Nxera Pharma Co., Ltd. (4565) June 15, 2026 Conference Transcript

Good afternoon, everyone. Thank you very much for joining Jeffery's Global Healthcare Conference today. My name is Miyabi Yamakita. I cover Japan biotech companies at Jeffery's in Tokyo. In this fireside session, we have the next server, represented by CEO Chris Kageo and CFO Hironoshin Nomura. Thank you very much for coming today.

Wonderful. Thank you for having us.

Yeah, recently, there were lots of progress, clinical stage assets, both partnering and in-house progressing, and in clinical stage, you disclosed multiple new programs. So my first question is, where are you seeing the most exciting progress in your pipeline recently?

Yeah, excellent. Thank you. I'll take the first question. I'm Chris Cargill, CEO. Maybe actually I'll start by sort of describing who we are. You know, we are a Japanese biotechnology company, one of the very few Japanese biotechnology companies. I would say that we are, you know, we're a deep value stock. We've been the engine room of a lot of progress for large pharma companies of late, and we're very proud of that. You may have read about, you know, a recent acquisition of Stessa by Lilly. You know, we had a hand in helping generate those molecules. You know, we're very proud of everything that comes out of our research laboratories in Cambridge, and I'll talk a little bit more broadly about the pipeline as we move forward. So I think there's lots of things I could cover, but I guess this year, probably, if I had to pick one thing that we're really excited about, it's been the progress of our in-house obesity, chronic weight management, and kind of rare endocrine disease pipeline. We've got a broad portfolio, and this is really sort of picking up on... Our deliberate shift last year from where we were working on first-in-class targets to a more best-in-class approach, and some of the targets we're working on, you'll know, GLP-1, Amelin, JIB, these are the core focus. Listen, ow, ow. The competitive advantage, really, is drugging these targets with oral small molecules. So the prize here is an oral small molecule market that's still ostensibly dominated by injectable peptides, and we want to make convenient, scalable oral therapies so that we can broaden patient access and give them more choice. I think the other thing I would say that's unique, you know, there are lots of people that are working on these targets. There are lots of molecules that are out there. You know, our view is certainly that... On the oral small molecule front, a lot of what we see are kind of scaffold hops away from orthoglipron or away from danuglipron. What we have is a proprietary hit finding. And structural biology platform that we call Nexstar, and we've been able to generate structures from very low affinity novel molecules, which is something that there's very little precedent in the literature from competitors. So from those structural positions, we're able to use our SBDD platform, and we've been able to deliver, you know, really large potency gains in just a few cycle times. So, you know, this is unusually efficient, and I would say that, you know, you'll start to see development candidate, you know, pharmaceutical. Company development candidates coming out of our platform probably sometime over the course of the next year. So we're very, very excited about that. We've got novel chemical positions, particularly on GLP-1 and Amelin. So we have, I mean, this is probably the most exciting thing. These are wholly owned programs. We've done a lot of work for partners and we've done a lot of work in our history as a company partnering our molecules with others. But these are coming through. They're wholly owned. It's a key emerging part of our story. So, yeah, we really want people to sort of focus on the good work that we've been doing there.

Great. You are developing multiple target obesity product. Which one is most progressing so far?

Yeah, I think, look, honestly, the GLP-1 and the Amalyn small molecule programs are the one that we're most excited about. As I said, they're novel. They're a differentiated approach, and we hope that they'll play a big role in the future of therapy in this area.

Okay. And then, in my understanding, you are looking to out licensing two phase two preparation stage assets, EP4 Agonist and GPL52 Agonist. Could you give us an update on the current status and also another in-house asset, EP4 Agonist?

