Interim Results for six months ended 30 June 2024

Arecor Therapeutics plc

("Arecor", the "Company" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024

-     AT278 insulin candidate demonstrates superiority to current best insulins in a Phase I clinical trial in Type 2 diabetics with high BMI

-     Expansion of diabetes and obesity pipeline, with oral GLP-1 receptor agonist development initiated and partnership inked with Medtronic on implantable insulin pumps

-     AT220 generating growing royalties under a worldwide licensing agreement

-     Growing technology partnerships portfolio offering significant future upside potential from licensing

-     Dr. Helen Parris appointed Senior Vice President, Commercial and General Manager, Tetris Pharma

-     Successful placing, subscription and retail offer raises £6.4 million, including support from two international life science healthcare investors, providing sound financial platform for further investment in Group R&D and in Tetris Pharma to drive Ogluo® product sales

Cambridge, UK, 26 September 2024: Arecor Therapeutics plc (AIM: AREC), the biopharmaceutical group advancing today's therapies to enable healthier lives, today announces its interim results for the six months ended 30 June 2024.

Sarah Howell, Chief Executive Officer of Arecor, said: "During the period we have significantly advanced and expanded our diabetes and obesity portfolio, reporting very positive Phase I clinical results for AT278 demonstrating its clear superiority and potential to improve outcomes and lower the burden for people living with diabetes, and expanding our technology platform in the development of the oral delivery of peptides, initially GLP-1, a potential high value, high growth proposition. With multiple opportunities for value creation, we continue to build momentum across the business. With a strengthened financial position following our fundraise we are confident in our ability to deliver against our strategy and excited about what can be achieved through 2024 and beyond."

Operational highlights (including post period events)

•     Significant progress in development of AT278 insulin candidate, demonstrating superiority to current best insulins in a Phase I clinical trial in Type 2 diabetics with high BMI

•     Expansion of diabetes and obesity pipeline, with oral GLP-1 receptor agonist development initiated

•     Entered a strategic research collaboration with Medtronic to develop a novel formulation of insulin for implantable intraperitoneal insulin pump delivery, fully funded by Medtronic

•     Arestat™-enabled product, AT220, generating growing royalties under a worldwide licensing agreement

•     Growing technology partnerships portfolio offering significant future upside potential from licensing, including expansion of ongoing collaboration with pharmaceuticals division of one of the world's largest chemicals marketing and pharmaceuticals companies, in addition to Medtronic partnership

•     Pipeline of future technology partnerships and licensing opportunities

•     Dr. Helen Parris joins Group as Senior Vice President, Commercial and General Manager of Tetris Pharma Ltd

Financial highlights

•     Revenue of £2.0 million (first half 2023 unaudited: £1.67 million)

•     Total income of £2.03 million (first half 2023 unaudited: £2.33 million)

•     Investment in R&D of £2.09 million (first half 2023 unaudited: £2.86 million)

•     Loss after tax for the period of £4.64 million (first half 2023 unaudited: £4.53 million)

•     Cash, cash equivalents and short-term investments of £2.53 million at 30 June 2024 (at 30 June 2023 unaudited: £6.61 million)

•     Post period fundraise of £6.4 million (before expenses), including support from two international life science healthcare investors, to be employed towards delivering significant value inflection points including investment in R&D to drive high-value partnerships and working capital inventory investment for Ogluo®, and balance sheet strength

Outlook (H2 2024 and beyond)

•     Continued strategic discussions around AT278 including evaluation of a co-development opportunity

•     Non-clinical pharmacokinetic proof of concept study in oral GLP-1 receptor agonist collaboration anticipated in 1H 2025 following initial positive results from the current formulation development phase

•     Pipeline of future technology partnerships and potential near term licensing opportunities

•     Focus on accelerating growth of Tetris Pharma initially in the UK and Germany though timing of sales potentially impacted by recent supply chain issues

•     The Board continues to target achieving consensus analyst revenue market expectations for 2024 though this remains subject to inherent uncertainty, such as the quantum of royalties on sales of AT220, the magnitude and timing of licensing transactions which are under active negotiation and the pace of the growth of Ogluo® product sales through the remainder of the year

Analyst conference call today

Dr Sarah Howell, Chief Executive Officer, will host a meeting and webcast for analysts and investors at 9.30am UK time today. Join the webcast here. A copy of the interim results presentation will be released later this morning on the Company website at www.arecor.com. Please contact ICR Consilium for details on [email protected] / +44 203709 5700.

