Arecor Therapeutics (LSE:AREC) — Investor Presentation

0:05 Good morning, ladies and gentlemen, and welcome to the ARECOR THERAPEUTICS PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab. It's just situated on the right hand corner of your screen. Please just simply type in your questions at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, all questions will be reviewed with responses published on the Investor Meet company platform where it is appropriate to do so.

0:36 Before we begin, I would like to submit the following poll and if you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand you over to CEO Sarah Howe. Good morning. Good morning and good morning everybody. So my name is Sarah Howell and I'm the CEO of ARECOR THERAPEUTICS and I'm joined today by Susan Lauber, our CFO. And today really we'll be talking you through our acquisition of Tetris Pharma, really the strategic rationale for that and our mission and vision moving forward.

1:11 So I draw your attention to our customary legal notice. So just by way of introduction, just a little bit of background on ARECOR THERAPEUTICS. So ARECOR is very much focused on transforming patient care by enhancing existing therapeutic medicines so that they're safer, more effective and easier to use. And we do this by taking existing medicines that are already on the market and applying our innovative and proprietary formulation technology platform, Aristat, to develop enhanced versions of these medicines. And we're very much focused on patient need and improving patient care and outcomes. We have ourselves an internal proprietary portfolio of best in class products focused within diabetes and specialty hospital care. And since our IPO, which was last June now, we've generated best in class clinical data for one of our lead diabetes products AT278, which is a ultra concentrated rapid acting insulin.

2:14 And also we're well advanced now in our second clinical study for AT27 which is our ultra rapid acting insulin and we're very much looking forward to reporting headline results from that study later this year. And we do continue to expand our revenue generating technology partnerships. This is where we partner with leading biotech and pharmaceutical companies and we were recently able to announce a further partnership with a top five global pharmaceutical company, which really validates the strength and the need for the Arostat technology platform. So moving on to Tetris Pharma, Tetris Pharma are a revenue generating commercial stage specialty pharmaceutical company. They've built sales, marketing and distribution expertise and a platform to sell and distribute niche injectable products across The UK and Europe.

3:10 They are revenue generating today from commercial product sales and we see significant upside potential from their lead licensed diabetes product Agluto. And I'll talk about Agluto in much more detail shortly. In terms of the terms of the deal, there are ARECOR shares at completion and up to a further £4,000,000 either in shares or cash at ARECOR's discretion of deferred consideration, which are based on success based earn outs over three years, which Susan will talk about in more detail. And there's £2,000,000 for initial Agluto inventory, so this is stock of that very exciting product and payment of one off liabilities and also a further 4,000,000 here for working capital really to support Tetris Pharma and that important rollout of the BlueO.

3:59 So looking at Tetris Pharma in a little bit more detail, as I mentioned, they're a revenue generating commercial stage specialty pharmaceutical company and we very much see the significant upside potential from their lead diabetes product Agluo. So Agluo is a stable liquid ready to use glucagon product that's indicated for treatment of severe hypoglycemia in people with diabetes. And it's an emergency medicine in this case. The product itself is patent protected out until at least 2035. That's very important to ARECOR as we're working on enhancing existing medicines and IP protection is core to ARECOR's licensing model. And Tetris Pharma have entered into an exclusive license and supply agreement with Zerus Pharmaceuticals to sell and distribute to GluO across The UK and Europe there. And it's important to note at this time that upon the transaction completion of transaction that some amended terms have come into effect there. Essentially the terms of that agreement at a high level is at least a sixteen year term. It's linked to patent protection.

5:14 There'll be a mid single digit royalty payable to Zerus Pharma on net revenues. And there are one time commercial milestones that are linked to exceeding certain net revenue triggers and targets within a single calendar year. Now Tetris Farm themselves have launched the product in The UK earlier this year and we can talk about that in more detail. And now the plan moving forward is to accelerate the launch across key EU territories over the next twelve to twenty four months. So we're very excited with the team that's coming across from Tetris Pharma and now part of the ARECOR Group. They have a very experienced team in terms of sales, marketing, distribution there. So regulatory, quality, manufacturing, pharmacovigilance, everything that's required to manage this infrastructure and platform across The UK and Europe. And they also engage a flexible contract sales organization for sales in the individual territories and countries there. So it's very capital efficient model as well. And the team themselves have a proven track record in sales and distribution and marketing across The UK and Europe.