Yeah, sure. No, no, thank you very much. These are, actually, we touched on these. At the Jefferies Conference in London in November last year, that was the first time we announced our pivot away from sort of novelty, a focus on novelty and a focus on first-in-class to perhaps moving forward with a more best-in-class strategy, which I just touched on. What that meant was we had a host of programs that have actually already been through the clinic. They've been through Phase 1 and 1B, and they're at the point now, because they're novel first-in-class programs, where we would like to out-license them. And find the appropriate home for them to be developed globally. And I'm pleased to say that, you know, we're making really good progress on that. We are in multiple discussions, multiple active discussions across both of those programs, and I'm very, very confident they're going to find world-class partners to take them forward. So just a reminder, the EP4 agonist, which our compound code is NXE744, it's a first-in-class gut-restricted EP4 agonist indicated for IBD, and it's designed to promote mucosal healing through a mechanism that's differentiated to the current standard of care, and so we've done all of the first-in-human work. It's got clean safety, it's confirmed, gut restricted. We've done dosing in an early UC patient cohort. And so, yeah, we're really excited about that, and we've confirmed target engagement, and there's, you know, discussions ongoing, and, yeah, as I said, hopefully we'll find a really good partner for that. The other program that you mentioned, Miabi, was the GP52 Agonist. This, candidly, was a program that was actually already partnered. It was partnered with German company Boehringer Ingelheim. But as so often happens when you execute these many partnerships, sometimes assets come back to you, right, because the partners had a strategic pivot. So this asset came back to us at the beginning of the year after having $25 million invested in it by our partner to take it through Phase 1 and 1B. It's novel. It's indicated for schizophrenia. It's got the potential to address both the positive and negative and cognitive domains. So the phase one's complete. It's phase two, ready to go. And so we're having active discussions on that program as well. So we're really excited and very hopeful that both of those programs will, hopefully in the second half of this year, if we're lucky, you know, these sorts of discussions can take some time, but we're hopeful that we'll find a new home for them. And then, you know, our partners can get to work on global clinical trials to move those programs forward and make a difference for patients. So yeah, we're really excited.

Great. And I think you have already talked to several companies, as you mentioned, but is the base case? Monotherapy for these two assets, or is combination therapy with a partner's product also possible?

Oh, I mean, that's, yeah, I mean, that's a good question, but there's so many partners we're talking to, it's a little bit hard to narrow that one down. Certainly our view, you know, when they were in our hands and we were moving them forward was that they had the potential to be monotherapies, but clearly... The one that is indicated for IBD is designed that it could possibly work as an adjunct therapy to some of the existing treatment approaches that are out there, so to speak, without giving too much away.

Got it. Thank you. Thanks. And regarding another in-house asset, EP4 Antagonist, recently Ono Pharmaceutical, another company developing EP4 Antagonist, disclosed pretty good data in ASCO of 2026. How was your impression about that data?

It's a good one. So I'm not going to hog all of the limelight. I'm going to let Nomra-san speak as well. Look, I think the one thing I would say is... There's no direct read across, but what we can now say, I think, with some confidence is that in certain tumour types, and it's gastric that Ono was going after, you know, this mechanism of action is de-risked. It works. We're quite excited by what we have seen, and it really has the potential to help us shape our clinical science and our clinical development program. So we are, we are, so just to remind everyone, this is, um... It's an EP4 antagonist, and ONO's version is being tested in conjunction with their checkpoint and a chemotherapy treatment regime. We are a little bit earlier stage, and we're exploring it slightly differently, but certainly the data that we've seen... Could really help us think about how we can maximize the value of that program. Did you want to add anything on that, Norma-san?

Yeah, actually, Chris covered basically all, but it's very encouraging, and we are very happy about the Ono's progression, because it shows a clear efficacy in our perspective, and especially in some type of biomarkers, subgroups. So, yeah, we're very encouraged about that. What's different from Ono's EP4 and our EP4 is basically we have three differentiated points. One, the compound is surface, of course, different, and the phase one data and the PKPD data shows we think our compound profile is okay and better. And the second point is we are doing the phase two trial not only for gastric cancer, which Ono's data was published, But other three cancer types. So phase two data, we are expecting the lead out is next, meet next year. So we hope we show not only gastric, but the other cancer types of results. And the third point is, of course, it's also applied to the owners compound, but we basically can combine with other PD-1, PD-L1 checkpoint inhibitor. We are now doing with atezorizumab. However, of course, if we find that mode of action, there's a potential we can combination. We can make a combination with other checkpoint inhibitor. So we have some flexibility for the future development.

