Earnings call transcript: Gubra’s Q4 2024 growth and market challenges

Gubra AS, a prominent player in the contract research and drug discovery sectors, reported robust financial performance for Q4 2024, with notable revenue growth in its Contract Research Organization (CRO) business. The company’s stock faced a downturn, dropping 8.07% to 592, following market reactions to its earnings call. According to InvestingPro data, Gubra has delivered an impressive 248% return over the past year, despite current market volatility. The company remains optimistic about its future, with plans for strategic expansion and innovation in the healthcare sector.

Key Takeaways

• Gubra’s CRO business saw a 31% revenue growth, with a strong EBIT margin of 30%.
• The company plans to limit CRO revenue growth to 10-20% in 2025 to focus on internal pipeline development.
• Gubra’s stock fell by 8.07% after the earnings announcement, reflecting investor concerns.
• Strategic focus is shifting towards women’s health and internal R&D programs.
• New partnerships and innovative drug discovery platforms are key to future growth.

Company Performance

Gubra delivered a strong performance in Q4 2024, driven by a 31% increase in revenue from its CRO business. This growth is underpinned by a solid EBIT margin of 30%, showcasing the company’s efficiency in managing its operations. Despite the positive financials, Gubra’s decision to purposely limit CRO revenue growth in 2025 indicates a strategic pivot towards enhancing its internal pipeline, particularly in weight management and women’s health.

Financial Highlights

• Revenue: Increased by 31% in the CRO segment.
• EBIT Margin: Maintained at 30% for the CRO business.
• Projected total costs for 2025 are SEK 230-250 million.

Market Reaction

Following the earnings call, Gubra’s stock price declined by 8.07%, closing at 592. This reaction reflects investor apprehension about the company’s strategic decision to moderate CRO growth and its reliance on internal funding. InvestingPro analysis indicates the stock is currently trading at elevated multiples, with a P/B ratio of 22.6x and negative earnings yield, suggesting potential overvaluation. The stock trades well above its 52-week low of 196, maintaining strong momentum despite recent volatility. For deeper insights into Gubra’s valuation metrics and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports.

Outlook & Guidance

Looking ahead, Gubra forecasts a 10-20% growth in CRO revenue for 2025, with a continued emphasis on expanding its internal pipeline. The company is investing in new therapeutic areas, including women’s health, and aims to bring 1-3 fully owned programs into clinical trials. Gubra’s innovative approach, including partnerships like the one with Amelix, positions it well for future growth.

Executive Commentary

Henrik Lo, CEO of Gubra, highlighted the company’s dual focus on CRO services and drug discovery: "We have a core research engine that we can use to deliver research services to external customers." Chief Scientific Officer Luis Delburry emphasized the complexity of obesity treatment, stating, "Obesity is a complex disease. It’s not just one disease."

Risks and Challenges

• Market volatility: Gubra’s stock is susceptible to fluctuations, impacting investor confidence.
• Strategic shifts: Limiting CRO growth may affect short-term revenue.
• Funding strategy: Continued reliance on internal funding could constrain expansion.
• Competitive landscape: High competition in the drug discovery sector requires constant innovation.

Q&A

During the earnings call, analysts expressed high interest in Gubra’s obesity treatment programs and potential partnerships for GroupAMi and UCN2. Questions centered around the company’s talent acquisition strategy and funding flexibility, with management expressing confidence in their ability to attract top talent and maintain financial agility.

Full transcript - Gubra AS (GUBRA) Q4 2024:

Conference Operator: Good day and welcome to the Gubra Earnings Release Q4 twenty twenty four. All lines have been placed on mute to prevent any background noise. And finally, I would like to advise all participants that this call is being recorded. Thank you. I’d now like to welcome Henrik Lo, CEO to begin the conference.

Henrik, over to you.

Henrik Lo, CEO, Gubra: Thank Thank you very much, operator, and welcome to everyone on this call. Today, we’ll be presenting the annual report 2024. And I’m Herbert Bloch. I’m the CEO of Grupo. And I also have with me Luis Delburry, our Chief Scientific Officer, and Christian Borbus, our Chief Financial Officer.

So Gubra is a research powerhouse. We have a core research engine, and we are specialized in preclinical research within metabolic diseases. This core research engine, we can use to deliver, research services, CRO, to external customers. And the other part of the business, with DNP, that is where we are using the core research engine to advance our own internal pipeline programs. So we’ve been growing steadily over many years, actually 30% yearly revenue growth over a very long period of time.

