4565.T

Overall Company Progress

• The company is transitioning from an investment phase to a delivery phase, with both business segments returning to profit in H1 FY26. IFRS operating profit swung from a 2.8 billion yen loss to a 1.9 billion yen profit, and core operating profit increased from 364 million yen to 6.5 billion yen.
• All five 2026 full-year priorities set at the start of the year are on track or ahead of schedule.

Commercial Operations (Japan/APAC)

• PIVLAZ holds over 70% market share in its indication (prevention of cerebral vasospasm), with steady H1 sales growth. New clinical practice guidelines published in March 2026 are expected to drive expanded appropriate use and future growth.
• QUVIVIQ (insomnia treatment) is growing rapidly, benefiting from a structural market shift to the dual orexin receptor antagonist (DORA) class, which is expected to reach 40% of the insomnia market by 2026. QUVIVIQ holds 9% DORA market share as of June 2026 and is on track to hit full-year targets. A Taiwan launch is scheduled for H2 FY26.
• Vamorolone (for Duchenne Muscular Dystrophy, DMD) launched in early 2026, with demonstrated superior safety compared to traditional corticosteroid standard of care. The company plans to expand development of vamorolone into three additional rare diseases that rely on glucocorticoid treatment: Fukuyama congenital muscular dystrophy, pediatric nephrotic syndrome, and juvenile dermatomyositis.

Research and Development

• Partnered programs achieved multiple milestones in H1: Neurocrine initiated a Phase II study for NBI-570 (schizophrenia), triggering a 22.5 million yen milestone. Eli Lilly's acquisition of Centessa, whose entire orexin agonist portfolio was generated on Nxera's platform, validated the platform's value at up to 7.8 billion USD.
• Direclidine (Nxera/Neurocrine M4 muscarinic program for neuropsychiatric indications) remains on track for a Phase III readout in H2 2027, with an improved competitive position after a competitor's M1/M4 program delivered only modest Phase II results.
• Three internal clinical-stage programs are progressing: NXE-149 (GPR52 agonist for schizophrenia, Phase II-ready, in advanced partnering discussions), NXE-744 (gut-restricted EP4 agonist for IBD, strong Phase Ib data, in advanced partnering negotiations), and NXE-732 (EP4 antagonist for immuno-oncology, Phase IIa sponsored by CRUK, interim readout expected H2 FY26, with independent validation of the EP4 mechanism from recent Ono Pharmaceutical data).
• Nxera is building a differentiated portfolio of next-generation metabolic/obesity programs focused on oral small molecules with improved tolerability, muscle mass preservation, and adherence versus current peptide-based GLP-1 therapies. Lead programs target GLP-1 agonism, amylin agonism, and GIP receptor agonism, with 4 IND-enabling studies planned for 2027 and clinical entry starting in 2028.

Platform Development

• The company launched a separate standalone entity for its NexAQ AI drug discovery platform in July 2026. NexAQ combines fine-tuned AI, quantum simulation, and 15+ years of proprietary GPCR data (493 experimental structures, 59 receptors, 30,000+ mutation data points) to accelerate early drug discovery. The platform is expected to reduce time to development candidate from 4-5 years to 1-1.5 years, and cut early discovery costs by more than 50%. The company targets 5 AI-led discovery programs by 2028.

• Full-year net product sales guidance is maintained at 19.5+ billion yen, with H1 net product sales reaching 9.9 billion yen (51% of the full-year target), in-line with expectations.
• Full-year IFRS profitability guidance is maintained, with profitability achieved in H1 FY26 following Q1, and costs tracking in-line with full-year projections.
• The company reaffirms its 2030 targets: 40 billion yen-50 billion yen in net product sales (only commercial products; adding platform milestone revenue brings total 2030 revenue to 50 billion yen-65 billion yen, maintaining the prior 50 billion yen+ total 2030 target) and an operating profit margin above 30% for the commercial business.
• The company reaffirms its goal to execute at least one new major out-license transaction (over 1 billion USD in total deal value) by the end of 2026, and remains on track to meet this goal.
• Mid-term targets: 5 AI-led discovery projects via the NexAQ platform by 2028; 4 clinical-stage programs for the U.S. market by 2028; 4 IND-enabling studies for metabolic programs in 2027, with clinical entry starting in 2028.
• Key upcoming milestones: New in-licensed products for Japan, vamorolone Japanese approval filing, first NexAQ AI program data readout, and further clarity on Lilly's orexin portfolio plans, all expected in H2 FY26; direclidine Phase III data readout expected in H2 2027.