For more information, please contact:

Notes to Editors

About Arecor

Arecor Therapeutics plc is a globally focused biopharmaceutical company transforming patient care by bringing innovative medicines to market through the enhancement of existing therapeutic products. By applying our innovative proprietary technology platform, Arestat™, we are developing an internal portfolio of proprietary products in diabetes and other indications, as well as working with leading pharmaceutical and biotechnology companies to deliver therapeutic products. The Arestat™ platform is supported by an extensive patent portfolio. 

For further details please see our website, www.arecor.com

Corporate overview

We continued to build strong momentum across the business during the first half of 2024, supporting the growth of Arecor's diverse portfolio of both proprietary in-house products and partnered programmes.

We further delivered on our diabetes strategy, generating additional clinical data that strengthen the potential of our ultra-concentrated, ultra-rapid acting insulin candidate, AT278, and established a development path forward that provides the best opportunity to maximise value for shareholders. Within our broader product portfolio, our oral glucagon-like peptide-1 (GLP-1) receptor agonist programme presents opportunities within high value global markets and offers the potential to further expand our technology platform to the oral delivery of peptides, which is a key target for global pharmaceutical companies.

Strong progress across Arecor's partnered portfolio highlights the value of our Arestat™ technology in driving revenue growth in 2024 and beyond. These partnerships are revenue-generating from inception and offer significant upside potential from licensing, as illustrated by AT220, the first launched product incorporating Arestat™ technology, which is providing Arecor with a growing revenue stream from sales royalties, under a worldwide license. Sanofi continues to progress the registrational enabling study for SAR447537, formerly INBRX-101 (AT292), which incorporates an Arestat™ novel formulation under license from Arecor.

Tetris Pharma, the Group's specialty pharmaceutical business, continues to focus on its key diabetes product, Ogluo® (glucagon prefilled autoinjector pen) and, with increased inventory enabled by the Group's fundraise in July 2024, the team is focused on accelerating commercial growth, initially in the UK and Germany. There has been a recent, third-party supply chain issue with respect to Ogluo® packaging, which is anticipated to lead to a near-term delay in our enhanced ability to increase Ogluo® stock in the market. This is being actively managed and is expected to be short term in nature. 

The Group has been actively engaged in a search for a new Chief Financial Officer (CFO) and had identified and progressed a preferred candidate. Due to circumstances beyond Arecor's control that candidate is no longer available. The process remains underway and the Group intends to appoint an interim CFO as soon as possible.

Arecor has multiple opportunities for revenue growth and value creation for shareholders and the £6.4 million gross raised in July 2024, including support from two international life science healthcare investors, provides a sound financial platform allowing Arecor to deliver significant valuation inflexion points. The Group will continue to invest in Arecor research and development, focused on areas in which our Arestat™ technology can deliver transformational opportunities, including the development of enhanced injectables through our portfolio of technology partnerships with leading pharmaceutical and biotech companies, and innovation in the field of oral delivery of peptides. We also continue to explore options, including strategic co-development and non-dilutive funding, to progress a three-day insulin pump study for AT278, which we believe is a major value accretion point, increasing both the potential and value of future dealmaking.

Operational review (including post period events)

Proprietary product portfolio

During the period we made significant clinical progress within our diabetes portfolio, announcing in May 2024 that the Group's ultra-concentrated, ultra-rapid acting, insulin candidate, AT278, had met all primary and secondary endpoints, and had also demonstrated superiority to NovoRapid® and Humulin® R U-500, in a Phase I clinical trial in Type 2 diabetics with a high body mass index (BMI).

Together with its superior profile in the earlier Phase I clinical study in Type 1 diabetic patients, AT278 has demonstrated its ability to maintain a fast and superior onset of action and glucose lowering profile irrespective of diabetes type and BMI. Not only does it have the potential to significantly improve post-prandial glucose control whilst lowering the burden for anybody with diabetes who has a high daily insulin need, AT278 is set to be a powerful catalyst in the development of next generation, truly miniaturised, longer-wear insulin pumps, a key focus for patients, physicians and the industry.