And now we are two sixty colleagues all gathered here in at our site, now of the Copenhagen, Denmark, apart from our colleagues in the Boston sales office. In the service business, we are servicing 16 out of top 20 pharma companies in the world. It’s a testimony to the high quality and specialized expertise that we can deliver in our services. So, in 2024, we experienced strong performance across GUPRA. In the service business, the CRO, we had a revenue growth of 31%, and that is compared to the ’20 to 15% growth that we were expecting in the beginning of the year.

So a remarkable growth and that is actually on top of another remarkable growth year back in 2023. We also saw very solid EBIT margins in the service business, 30%, and that also came in slightly higher than originally expected. For the pipeline part of the business, the DMP, we were expecting one to two new partnerships and we ended up making one new partnership, so that was also within expected range. And last but not least, last year we presented clinical results from the GUP AMI SAD phase one study and, they were very, encouraging and to our satisfaction. So we will get further into some of this today.

I’m just there, I’m shifting slides. So some of the operational highlights of the year, as mentioned in the AMOLED program, we did release SAD data in November. We have a multiple ascending dose study, which is progressing to plan, and we are now revealing that we will be giving, some interim results from the MAD study in April 25, so in April, and that is a specification compared to previously announced where we said it will be in the first half of this year. But now we can reveal that it will be in April. Another pipeline program which is highly interesting we find is our UCN2 program for healthy weight loss.

We are advancing it at speed, and the preclinical talks is currently ongoing, and we are ramping up for a phase one study with this program late this year or early next year. As mentioned, we entered into a new partnership that was with Amelix. It’s a very interesting partnership where we are together with our partner developing a novel long acting GLP1 receptor antagonist. So it’s within the treatment of post phyrexic hypoglycemia and other rare diseases. And last but not least, as mentioned, a significant growth in service business, 31% revenue growth and primarily driven by a very strong interest in obesity services and kidney related services.

And for the CRO business, we saw an EBIT that was up by 44% year over year. In the annual report, we’re also shedding some light to our new 02/1930 strategy. And I’ll shed some light on a few aspects here. So in the pipeline and models part of GUPRA, we are still very enthusiastic and ambitious. We have upped our, ambitious expectations.

So we where we previously said we would have one to two fully owned programs in the clinic. We now just we now say that we will aim for one to three fully owned programs in the clinic. Also, we are now saying that we will be developing one to two new flagship areas. And starting out, we will be looking into women’s health, where we see a number of factors that makes this a very interesting area for us. We see a significant unmet need.

We see a growing interest across the industry. And we also see a range of diseases where we can build on the knowledge and expertise that we already have in house. So based on these factors, we expect it to be an area that can contribute in the future to both the service business and the pipeline business of Kupra. Another aspect which we are mentioning here is that for the core research engine, we have experienced this exciting growth over several years and it means we have been expanding heavily here. And now we are actually saying that we will purposely limit the growth in CRO revenue, that’s going into the core research engine in 2025.

So we will limit it to a growth of, 20 10 to 20% and, that is because we would like to ensure that it stays as sharp and strong as possible to enable the future growth of Gubra and the future pushing forward of our pipeline assets. So we’ll actually also go in and work a little bit on the balance, how we are using the core research engine. We’ll be spending more resources on the pipeline in ’25, compared to previous years. And that’s why we are, as mentioned, purposely limiting the influx of service studies to, to the core research engine. Alright.

I think that’s enough on my part. I will hand over the word to Luise.

Luis Delburry, Chief Scientific Officer, Gubra: Thank you. So moving on to the drug discovery and partnership part of the business, and let me just start by saying here we’re peptide experts. We discover novel peptide based drug candidates, either alone or with a partner. And all our work is done using an internal developed streamlined drug discovery platform. And using this platform, we can quickly develop a peptide hit molecule into a novel IP protected development candidate.

So the platform takes advantage of AI and machine learning, which is combined with high throughput wet lab screening. We screen multiple peptide libraries, thousands of peptides. And we use multiple parameter optimization, which saves time and enables the identification of better molecules faster. So the streamlined platform is key in the build up of a pipeline. So here, you see the Gupra pipeline in green, the internal programs.