Yeah, thank you. And just, yeah, I think it's probably worth reminding everyone, you know, we actually are, we're not really an oncology company, so to speak. So, as I mentioned at the beginning, the call. The underpin of our business is a structure-based drug design platform. So given this is in the clinic and it's in a competitive area, we partnered with Cancer Research UK, who bring all of the expertise when it comes to executing the clinical trial. So they will continue to do that. As Nomura Sun said, they're looking at multiple tumour types, but I think based on the emerging data that we've seen, it's a really good opportunity to think about how we can... Move this program forward in a direction that's going to be best for patients. So, yeah, we're very excited and, yeah, wonderful data by our competitor owner.

Okay, now I'd like to move on to next topic, the recent earnings. So, the market reacted positively to your first quarter results, including the decent commercial business progress. How do you view the performance?

I'm really happy. I mean, I'm, you know, I'm stoked. I think... We made a strategic decision in June 2023 to acquire... The business of Edorsia Pharmaceuticals in Japan and in Korea, not only do we get a fantastic team, we've got two great assets, and that has really given us the ability to build out our... We've talked a lot about what we do on the discovery side and the early research side. As a Japanese company, very important that we have a late stage development and commercial capability. We got that from that acquisition. And since we purchased that business, the business has gone from strength to strength. The products are making a difference to patient lives every single day. They're growing really effectively. And that has given us the opportunity to now be in a position where we can add more products to that portfolio. And everybody hears about the drug lag and the drug loss problems that Japan has suffered for so long. We have built a nimble, agile business where we can make very rapid decisions on products that we can bring into the portfolio. And I've got to, I must say, you know, Vemoralone is a product that we have recently secured the rights to. It's a steroid-based treatment for boys that suffer from Duchenne muscular dystrophy, and our interactions with the regulators in Japan have been fantastic. They're so willing for... Small and mid-sized companies like ours to make these medicines available to patients in Japan, and they're really helping us accelerate things. They ought to be commended. They're doing a fantastic job. So we're really, really happy. I might pause because I think Nomura-san can also comment on the results and how that was primarily driven, of course, by our Japan commercial business. But there are other aspects. Our partnered businesses hit a lot of milestones in the first quarter, candidly, which helped. But I'll let Nomura-san talk to that a little bit.

Yeah, yeah, yeah, you cover, but so first quarter is actually we are very good progression. We have a very good progression with our partner, which delivers us a lot of milestone. However, if you can see our presentation, this is not all we expected this year. Of course, we are expecting some more milestones, second, third, fourth quarter. That is one thing. And also, yeah, as Chris mentioned, so the P-Blast and Kuivik sales going very well, and especially Kuivik, after the first quarter result, we have several discussions with investors, and some investors are aware now the COGS, manufacturing cost of the Kuivik, is slightly declining, started declining. That is actually earlier than our original expectation. When we are changing the manufacturing side, we expected that cost reduction from 2027. However, part of that already started. Of course, that actual impact will come from next year as we expected. However, that kind of, how can I say, both top line and the bottom line improvement helps the first quarter result, Yeah.

