Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Gubra Q2 2025 earnings release. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Henrik Blou, CEO. Please go ahead.
Thank you very much. It's a pleasure for us to present the highlights from 2025 to you today. With me here, I have Louise Dalbøge, CSO, and Kristian Borbos, CFO. We are specialized in metabolic diseases and other diseases related to the human metabolism. We had a hybrid business model where the core research engine was built. We use it to sell research services as a CRO and also to advance our own internal pipeline programs towards future partnerships. We have a long history of growth. Today, we are at nearly 275 colleagues here at Gubra. In the service business, we are servicing 16 of the top 20 pharma companies in the world. We have a very strong reputation within our niche. The growth history is represented here. The blue part is revenue stream from the service business. The pink part is revenue stream from Discovery & Partnerships.
As you can see, these two arms of the business are providing revenue in different ways. In the CRO service business, it's quite a steady business, whereas in Discovery & Partnerships, it's more long. That is associated with the nature of deals, that upfront and milestone payments come in in a more prolonged fashion than the revenue from the CRO service. As you can see here, a long history of growth. These figures go until 2024, but it will really include just the first half of 2025 to the order of magnitude of the revenue associated with the recent deal that was made on the Amylin program, the partnership with AbbVie. It really puts things into perspective, and that also shows that the first half has been by far the most successful half year in the history of Gubra when it comes to revenue.
Taking operational highlights, we were able to pay out a dividend of 1 billion DKK earlier this year, and that was a direct consequence of the agreement that was made on the Amylin program. A deal worth $2.2 billion, including an upfront of $350 million. On top of all this, there are royalties. It's a strong signal and something that reflects the strength of the business model, that we are able to channel back serious amounts of dividends to our shareholders. Also, earlier this year, we presented very strong data in the GUBamy program, amlyin programs. It was from the MAD part of the phase 1 study. It comes from what we've seen previously in the SAD part. The compounds were tolerated, had a very long half-life, and were also able to give a significant weight reduction. Our next in-line pipeline program, the UCN2 program for high-quality weight loss, healthy weight loss.
In this program, it's focused around shown prevention and restoration of lost lean body mass. On top of that, there are benefits, and we are preparing UCN2 for a program called starting in early 2026. To give you some more details on that program for you. In the CRO services business, we see a slight decline in revenue versus the first half of 2024. We actually saw a growth in quarter two of 12% compared to quarter two last year. However, for the full half year, there's a slight decline, and that also led to recent change in our outlook for the full year for the isolated CRO services revenue. It's driven by some uncertainty in the U.S. market, which we still see a sort of customer demand in the European market. Another recent news from Gubra is that we've been through a planned succession process.
I will step down as CEO of Gubra, and from September 8, it will be Markus Rohrwild taking over. Diving in on the Discovery & Partnerships segment part of Gubra, all our internal programs are based on PET charts, and we have a platform, the Streamline platform, we use to develop PET charts for our internal programs. Using this platform, we are able to generate delivery candidates in a fast way, and in parallel, we can optimize for a range of important parameters when developing pipelines as another drops. A really strong platform, and using this, we have been able to build a significant pipeline over the year. As represented on this slide, the green ones are the programs that are not yet partnered. You can see the most advanced UCN2 program. Today, Louise will share some interesting data with you on muscle and then also on the contrast.
A range of other programs here that are not partnered yet, and also a range of already partnered programs for ongoing collaborations with Boehringer Ingelheim. We have an ongoing collaboration with Amylyx Pharmaceuticals, one with Chema, and as previously mentioned, Louise additionally collaborates with us on the Amylyx Pharmaceuticals program. That was a quick run-through, and now I'll pass over the word to you, Louise.
Thank you. Now let's dive into some of these programs. Starting with the long-acting Amylin analogue, formerly known as GUBamy. GUBamy has been developed for weight management indications and could be positioned as both an alternative or an addition to inputs in this treatment. As key differentiating features, GUBamy has a balanced receptor profile under Amylin and calcitonin receptors, just like native Amylin. It passes a reasonably long pipeline of 11 days. GUBamy has been designed to be fitted for a chemical stable at neutral pH. This allows co-cumulation with other anti-obesity agents. GUBamy is found in testing in a phase 1 multiple ascending dose study. From part A, we announced strong interim clinical results in April. This part of the study consisted of two cohorts, receiving one weekly treatment for six weeks of one or two mg of GUBamy.
The data confirmed the general literature from the NAD study, with a high degree of consistency within cohorts. The study showed that GUBamy was well tolerated, not very pronounced, being predominantly GI-related or mild, and consistent with data from the SAB study. GUBamy demonstrated a remarkable dose-dependent weight loss. Mean weight loss in the two mg cohort was almost 8%, compared to mean weight gain of 2% in the placebo arm and the core group. The study also confirmed the long and favorable half-life of 11 days. The second part of the study attempting higher doses during the longer treatment period is ongoing and progressing up there. We are delighted to see our group expanding development options in this study. Overall, we're excited about this cognitive resource with further support development of GUBamy for weight management indication.
