Nxera Pharma Co.,Ltd. Q2 FY2026 earnings call

Corporate Strategic Transition

• The company is transitioning from an investment phase to a delivery phase, organized around four complementary, mutually funding value engines: Products, Platforms, Pipeline, and Partnerships
• The company achieved H1 profitability on an IFRS basis, meeting its full-year profitability target six months early, and is on track or ahead on all five 2026 annual priorities
• Cumulative cost reduction efforts have delivered 50% of planned multi-year cost targets, in line with management expectations

Commercial Business (Japan/APAC)

• Commercial products sales have grown 2.6x since the July 2023 acquisition from Edosia Pharmaceuticals Japan, with 20% of the legacy cost base eliminated
• PIVLAS is the clear market leader in cerebral vasospasm prevention; Kivivic is growing rapidly alongside the expanding dual-orexin antagonist drug class for insomnia, which is expected to reach 40% class share of the insomnia market by end-2026
• Vamorolon demonstrated significantly improved safety vs standard corticosteroids in its pivotal trial, with strong consensus long-term global sales forecasts of ~$6.7 billion across all territories
• A Taiwan launch of commercial products is secured for H2 2026

Research & Development Progress

• R&D delivered multiple milestones across discovery, clinical development, and partnering in H1; the underlying pipeline is increasingly valuable and externally validated
• Partnered portfolio progress: Neurocrine initiated Phase 2 development of NBI 517 for schizophrenia (triggering a $22.5 million milestone), and Directlydine (M4 muscarinic agonist) is on track for Phase 3 data readout in H2 2027; three orexin agonists discovered on Nexara's platform were acquired by Lilly via the $7.8 billion Sintesa acquisition, providing strong external validation of platform value
• Internal clinical portfolio: NXE149 (GPR52 agonist for schizophrenia) is Phase 2-ready and in advanced partnering discussions; NXE744 (gut-restricted EP4 agonist for IBD) delivered strong Phase 1b data and is in advanced negotiations with major IBD players; NXE734 (EP4 antagonist for immuno-oncology) has an ongoing CIUK-sponsored Phase 2a study, with recent third-party data validating the EP4 mechanism, and interim data is expected in H2 2026
• Next-generation metabolic/obesity pipeline: The company is developing oral small molecules targeting GLP-1, amylin, and GIP receptor, designed for better tolerability, oral dosing, and lean muscle preservation vs current therapies; the portfolio is on track for four IND-enabling studies in 2027 and first clinical entry in 2028

Platform Development

• NextAQ, the company's AI and quantum simulation GPCR drug discovery platform, was spun out into a separate legal entity on July 1, 2026, with an experienced founding team
• The platform leverages 15 years of proprietary, private GPCR data not available in public databases, built on AWS cloud infrastructure; it is designed to reduce early discovery time by 70% (to 1-1.5 years per program) and cut discovery costs by over 50% (to <$5 million per development candidate)
• The first AI-led research program has been initiated, with data readout expected in H2 2026; the platform targets 5 active AI-led discovery programs by 2028

Overall company revenue grew 25% year-over-year to 18.9 billion yen in H1 FY2026. The company achieved an operating profit of 1.9 billion yen, reversing a 2.8 billion yen operating loss in the prior year period, while core operating profit increased from 364 million yen to 6.5 billion yen. Both business segments turned profitable in the period:

1. Commercial Products Segment: Total product sales reached 9.9 billion yen, accounting for 52.4% of total H1 revenue. PIVLAS (Pibratz) sales hit 6.3 billion yen, up 9% year-over-year, and holds 74% market share in its indication in Japan. Kivivic (Qubiq) sales reached 3.6 billion yen, up 127% year-over-year, and holds ~9% share in its drug class in Japan as of June 2026. Vamorolon is approved for Duchenne muscular dystrophy across major global markets and is progressing in Japan, with planned expansion into three additional rare disease indications.
2. Platform Business Segment: Revenue is driven by partner milestones, contributing 47.6% of total H1 revenue. The segment delivered multiple revenue milestones from partners including Neurocrine, AbbVie, Sentessa, and Lilly. A new GPCR-targeted program spinout company was formed with up to $275 million in potential future milestones plus royalties, with Nexara holding a significant minority equity stake.

