Good morning, ladies and gentlemen, and welcome to this morning's call where Arecor will be presenting an update. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session through the phone lines, and instructions will follow at that time. I would like to remind all participants this call is being recorded. I will now hand over to Dr. Sarah Howell, Chief Executive Officer, to open the presentation. Please go ahead.
Great. Thank you. Good morning, everybody, and thank you for taking the time to join us today. As you know, my name's Dr. Sarah Howell, and I'm the CEO of Arecor Therapeutics. I'm also joined today by David Ellam, who's our interim CFO. So we've called this analyst briefing this morning just to provide an update on the announcement we made this morning. I'm sure you will all have seen that we announced this morning the orderly cessation of the Tetris Pharma operations and our mutual agreement with Xeris Biopharma to return the Ogluo rights to Xeris.
So, I mean, this decision follows a recent strategic business review, which included a thorough analysis of the future commercial opportunity of the Tetris's lead product, Ogluo. This is an emergency use glucagon product indicated for the treatment of severe hypoglycemia in people with diabetes. Now, while we continue to believe that Ogluo remains a proven product with important potential patient benefits in this patient population, what we have seen is rising supply chain costs and also a fixed selling price for the product within the licensed territories. So that's across the U.K. and Europe, and this has significantly reduced margins. And this subsequently results in an extended timeline required to achieve break-even, and this no longer represents an optimal investment case for Arecor.
In addition to Ogluo, also our 2025 and beyond revenue outlook for non-Ogluo products sales within the Tetris business has been materially reduced in light of our partner losing a key NHS tender for these products, and that materially reduces the 2025 revenues for non-Ogluo, just to be clear, that's non-Ogluo products. Now, this, of course, has not been an easy decision to make.
However, we fully believe it's the absolute right decision to make at this time and to make this in a timely manner. It will also allow us, of course, within the business, to fully focus our efforts, and that's the efforts of our senior team as well, and our resources and capital across areas that present the greatest opportunity for the group to deliver transformational value, and most notably, these areas are across our proprietary insulin portfolio here, where for one of our lead products, AT278, which is our ultra-concentrated, ultra-rapid-acting insulin, and the strategic co-development partnering discussions there that we talked about earlier in 2024, well, over the summer, are progressing at pace, and also the development of an oral delivery platform for peptides there.
Our first product within our focus is an oral GLP-1, and that continues to generate promising data, and we're on track to commence the non-clinical PK study. So that's to assess the bioavailability within the first half of 2025. We fully believe that that's where we can best realize value for our shareholders. We remain fully confident in the prospects of the business, and it's a fully board-backed decision here to close down those Tetris Pharma operations. I'm happy to take any questions that anybody has on this today. We can move to questions, please.
Ladies and gentlemen, we will now begin the question and answer session. To ask a question on the phone line, please signal by pressing star one on your telephone keypad. We'll pause for a moment to assemble the queue. We'll take our first question from the line of Julie Simmonds from Panmure Liberum. Your line is open.
The wind down of the process, so when it actually sort of all kicks off?
Sorry, Julie, I didn't hear the beginning of your question. Would you mind just repeating it, please?
Sure. I was wondering how long it's going to take to start the process and sort of when we should be thinking that the Tetris revenue stops, and then also the impact this has on working capital, because clearly that's been one of the biggest issues with Tetris in recent years.
Yeah, sure. Thanks, Julie. So in terms of the stock, obviously, we've been fully back in stock now post the raise in the summer in the U.K. and Germany. So as a business, we're committed to continue to supply the product to patients within the U.K. and Germany there and to sell-through that stock. Now, the timing of that obviously depends somewhat on demand and the flow through of that stock, but we'd anticipate that going into the second half of 2025, and in terms of the working capital, I'm just going to hand over to David to give some more color on that.
And probably the key headline on the working capital is that as we sell-through the inventory during 2025, that's inventory that we've already purchased. So it's almost entirely cash back into the business for reinvestment in the insulin and the oral peptides.
Lovely. Thank you.
Thank you. Your next question comes live from Karl Keegan from Singers. Your line is open. Carl, your line is open. Carl, your line is open. If you wish to ask a question, please press star followed by one on your telephone and wait for your name to be announced. That is star one if you wish to ask a question. And your next question comes to the line of Edward Chan of SCM. Your line is open.
Thank you. Yeah. Hi, Sarah. It's just probably a follow-up question from Julie. So in terms of the wind down of operations, is there much restructuring costs in terms of that staff that you hold within Tetris and how that might sort of will there be some sort of will the employees join over from Tetris and join the Arecor team, or what kind of will happen sort of moving forward, if you don't mind me asking?
Yeah. I mean, obviously, as we've announced, there'll be an orderly cessation of the Tetris Pharma operation. So that means that will be over a period of time. And we are committed to continue to provide Ogluo to patients across the UK and Germany. So that will involve that sell-through as well as the Ogluo stock that we have on hand. And obviously, we require the expertise within the organization and the people to do that. In terms of over time, then there will be that orderly wind down of the organization there, and there will be some modest one-off costs associated with that as well in the closure of the business.
Perfect. That's really helpful. And then maybe just on the sort of wind down of Tetris again, was there not a possibility to potentially sell those rights to someone else?
Yeah. No, that's a good question, Ed, and we have explored options as part of this full business review to partner the Ogluo rights in the licensed territories there, and that included discussions and detailed discussions with a number of potential partners there, and really, the challenge remains the same for those partners as well. It's around those costs of goods increasing. We've seen increasing costs across the supply chain.
Many of those are inflation-driven, so those have increased at higher rates than perhaps we would have first anticipated, and there's a fixed selling price for Ogluo in the licensed territories, and that fixed selling price has been set by legacy glucagon products in those territories, so there's no opportunity to increase the selling price there, so that obviously puts pressure on the margins, and that remains whether that's under Tetris Pharma or a partner.
So therefore, we've not been able to find a partner for Ogluo in those licensed territories. And then in addition, if you look at Tetris Pharma as a whole, we've also seen the 2025 and beyond revenue outlook reduced due to the loss of the NHS tender for those key non-Ogluo products there. So yes, it is an area that we explored and diligently explored, but it wasn't possible.
Okay. No, that's really helpful. Thank you.
As a reminder, if you wish to ask a question, please press star followed by one on your telephone and wait for your name to be announced. As there are no further questions, I will hand back to Dr. Sarah Howell for closing remarks.
Thank you, everybody, for joining today. We appreciate you joining and also your questions. I think as we talked about today, this is a difficult decision to make, but the right decision to make to the business. We're fully focused moving forward in terms of, of course, the orderly cessation of Tetris Pharma, but also focused on those areas where we can have the opportunity to add transformational value to the business. That's our proprietary insulin portfolio and that oral delivery of peptides. Moving forward, happy to engage and answer any additional questions that people have.
That does conclude our conference for today. Thank you for participating. You may now disconnect.