We are equally excited about an in-line internal obesity program focused on high-quality weight loss. This program builds on a new mechanism, a long-acting UCN2 analogue designed to deliver a healthier, more sustainable weight loss outcome. This program is critical because the current weight loss strategies do not typically account for 20% - 40% of the total weight loss. We believe time has come now to focus on the quality of the weight loss and not just the quantity of the key differentiating factor for the next generation of obesity treatments. We have designed a selective UCN2 analogue with a target profile of one weekly dosing in humans. UCN2 has potential to treat the multi-morbid obese patients by improving body composition, increasing lean muscle mass, reducing fat mass, while also addressing key obesity-related comorbidities such as cardiovascular and kidney diseases as well as improving blood glucose.
Today, let's zoom in on the beneficial effects of UCN2 on muscle and cardiac function. Starting with muscle, as shown before in diagnosed obese rats, UCN2 improves body composition by increasing lean mass and reducing fat mass, as shown on the graph here in green. You can also appreciate that weight-lowering agents such as semaglutide and [fibrinolipid] lower both lean and fat mass. What is really exciting here is when we combine UCN2 with weight-lowering agents such as semaglutide, we can completely prevent the lean mass loss typically caused by gut treatments and drive the fat mass loss even further. The ability of UCN2 to improve body composition is evident in this new study. This is illustrated by a neutral effect on body weight and increasing lean mass and a reduction in fat mass.
Looking at individual muscles, here looking at three different types, UCN2 increases muscle weight, as shown on the top graphs. You can also see that UCN2 reduces unwanted ectopic fat distribution in muscle tissue. In addition, as shown on this slide, it lowers blood glucose and fat mass by using rats with no effect on cholesterol. Overall, this highlights the potential of UCN2 to deliver an overall beneficial metabolic profile. In the scientific literature, UCN2 has been secondly shown to improve cardiac function. Here we extend these findings using a long-acting UCN2 analogue in a rat model of chronic heart failure. In this model, chronic myocardial infarction is induced by permanent ligation of the left anterior descending artery. This creates an infarct in the left ventricular wall. Sham-operated animals serve as a sulfate control, as shown here in green on the graph to the right.
One month after MI induction, when systolic impairment is really stressed, animals are treated with vehicle, as shown in black, low or high dose UCN2, as shown in green, or total standard of care combination, as shown in purple. Animals are treated for eight weeks. Cardiac function is then assessed using echocardiography, which shows a marked reduction in ejection fraction and cardiac output in the MI treated animals versus healthy sham control. In this setting, the long-acting UCN2 analogue significantly improves ejection fraction and cardiac output, highlighting its ability to also improve cardiac function. These compelling preclinical findings support UCN2 as a differentiated effort combining high-quality weight loss with improvement in key obesity-related comorbidities. Building on this strong foundation, we are now preparing UCN2 for clinical development. Primary objective is, of course, as always, safety and decay, and we expect to start the phase 1 study early next year.
Thank you very much, Louise. I'm turning to a brief overview of the financials, starting with the Discovery & Partnerships segment. As Henrik said, the first half, including the second quarter, has been phenomenal for Gubra. We received this upfront payment, which is very, very significant. Looking at the revenue from this business unit, we had DKK 2.4 billion compared to revenue of over DKK 30 million in the same period last year. A very, very significant amount of revenue and earnings from this business unit. Total cost is roughly in line with what we expect. I will come back to the outlook shortly, which is unchanged for the total adjusted cost we got for this business segment. Overall, an enormous improvement compared to last year. Turning to the CRO services business, reminding what the business is. We're a highly specialized preclinical service provider.
We cater to both small biotechs and the largest pharma companies in the world. We serve 16 out of the top 20 pharma companies in the world in our highly brand translatable animal models. I think the most important change here compared to what we spoke about earlier is adding women's health to our service area. This is a highly unserved area where we think we can play an important role in assisting our clients in developing compounds in this area. You will hear more from this as we progress. A very interesting area and a new flagship area for Gubra. Taking the CRO services business, and as Henrik said in the beginning, we had an improvement in the second quarter compared to the second quarter last year.
If we look at the first half in total, there's a small decline of 2% compared to revenue in the first half last year. What we're seeing in 2025 is the U.S. market becoming a bit challenging. There's a lot of macroeconomic uncertainty in that region of the world. We can also see funding opportunities for smaller biotechs, for example, not being as beneficial as it was last year. That includes both ordinary funding and grants to these types of companies. That impacts their decision timelines for ordering studies at Gubra. I'll come back to the outlook in a second. On the contrary, Europe is progressing well with some development there, especially the obesity space where we see strong growth. On the earnings side, whenever we have a slowdown in revenue, we also see that influencing our earnings.