The most advanced one is the Amlan program where we released positive top line results from the SAB study back in November. Next (LON:NXT) in line is a UCN2 program within high quality weight loss also headed towards the clinic. Additionally, we have a range of other early stage programs. Then we have the assets developed through various partnerships. You can see the first four here is with Boehringer Ingelheim.

And you might recall the small asterisk next to the top program saying that it has been discontinued within obesity. New information here is that BI is exploring the potential for the compound in other disease area. We also have a collaboration with Hemap within bleeding disorders and with AMELIX within the post bariatric hypoglycemia, the new collaboration. But let’s take a closer look at some of these programs. Starting with GroupAMi, a long acting amylin analog.

And GroupAMi is in development for weight management indication and could be positioned as both an alternative or an addition to impotent based treatment. Group Amyl has a balanced receptor on the amylin and calcitonin receptors just like native amylin, and it has a half life compatible with once weekly dosing. Importantly, gupamid is chemically and physically stable at neutral pH, allowing co formulation with other anti obesity agents. So in November, we released top line phase one a results for Gugami. The single ascending dose study was a very traditional dose escalation study, and doses covered range from zero point five to six milligram.

It was a randomized double blinded within cohorts and placebo controlled study enrolling a total of 48 subjects. In this study, we showed that gupemic was very well tolerated with adverse events being predominantly TI related, mild, and transient. GuPMI had a long half life of eleven days and a single dose of GuPMI reduced body weight dose dependently and the effect was sustained throughout the study. So we are very pleased about these positive results supporting further development of GuPMI. So we are currently testing GuPMI in the multiple ascending dose part of the study.

The study outline is shown on the slide here. And in this part of the study, we’re also including females. The study consists of two parts, a Part a, where subjects are dosed for six weeks, two cohorts, and a part b, where subjects are dosed for twelve weeks, three cohorts. And it’s from part a, the first two cohorts, where we’re looking very much forward to present interim results in April. So moving on to another very exciting program in our pipeline.

So this program builds on a new mechanism where we use long acting UCN2 analog to induce a muscle sparing weight loss. And this is interesting because with current weight management strategies, it’s well acknowledged that lean mass accounts for 20 to 40% of the weight loss and lean mass its bones and its muscles. Therefore, we think it’s time now to focus on the quality of the weight loss rather than just the quantity. By this, we mean that we want to maximize the loss of fat mass while preserving or even increasing lean mass. And then we want the potential for cardiorenal off-site.

In preclinical animal models, we have shown that we can obtain all this with a long acting UCN2 analog, which holds potential to become the next generation of anti obesity treatment. We have designed a selected UCN2 analog. It has excellent formulation properties and allometric scaling from data in mice, rats, and MiniPix supports a once weekly dosing profile in humans. So if we look at this data from a study conducted in diet induced obese rats, you can see that by itself, the UCN two analog doesn’t change body weight much. But when we look at body composition, that’s when we start to see the real changes here.

You can see that the UCN two analog increases lean mass and decreases fat mass. So basically, you can say that we’re turning fat into muscles. You can also appreciate that other weight lowering agents such as the maclutide decreases both lean and fat mass. When we combine a UCN2 analog with weight lowering agents such as methotite, you can see that we can completely prevent the lean mass loss and drive the fat mass loss even further. So we are currently planning for clinical testing.

We have initiated the non clinical tox program and we plan to initiate a Phase one clinical study late twenty five, early ’20 ’6.

Christian Borbus, Chief Financial Officer, Gubra: Thank you very much, Luise. And just a very few words about the financials. And this is our discovery and partnership business. So in in ’24, we got a little bit more, milestone payments than we did in ’23. On the other hand, we also spend more, funds on developing own programs.

And as Louisa said, both the Amylin and the UCN2, so we increase the costs in 2024. Again, this is as expected and to drive more projects in parallel. Turning to the CRO business, this is a very, you know, traditional style. You’ve seen that before. That is just a brief explanation of our CRO business.

You know, we’re specialized in the, in the only in the preclinical phase in our CRO business with a stronghold in metabolic and fibrotic diseases and not least, obesity also. And we serve everything from very small biotech companies to the big pharma companies. And out of those big, the top 20 big pharma companies, 16 out of those are or have been customers at Gubra. So a great variety of customers turn to Gubra for our expertise in performing high quality and CRO studies at speed and not least again at quality. As Henrik touched upon in the beginning, the results for a CRO business was nothing but excellent in ’24.