6:28 So overall for ARECOR we see this very much as a commercial value generation opportunity here and significant potential revenues from the sale of that key product Agluo and also and I'll talk about this in more detail future potential to leverage this infrastructure and expertise to expand the commercial product portfolio now across the enlarged group. So if we just look at the combined portfolio now of the company. So if we start with the Tetris Pharma products here. So as I've mentioned the first and lead products is a GluO, which is a ready to use glucagon pen for the treatments of severe hypoglycemia. So this is very much a fit with ARECOR, both in perspective that it's a key product for treatment of people with diabetes, particularly those that take insulin. They're at the highest risk here of having a severe hypoglycaemic event. So this is very much the same target patient population as we're targeting with our best in class insulin products AT247 and AT278.

7:40 It's also important to note that it's a ready to use product, so it can be used very effectively at point of care. So this is very much aligned to our specialty hospital franchise and our strategy here, where we're taking products that are used within the hospital setting and are lyophilised or in powder form that require this complex mixing procedure prior to use. We're using the Arasat technology to develop stable liquid ready to use or ready to administer versions of these products. So in addition to AGLUO, Tetris Pharma also have nine sales and distribution agreements for niche and specialty products here. And again we see very much a fit with our ARECOR specialty hospital portfolio that this same expertise and sales marketing and distribution infrastructure could be used to sell and distribute ARECOR specialty hospital products within those territories.

8:39 I think it's important to note also here that our strategy for our lead diabetes products AT247 and AT278 remains unchanged in that we plan to generate further clinical data that further demonstrates the superiority of these products and also to generate a data package to position these products for partnering. And here we see the optimum value generation here to partner with a leading pharma company, so that we can target market share within that very large existing $6,400,000,000 marketplace. So perhaps moving on and looking at a little bit more holistically at the combined company here. So with ARECOR THERAPEUTICS, we of course bring an innovative and proprietary formulation technology platform, Aristat that we use to enhance the properties of existing therapeutic medicines.

9:38 We have our best in class products in development currently that we plan to develop to a higher value inflection point prior to partnering. We're very much focused on specialty hospital care and diabetes, which is also a key focus for Tetris Pharma. ARECOR is revenue generating from our partnerships with leading pharmaceutical and biotech companies and also the licenses that we have in place today where we've licensed either our technology or products that we've developed within the specialty hospital space. For example our two co development and licensing deals with Hikma pharmaceuticals. Now with Tetris, this also brings of course that focus on specialty hospital care and diabetes, but also an acceleration opportunity for revenue generating.

10:26 Revenue generating from commercial sales today And as we've talked about, we see significant opportunity for acceleration there with the rollout of Gluo and being a key product. They also bring of course that commercial sales distribution and operational expertise to the table that can be further leveraged now across the combined group to add further products and where that makes sense to this expertise and infrastructure. So again, if we look at that combined company rationale in a little bit more detail, you know first and foremost, we believe Agluro is a great product and it meets an important medical and patient need. It's obviously there for patients with diabetes which is a key therapeutic area of focus for ARECOR and very much fits with our mission to transform patient care by enhancing existing therapeutic medicines so that they're safe and more effective and easy to use.

11:27 We also see very much a strategic fit here with ARECOR's specialty hospital franchise and Tetris Pharma's expertise in specialty hospital sales and distribution here, and really gives us optionality for our in house proprietary specialty hospital products moving forward. So for example, if we were looking to partner with a pharmaceutical company whose primary focus was The US market, then we could retain rights for The UK and Europe, which of course we could have done prior to the acquisition. But we would have limited options there to realise the value of those rights. Now we could realise that value by selling and distributing those products ourselves across The UK and Europe. It also gives us leverage really in that deal making to ensure that where we do enter into broader more global partnerships that the value of those markets is taken into account and to make sure that our partners are appropriately motivated to launch in all territories.

