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Gubra AS, a prominent player in the biotechnology sector with a market capitalization of $945 million, has reported a significant financial boost in the first quarter of 2025, driven by a lucrative partnership with AbbVie. The earnings call revealed a strategic focus on innovative obesity treatments and a robust outlook for the company’s contract research organization (CRO) business. Following the announcement, Gubra’s stock price rose by 2.6%, reflecting investor optimism about the company’s future prospects. According to InvestingPro data, the company has demonstrated strong revenue growth of 29.6% in the last twelve months.
Key Takeaways
- Partnership with AbbVie brings a $350 million upfront payment and potential for $1.875 billion in milestone payments.
- Promising results from the GUPAMI program with significant weight loss observed in early trials.
- The company maintains its full-year guidance for the CRO business, targeting 20% growth.
- Observed a slight decline in CRO revenue compared to the previous year.
Company Performance
Gubra’s performance in Q1 2025 highlights its strategic shift towards innovative obesity treatments and leveraging partnerships. Despite a slight decline in CRO revenue, the company remains a key player in the industry, with 16 out of the top 20 pharmaceutical companies as clients. The recent deal with AbbVie is expected to enhance Gubra’s financial standing significantly.
Financial Highlights
- Q1 CRO business revenue: 51 million DKK, showing a slight decline year-over-year.
- AbbVie partnership: $350 million upfront payment, with potential milestone payments up to $1.875 billion.
- Revenue from the partnership expected to bolster financial results moving forward.
Market Reaction
Gubra’s stock price increased by 2.6% following the earnings call, reflecting positive investor sentiment. Despite a significant year-to-date decline of 38.3%, the stock’s movement positions it well within its 52-week range of $42.74 to $113.47. Based on InvestingPro Fair Value analysis, the stock currently appears slightly undervalued. The market appears to have reacted favorably to the strategic partnership and promising program results, with analysts maintaining a strong buy consensus.
Outlook & Guidance
Gubra maintains its full-year guidance for the CRO business, with a target of 20% growth. The company is also preparing for the first-in-human study of its UCN2 obesity program, planned for early 2026. Additionally, Gubra is evaluating merger and acquisition opportunities to further expand its market presence. InvestingPro analysts project strong sales growth and a return to profitability this year, with an estimated EPS of $18.04 for FY2025. For detailed analysis and growth projections, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Executive Commentary
Luisa Thadberg, Chief Scientific Officer, emphasized the importance of focusing on the quality of weight loss, stating, "We believe that time has come now to focus on the quality of the weight loss and not just the quantity." Meanwhile, Henrik, a company executive, noted, "We are currently evaluating carefully all these possibilities," regarding the use of proceeds from the AbbVie deal.
Risks and Challenges
- Slight decline in CRO revenue could signal potential challenges in maintaining growth.
- Longer decision times from US-based companies might delay business expansions.
- The timeline for the UCN2 program’s first-in-human study could be seen as a distant milestone by investors.
Q&A
During the earnings call, analysts inquired about the utilization of proceeds from the AbbVie partnership. Management indicated that they are evaluating various opportunities, highlighting solid demand from the European market but noting longer decision times from US-based companies.
Full transcript - Gubra AS (GUBRA) Q1 2025:
Operator: Alright, everyone. I will now conduct account on from five to seven, two and one. As a reminder, your lines are open from this point on, and I think we will be heard in the meeting. We are going live in five, four, three. Thank you for standing by.
My name is Gail, and I will be your operator for today. At this time, I would like to welcome each and every one of you to the Gubro First Quarter twenty twenty five Earnings Release. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. Thank you.
It is now my pleasure to turn today’s call over to Gubre to start the presentation. Please go ahead.
Henrik, CEO or Senior Executive, Gubra: Thank you very much, operator. It’s our pleasure today to present first quarter results for you. Starting out, Gupra is a hybrid business model company. We are experts in preclinical research into metabolic disease and neighboring scientific areas. We have built a core research accelerator, meaning we have all the labs and testing facilities in house in order to progress preclinical programs.
And this core research accelerator, we use to provide services to external clients as well as to mature our internal research programs. So that is the CRO business, the external clients, and the pipeline business, the DNP business for the internal programs. Today, we are roughly 270 colleagues. And in the service part of GUPRA, we’re working with a long list of various clients, 16 out of top 20 pharma companies in the world either are have been clients of Hoop. So diving into the update from the recent quarter, the biggest piece of news was, of course, our landmark agreement with AbbVie on the GUPAMI amylin program.