So we grew the business, 31% in terms of revenue, and we do this in a profitable way also. So we improve the EBIT in absolute terms more than 40% and and within and that translate into margin of 30%. So now an excellent year for a zero business again. And the main drivers has been obesity, as Henrik said, and also kidney. Last but not least, on the outlook for ’25.

So as Henrik also mentioned, you know, we want to find a balance between our internal programs in and our external CRO business. So we’ve grown 30% in ’23, roughly the same in in ’24. We think it’s prudent and value improving for Guba to also focus on our internal programs. So we guide for an organic revenue growth in our CRO business of 10% to 20%. That translates into an EBIT margin of 25 to 31%.

In our discovery and partnership business, here we are, you know, scaling up a bit. We’re running the Amylin, the MAD study this year, and we are preparing the use in two for the clinic that entails some additional cost compared to, ’24. ’20 ’4. And we’ve also, you know, upscaled our R and D efforts. So all in all, that means that we’re now guiding for total cost in that that is both cost of sales, COGS, and an operating cost, OPEX, of $230,000,000 to $250,000,000.25.

That concludes our presentation and now we open up for questions.

Conference Operator: Thank you. We will now begin the question and answer session. And your first question comes from the line of Thomas Bowers from SEB. Please go ahead.

Thomas Bowers, Analyst, SEB: Yes. Thank you very much. I’ll kick off with a couple of Emilio and Google (NASDAQ:GOOGL) Meet questions here. So firstly, just given the you could say the increased focus we have now on spending in DNP, so can you maybe just update us on your partnering plans here and timing for Gugamie in terms of potentially an out license deal? And then also sort of in addition to that question, at least one competitor has been quite outspoken recently about high interest for its eminent projects.

So is this something that you’re seeing as well even though you are, of course, a little bit earlier stage here? And then a question also on gukbome in terms of the clinical trial. So what should we actually expect to see from those first two doses here that you will disclose in April? So of course, given you see no need for titration here, I’m just wondering whether that’s fair to assume that we should see data that is somewhat below the relevant therapeutic window at this point. So what should we consider here as a good result in terms of rate reduction for those two first doses?

And then also can you maybe give a little bit of flavor on your considerations for the Part B in terms of also titration and dose levels? Any color here would be very helpful. Thank you.

Henrik Lo, CEO, Gubra: Thank you, Thomas. So I can start off. First part of the question with regards to partnering plans for GroupMe and timing. We generally have a strategy of partnering relatively early, as we call it. We can take programs into phase 2a, but no longer, and that is still our strategy.

So, we are opportunistic. We are keeping relevant parties informed, and we ensure that, whenever we have new data, we take them out and discuss them with potential relevant partners. And, I think that’s, diving into the second part of your question, really, if there is an interest out there. And we definitely think so. There are many, discussions, there are many presentations, there’s a lot of interest out there within obesity.

I think it’s fair to say that, a lot of companies are considering how, if, when should we enter the obesity race. So, we believe that, that are, today, we are treating all these patients more or less in the same way. Going forward, there will be a segmentation of this huge patient population. There will be companies trying to make specific treatments for sub segments of these patients. So it could be overweight with a heart angle, overweight with a liver angle, overweight with a muscle angle and so on.

So we definitely still expect a range of companies that would like to enter the obesity race, with each their, view on how they should do it in the best way. So expectations for the NAD, it’s, NAD means multiple ascending dose. So by nature, we’re starting out with the lower doses. So the two first cohorts where we will be releasing data from in April, are, of course, with lower doses. They’ve been dosed for six weeks, and, with the same amount each week.

And we are, of course, looking a lot into safety and tolerability. Those are key things for a phase one study. And also PD markers. So in this case, what type of weight loss is, of course, also of interest. But we are not pre guessing.

We are awaiting the data as everyone else, and then we will see what they should. But we think based on the very encouraging SAD data where we saw after just one dose, we saw weight loss, and we saw a sustained effect for six weeks. We are, we are of course very excited and looking forward to seeing those data as well. And for the Part B titration, Luisa, will you comment on that?

Luis Delburry, Chief Scientific Officer, Gubra: Yeah, so definitely. So from the single ascending dose study, we saw that we could dose really high up to six milligram, and it was very well tolerated. So, of course, as Henrik mentioned, the ambition with the ascending dose study is to, to dose multiple times with the increasing dose levels. And the ambition is to explore the full dosing potential of guqm3.