12:30 So this doesn't mean we're going to take all of our specialty hospital products and sell them ourselves, but it is that optionality to do so. Also as I've mentioned it's very much complementary team skills and expertise and quite frankly you know ambition and vision here. So for neither company you know this isn't an exit for the Tetris team here, it's really part of that and strategy and vision to build a global self sustaining biopharmaceutical company. We believe combined that we're in a better position to do that and it clearly brings skills and expertise now across the whole life cycle of product development through to commercialisation there. Clearly with Agluo being a leading important product within Tetra's pharma portfolio, this is very much a diabetes product. So we have shared expertise and networks across key opinion leaders, patient groups and payers which will be complementary both to the rollout of Agluto, but also for AT247 and AT278, ARECOR's lead diabetes products.

13:38 And we'd anticipate a positive cash flow contribution from Tetris Pharma and of course this positive cash contribution can then be reinvested into value driving opportunities across the group. So now maybe to talk a little bit more detail around, the product Agluo. So as I mentioned, it's a stable liquid ready to use glucagon product that's indicated for the treatment of severe hypoglycemia. So severe hypoglycemia is dangerously low, blood sugar here and it's also characterised by the fact that the individual themselves is unable to treat themselves. So they need to have glucagon administered, glucagon's the only treatment for this condition

14:22 and by a third party. It might be a friend, a family member or simply a stranger in the street. So a product that's easy to use here is key. Now across The UK and Europe the standard of care currently is something called a Glucogen Hypo Kit from Novo Nordisk which you can see in the orange box here. And this contains a vial of glucagon that's a powder that requires reconstitution prior to use and it requires the user to go through a complex eight step administration procedure for the administration of the Glucogen Hyperkit. Whereas Glu offers another alternative to patients here. It's a ready to use glucagon in an auto injector pen which you can see on the right hand side here. And to administer this product it's a simple two step administration procedure where you simply remove the red cap and press the pen against the skin and push and hold down the yellow button for five seconds.

15:24 So straightforward to use. And in a study performed by Xeris Pharma, which on their product Gvoke, is the equivalent to Agluo in The U. S. And Aziris Pharmaceuticals have launched this product in The U. S. They found that there was a ninety nine percent rate in the administration of glucagon using the auto injector pen and that was in people with diabetes. So if we look as well, it's important to look across of course the competitive landscape for the product. So Aglue itself is launched as I mentioned earlier in The UK. In The UK it's competing with the Glucogen kit, so this is the lyophilised kit that requires the reconstitution procedure.

16:13 So we think there's a significant opportunity here to gain market share and offer an alternative product to patients within The UK. And then across Europe Agluro will be competing with both the Glucogen kit and also another ready to use glucagon product from Eli Lilly, which is a nasal product. Now of course, there'll be some inherent patient preferences between, nasal products and injectables, some will prefer a nasal, some will prefer an injectable products, bearing in mind that these patients are used to injecting insulin daily also. So there will be those inherent preferences that exist and we can to a certain extent look to The US where these same products are competing in The US for comparison there, where we can see Xeris Pharmaceuticals gaining market share with the Gvoke products there.

17:10 And then for Agluto there are some additional advantages. It has a slightly broader indication, it's indicated for use from the ages of two years upwards. It has very good shelf life stability and room temperature stability, which is important here because we'd expect, patients to be carrying one of these pens or the Lilly ready to use nasal around with them. That room temperature stability is important. There is a fourth product that, is on this slide and I think it's important mention, although it isn't, it hasn't been filed for approval in The UK or Europe at this stage. So isn't a competitor within the marketplace at this stage.

17:56 It's a glucagon analogue, so it's a novel glucagon from Zealand pharmaceuticals called Zaculogue. So of course we will be keeping an eye out for any developments there. So if we move on to looking at the market opportunity for glucagon. So firstly, for glucagon, is clinically appropriate, a prescription for glucagon would be clinically relevant for anybody with diabetes who's taking insulin. So if we look at the total potential addressable market opportunity, so if we look at the number of people with type one and type two diabetes who are treated with insulin in The US this is around six point eight million people in across the licensed territory, is the European Economic Area, UK and Switzerland, it's around five million people.

18:49 Now if we assume that if you take a prescription of glucagon, you take two units, so two pens for example, one to carry around with you, to have somewhere safe, where your sort of primary third party caregiver knows where it is, in the fridge, at school, or you know at home. And also if we take the price per unit of glucagon for ready to use glucagon units and times that by the total number of units, it leads you to a total potential market opportunity across the licensed territory for a gluo of up to $1,000,000,000. Now the fact is today that not everybody who would be clinically appropriate for a glucagon prescription takes that glucagon prescription.

