 2026. In our pipeline, we expect a new global out-license transaction in the second half of 2026. And our first metabolic disease program, we're aiming to enter the clinic in 2028. And with our partnerships, we expect further clarity on Lilly's plans for the orexin portfolio in the second half of 2026, and we look forward to Neurocrin's M4 Phase 3 readout for Direclidine in the second half of 2027. So with that, that concludes the main presentation. I'm going to go back to open the floor to questions. Please turn to the next slide. So, we'd be glad to take your questions now, and I'm joined by my colleagues from finance, commercial, and research development, and over to you, Nomura-san, to manage. Thank you.

Thank you, Chris. As Chris mentioned, we would like to move on to Q&A session. As usual, institutional investors, analysts, and media people, please use the raise hand function. And since we already have the hands, we would like to take the question. Hashiguchi-san from Daiwa Securities, please unmute yourself and ask questions. Yes, Hashiguchi from Daiwa Securities. Thank you. The first question. What is the license out negotiation of your products? From January, you started negotiations and a few months passed. Two products were the main targets. And at this point in time, what is the progress of the out license? Program and will you be able to complete during this year? Thank you for the question. So this is about outlicensing. Chris would like to respond to the question.

Yes, thank you very much, Nomura-san, and thank you, Hashikuchi, for the question. I think you will understand from our previous experiences that partnership negotiations can take some time, but that usually we open the year at the J.P. Morgan Healthcare Conference, where we have many. Strong and good conversations with potential partners, and then we move forward through the rest of the year with a goal, usually towards executing these partnerships by the end of the 12-monthly cycle. We are continuing to have discussions on both programs right now, and I'm very confident our goal for this year is to... And I mentioned it on our previous slides, execute at least one new major out license across some of our clinical projects. And we're on track to do that. So we are now moving into the second half of the year. Discussions with partners are becoming much more serious, much more focused. And you can expect to hear from us in the second half of the year regarding a new potential transaction. So thank you very much for your question.

Thank you. I have another question. The forecast for sales of PIVLATS and QVVIC, you have not made any revision. And at this point in time, how likely will you be able to reach the target, especially the progress of QVVIC seems very high? And on a four-year basis, is it possible to see go upside? Thank you. Then let me respond briefly to this question. Both of them are in line. That is our view from the company as of now. But P-flats and QVV, they have different significance. P-flats, we are distributing ourselves, and we can have the revenue. So this is in line and in line. But as Hashiguchi-san, you pointed out, with respect to QVVIC, as you know, we are not selling directly, and amongst our revenue, Product supply is accounting for quite significant amount. So Shi Onogi, if they increase the inventory for the future, then there will be increase of revenue. And if they reduce inventory, that will not be the case. So the actual demand does not synchronize. So these figures are from these range. Personally, I do agree that this may not fit within the range, but it is not controllable by the company, so this is still within the range at the moment. Did I respond to your question? Yes, thank you. You responded to my question. Thank you.

We will now take the next question. Nomura Securities, Matsubara-san. Please unmute yourself and ask a question. Matsubara from Nomura Securities. Thank you. Can you hear me? Yes. Thank you for the explanation. I also have two items for the outlicense. So at least one outlicense this year, I understand. So phase two study has already completed the preparation, but has not started yet. So the outlicense, if you cannot do the outlicense, this P2 study will not start. Am I right? So Chris, if you could answer that question, please.

Yes, that's, thank you for the question, Matsubara-san. That's correct. We, if we don't out-license the EP4 agonist or the GPR52 agonist, it is not our intention to conduct global phase two studies ourselves. These programs have been taken to their logical point of inflection for our company, and it is best that both of them... are moved or advanced by partners. So if you think about what we are discussing here, EP4, IBD, very, very large global indication, that is much better suited. to a large company that has an IBD franchise to take that program forward through phase two and phase three. Similarly, GPR52, this is a mechanism of action that is indicated for schizophrenia or psychosis in Alzheimer's disease patients. Again, it's a very, very large indication. We need the support and the expertise of a large partner to move that forward through phase two and phase three. So hopefully that answers your question.

Yes, understood. Thank you very much. And so for this IVD, there are some oral disease competitors too. And so if you cannot have the good partner, it will be an opportunity loss. So rather than that, but that cost is more important, is a higher priority for you. Am I right? So Chris, if you could answer that question too.

Yeah, thank you for the question. Look, generally speaking, our preference is to out-license to a large partner that is fully funded to do all of the clinical development required to make the medicine a success. As you know from our history as a company, There are other ways that we can move programs forward without necessarily doing a licensing deal as well. Now, our current focus and our current priority is to find a licensing partner. However, if we were unable to find a licensing partner, we could create a spin co, and we could bring venture capital investors in to fund the trial, and we could, in return, own. A significant minority equity stake in that SPINCO and the venture capital funds could move the project forward cost effectively. That would be another way that we could realize value from these projects. I just want to make it very clear that Nexera will not be spending 100% of the development costs on these projects. So priority number one is a licensing transaction with a major pharmaceutical company. If we were not able to do that, priority number two would be a spin co with top tier venture capital providers to move the asset forward in that fashion. Hopefully that answers your question, Matsubara-san. Thank you.