Thomas Bowers, Analyst, SEB: Great. Thank you very

Conference Operator: much. Your next question comes from the line of Suzanne Van Borthuizen from Kempen. Your line is open.

Suzanne Van Borthuizen, Analyst, Kempen: Hi there, this is Suzanne. Thanks for taking my question. April data release on Gubame, what should we expect in terms of disclosure? How much data will you release? Should we expect something in a similar fashion and level of detail as the single sending dose data from last year?

Or will it be more limited? And my second question is, if you can give some more context on the dose that you selected for the multiple ascending dose Part one. You mentioned these are lower doses. Do you mean low in general or low relative to the single ascending dose levels? And can you remind us what we should expect in terms of weight loss or other metrics that you would want to point to as relevant in this update?

And then I have some follow-up questions on the strategy for the zero and NP segments.

Henrik Lo, CEO, Gubra: Yeah. Thank you for these questions. For the April release, it’s not entirely decided exactly in what format and what would be released. So, but we will, of course, be having some degree of similarity to what we could disclose

Christian Borbus, Chief Financial Officer, Gubra: from the

Henrik Lo, CEO, Gubra: SAD. So, I mean, it’s it would be natural to, to look into adverse events and, and also weight loss, but it’s not entirely decided how and exactly what it will be. So, for the dosing levels in the MAD, that is not disclosed yet and it’s not something we can’t disclose at this point in time. And you were speculating to low. What does that mean?

And we’re just referring to the nature of MAD trials where you’re starting out at a somewhat low level because you are increasing in each new cohort that you’re going into. So it’s a relative term, low in this regards, and cannot be directly translated into, the SAD levels here. So, and again, for the weight loss expectations, we don’t want to speculate. We will take the data, and we will look at them, and we will see what they show. So, again, we are super excited within the SAD data, held a lot of promise and of course, we are super excited to see what the MAD data will be showing.

Suzanne Van Borthuizen, Analyst, Kempen: Got it. Thank you. And then, on the CRO outlook, how do you plan to limit the revenue growth to 10% to 20%? Let’s say in the case there’s more services a month than 20% growth, how do you prioritize which services you will provide or is there a first come first serve basis? What’s your thinking about service requests that you may say no to?

Are there any risks related to that? And then on the DMP ambition, can you elaborate a bit more on, you aim to expand it, but how extensive do you hope your pipeline to be by the time you bring one to three wholly owned products in the clinic in 02/1930? Thank you.

Henrik Lo, CEO, Gubra: Yes. And thank you also for these questions. So, sort of limiting the influx of services, it’s it’s partly as you also allude to that, we will be prioritizing some of the internal programs. And that will mean there will be longer lead in time to certain services. And thereby there will be less capacity available to conduct those kind of services.

And therefore, some request we may not capture. We will also have an eye to where we are the most efficient, what kind of services can we produce in the most efficient way, thereby preserving the EBIT margins that we have in this space. So there are sort of a number of ways to look at it. And we will be using several of these. And also, we have worked on the pricing for certain services.

And I think that will also incur a natural balance as to how many requests we will get in those areas. And for the second part, so the DNP extensiveness. Yeah. As mentioned, we are aiming for one to three programs in the clinic. So the pipeline should have a sufficient breadth in order to for us to obtain that goal.

I cannot say exactly that means that we should increase increase the number of pipeline programs by a certain percentage. But it means that we will have a very keen focus on making enough pipeline programs in order to, with attrition, to have sufficient clinical programs to fulfill our strategy.

Suzanne Van Borthuizen, Analyst, Kempen: All right. Thanks a lot.

Conference Operator: Your next question comes from the line of Martin Paquay from SEB. Your line is open.

Martin Paquay, Analyst, SEB: Great. Thank you very much. And Martin Paquay, SEB. Just a couple of questions. Firstly, on the material lift up in cost in the DLP division from SEK135 million last year to CHF230 million to CHF250 million.

Could you elaborate a little

Thomas Bowers, Analyst, SEB: bit more on the driving the cost

Martin Paquay, Analyst, SEB: increase? Is it how much is related to preparation for clinical start of USEN2 and so forth? And then second question is, you expect to see the Phase one data in H2 for the triple agonist. Maybe I know that this is partnered, so it’s a little bit more out of your hands, but could you read a bit that what should we expect the level of details? And also if you think that your partner will at that point in time reveal the actual target of this first in class triple agonist?