19:36 So it's important to really hone in now to the actual market numbers currently and that opportunity for growth. So if we start with The US market and the reason to look at The US market here is the competitive environment for glucagon is the same as it will be across

19:55 Europe in that there's a lyophilised rescue kit, there's Baqsimi which is Eli Lilly's nasal ready to use glucagon and Gvoke which is the equivalent to Agluo in The US that's been launched by Xeris themselves. And what we can see from The US that since the introduction of ready to use glucagon is that there's a year on year increase in the conversion of patients and prescriptions to the ready to use product format. So this is a combination of Baqsimi and Gvoke and back in May of this year around 65% of the prescriptions of the glucagon market had moved across to ready to use product formats. So showing that switch across and that prescriber and patient preference for these formats of glucagon.

20:46 What you can also see if you look at the bar chart on the right hand side is that since the ready to use glucagons have been available, that the total number of prescriptions per year is also increasing. So we're seeing that increase in market growth. And then honing into the Gvoke experience in

21:03 The U. S. As you can see and this is Ziris Pharmaceuticals numbers here, that we can see that since they launched at the back end of twenty nineteen, again they're seeing a quarter on quarter growth in the number of prescriptions of Gvoke and they saw a significant uplift in Gvoke sales post the relaxation of the Covid restrictions in The US. I assume that was due to then their sales representatives being able to go out and talk to the prescribers and patients and key opinion leaders here.

21:39 So then if we look at the market opportunity for Agluto, so this is across the licensed territory here, we estimate this to be around £100,000,000 market opportunity based on twenty twenty one actual numbers of prescriptions. And how we've calculated this is that there are around 1,650,000 units of glucagon prescribed in 2021. And if we take the premium pricing of

22:06 glucagon and I'll come back to that this in more detail and multiply that by the 1,650,000 units it gives you a twenty twenty one market value of up to around £100,000,000 So it's important to note here again that Igluo is patent protected out until at least 2035. That's important because it prevents generic entry which we know can lead to price erosion here. And as we've seen from The US there is there's an opportunity here where as these ready to use glucagons are available that you see an increase in the total number of prescriptions and then a potential increase in the value of that existing £100,000,000 market. And then if we look at the experience to date, Agluto was made available by Tetris Pharma back in December 21 and has been more actively marketed from quarter one of this year. So as you can see again from the bar chart on the right hand side, Tetris Pharma have seen a month on month increase in the number of prescriptions

23:16 of Agluto. And if we look at the market size for The UK, again in 2021 there was 224,000 units of glucagon sold and Tetris Pharma have achieved premium pricing and reimbursement for a glue of £73 per unit. So £73 per pen. So if we multiply this again by the numbers of units in 2021 that gives you a market opportunity in The UK alone of around £16,000,000 and here there's no other ready to use glucagon available for patients. So we see a real opportunity here to gain market share within The UK market.

24:02 And now of course as part of ARECOR THERAPEUTICS and we've raised the funds and £4,000,000 working capital to support the rollout of the GLUO. We'd expect to see now in the second half of this year and certainly going into next next year an acceleration in the uptake and prescriptions of the gluco as it's more actively marketed and as it gains formulary positions on the main centres, main diabetes centres across The UK.

24:34 And now if we just hone into a little bit more detail across Europe here and to talk a little bit around the market opportunity here. So what you're looking at the left is the expected ready to use glucagon pricing here that will be used as a guide for a gluon. Now of course in The UK the pricing and reimbursement has been achieved £73 per unit has been converted to euros here within this table. And the strategy now moving forward would be to target launch in key European territories here. And as you can see, particularly those territories where that premium part pricing can be achieved. And Tetris Pharma again are very well advanced there in terms of their applications for pricing, reimbursement and launch preparations.