Yes, thank you very much. So my second question is AI drug discovery strategy. So data accumulation, you are accelerating the speed and you are reducing the time required. I understand that. On page 26, there is an ethical drug. And so in the development, what you are aiming for the new drug is first in class or best in class? What is your preference right now? Thank you very much. So, Patrick, if you could answer that question, and if there is something to add, Chris also, please.

Okay, thank you for the question. Generally, when you look at... The targets that we work on, they are currently primarily dominated by peptide drugs. There are certainly in the GLP-1 and amylin other small molecules that are ahead of us. However, given that we have the structural insights in these programs, we have a clear way how we can differentiate as a best-in-class molecule. And we know that certain molecules in the GLP-1, JIP, or amylin space got some limitations. And that's what we are very much focusing on, achieving. Weight loss, not to the maximum extent, but quality of weight loss, preserving muscle mass, and also what we see in the clinic, which is very important, achieving. High compliance of getting good tolerability with patients, because we do see quite significant dropout rates at the moment, certainly with the GLP-1, and that's a way how we position our molecules. Generally, as I said, focusing on small molecules, replacing a market that is currently dominated by peptides, and for the small molecules, very much best in class, following the front runners and adjusting our profile accordingly. Chris, anything you want to add?

No, just except to reiterate, thank you, that was clear, Patrick. Just wanted to reiterate, last year in November, we were very clear that we would be largely moving away. From novel, first-in-class drug discovery, and moving very much towards working more on clinically or biologically validated GPCR targets, where our platform enables us to drive differentiated chemistry and differentiated potential outcomes and molecule profiles. That remains the focus. As you can see on this page, many of these targets on the left-hand side are well-known and they are well understood. However, the companies that are pursuing them do not have access to the 15 years of proprietary data sets, know-how, knowledge, nor our platform to drug these targets really well. So that's what we're going for, differentiated molecules to well-understood and validated targets. We see that as as a much. More effective, high probability of success strategy for our drug discovery operation. Thank you.

Thank you very much.

Thank you, Matsubara-san, for your question. Let us move on to the next question. Pathology Athosist, Dion, please unmute yourself and ask your questions.

Thank you very much for taking my question, and congratulations on a fantastic quarter. I have two questions. The first regarding QVVIC. I know what you've said, Numerosa, regarding the situation with inventory and also the class expanding, but I wonder if you can add anything related to new patient starts versus patients switching from competing therapies regarding this. Thank you.

Thank you. May I? So, Maeda would like to respond to your question. Please go ahead. Yes, thank you. At the moment, for those patients who start sleep treatment, That is being done at the moment, but as to which drug is selected at the beginning, it is most impactful for the prescription, and if it is prescribed at the beginning, it will be used for long time, so we will ensure to have the new patients. The figures here do not only include the new patients, but this 9% represents other patients as well, so if there are new patients, there will be more patients who will continue. So at this point in time, it's 9%, but this is promising. In a few years, if new patients continue, and if we can gain more patients, then this is going to be a large drug. I hope that answers your question. Thank you, Maeda-san. If you can continue with the second question.

Thank you. Thank you very much, Nomura-san. That was perfectly clear. My second question is just regarding Sentessa. And with the acquisition now closed, I wonder if there's anything that you can comment on the economics that you receive or will receive from the transaction and whether there will be any additional proceeds related to the transaction. Thank you.

Thank you. Then, Chris would like to respond to the question.

Yeah, thanks, Dion. Thanks for the question. Obviously, our agreement with Syntessa is confidential, so I can't disclose the specifics. Certain details have been disclosed previously in the public filings of Sintessa, so I can confirm that there are still milestones that we are to receive for the progress of the three molecules, and they will continue to progress under Lilly's stewardship. That's clear. They will be moving forward. And in terms of the royalty economics that have been referenced in some Tessa's public documents, it's single-digit royalties is what's been referred to in the past. So I won't say anything more than that, except to say, obviously, it's truly fantastic that Lilly have recognized the value, not only in the programs we discovered, but the... You know, incredible effort that the team at Stessa did to develop those molecules so quickly. And we're just really excited to hear more about what Lilly plans to do. So far, there's been general comments publicly from CEO and CSO of Lilly around what they plan to do with these programs, but clearly. They have ambitions beyond just sleep-wake disorders and, as I said, into broader brain health and neuroscience, looking at potentially cognition, mood disorders, fatigue disorders, et cetera. So, yeah, we're really excited, and, yeah, what a great outcome for the team at St. Tessa, and we really look forward to seeing what Lily will do with the programs going forward. Thank you. That concludes my response.

Understood. Thank you very much. Can I just ask one further question, if possible, regarding your NextAQ platform, which is very exciting? And I wonder, you mentioned creating SPINCOs or involving VC funds, and given the value, what must be a very large value of 15 years of proprietary GPCR data, if there's any opportunities that you can think of? To leverage this asset beyond keeping it internally and potentially suffering a bit of a conglomerate discount, if I can use that term, given the valuations achieved generally by AI companies. Can you make any comments on that? Thank you.