And then thirdly, with the in PAI-two, which is a little bit of a comeback after the obesity against the indication of the picture. Now that Boringa is looking for new indications, what have this done in terms of the financial terms that deals you initially did with Boringa?

Christian Borbus, Chief Financial Officer, Gubra: Okay, Martin. I can start off with the cost increase. So this year, we run the M and A study for the Amylin and we’re also starting our preparations for the clinical study for UCM2. And that, of course, you know, the one important delta is that we, you know, are running two programs now in clinical or clinical preparations. We’ve also increased the organization significantly.

So in the guidance also includes salaries. So, and as Henrik said, we’re also ramping up on our ambitions to feed the pipeline. So one more program, you know, preparing for the clinic and a ramp up of discovery activities that, you know, really explains the delta from the 155,000,000 in 2024 to the $230,000,000 to $250,000,000 in 2025.

Henrik Lo, CEO, Gubra: Yeah. And for the next question, the triple, Louise, will you?

Luis Delburry, Chief Scientific Officer, Gubra: Yeah. So definitely. So just to remind you about the triple agonist study, so it consists of two parts, a Part A, a single ascending dose trial and a part b, a multiple ascending dose trial. And in what format data will be released and whether they will be disclosing the components of the triple agonists that’s up to Birner Ingelheim’s discussions. We don’t have control about that.

Henrik Lo, CEO, Gubra: And I can comment on the last question with regards to the NPY2R program where, earlier it was communicated that they have terminated efforts within obesity. Now we know that, they are still considering a future within other indications. I mean, the code contract is still intact, which means if Werner decides to take it forward, if there are some potential milestones and so on, whatever is is in that contract. So it’s again, it’s up to Winger Inghain to disclose further details here.

Martin Paquay, Analyst, SEB: Okay. And then just a follow-up question on the focus that you have also discussed in your end result on the women’s health that you will target this more now. Is this can you just say that this will both be in the COO and in the DMP divisions? Do you already have the in house competencies to target this? Or do you also look for some inorganically outside as well?

Henrik Lo, CEO, Gubra: Yes. So starting out, I think when we evaluate various areas as similar components, One is there has to be a medical need, which is unmet. Clearly see that here. Also, we think that there’s a growing interest across the industry, and we see that. And last but not least, we can build on our current competencies.

So it’s, it’s a natural step for us to develop into this area. And, it’s not an area where we expect that we need to do an acquisition in order to deliver on it, but we won’t preclude it. But it’s not my current expectation that that is needed. So because of that all these three, aspects are intact here, it’s definitely I think something that speaks nicely with our core research engine, we can incorporate it here and we can use it to deliver both preclinical research studies to clients in that space when we have developed it to maturity And we can then also use it to advance internal programs at that point in time.

Martin Paquay, Analyst, SEB: Thank you very much.

Conference Operator: And your next question comes from the line of Morten Lathan from ABG Sundal Collier. Please go ahead.

Morten Lathan, Analyst, ABG Sundal Collier: Thank you very much. Hey guys, a couple of questions from me. First on the margin in the CRO business and your guidance for 2025 to come out a bit softer than I had expected and obviously you raised the target a lot through 2024. But can you just try to help us out in how we should see that a bit softening a margin in 2025 versus your longer term margin trajectory and how we should bridge that? That’s one.

Second, can you add some wording on how you find the market for attracting talent and colleagues out there because you are ramping up fast. So just running into tight labor market out there. So how are you finding access to new customers? Thirdly, the loss making again in 2024 on the bottom line, you are targeting a significant cost ramp up and you are expanding more into the biotech projects and want to go into women’s health. How should we see your longer term funding considerations playing out as we progressed through 2025 and into 2026?

I have some follow ups after that, but let’s start with those three.

Christian Borbus, Chief Financial Officer, Gubra: Thank you, Morten. I will take two of the questions and Henrik can probably take the one on talent acquisitions. So on acquisitions. So, on the CRO earnings, it is I think the level of 30% we had is quite good for ’24. As we grow the company there, we also have a need to ramp up on certain service functions, you know, HR, finance, billing and, you know, IT security, cyber security.