And I think... Maybe it's worthwhile, Miyabi, that just for those that are not familiar with our company, in Japan, where we acquired these assets and the people and the programs from Eudorsia, we have one product called PIVLAS. It's for the prevention of cerebral vasospasm. After an ASAH episode, it... It has about, you know, 70% to 75% market share now. It continues to grow, but it's making, you know, huge impact on patient lives, and, you know, we love the product. The second product that came with that acquisition was a drug called Cuvivic. It's for insomnia. That is not a product that we market ourselves. So we made a strategic decision to partner with another well-known Japanese company called Shionogi. That was a fantastic decision as well. You know, they are a great partner. They commercialise with huge effort and zest. We're really happy to work with them. And that has really accelerated, you know, the uptake of that product. It's very early in its launch phase. You know, really, the two-week prescription restriction that you have in Japan was only lifted in December last year. So that product is very much in its launch trajectory. And as I mentioned, vomoralone, which is a drug that we license from Santhera, you know, we're currently going through regulatory discussions. We're really hopeful that we can make that drug available to patients as soon as possible. And then our strategy with Japan is, you know, it's our linchpin market, it's our home market. Once we get these drugs on the market, we can then expand. And we have a fantastic team in Korea who are working very, very hard as well. We expect to see Vimoralone move forward over there shortly, and then we'll work with partners throughout the APAC region, Taiwan, Australia, New Zealand, et cetera, to make our medicines available, certainly the ones that make sense in those various markets. On the first quarter performance I mentioned, milestone momentum really helped. We have fantastic partners who are moving our assets forward with Pace. I should mention Nirokren. Wonderful company, wonderful partner. They are great stewards of the muscarinic agonist that were discovered, and some early development was done by our team in Cambridge. They're moving those forward. What's exciting is there's the lead product in that portfolio, which is a muscarinic M4 agonist. It's indicated for schizophrenia. It's in a phase three registrational. And there's going to be an outcome next year, we think. Somewhere towards the end of the next year, we think the phase three will read out. And that would be an enormous milestone for us as a company. That would be the first molecule that's come out of our laboratories in Cambridge, UK, and gone on to the global stage, and hopefully it gets there. We're really pleased with that partnership, and as all of those. Programs in their portfolio, Muscarinic Agonist portfolio progress, you know, we will learn more. St. Tessa, I mentioned earlier, St. Tessa has been acquired by Lilly, so we had a hand in assisting the team at St. Tessa, who did a great job working with us to discover, and then they obviously took on the early development of the orexin-2 agonist portfolio. So that's going to be fantastic. I believe the transaction is slated to complete around the end of September this year, and thereafter I would expect that Lily will hopefully have some form of a strategy day, and they'll actually tell the world what their plans are for all those Orexin 2 agonists. So that's very encouraging. We also had some other milestone activity with other partners that we have. We have a separate to our in-house obesity and chronic weight management pipeline. We do have a metabolic disease co-lab with Lilly. It's a much more earlier stage, but we've hit all our milestones there, and we've handed over all of our work, and now those programs will progress within Lilly's portfolio. We also have a very broad neurological disease collaboration with AbbVie as well, which is very early stage. But we've been hitting milestones on those as well. So as you know, when you hit milestones, we receive income, and that went a long way to ensuring that we achieved profitability. in the first quarter. I think that's probably where I would pause. Anything else? No? Thanks.

And then just following up a little bit, so PBLAT and Kubiwik are doing good, and we expect you can generate decent size of cash flow, of course, together with milestone income. And in terms of the capital allocation, what are you going to use the cash which will be generated over the next couple of years? Debt repayment or new business development?

Bit of everything, to be honest. We've got, I mean, we have quite aggressive mid to long term strategic growth plans. And of course, business development forms a large part of that. And when I talk about business development, it's twofold. You know, we are discovering and developing assets. And we need to get them to a certain point so that they can achieve values that we can execute an out license. So of course, that's what I'd characterize as general investment in R&D. We have this amazing Japanese commercial platform that we need to secure medicines for. You know, we're broadly speaking, we're focused on specialty and rare diseases. You will see us in licensing additional medicines. And hopefully doing a fantastic job of getting them moved through the clinic, through the regulatory process, and then on the market and available for Japanese patients. So those are two core areas of focus for us. Of course, we do have debt liability management that we have to do from time to time. It's all part of our capital allocation strategy, but for the most part, we're focused on growth. So any additional cash flow that comes in will be utilized for executing long-term value creation for the company and to move as many medicines forward so that we can help patients in Japan.

Okay, great. And I'm excited about your new drug discovery strategy using AI. So you discussed recently the AI related drug discovery strategy. What is your competitive strengths in AI-driven drug discovery platform, and what is the timeline?