25:27 And again we expect to now accelerate those moving forward post the acquisition. And in terms of targeting and patient populations here, what you can see on the right hand side is really that cascade and it's really starting with those patients that are most at risk of severe hypoglycemia. So paediatrics or children living with diabetes, hypo unaware patients for example moving through type one diabetic patients and type two. So really will be a focus there on product awareness across key opinion leaders, prescribers, patient groups, etc within that rollout plan. So again, we look at a relatively high level of upcoming milestones here. So you know, the Tetris Pharma team have made great strides to date since licensing the product from

26:23 Zerus Pharmaceuticals last year. They've obviously received that premium pricing reimbursement approval in The UK, 73 per pen. That's compared to £11.52 for the lyophilise kit. And Aglura has been made available. And now we're seeing that acceleration of that launch across Europe, which we see as a key market given there's no other ready to use glucagon available. And now looking forward really targeting those key launches across EU territories. And then as we mentioned earlier, addition the nine UK licensing and distribution agreements for niche products here, which really have leveraged the existing expertise and sales infrastructure and we're leveraging that now and touch Tom will be leveraging that for the rollout of Agluo and they also make a positive revenue contribution to the business.

27:16 So I'm now going to hand over to Susan who's going to talk a little bit more about the financials.

27:23 Thank you Sarah. So just really starting with the acquisition and the consideration. The acquisition includes initial and deferred consideration, which is paid in ARECOR shares and there is a focus on that performance based earn out. Tetris Pharma shareholders are the team plus friends and family. So this is not an exit for them, but they view this very much as an opportunity to become part of a growing self sustaining biopharma group. So just to note the consideration shares which are issued at completion and also on achieving those performance conditions are subject to a twenty four months lock in followed by a twelve months orderly market. So Sarah said, we have raised CHF 6,000,000 of which CHF 2,000,000 includes settling some historic liabilities, including an initial inventory payment to Ziros to support the Aglua rollout.

28:15 We've also raised GBP 4,000,000 of working capital, which we have modeled and actually gives us a line of sight to the Tetris Pharma business achieving breakeven and that positive cash flow contribution.

28:27 So just a little bit more about the deferred consideration. It's a performance based earn out with triggers over three years. The first earn out period is from August 22 to July 23, followed by consecutive twelve month periods ending July 24 and July 25. We've agreed performance conditions, which reflect revenue and EBITDA numbers that the TETRA's team think are reasonable and will be material to the ARECOR THERAPEUTICS The first year's targets reflect a business that is investing in the Aglua rollout in the first twelve months, so that performance condition reflects modest low million revenues and an expected EBITDA loss. The second year performance condition reflects a step up in the business to double digit million revenues and a transition to a low level profitability.

29:18 Then the third year performance condition is double digit millions revenue and single digit millions EBITDA. And just to give these performance conditions some context, to achieve that third performance condition, the earn out revenues would need to achieve our modeling of that peak market penetration, which is effectively 30% of that GBP100 million market opportunity, which Sarah talked about earlier, plus reaching that positive EBITDA. So just moving on to talk a little bit, the next two slides really give us a bit more colour about what we mean when we refer to that sales and distribution platform. So starting with some of the milestones that the Tetris Pharma team have achieved to date, which reflects building this pan European sales and distribution platform.

30:06 Tetris Pharma was established in 2020 led by Shafiq Choudhary, the CEO, who will continue to lead the business post completion as part of the ARECOR THERAPEUTICS. SHAFICS has assembled an experienced team of regulatory, manufacturing, supply chain and pharma product sales and marketing expertise. And that team secured new agreements in quick succession to generate sales. That is part of the nine sales and distribution agreements which Sarah talked about earlier. Then in quarter three twenty one, they secured The UK and European license supply and distribution agreement for Aglua with Zerus Pharmaceuticals. And they started the process to launch Aglua in The UK whilst also planning that European rollout. Then in 2022, we've had the first Aglua sales at the end of quarter one and the team have set up packaging and pre wholesale agreements to support the European launch. They also set up offices in Netherlands in May to support that European launch.

31:06 So just talking a little bit about what we refer to as that sales and distribution platform. So, Shafiq and the team use a very capital efficient model to manage outsourced warehousing, logistics and that contract sales organization. They have an agreement with the Phoenix Group who provides supply chain and logistics services in 26 countries across Europe. And in The UK, they've established agreements with Maudsley, AAH and Alliance. So I appreciate this is a slightly busy side but starting at the left with Tetris Pharma, the order is placed with Xerus and then Zerus shipped to Sharp in The Netherlands and Sharp carry out the secondary packaging according to country specific requirements. And then the final packaged product will be shipped to the pre wholesaler Brokosef in The Netherlands and Brokosef are part of the Phoenix family.