Earlier this month, the results from the latest study were presented at the 60th Annual Meeting of the European Association for the Study of Diabetes (EASD) in Madrid. The abstract, which was selected as a late-breaking presentation, was well received at the international congress, with recognition of AT278's unique characteristics in the competitive field of insulin analogues and the opportunity it presents to improve the future management of diabetes.

As previously communicated, we believe the optimal value inflexion point for AT278 and potential value for shareholders is likely to be best achieved through conducting an insulin pump study, to provide sufficient data for potential licensing partners. Arecor continues to explore funding options, including but not limited to co-development partnerships, to conduct the clinical pump study.

The Group's proprietary product portfolio provides significant opportunities to further expand its proprietary pipeline of different therapeutic injectables for partnering and is a continued focus of research and development.

In March 2024, Arecor established a research collaboration with TRx Biosciences, a drug development company applying novel lipid technology to the oral delivery of challenging molecules, for the formulation development of an oral GLP-1 receptor agonist product. The collaboration is progressing at pace, with initial positive results from the current formulation development phase, and we anticipate commencing non-clinical pharmacokinetic (PK) studies in 1H 2025.

With current treatment options mostly limited to injectable therapies, many patients in need are unable to benefit from these highly effective treatments, providing a significant market opportunity within the GLP-1 market, which is forecast to exceed $100 billion by 2030. The collaboration with TRx Biosciences provides scope for expansion to develop further oral peptide products and combination approaches which may be key in the treatment of obesity-related health conditions, as well as for other peptide products targeting multiple therapeutic areas. If technically successful, Arecor anticipates its oral GLP-1 receptor agonist product to be highly commercially attractive to partners but, potentially of more significance, this would allow expansion more broadly into oral delivery of peptides.

Partnership products

A robust portfolio of revenue-generating partnered programmes underscores the strength of Arecor's Arestat™ technology and its value to our partners in the development of enhanced formulations of their proprietary products which would otherwise be unachievable.

Commercialisation by Arecor's partner of the first product incorporating Arestat™ technology, AT220, commenced in November 2023 and the reach of that product continues to grow within multiple major global markets. This is providing Arecor with a revenue stream from royalties on AT220 sales under a worldwide license, which is growing in line with the Group's expectations.

In May 2024, Sanofi announced the completion of its acquisition of Inhibrx's assets and liabilities associated with SAR447537, formerly INBRX-101 (AT292), an Arestat™ formulated optimised recombinant human AAT-Fc fusion protein, for treatment of patients with emphysema due to alpha-1 antitrypsin deficiency, which is under license to Sanofi. A registration-enabling clinical trial of SAR447537 commenced in 2023. Sanofi's acquisition of Inhibrx further endorses our Arestat™ platform and highlights the value of this novel therapy for patients and its future commercial potential.

In May 2024 Arecor added to its portfolio of technology partnerships with leading pharmaceutical and medtech companies by establishing a research collaboration with Medtronic, the global leader in healthcare technology. Through the partnership, Medtronic is funding Arecor's development of an Arestat™ enabled novel, high concentration, thermostable insulin, for use by Medtronic's Diabetes business in intraperitoneal therapy via an implantable insulin pump system. This new insulin has the potential to bring significant advancements in the current insulin treatment options for an extremely vulnerable patient group who have limited options for controlling their diabetes with traditional therapy.

An ongoing collaboration, which Arecor established in 2023, with the pharmaceutical division of one of the world's largest chemicals marketing and pharmaceuticals companies to develop a differentiated, RTU liquid formulation of the company's product, AT351, was expanded in January 2024. 

The Group anticipates further expansion of its technology partnerships portfolio, alongside the conversion of new licenses from existing partnerships, to continue driving revenue growth in 2024 and beyond.

Tetris Pharma

Tetris Pharma, the Group's specialty pharmaceutical business, continues to focus on its key diabetes product, Ogluo® (glucagon prefilled autoinjector pen). Dr. Helen Parris, who was appointed Senior Vice President, Commercial and General Manager of Tetris Pharma in January 2024, is focused on ensuring sufficient stock of Ogluo® to meet demand and implementing targeted awareness campaigns to drive further demand and revenue growth.