While they were up core to core compared to last year, we see a decline compared to the first half last year. We have an EBIT margin of 25% in the second quarter, just in the lower end of our guidance we had provided earlier. We now take the outlook as a concluding comment. Yesterday, we were out flagging that we expect the revenue for our CRO services business to be slightly below last year. Remember, last year was a record year. We've grown our CRO services business massively during both 2023 and 2024, and really, really successful. We expect to be just slightly below the level in 2024, a downward revision from a very high level in 2024. In the same manner, we also reduced our EBIT margin to around 20% compared to the previous such 25% to 31%.
Rounding off, we're just rewriting the guidance for the DMP, total adjusted cost of DKK 230 million -DKK 250 million. That is unchanged. With that, we have concluded our presentation. Now, operator, we open up for questions.
At this time, I would like to remind everyone, in order to ask the question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Thomas Bowers with SEB. Your line is open.
Yes, thank you very much. A couple of questions from my table here. First, diving a little bit into the CRO services business. Again, a recovery in Q2 was sort of expected from U.S. clients and did not materialize, and we fall for the guidance update here. Firstly, do you have any good understanding on the remainder of 2025? Now only four months remaining of the year. Is there anything that can sort of have much deviation from where you are with the current outlook you have? Second question, just on, you limited the number of orders going into 2025 to prioritize the Discovery & Partnerships segment. Is it fair to assume that you, in principle, could have enough ex-U.S. European customers to secure a 10% - 20% growth, just in case the U.S. problem or whatever you call it persists into next year, 2026?
Thirdly, just to confirm, is this issue in the CRO services business primarily lack of investor funding to small-cap biotech companies, or is this primarily biotechs missing out on U.S. government grants? I'm just trying to figure out whether there could potentially be a risk to companies outside the U.S. also, with maybe a little bit less access to capital, making it a little bit difficult for them maybe eventually to fund studies as well. Lastly, on the EBIT margin guidance, is there any difference in profit margins between U.S. and European customers? I guess, of course, this mostly reflects internal fixed costs, but you also delivered about 30% last year with close to similar revenue levels. Is there anything that I need to understand here?
Just a final one here, on the pipeline, are you able to give us any sort of timeline indications on when we can expect the next data update for GUBamy? Anything possible at Obesity Week on updates on the MAD cohorts? Also, I'm not sure whether you are allowed to give any indication on timelines from your partner on potentially the phase 2 start at this point in time, assuming, of course, the MAD progresses as planned. I think I'll stop there. Thank you.
Thank you very much. We'll start in one minute, and just to remind us if there are stuff that we are not addressing. Starting from the back with regards to the GUBamy program, it is being transferred to AbbVie, and they are controlling the development from forward. We really like to see AbbVie's channel development options in the ongoing study. I really think it shows the strength of having a partner such as AbbVie on board. For specific information regarding timeline and data, you would have to go through AbbVie. Zooming in, I guess, Kristian, you've been talking to the EBIT stuff. We have asked for that one. I won't tell if we're talking to the market conditions currently. The way we experience it is that it is isolated to U.S. customers. What we see from our end is that there are prolonged decision timelines for these companies.
It appears that they are considering well before they invest a dollar more than they did previously. They perhaps also had to prioritize industry-based pipeline programs, at least not pushing as hard on the programs they have, not exploring as much on in-patient studies. This is giving these prolonged timelines. It's probably a combination of several factors in the U.S. market. I think there's an interplay of the funding situation, the grant situation, and perhaps also other factors. Therefore, we've seen it now for some time this year. That's also the background for the update to the outlook that we gave very recently. Looking forward, we expect things to normalize. It's difficult to say exactly when. We've been in the service business, the CRO business, for many years. We have seen in previous years a sudden slowdown. So far, we've always seen some kind of normalization after a while.
We still have our midterm guidance growth. We definitely expect that. As mentioned, we see good development in other markets such as Europe and Asia, which is kind of a small market for us. It's not like we could just fill up with requests from European customers or Asian customers. If that was the case, we would do that. It requires work, marketing, and so on to fill that need further. That is, of course, some of the initiatives we are doing right now. We are focusing on developing the U.S. market, but also the markets that seem to be a little more well-functioning with the U.S.
Yeah. If I would continue on the EBIT margin question, that's a fair comment to tell us. One of the reasons that we lowered the EBIT margin is also we're building up new areas, not least the women's health. That means adding competent colleagues and setting up models and preparing for selling these studies. We hope, of course, in incoming quarters, that will add revenue to our CRO services business. We're building up the organization planning for success, not least the build-up of the area women's health. That's probably one of the main explanations why we see a slightly lower EBIT margin compared to what we saw last year with roughly the same amount of revenue.