So there’s a lot of these investments we made to, to prepare Gubra as a bigger company. And that, of course, is cost that need to be borne by the whole organization. So it is not a dilution of the earnings as such in the CRO business. It is just that we are a bit bigger company and we need to invest in other non directly related costs to the services. That’s the main explanation to the, to what you could say a slight reduction compared to the margins we had some three, four years ago.

And that’s also speaks into ’25 also. We are, you know, increasing our organization as a whole and and that also impacts the margins slightly. But it’s again, I think having margins in the twenty five percent to 30% area is quite good for a CRO. And we’re growing the company, and so I think that’s a satisfactory level from our point of view. Yeah.

And also, your question regarding the acceleration of our R and D efforts and how we should fund these. I mean, Gubra has, since the company was formed back in 02/2008, relied on internal funds to fund our operations. We did one raise in connection with the IPO. And we have these different avenues of financing our business through internal funds and we also have an equity capital market that could be used if needed. So, we’re not I think we will make a decision how we should fund it, but we have a lot of opportunities to fund our business.

Henrik Lo, CEO, Gubra: Alright. And with regards to talent acquisition, I can say, you’re absolutely right. There’s a tremendous competition for talent. And I think we’re in a pretty good place because also what came with the listing as a public company, a lot more attention on Uber (NYSE:UBER) and a lot more general knowledge around Uber. So, I think, really, the the applicants that we get are very strong, and we do see interest from, you know, the all over Europe.

So there is a I think we have a strong brand here. We have a good reputation, and it’s a it’s an exciting place to work. So, we definitely think we are in a good place when it comes to getting the right talent on board.

Morten Lathan, Analyst, ABG Sundal Collier: Thanks. Two follow-up, if I may. One, on that allocation of resources between the CRO to the DNP business. One thing that has been a little bit weak since the IPO has been attract seems to be your ability to attract new partners into the DNP business. Now you’re allocating more resources into it.

Should we read into it that you think you can find even more partners more than what you’re possibly guiding for even in the near term in the DAP business? That’s one. And second, particularly Henrik, your communication style and meaning much more into the UCN2 project, which appears very interesting. Would you go so far as to make a prediction on which one you’re going to partner out first, Hubertin, or UCN2?

Henrik Lo, CEO, Gubra: Thank you for that. I think we have

Morten Lathan, Analyst, ABG Sundal Collier: more partner interest.

Henrik Lo, CEO, Gubra: Yeah. Thank you for those follow-up questions. First of all, allocation of resources. We do see a tremendous potential for building value in the pipeline footprint. Really, it’s, it’s clear that, you know, the, that potential, there is this, you know, a possibility to have a, a very different return on the investments.

And we see right now, we are in a very good position, a strong pipeline. We are in a field of diseases that attract a lot of attention from many players. So now is the time to invest. And really, we call research engine. It’s I mean, it’s very sophisticated, what we can deliver those type of studies.

That’s also what the external customers are coming from are coming for. So it’s it’s really if it’s an external customer or an internal customer, that’s how we see. It doesn’t make a lot of a difference how we are to deliver on it. So it’s just adjusting that balance a little bit, prioritizing the internal programs, so that we can advance them at even more speed. And when it comes to UCN2 and the, the Amylin group, I think, you know, many players look into obesity could have an interest.

They’re quite different in nature, these two programs. One is with a pretty novel mechanism that you see in two, whereas amylin is more well known. So it’s, it’s not always the same type of companies that are showing an interest. Sometimes it is. So, I’m not going to, to give any to give my guess on which one.

I think, we are optimistic when it comes to both programs. We do think both of them will have a high potential buyback.

Morten Lathan, Analyst, ABG Sundal Collier: Thank you very much.

Conference Operator: Your next question is from the line of Thomas Bowers from SEB. Your line is open.

Thomas Bowers, Analyst, SEB: Yes. Thank you very much for taking my follow-up question. Just going back to you, Tian2. So I know it’s a bit early here, but maybe based on literature publications, would you expect this target to actually have additional benefits aside from the fossil preservation that is so compared to GLP-one amylin? I’m primarily thinking about tolerability, safety, other co morbidities that, of course, is in Bayfocus, yes?

And also second to that, based on the preclinical data, do you see a need to combine this with an amylin or GLP-one in order to get to those, you know, maybe commercial attractive 15%, twenty % rate reduction levels? Or could you maybe see a scenario where UCN2 can also do that based on it as a stand alone? Thank you.