Yeah, yeah, sure. So I guess I teased this a little bit at the shareholder meeting in March this year. I guess the headline is we are launching... A new AI native drug discovery operation. We've made all the hires. We have the team in place. They're currently sitting in the office very close to me in London. And there are actually some really talented people from our existing operations in Cambridge that are going to actually support the establishment of this activity. The thing that makes us different is we've been using AI and machine learning for a long time, actually. Like, this is not a new concept. We've been using it for a long time in the way that we not only achieve structural enablement for drug discovery, but the way that we, you know, accelerate hit-finding approaches and the like. I guess the thing that makes... What I believe our strategy differentiated is it's a GPCR-specific AI-native operation. So if you think about our rich history in GPCR drug discovery, the only thing that we've really been doing, you know, really, really well for the last, you know, 20 years is we've been... Gathering a world-class proprietary data set on this entire receptor family, and we believe that's going to be what differentiates us. You know, this is not another AI-native drug discovery company that's going to train on publicly available data and models, right? We are going to be utilising all of the positive data that we've generated over the journey, as well as... All of the negative data that we've generated over the journey, and all of that is proprietary, and it all comes from, you know, the extremely capable and competent team that we have working in the wet lab. So there's kind of this just compounding effect of data that comes out of our operation in Cambridge that we'll be fueling and feeding the way that we fine-tune models and the way that we build this platform. And the overarching goal is... You know, that data advantage. It's hopefully going to help us completely crush cycle times and be able to discover more medicines to GPCRs faster. I mean, we're already really fast. I mean, we can go from target ID to a development candidate, sometimes as fast as 18 months. We would look to even try and compress that time even more. And the beauty of it is, it's scalable. So, not only will we be able to discover drugs faster, we'll be able to work on more programs and scale. Through, hopefully, the deployment of agentic scientists on top of the platform that we build. And so... That is something that I think is going to really move the needle over the next two to three years, being able to do significantly more amounts of drug discovery in a much more productive and efficient fashion over and above what is already an outstandingly efficient and productive group. So we're very excited. You know, a lot of these, a lot of the... The tools and applications and off-the-shelf models that people use, they're generally commoditized, but what we have is proprietary, experimentally grounded data that nobody else has access to, and we think that that is going to be the thing that gives us the cutting edge.

Great. Thank you so much. We have another couple of minutes. Now I open the floor to questions. Does anyone in this room have any questions? No. Okay. Okay, then I have another question. So, you disclosed the business restructuring back in November last year. So, has it done or still continuing?

Yeah, no, that's complete. That's complete. So, that was, you know, it's... It's never nice to do these things, candidly, and lots of very talented people at our organisation were part of that process. We hope that they've gone on and been able to find other roles at other places, but for us, it's a business necessity to get our organisation into... The perfect size and shape so that we can do everything that we want to do, and most importantly, that we can do it sustainably. You know, there's lots of pressures that not only we face, but all companies in the industry face, and you have to be... You have to be proactive and you have to be speedy when it comes to reacting to those changes so that you can live to fight another day and continue doing the good work that we do. So, yeah, that's all complete now. We're looking forward. And as I said, we're in a growth phase. So we're really excited and there's lots for us to do.

Great. Thank you so much. I think we covered everything, but any last words to market?

Anything that you wanted to say, Nomura-san?

Yeah, of course, we understand the market total situation in Japan. I understand someone likes semiconductor. However, our real business is actually going very well, and we are very happy to announce maybe second quarter, third quarter, and the full year of this year, how our progression of this year will be. And I believe that is great.

Yeah, I think what I would add is... Everyone that works at this company works so incredibly hard. Every day we're executing. Every day we're improving. Every day we're moving forward new medicines, and we're executing, and we're generating profits, and we're bringing on market new medicines. There's a really large amount of value that we've built in this company over the last 10 to 15 years that clearly is not really recognized at the moment. It's tough work being one of very few biotechs listed in Japan. That's just how it is. If you look at how the markets are behaving right now in Japan. As Nomura-san said, unless you're in the semiconductor business, you know, pretty much, you know, no one is buying you. So there has been a lot of downward pressure on a lot, not just us, and I'm not complaining, like, there's lots of great companies across lots of great sectors that are not doing semiconductors. So I just want to reiterate to the market that regardless of how our share price might be trading, which is completely outside of our control, the fundamental value in the medicines that we are discovering and moving forward is compounding and growing every day. We truly are. An example of one of those many Japan deep value, Tokyo deep value stocks, and we're looking forward to just continuing to execute, and over time, we will grow to the appropriate valuation that we believe that we deserve, and that will be good for our shareholders, but most importantly, moving our programs forward is good for patients, and that's what we're focused on doing.

Great. Thank you so much. Let's conclude this session here. Thank you very much, everyone, and have a nice day.

Excellent. Thank you. And thank you to Jeffries for hosting.