That's great. Thank you very much.
Your next question comes from the line of Rajam Sharma with Goldman Sachs. The line is open.
Hi. Thanks for taking my question. A couple on the pipeline. Just thinking ahead to the phase 1 for the UCN2 asset, could you just kind of walk us through how you're thinking about trial design there? Are you expecting to include DEXA scan or MRI in that trial to monitor body composition? Would you use more than one GLP-1 partner? Secondly, just on Amylin, it would be great to get your perspectives on Eli Lilly or eloralintide phase 1 data, which were presented at ADA in June. I think there's an emerging view amongst investors that eloralintides set a bar for Amylins now. It would be interesting to understand, having seen the data, how confident you are in GUBamy's differentiation. Is there anything in particular that you'll be monitoring for in the phase 2 data when that's available? Just one on the CRO business.
Could you comment on the underlying trends amongst your large pharma customers in the U.S.? I presume they're insulated against some of the macro factors that you talked to that's impacting the smaller companies. It would be helpful to understand if demand's still resilient amongst the large pharmas and to what extent is the exchange rate a headwind in the U.S. Thank you.
Yeah. It's definitely serious. Starting with the questions regarding the UCN2 program, we have not revealed much on our thoughts here on the clinical program. Ambition is to initiate the study early next year, and we're going for high-quality weight loss. As I said before, the study will be super concerning, looking at safety and PK. We will, of course, reveal more in time. Maybe moving on to Amylin and the eloralintide data, in general, I would say that we refer for oncology directly on data from other companies. I would say that for the broader class of Amylin, the data appears strong. It appears that Amylin can deliver clinically relevant weight loss and can be used as a standalone treatment as well as in a combination with other input things. GUBamy for itself has a differentiated profile.
We have a balanced processor profile on the Amylin and the solenoid substance, just like native Amylin. We have a long half-life, which definitely also gives us some advantages. It's important to be careful when comparing early clinical trials. We see huge potential in GUBamy.
I'd like to follow up on the CRO part of the question. If we see a trend in last year when U.S. clients and their behavior, that is not a real trend, I'd say. The large pharma segment generally seems to be progressing with what they're doing. There will always be fluctuations, but I think it's not like we see any kind of strong trend there. What we see is mostly related to other clients, like for instance, academia and biotech.
Okay, thank you.
We have a rapid question. It comes from the line of Sushila Hernandez with VLK. Your line is open.
Yes. Thank you for taking our questions. Apologies, this was already addressed on the call. There is an echo on the line. On the CRO services business, could you elaborate on the decline seen in the mass and kidney? Are you seeing a trend here? Also, how conservative are you on your revised guidance? Could there still be growth happening later this year? Secondly, on the triple agonist partnered with Boehringer Ingelheim, any color on what to expect, what level of detail, and is it still expected for the second half of this year? Thank you.
Should we start over, Louise, then?
Yeah. Definitely. The triple agonist program, the phase 1, is currently ongoing. What we have said before is that we expect it to end, also be completed by the end of the year. Again, it's up to Boehringer Ingelheim to give specific details from the study.
Kristian, you can comment on the other part on the kidney part.
Yeah. I mean, we've declared the strongest disease category is the obesity, where we see, on the other hand, we see a slight decline in the two other large areas in Gubra, being the mass space and the kidney space. Again, as Henrik said, you know it's primarily from the U.S. market and the smaller biotechs and academia. We've seen these fluctuations over the years sometimes, and we think it will normalize once there are more prompt macroeconomic support.
I think there's been a coincidence where a lot of kidney activities have been related to U.S. biotechs, and therefore, it's showing the reaction. For mass, it's interesting to see what's going to happen. We've reached approval in that space. Previously, we've seen stuff like that during renewal interests, but I guess it's too early to say. For the guidance, it's definitely based on the information we have now, our book, and so on, where we now guide on slightly below last year. That is definitely based on the information available to us. That is definitely where we see this year going.
Okay. That's clear. Thank you.
Was that a question or just a?
Hi, Kristian. We don't have any questions from the live questions and also on the webcast.
Okay. Thank you very much. I will hand it over to Henrik just to say a very, very friendly comment.
As Kristian, next time it will be Markus Rohrwild giving you the update. It has been an immense pleasure for me over the last decade to be part of the Gubra journey. We are at a fantastic place, and it is a very nice feeling to hand over now to Michael and in the future follow it from the outside. Thank you to you for following the Gubra journey so far.
Ladies and gentlemen, that concludes today's call. You may now disconnect. Thank you and have a great day.