According to the terms of the agreement, we are granting AbbVie a global right to develop and commercialize Gooami for for various treatments, but of course, especially with a focus on obesity treatment. For the economics of the deal, they are quite significant and they are giving substantial economic freedom to GUPRA. We have received 350,000,000 US dollars in the upfront payment, and there is a milestone package of 1,875,000,000.000 as part of the deal as well as tiered royalties on net sales. Also, in in early April, we presented interim data from the ongoing multiple ascending dose trial. And then we could present the top line data from the first two cohorts.
They they confirmed what we did see in the single ascending dose part of the trial. Generally, group Ammy was very safe. It was well tolerated. We saw, the only expected, mainly GI related adverse events, and they were generally mild. Also, we did see a very interesting weight loss when we treated with Gobami for six weeks.
And the the weight gain in the placebo group was approximately 2%, whereas the weight loss in the two milligram treatment group was approximately minus 7.8%. So an almost 10% difference between placebo and active. Also, we have a new data in the UCN two program. That’s our next in line obesity treatment. And the the dataset that we now have is confirming the previous findings that using UCN two, you can actually as of the weight loss that you get with current weight management treatments, so that it is a loss of pure fat mass and no longer a loss of lean body mass.
Furthermore, we saw in this dataset that if you have been on a a one of the current treatments and lost some lean body mass, we can actually restore the lean body mass that was lost. So a super exciting dataset, and we will also be presenting some more details from that today. Also, today in the, quarterly update, we give numbers for the service business, the CRO business. We saw a, a revenue in the CRO business of 51,000,000 DKK, which is slightly below the revenue that we saw in the same period last year. We generally experience solid interest from our clients.
So, especially in Europe, that is the case. Going on to the pipeline. Just a brief look at the pipeline. Currently, we have an impressive seven partnerships ongoing, with the last addition of the AbbVie partnership. Also, we still have five unpartnered programs as you can see.
UCN two being the most advanced of these, and also we are preparing this for first in man study, which we expect to start late sorry, early next year. And just a slide here on the AbbVie licensing deal. As mentioned, according to the terms of the agreement, we grant a global license to AbbVie for the further development and commercialization of the group AME AMEly program. In the deal terms, we received 350,000,000 US dollars upfront. We have received that.
And, also, there is a milestone package, which can amount to 1,875,000,000.000 US dollars. On top of that, we will be receiving tier royalties on net sales. So with this, I will hand over the word to GUPRA CSO, Luisa Thadberg.
Luisa Thadberg, CSO (Chief Scientific Officer), Gubra: Thank you, Henrik. And now let’s dive into some of our programs. Starting with the long acting amylin analogue, formerly known as GUPAMI. And goopami is in development for weight management indication and could be positioned as both an alternative or an addition to incretin based treatment. Of key differentiating features, GUP AMI has a balanced receptor profile on the amylin and calcitonin receptors, just like native amylin.
It has an exceptionally long half life of eleven days. And GUP SOCOOP AIMY is currently being tested in a Phase one multiple ascending dose study. The trial design is shown on this slide.
The study is a typically randomized, double blinded, placebo controlled study enrolling both males and females. The study has two parts. Part A consisting of two cohorts receiving once weekly treatment for six weeks. This part has now been completed. Then there is Part B but testing higher doses during a longer treatment period.
This path is ongoing and progressing as planned. From Part A, we announced strong interim clinical results here in April. The data confirmed the general picture from the SAD study with a high degree of consistency within cohorts. The study showed that Group Ammy was well tolerated with adverse events being predominantly GI related, mild and consistent with the SAP study. Group Ammy demonstrated a remarkable dose dependent weight loss.
Mean weight loss in the 2mg cohort was 7.8% compared to weight gain in the placebo arm of 2% on day forty three. The study also confirmed the favourable half life of eleven days. So we are very excited about these positive results, which further supports the development of GroupAmy for weight management indication and position GroupAmy as best in class. So besides Amylin, we are equally excited about a next in line internal obesity programme. It is focused on high quality weight loss.
And it builds on a new mechanism using a long acting UCN2 analogue designed to promote fat mass loss while preserving lean muscle mass. And this focus is critical because current weight loss strategies lean mass typically account for 20 to 40% of the weight lost. We believe that time has come now to focus on the quality of the weight loss and not just the quantity as a key differentiating factor for the next generation of obesity treatment. So here we are talking about maximising the loss of fat mass while preserving or even increasing lean mass. In preclinical studies, our UCN2 analogue have shown the ability to deliver this improved weight loss profile along with cardio renal benefits.