Luis Delburry, Chief Scientific Officer, Gubra: Yeah. So, thanks for those questions. So, regarding the first question about the additional indications, then from a preclinical animal model, as also mentioned, we have seen beneficial effects in the cardiorenal animal model. So, that’s, of course, an opportunity. Right now, we are exploring it within obesity.

And whether we need to hit that fifteen percent or if we need to add it on top of PLP1, I think, again, that depends on the patient segmentation. Right now, we’re treating obesity as X1 disease. It’s definitely not. Obesity is a complex disease. So we need many treatments.

And as also mentioned, it’s time to focus on the quality and not just the quantity of the weight loss. So using it too could be used in combination with the incretin based therapies or other combinations. But you can also imagine a patient population, an old, fragile, psychopenic, obese population that can’t lose muscle mass. So here, you only want to induce fat muscle. So that could also be an opportunity.

But of course, this is speculating.

Thomas Bowers, Analyst, SEB: Makes sense. Great. Great. Thank you very much.

Conference Operator: And before we continue on to the next question, a reminder for those on the webcast to submit your written questions online.

Martin Paquay, Analyst, SEB: For those on the phone,

Conference Operator: please press 1 to join the queue. And your next follow-up question comes from the line of Martin Paquay from SEB. Please go ahead.

Martin Paquay, Analyst, SEB: Yes, Martin Paquay, SEB. I actually only have one follow-up question for now at least. And just we have discussed that ever since the IPO of GUPO with respect to the balance between having a CEO and have a and DoP business. Does are there any kind of collateral damage between running these businesses? Now you are doing somewhat more in the DRP business, taking more molecules into to clean it more on basis.

Do you think that in a sense can scare away some of your clients in the CO business?

Henrik Lo, CEO, Gubra: Thank you, Martin. No, I don’t see at all a risk for scaring clients away. I think we’ve always been running this hybrid business model. And there is a very long standing collaboration between Gupra and external clients. And it’s been with even when running this hybrid business model, it’s never been a problem.

So I don’t see any risk there as such related to that one. Was there another part of your question, sorry? Or did I answer it?

Conference Operator: Sorry, Martin, are you there? Did I answer the question? And there are no further questions on the conference line. I would like to hand back to the management team for any written questions.

Christian Borbus, Chief Financial Officer, Gubra: Yes. Maayan, the written questions has been already addressed, but let’s take a few of them that is not overlapping. So we have one gentleman asking about the UCN2 and what is an efficacy bar in UCN2? How do you, how much benefit on muscle preservation would warrant to move this project forward?

Luis Delburry, Chief Scientific Officer, Gubra: Yeah. And as always, that’s an interesting question. And I think for now, we are not commenting on expectation and not guiding on this at the moment.

Christian Borbus, Chief Financial Officer, Gubra: Okay. This trying to figure out how many there’s been overlapping. There’s also one question regarding the differentiation factors in obesity development. So a lot of focus has been on weight loss as such, but, I think we would like to speak also about the differentiating factors in obesity treatment and perhaps, Luisa, if you could put a few words to to what could a future landscape be in obesity treatment?

Luis Delburry, Chief Scientific Officer, Gubra: Yes, so most certainly. And again, as mentioned previously, obesity is a complex disease. It’s not just one disease. And currently, it’s not all patients that are being treated ideally. So therefore we see many opportunities for future obesity treatment.

We expect the market to be more segregated so that people, patients will be treated differently. We think the impotence, of course, induce a nice weight loss, but but there’s also a possibility to combine with other agents that could be an amylin. It could be a UCN2. You could also expect or maybe envision that a certain patient you just want to induce fatness loss, that could be a a UCN2. So, collectively, there’s many opportunities in the future for treating obesity.

And I think we’re just getting started.

Christian Borbus, Chief Financial Officer, Gubra: I think that concludes the questions. And operator, are there more questions on the line? Otherwise, we can conclude the presentation.

Conference Operator: There are currently no further questions on the conference line.

Henrik Lo, CEO, Gubra: Okay. So, that was what we had for today. Thank you very much for listening in and looking forward to next session after we present the next quarter’s result. Thank you.

Conference Operator: This concludes today’s conference. Thank you for joining us. You may now disconnect.

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