31:59 The wholesalers will place the order and the pre wholesaler will pick, pack, ship and then bill the wholesalers in those different countries. So Tetris Pharma send one invoice per month to Modalese for The UK and as we roll out in Europe, they will send one to Brokacef for the European territories. So the country specific wholesaler receives orders from hospitals or retail pharmacies and then ships. So Tetris orders from Ziros and Aglulo is delivered straight to Sharp in The Netherlands. So Tetris don't need to receive the product or warehouse it and the work was SHARP to ensure that regulatory compliance. So really just a little bit more about the enlarged ARECOR THERAPEUT and how Tetris Pharma will slot into the ARECOR Group. So post completion, TETRIS Pharma will continue to be led by she, Palf Shafiq and managed by his team.

32:56 It will be an autonomous trading subsidiary of ARECOR THERAPEUTICS PLC and their focus will be on sales, marketing, logistics and distribution in The UK and EAA. ARECOR LIMITED will continue to be our R and D and proprietary products engine of the group. These two entities will overlap. Shafiq will join the ARECOR leadership team, but they will operate independently of each other. From a governance perspective, they will be controlled by the ARECOR board. They will adopt our corporate policies and procedures. So, SHIFICS will have authority to incur expenditure and I will have close financial oversight. And just to end by saying at a group level, we control funds in ARECOR THERAPUITICS PLC and then we allocate working capital to the subsidiaries via intercompany interest bearing loans.

33:46 So just picking up on some key financials of Tetris Pharma to date. This is focused on the unaudited six months to 06/30/2022. Sales were just under £600,000 with the first sales from the GLOW at the end of March. So as you'll see, those nine sales and distribution agreements provide quite a strong foundation. And as part of our modeling, what we have assumed is that they will provide between 1,000,000 to £2,000,000 of revenue per annum. But the focus is very much on that rollout of Agua because that is what we're acquiring and that is our focused use of proceeds. So you will see the loss after tax for the first half reflects a ramp up of costs and the team became employees at the start of twenty twenty two. And as I said in May, they established the company in The Netherlands as the European hub.

34:35 Just to say that included in the first half are about GBP 500,000 of non recurring costs. And at a run rate level, the largest fixed cost is the team, which is circa GBP 1,200,000. And as we've described, there is a very capital efficient, flexible outsourced model and as part of the sales and distribution platform. So assets include production equipment in The UK and some investment in The Netherlands packaging line. That inventory of £1,700,000 includes £1,100,000 of initial global inventory. And liabilities include shareholder loans, which were effectively settled as part of consideration paid at completion. Thanks Susan. So really just to round off today, hope we've given you a good insight and an overview into Tetris Pharma and the rationale here for the acquisition and really how we see this as a next step and building towards our ambition to build a large self sustaining biopharmaceutical company.

35:39 So that concludes the presentation for today, but we're very happy to take questions. Sarah, Susan that's great and thank you very much indeed for your presentation this morning. If I may I will just bring back up your cameras. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated in the right hand corner of your screen. But just while the team takes a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Sarah, Susan, as you can see we have received a number of questions throughout today's presentation, so may I take the opportunity to thank all those investors for their engagement this morning. And if I may just hand back to you both just to run through that Q and A tab and where appropriate to do so, if you could please just read out the questions and give your response and then I'll pick up from you at the end.

36:30 Thank you. Perfect, thank you. And so I'll just read the questions out and then between Susan and I we can answer these. So the first question is Ausulin and Tetris' generic portfolio aren't mentioned in your proposed acquisition RNS. Is this because you consider that these products represent an immaterial part of the deal? So perhaps Susan, you'd like to answer that one. Yes, certainly. And I think I probably hopefully touched on it in my presentation. Our focus and our use of proceeds is to accelerate the rollout of Gluo in The UK and Europe, which in turn will trigger those performance based consideration. As I said, those nine existing agreements provide a foundation for Tetris Pharma. And in our working capital modelling, we've modelled a contribution of 1,000,000 to 2,000,000 revenues per annum. So they provide a positive contribution, but not a main focus.