• Full-year 2026 net product sales target is maintained at 19.5+ billion yen; H1 net product sales reached 9.9 billion yen (51% of full-year target), with both PIVLAS on track and Kivivic tracking ahead of forecast
• Full-year 2026 IFRS profitability target is maintained, and the company has already achieved this milestone in H1
• The company reaffirms its target of executing at least one new major partnership/out-license transaction with total deal value above $1 billion by the end of 2026, and confirms it remains on track to deliver this
• Long-term 2030 targets: 40-50 billion yen in net commercial product sales with an operating profit margin above 30%; 5 active AI-led discovery programs via the NextAQ platform; 4 clinical-stage pipeline programs for the US market
• The 40-50 billion yen 2030 product sales target only covers commercial products; including platform business, total 2030 group revenue is expected to reach 500-650 billion yen, maintaining the prior 500+ billion yen aggregate revenue milestone
• Key upcoming milestones: Vamorolon Japanese approval filing and new in-licensed products for Japan in H2 2026; first NextAQ platform program data readout in H2 2026; NXE734 Phase 2a interim readout in H2 2026; Directlydine Phase 3 data readout in H2 2027; first metabolic program clinical entry in 2028

• Platform business revenue is heavily dependent on partner milestones, which are not predictable or controllable by Nexara's management
• Successful global development of mid-stage internal programs (NXE149, NXE744) requires a partner to fund and lead late-stage development; Nexara will not self-fund 100% of global development costs for these assets
• Current GLP-1 therapies face challenges with high discontinuation rates driven by gastrointestinal side effects, and there is no guarantee Nexara's next-generation candidates will overcome these issues
• Biotech valuations in the Japanese market remain depressed, potentially leading to under-valuation of the company's pipeline and platform assets relative to their intrinsic value

Q: The company targeted one new >$1 billion partnership this year; are you still on track to deliver this, and what is the outlook for hitting the target? / A: Management confirms the company remains on track to execute at least one major out-license transaction by the end of 2026. Discussions with potential partners have progressed to more serious, focused stages in H2 2026, and an announcement is expected in the second half of the year.

Q: If you cannot out-license NXE149 or NXE744, will you still advance their Phase 2 trials, and how would you structure that? / A: Nexara's top priority is out-licensing these programs to a large pharmaceutical partner with existing relevant franchise expertise and full funding for late-stage development. If a license deal cannot be reached, the company's backup plan is to spin the program out into a separate entity funded by venture capital investors, with Nexara retaining a significant minority equity stake. Nexara will not cover 100% of global development costs for these programs in any scenario.

Q: What is your outlook on unlocking fair value for the company, given the weak Japanese biotech valuation environment? Would you consider alternative listing structures? / A: Management confirmed Nexara has no plans to delist from the Japanese exchange and is focused on becoming a leading Japanese biotech champion. However, management has proposed a potential carve-out listing for the obesity/endocrine pipeline and standalone NextAQ AI platform to the board of directors, which is now under review as part of the midterm business plan. Management believes these assets would receive a far higher valuation from US institutional investors than in the current Japanese market.

Q: Could you share details of the economic proceeds Nexara will receive from Lilly's acquisition of Sintesa? / A: The terms of Nexara's agreement with Sintesa are confidential, though some details have previously been disclosed in Sintesa's public filings. Management confirmed that Nexara remains eligible to receive future milestones for progress of the three orexin programs now owned by Lilly, as they continue to advance under Lilly's stewardship.

Q: Is there a plan to unlock value for the standalone NextAQ AI platform, given the high valuations for standalone AI drug discovery companies? / A: Management confirmed NextAQ was already set up as a separate legal entity from day one, which provides full flexibility to attract outside investment from non-pharmaceutical investors (including technology and AI-focused investors like SoftBank and NVIDIA) in the future. The separate structure also leaves the door open for a separate listing if that becomes the best option to maximize shareholder value.