While first half of 2024 sales were significantly tempered by the availability of Ogluo® stock, the Group's fundraise in July 2024 has enabled increased investment in this business to continue commercial expansion. Through the remainder of 2024 and in 2025, Tetris Pharma is focused on implementing targeted awareness campaigns in two key territories, the UK and Germany, where the RTU glucagon market is estimated to be worth approximately £18 million and £9.5 million respectively.

In recent weeks, Tetris Pharma has been informed of an issue related to the sealed foil pouches that protect the product from light and moisture, in the latest consignments of Ogluo® intended for Tetris Pharma. This is not related to the quality of the autoinjector pen itself, however, it is likely that there will be a short-term impact on supply in Germany and, potentially, in the UK. The issue was identified at the packaging stage and does not impact any product released to the market. Tetris is working closely with its manufacturing partner to resolve the issue and to prevent any recurrence. While there is expected to be some impact on Ogluo® product sales, any impact on cash will be minimised by adjusting the timing of future inventory investment accordingly, and cash will be proactively managed. 

Intellectual property portfolio

Arecor's broad and robust global patent portfolio has >90 granted patents across key territories protecting both the Arestat™ technology platform as well as the enhanced versions of therapeutic medicines that we develop leveraging Arestat™. That portfolio was bolstered in January 2024 by a patent from the European Patent Office protecting novel formulations of the Group's proprietary insulin products, AT278 and AT247, alongside patents of similar scope that were granted in Australia, India and Mexico.   

Finance

The consolidated financial results for the period ended 30 June 2024 reflect the performance of Arecor Therapeutics plc and its trading subsidiaries; Arecor Limited and Tetris Pharma Ltd.

Total income for the six months to 30 June 2024 of £2.03 million (Restated H1 2023: £2.33 million).

Other operating income for the period was £39,000 (Restated H1 2023: £656,000). This decrease was due to the completion of a UK Government research grant in the prior year and therefore not repeating in the current period.

Investment in R&D of £2.09 million (H1 2023: £2.86 million) reflecting a reduced R&D spend on clinical development in our proprietary diabetes portfolio. Future R&D expenditure will increasingly focus on areas in which the Group's Arestat™ technology can deliver transformational opportunities, including within diabetes and the field of oral delivery of peptides.

Sales, General and Administrative costs were £4.78 million (H1 2023: £4.38 million).

The total loss after tax for the six-month period was £4.64 million (H1 2023: £4.53 million).

The Group ended H1 2024 with cash, cash equivalents and short-term investments of £2.53 million (H1 2023: £6.61 million).

Post the period end, the Company raised £6.4 million (before expenses) from new and existing shareholders. These funds will be made available to the subsidiaries within the group to enable continuation of R&D activities and growth of sales.

The Company continues to examine cost mitigation and manage cash as efficiently as possible. A targeted reduction in headcount will deliver annualised savings.

Summary and outlook

The Company remains confident in its strategy and opportunities for significant valuation creation. Following the positive AT278 clinical readout, we are continuing positive co-development discussions with potential partners to maintain progress in our diabetes portfolio. With a strengthened cash position, and multiple opportunities for valuation creation across the Group, including the potentially transformational impact from enhanced delivery of oral peptides, we look forward to building momentum through the rest of the year and beyond. 

Reflecting the Company's near-term pipeline of technology partnership licensing opportunities and anticipated growth in both AT220 royalties and sales of Ogluo®, we anticipate revenue growth over the full year. The Board continues to target achieving consensus analyst revenue market expectations for 2024 though this remains subject to inherent uncertainty, such as the quantum of royalties on sales of AT220, the magnitude and timing of licensing transactions which are under active negotiation, and the pace of the growth of Ogluo® product sales through the remainder of the year.

Sarah Howell

Chief Executive Officer

Arecor Therapeutics plc

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024

Consolidated Statement of Comprehensive Income

There were no other items of comprehensive income during the periods under review.

Arecor Therapeutics plc

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024

Consolidated Statement of Financial Position