37:23 We will consider other sales and distribution agreements if they make sense, but just to say that will be an upside to the working capital modelling that we've done as part of this acquisition. Thanks Susan. And so the next question is did ARECOR approach Tetris first or did Tetris approach ARECOR first regarding the acquisition? Yeah so Elizabeth's background on this, so ARECOR and Tetris PLC THERAPEUTICS and THERAPEUTICS PLC and So THERAPEUTICS ARECOR THERAPEUTICS PLC, products within developments that we are planning to take to a high value inflection point and closer to market. And of course with Tetris Pharma building out that expertise and sales, marketing and distribution infrastructure.

38:20 So, you know, we're building a network and relationship there as we do with many pharmaceutical companies there. Then, know, simply the opportunity arose here that there was discussion around those really good fit here with that cross flow across diabetes and specialty hospital space. And of course then as part of the enlarged group really being able to accelerate that mission and vision that both companies have to build that large self sustaining and biopharmaceutical company. So the next question is following your recent acquisition, have you locked in the key personnel? Again perhaps Susan you'd like to touch on this because it's all linked in as well to how we approach you know ARECOR employees being shareholders as well.

39:11 Yeah, so I would say that as I mentioned earlier that the Tetris Pharma shareholders are effectively employees and family and friends. And so as part of this acquisition that team of employee shareholders will be joining the enlarged group and joining ARECOR THERAPEUTICS they will be the team that are effectively pushing forward on those earn out performance conditions to receive those additional consideration shares. So I think in that respect they are focused and locked in in terms of delivering. As Sarah said as well, just to echo the point that the team really want to be part of growing a larger company and so this allows them to focus on what they do best, which is that sales and marketing and distribution. Becoming part of a larger group means that they can tuck in. And Sarah and I obviously have that existing infrastructure at a corporate level, which means that they can focus on the things that they really enjoy and the things that they want to do.

40:06 I think just touching again, Sarah mentioned our philosophy at ARECOR. We have a long standing history of providing share options to our employees. We have an EMI scheme and we have many employee shareholders at ARECOR and that is something that we will continue doing as part of that enlarged group. And final point, as you would expect under a sales and purchase agreement, there are commitments that those selling shareholders and those employees have given in terms of non compete. So I think we've got it broadly covered in lots of different ways. Great, thanks Susan. So the next question is a few years back ARECOR's lead in house development product was an improved glucagon product for diabetes using Aristat technology. This was deprioritized to enable you to focus on the insulin developments. Now you've acquired Tetris Pharma and Gluo, will you now revive that in house development project to produce an improved Gluo?

41:03 Yeah, I mean that's right actually, ARECOR did and this is why we know this product so well actually. We know, you know we understand that there's a patient need here and that a ready to use pen is a good option for that patient population in this emergency situation. And also that we'd expect there to then be a market and opportunity to gain market share. So you know for ARECOR, we did work on glucagon a number of years ago. Now looking at developing a stable liquid ready to use version of glucagon. We did put that programme on hold, terminated that programme. And one of the main reasons actually for this was that we, through analysis, felt that we would miss the commercial window of opportunity for this product because there were competitors that were further ahead than us. Of course, it probably doesn't take any prizes to guess that that's, you know, main competitor there was Xerus Pharmaceuticals.

42:05 So again, we've known Xeris and Biopharma for many years there and have followed their progress. So it's really come full circle now with the licensing of the Agluto product. And I think the short answer to will we revive our in house development is no. And the reason for that is that Agluro is a great product. It is a stable liquid, ready to use injectable in an auto injector. So you know there's very little if any room for improvement for this product. So our focus will be very much with the Tetris Pharma team now, you know rolling this out, building the awareness of the product and you know its benefits here and really working together as a team there focusing on that rollout of Agluto, which as we mentioned, we believe can bring significant upside potential and acceleration for the group in terms of revenue generation.

43:07 Then the next question, which I will hand over to you Susan is, when you were in negotiations to buy Tetris Pharma, what were the main valuation parameters you used for the company when determining the price for the acquisition? Okay, I'd say it's always that this is a commercial negotiation in terms of valuation. You've seen, you know Sarah has presented you know the rationale for putting these companies together. Sorry for acquiring Tetris and making this a large group. So I think that it's very clear that there was value added across several different parts of our group and our vision and our mission as a business. And in respect of the negotiations with the sellers, what I would say is that they had invested the order, they'd invested through equity and they'd invested through shareholder loans which have been converted into equity. And so that initial upfront consideration of 2,000,000 effectively in ARECOR shares reflects the investment that they have made to date. And so the main valuation parameter is really about that earn out and growing the business because it very much as you've heard is at that key inflection point but still really is at the start point of getting this rolled out. And so that is reflected in the negotiation that we had also the valuation that we applied. And also I think the structure of the consideration itself. It is very much based on that