Consolidated total revenue for the first half of FY26 was 18.9 billion yen, a 25% increase year-over-year. The firm operates two business segments:

1. Platform Business: This discovery-focused segment generates revenue primarily from partner milestones. Milestone revenue grew 60% year-over-year from 5 billion yen to 8 billion yen, and the segment achieved core profitability in H1 FY26. The segment accounts for approximately 42.3% of total H1 FY26 revenue.
2. Commercial Business: This product-focused segment includes the company's Japan/APAC marketed and pipeline products. Product sales grew 32% year-over-year from 7.5 billion yen to 9.9 billion yen. Within commercial product sales: PIVLAZ delivered 6.3 billion yen (up 9% YoY), QUVIVIQ delivered 3.6 billion yen (up 127% YoY). The segment saw 11% sales growth alongside 38% profit growth, driven by cost reduction efforts, and achieved profitability. The segment accounts for approximately 52.4% of total H1 FY26 revenue.

• Platform business revenue is heavily dependent on partner milestones, which are difficult for the company to control or forecast accurately.
• QUVIVIQ revenue is tied to Shionogi's inventory decisions, so reported revenue may not align with end-consumer demand and can fall outside projected ranges outside of the company's direct control.
• The company's current share price trades substantially below management's estimate of its intrinsic fundamental value and below analyst consensus target prices, limiting the company's ability to use equity for financing if needed.
• The company will not self-fund global Phase II/III development for its two clinical-stage out-licensing candidates (NXE-149 and NXE-744); failure to secure a partner or alternative funding would delay or halt progression of these assets.

Q: What is the current progress of the two targeted out-license programs, and will a deal close this year?

A: Management confirms they remain on track to execute at least one major out-license transaction by the end of 2026. Discussions with potential partners have advanced to more serious, focused stages in H2 FY26, and an announcement can be expected in the second half of the year.

Q: If the targeted out-license deals do not close this year, will the company advance the Phase II studies on its own? What is the backup plan?

A: Nxera does not plan to conduct global Phase II development for either program itself, as both target large global indications that are best advanced by a large pharmaceutical with existing relevant franchise expertise. The top priority remains a full out-license to a major partner. If that is not achieved, the backup plan is to spin the program out into a standalone company funded by venture capital, with Nxera retaining a significant minority equity stake rather than covering full development costs.

Q: What is Nxera's AI drug discovery strategy: do you target first-in-class or best-in-class molecules?

A: Nxera has shifted its strategy away from novel first-in-class discovery to focus on clinically/biologically validated GPCR targets, where the company's proprietary 15-year GPCR dataset and platform allow development of differentiated, best-in-class molecules. For the metabolic portfolio, this means targeting improved tolerability and muscle preservation relative to existing GLP-1/amylin programs, addressing high dropout rates seen with current therapies. This higher-probability strategy leverages Nxera's unique platform advantages without taking on unnecessary target validation risk.

Q: Nxera's share price has been sluggish despite positive recent news. Do you have plans to unlock shareholder value via listing changes, including a U.S. listing?

A: Management confirms the company is not considering delisting from Japan, where it is proud to be a founded domestic champion. However, the Board is actively evaluating a carve-out dual listing on the U.S. Nasdaq for the company's metabolic/rare disease pipeline and NexAQ AI platform, which management believes would be valued far more appropriately by U.S. institutional investors than the current combined Japanese listing. Management notes the current share price is far below internal estimates of intrinsic risk-adjusted value, with the Centessa acquisition providing clear third-party validation of Nxera's platform value.