Nxera Pharma Co.,Ltd. Q1 FY2026 earnings call

• Company Strategy & Vision

  • Nexera Pharma aims to become a high-growth, high-profit Japanese biopharmaceutical company, building on the legacy of former So-sei Group, with dual platform (drug discovery) and commercial (product sales) business models, targeting an operating margin of over 30% by 2030.
  • The company maintains 5 global locations across Japan, the UK, Switzerland, and South Korea, with over 400 total employees. The UK platform hub leverages cryo-EM and structural analysis capabilities from acquired Heptares Therapeutics, while the Japanese commercial hub gained capabilities via acquisition of Idorsia's Japanese/Asian business.
  • The company's core proprietary technology enables high-precision GPCR structure-based drug discovery, which has delivered first-in-class structural resolution of the GLP-1 receptor, and allows development of best-in-class compounds with high target selectivity and low off-target side effect risk.
  • The platform segment has over 1.05 trillion yen in remaining outstanding potential milestone payments from global pharma partnerships, ranking 4th globally for total licensed deal value among biotech platform companies since 2015.

• Key Pipeline Progress

  • Muscarine Program (schizophrenia): The company's selective M4 agonist for schizophrenia has entered the first of 3 planned Phase 3 trials, which is expected to complete by October 2027. Phase 2 top-line data met the primary endpoint for the 20mg once-daily dose, with an effect size comparable to existing approved therapies, and the program is currently the company's highest priority opportunity, with a projected 2030 market size of ~700 billion yen for the class.
  • Commercial Products: Pivlats has guidance of 13 billion yen to 14 billion yen drug price-based sales for 2025, while Quviviq is guided to 4 billion yen to 5 billion yen in 2025 revenue for Nexera (from product supply and royalties), with Shionogi guiding total market sales of 9.3 billion yen for 2025. The total DORA insomnia market in Japan is already 78.5 billion yen annually.
  • OX2 Agonist Program (narcolepsy): Partnered with Centessa Pharma, ORX750 for narcolepsy and idiopathic hypersomnia is expected to deliver Phase 2 data in 2025, with high selectivity for OX2 over OX1 and a favorable early safety profile compared to competitor Takeda's TAK-861.
  • EP4 Antagonist Program (cancer): Self-owned program partnered with Cancer Research UK, completed Phase 1, with Phase 2 planned to start in 2025 H1, focusing on colorectal, gastroesophageal, and cervical cancers, with Cancer Research UK covering all Phase 1/2 costs.
  • mGlu5 NAM Program (substance use disorder): Partnered with Tempero Bio, TMP-301 for alcohol use disorder is in Phase 2, and for cocaine use disorder is in Phase 1, with results expected in H2 2025. Tempero Bio recently raised 100 million yen to fund development through this stage.

Nexera Pharma operates two business segments: 1) Commercial Segment: The company sells two approved products in Japan/APAC: Pivlats (clazosentan) for prevention of cerebral vasospasm after subarachnoid hemorrhage, which has reached ~75% market penetration; and Quviviq (daridorexant), a dual orexin receptor antagonist (DORA) for insomnia, supplied to Shionogi for commercial sale. 2) Platform Segment: Based in the UK, the segment operates the NxStaR and NxWave GPCR drug discovery platforms, with multiple partnered and proprietary development programs, and earns revenue from upfront license fees, milestone payments, and future royalties. Undisclosed segment-level absolute revenue figures or revenue contribution percentages are provided in the available transcript.

• 2025 Commercial Product Sales Guidance: Pivlats is guided to 13 billion yen to 14 billion yen, Quviviq is guided to 4 billion yen to 5 billion yen for Nexera, maintained from prior guidance.
• 2030 Long-term Guidance: Total company revenue is projected to reach at least 500 billion yen, with an operating profit margin of over 30%, consisting of 30 billion yen to 35 billion yen from commercial products, 10 billion yen to 15 billion yen from license and milestone revenue, plus additional upside from new product royalties. The guidance is maintained as previously stated.
• 2025 Clinical Data Readouts: Up to 6 clinical programs are expected to deliver data readouts in 2025, including the muscarine program, ORX750, EP4 antagonist, and TMP-301.
• Near-term Profitability Guidance: Management maintains that the company will target IFRS-based net profitability for the current fiscal year, even without the GPR52 partnership option exercise milestone.

• Clinical trial uncertainty: Like all biotech development programs, there is risk that Phase 2/3 trials will fail to meet efficacy or safety endpoints, even with positive Phase 1/2 data. The muscarine M4 agonist Phase 2 trial only showed efficacy for the 20mg dose, with higher doses failing to meet endpoints, requiring confirmation in larger Phase 3 trials.
• High regional cost base: The company maintains high-cost locations in Cambridge (UK) and Basel (Switzerland), where personnel costs are 2x and 3x higher than in Japan respectively, putting pressure on operating expenses compared to purely domestic Japanese biotechs.
• Low brand recognition: After rebranding from So-sei Group to Nexera Pharma, the company has low brand recognition among Japanese retail investors, requiring increased IR and PR investment.
• Partner dependency: Most late-stage pipeline programs are partnered with other biotech/pharma companies, so development timelines and data readouts are dependent on partner resourcing and priorities, and milestone revenue is volatile based on partner progress.

Q: What explains the relatively high reported average employee salary and number of executives, compared to other Japanese biotechs? / A: Nexera operates a global 5-location business across high-cost regions, with reported salaries aggregate local compensation for UK and Swiss staff. Japanese reporting rules require consolidating these salaries, which creates an appearance of higher pay that does not reflect actual Japanese domestic payroll. Executive numbers are higher because local legal requirements in different regions require dedicated regional executive directors to comply with local law. Executive compensation is benchmarked to global biotech norms by a mostly-independent compensation committee, and the CEO's pay is below the average for similarly sized US-listed biotechs. Management will work to improve disclosure clarity for these items going forward.

Q: What steps is the company taking to improve investor communication and demonstrate its progress? / A: For institutional investors, IR headcount and meeting volume has increased sharply, with 101 institutional meetings in May 2025 alone, up from prior levels. For retail investors, the company plans to host in-person investor seminars across Japan, already held one in Nagoya, with planned events in Osaka and Sapporo this year. The company is also exploring shareholder-only content like industry commentary reports, to improve education on the biotech sector and the company's pipeline. Management has prioritized improving awareness of the company post-rebranding.

Q: When do you expect to reach profitability, and how will you make operational progress more visible to investors? / A: The company still targets IFRS-based full-year profitability for the current fiscal year, even without any additional option exercise milestones from partnered programs. Management will continue to break out commercial segment revenue and costs quarterly, to show the ongoing profitability improvement of the commercial business, which can eventually be valued via traditional metrics like P/E once consistent profitability is established. The company is now in a dramatically different position than in prior years, with 6 active late-stage trials potentially read out in 2025, and management will continue to communicate progress transparently.

Q: Why was the Phase 2 trial end date updated for the EP4 antagonist program? / A: All early-stage oncology trials initially use approximate timelines, as the trial design is adjusted once patient recruitment starts and the target cancer patient population is refined. The update reflects that the trial is actively progressing, and the timeline has been clarified as recruitment plans are finalized. Cancer Research UK fully funds the Phase 1/2 trial, so there is no additional cost pressure on Nexera, and results will be publicly disclosed once available.