44:37 burnout and that performance. Thanks Susan. So the next question is regarding your Aristat technology platform, what sort of protection will the 20 pendant patent applications provide to ARECOR? Yeah I mean for ARECOR and as we we've talked about as well previously intellectual property protection is absolutely key and core to our business. And we have very broad and robust IP protection both of the Aristat technology platform itself. So these are the ingredients and excipients that we use to enhance the properties of a broad range of therapeutic products and medicines and through to IP protection of the actual products themselves. So within the diabetes space for our insulins for example, we have patent families protecting those formulations, including clinical data and the use of those products for patients. So we currently have more than 50 granted patents across key territories across The US and Europe, for example.

45:44 And as you mentioned here, pending patent applications, we continue to build strategically and robustly to protect our key inventions and our best in class proprietary products. We've been very successful in prosecuting our IP. You might remember from our results earlier in the year, we talked about sort of key and patent protection across polysaccharide vaccines. We routinely receive additional grants there. So it really shows, we really are experts in this area of IP protection and it's core to our strategy. So the next question Susan I'll pass on to you it's please kindly expand on cash flow contribution from Agluo and how this helps fund the progress of AT247 and AT278.

46:40 Okay, thank you Sarah. So what I would say is that as Sarah touched on at the very start of this presentation, our strategy for progressing AT247 and AT278 has then changed. And that strategy was set out at our IPO last year and when we raised those 20,000,000 proceeds. And what you will see from our announcement at the end of June, our cash before this placing was 13,700,000 and those funds were as we set out at our IPO effectively to fund the progress of AT247 and AT278. So that is unchanged. The proceeds that we are raising for Tetris Pharma acquisition is effectively to fund that business to get to the cash flow breakeven, wash its face and then into profitability. And we've modeled that in effect would be generating positive cash flow from probably financial year 2024 onwards.

47:32 But the main message is that in the short term our focus on funding 247 and 278 through our value inflection points in 2022 and 2023 is unchanged. Thank you Susan. So I think that's all of the questions that have been submitted so far unless anybody has any others they'd like to flag? Sarah, Susan, if I may just jump back in there. Thank you very much indeed for taking the time to address all of those questions that came in from investors this morning. And of course if there are any further questions that are submitted today, we'll make these available to you immediately after the presentation has ended for you to review. And ladies and gentlemen, we'll publish all those responses where it's appropriate to do so on the Investor Meet company platform. Sarah, perhaps before redirecting those on the call to provide you with their feedback, which I know is particularly important to yourselves and the company, if I could please just ask you for a few closing comments to wrap up with that would be great.

48:24 Yeah sure, mean obviously as you can see from today we're really excited about the acquisition of Tetris Pharma and them now being part of the enlarged ARECOR THERAPEUTICS Group, we see a real opportunity with their lead diabetes products, Agluo, which we believe is a great product and with the patient needs there and that opportunity for upside potential from revenue generation. And also really that strategic optionality now as a combined group for us moving forward across the specialty hospital care space as well. And you know looking back to you know our core therapeutics as well, you know we've got a number of upcoming key milestones and that would be good to just cover here. Obviously we have our interim results in September, so following on from that, as I mentioned, we're very much looking forward to being able to report headline results from our three day insulin pump study, which we're performing in The US in type one diabetic patients for AT247.

49:28 So we see that as a key inflection point, and where we're looking to further demonstrate the superiority of that product. And also we anticipate initiating our next clinical study in type two diabetic patients in this case for AT278, is our concentrated rapid acting insulin. So lots of progress, lots of clinical progress, best in class data, more data to come from our diabetes portfolio as well. And as I mentioned earlier, we'd expect to continue to enter into value driving partnerships with pharmaceutical companies as well as we have a strong pipeline of opportunities that are under discussion currently. But yes, so thank you everybody for joining us today and for your questions as well.

50:16 It's been a pleasure. Thank you. Sarah, Susan, that's great. And thank you very much indeed for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. It's going to take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of ARECOR THERAPEUTICS PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.