So we have designed a very nice molecule, a selective UCN2 analogue, excellent formulation properties and allometric scaling from animals supports a once weekly dosing profile in humans. In earlier studies in obese rats, we have shown that UCN2 combined with other weight lowering agents enhances fat mass loss while fully preventing lean mass loss typically induced by these agents. We have now extended these findings using much older obese rats treated over a substantially longer period to better mimic an older obese population. The study aimed to one, confirm the potential of UCN2 to increase lean mass and reduce fat mass in older animals and two, to assess if we can reverse lean mass loss induced by prior semaglutide treatment. And the results are striking.
So UCN2 alone, as shown in green, modestly affects body weight, but significantly improves body composition. Semaglutide, shown in dark purple, reduces both fat and lean mass. When combined with semaglutide treatment, as shown in blue, UCN2 fully prevents the lean mass loss. It even increases lean mass and it drives fat mass even further. And in semaglutide pretreated rats, adding UCN2 from Wick3, as shown in pink, completely restored the lost lean mass and potentiated fat mass reduction.
So this highlights UCN2 s potential as both a protective and a restorative agent in combination treatment. So we are currently advancing UCN2 for the clinic. Initially, we discussed a twelve week study period, but we are now planning to extend it to sixteen weeks. And the primary objective is of course as always safety and PICO. And we start expect to initiate the phase one study early twenty six.
Financial Executive, Gubra: Thank you, Luise. And just a few words on the financials, starting with the discovery and partnership business. So the revenue was up slightly, but please bear in mind that the upfront payment that that follows the closure of the the successful closure of the transaction, which happened here in q two. So that does not feature in the q one account. And that’s an again, a very substantial amount with 350,000,000 Danish sorry, million dollars equivalent to 2,400,000,000.0 Danish.
Right? And you can also see the total costs are going up. That is as expected, and they it’s that we’re driving now two programs in parallel, both Amelin and and the clinical preparations for use in two and the nonclinical study. So that is fully as expected. Turning to the CRO business, we saw a slight decline in revenue.
And, you know, sometimes there are, you know, little small differences between quarters. We still see a sound order situation, especially in Europe. And when you have a large fixed cost base as you have with salaries, that’s the main cost component in the zero business, Then, of course, we also saw a decline in EBIT. Turning to the outlook for the full year, we maintain that. And and, again, to reiterate for the CRO business, we see a sound order situation and especially in Europe.
And also for the DMP business where we have the cost guidance that is unchanged. With that, I’ll leave the word over to the operator, and then we can take questions.
Operator: Time, I would like to remind everyone that in order to ask a question, Okay. So your first question comes from the line of Suzanne Van Voorheisen with Kempen. Please go ahead.
Kara Muntyrone, Analyst, Kempen: Hello, team. Thanks a lot for taking my question. This is Kara Muntyrone on behalf of Suzanne from Kempen. So given the successful closure of the partnership with AbbVie, We were curious to know how you intend to use the upfront cash and potential milestones in the future? And if I may ask a second question, if you could provide more color on the Q1 numbers for the CRO business, if you see any seasonality or anything like that?
Thanks a lot.
Henrik, CEO or Senior Executive, Gubra: Thank you very much for the questions. Starting out, use of proceeds from the deal and allocation of capital. So we are, of course, in a very lucky situation with significant freedom for the company. And we are currently evaluating carefully all these possibilities, and we are still investing resources, analyzing m and a opportunities. We are also using resources looking into various areas where we can expand our pipeline or our service offerings, our disease area focus, and generally assessing the various opportunities for us to develop the company.
So there is there there’s no specific new part to our communication at this point in time. We are still evaluating these new opportunities together with the board of Coupa. When it comes to the CRO revenue, we, as mentioned, still experience solid demand, especially from Europe. We see a bit of a longer decision times from US based companies. If that is just random or if it’s a signal, it’s difficult to say this soon, and I I would say we are we are we are not expecting this to influence the the full year result of the service business, and we maintain our outlook for the year where we are looking to attain to a 20% growth.
Kara Muntyrone, Analyst, Kempen: Thanks a lot.
Operator: It seems that we don’t have any questions now. And I would like to turn the call over to Gubra for the closing remarks. Please go ahead.
Henrik, CEO or Senior Executive, Gubra: Thank you very much for listening in on this q one update from GUPRA. We are looking forward to reconnecting again once once we have the next quarterly update. Thank you.
Operator: Thank you, everyone. That concludes today’s call. You may now all disconnect. Have a nice day ahead.
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