Yeah, that's a really good question. I think it's clearly been very front of mind for me, and in a way, I mean, We set this platform up as a separate company already. So, you know, if you look at the company's house filings in the UK, you will see that Nexera Pharma AQ Limited has already been established as a separate entity. And what that means is it gives us flexibility in the future should we want to attract direct investment into that entity and the build out of the platform. We can. And also, of course, with a view to the future, Dion, we're always considering what is the most appropriate venue for a company like this? It is the most appropriate place for our AI and quantum platform to be sitting within a Japanese pharmaceutical company. Maybe that's not the case in the future. And because we've already established it as a separate legal entity. And we have maximum flexibility if we wanted to, you know, in the future, spin it out or take direct investment from. What I would call not traditional pharmaceutical investors, right? Currently, a lot of the money that's being invested in this space comes from the likes of the soft banks of the world, the Nvidia's of the world, the tech bio investment community. We've already set it up from day one to be structured so that it's really easy to do that. So hopefully that answers your question without giving you too much detail.

Thank you very much.

Thank you very much, Yon-san. Time is limited, so we will move to the next questioner. Jeffrey's Securities Yamakita-san, please unmute yourself and ask your question, please. Jeffrey's Yamakita speaking. I have a first question. So, your fair value and market evaluation difference, discrepancy. This year, there were many positive news. But your share price, especially recently, has been rather sluggish. On the other hand... Looking at the market, in the U.S., biotech companies' share price is recovering, but Japan, including yourselves, biotech shares are still weak. So my question is the following. If in the Japanese market you are not evaluated fairly, maybe listing in Japan to unlock the value, fair value, do you have... The acquisition possibilities, so how you plan to unlock your value. Any methods that you have in mind? Thank you, Chris, if you could answer that question, please.

Yeah, thank you, Yamakita-san. Yeah, this is quite topical for us at the moment in our discussions, particularly with U.S. institutional investors this year. This question continues to be raised. It is natural for a company to periodically consider if it is listed in the right market, a market where the company should be valued fairly and appropriately. I've said for many years, we're very proud that we were founded and we're very proud that we are listed in Japan. And it is my duty to make sure Nexera becomes a Japanese biotech champion. And just to be clear, we are not considering delisting from Japan. But I do think it is a fair comment that if we were starting this company today, We would clearly be targeting a US NASDAQ listing. That's clear now. We have options available. We could do a direct dual listing or we could do a carve out listing. Now, regarding the latter, the concept of a carve out listing. I have already proposed this to our board of directors, and the board of directors is already considering it as part of our midterm business plan. So for this strategy, we firmly believe our obesity and rare endocrine disease pipeline, plus even the AI discovery platform, which I just mentioned, we've already established it in a separate legal entity. We think that the pipeline and the platform would be valued. Far more highly by U.S. institutional investors, and perhaps in the future, U.S. NASDAQ is much more appropriate for the pipeline and for the platform. Now, you know, given where our share price is, it's a long way below fundamental intrinsic value. We understand as a company what our fair value is. If I look at... You know, yourself and the analyst community, you have a median consensus target price of between 1800 and 1900 yen per share. This is, you know, from our perspective, very, very conservative. We have internal risk-adjusted models of our cash flows. We know that the value is much, much higher than where the analyst consensus is, and we know that because... Only we know the confidential information in our contracts and our agreements, and therefore, we know how to appropriately value it. And I think the last thing I would say on this topic of fair valuation, I mean, another reference point, Lilly has acquired Sentessa for $6.3 billion, maybe up to $7.8 billion. And Syntessa's entire pipeline came from our platform, right? So that's a very fantastic validation of. Not only the quality of our science, but the value of what we produce. So I'll leave my response there, but hopefully I've given you lots to think about. Thank you, Yamakitsa.

Thank you very much. So that is all from me. Thank you very much.

Thank you, Yamakita-san. We are behind schedule, but there is one last question I would like to take up from the chat. This is on product target that is shown here in 2030, a revenue of 40 to 50 billion yen. And this meaning in the past that we had the 2030 vision, and this is also on our website, Corporate Home Wage. And how is it related to 50 billion? And since this is related to finance, let me respond. In the past, we said that 50 billion yen by 2030, and that includes a milestone and a platform business between 10 to 15 billion. And this 40 to 50 billion is a products only. So if you add them up, roughly 50 billion to 60 billion, 65 billion would be the total amount. So, at least 50 billion is maintained, as we mentioned in the past division. So, if we add them together, between 50 to 60 billion. So, please do understand this way. We were only able to take up just one question from the chat and my apologies. But as the time is already here, we will like to conclude. Since we have the blog, official blog, we will like to respond to your questions through the blog. And we will upload this session, including the Q&A on the website. And after this, Thank you very much for joining this session. And with this, we would like to conclude the first half financial results meeting for FY2026. Thank you for joining.