Algorae Pharmaceuticals (ASX: 1AI) reported material progress across both its AI drug discovery platform and commercial pharmaceutical strategy during the December 2025 quarter.
The company said independent preclinical validation of its AlgoraeOS platform and the launch of an upgraded version strengthened confidence in its AI-driven approach to identifying synergistic drug combinations.
At the same time, Algorae advanced its commercialisation pathway through new distribution and supply agreements that provide a route to near-term oncology revenue.
The company ended the quarter with a strengthened balance sheet following receipt of non-dilutive funding and additional working capital support secured after period end.
AlgoraeOS Platform Development
During the quarter, Algorae completed independent preclinical validation of AlgoraeOS Version 1 at the Victorian Centre for Functional Genomics at the Peter MacCallum Cancer Centre.
The program generated approximately 10,000 data points across 84 cannabidiol–drug–cell line combinations, confirming the platform’s ability to prioritise combinations with true biological synergy.
Algorae said the results provided clear preclinical support for the use of AlgoraeOS as a decision-support tool for experimental design and drug combination selection.
Building on this foundation, the company launched AlgoraeOS Version 2 in November, incorporating confidence-weighted predictions and full dose-response modelling across multiple synergy metrics.
“AlgoraeOS represents a new generation of AI models that not only predict outcomes but also understand their own limits,” UNSW Associate Professor Fatemeh Vafaee said at the time.
R&D Pipeline Expansion
Algorae confirmed receipt of in silico predictions from AlgoraeOS Version 2 covering more than 500,000 cannabidiol–drug–cell line combinations.
Following preliminary triage using predefined prioritisation thresholds, the company identified 90 high-quality candidates for further evaluation.
Discussions commenced with the Peter MacCallum Cancer Centre to undertake a second independent validation program focused on AlgoraeOS Version 2 outputs.
This work is intended to further de-risk the platform while narrowing the pipeline toward combinations with the strongest translational potential.
Commercial Pharmaceutical Progress
Through its wholly owned subsidiary AlgoraeRx, the company also advanced its commercial pharmaceutical strategy during the quarter.
Algorae entered into a distribution agreement with Dr Reddy’s Laboratories to supply Capecitabine 500 milligram tablets into the Australian market, with the first shipment received in January 2026 after quarter end.
The company also continued work toward finalising a binding licence and supply agreement with Cadila Pharmaceuticals covering two generic medicines targeting cardiovascular and metabolic disorders in Australia and New Zealand.
These initiatives build on its existing oncology-focused commercial portfolio and support a pathway to near-term revenue generation.
Strong Financial Position
As at 31 December 2025, Algorae held cash and cash equivalents of $1.83 million, with net operating cash outflows of approximately $221,800 for the quarter.
The company received $384,467 under the Research and Development Tax Incentive during the period, providing non-dilutive funding to support ongoing platform development.
Subsequent to quarter end, Algorae secured a $3m receivables-based working capital facility from ScotPac – a leading Australian lender specialising in invoice and working capital finance – to support inventory funding and commercial scale-up across Australia and New Zealand.
The facility is revolving and flexible, allowing Algorae to draw on and repay funds as required, with interest charged only on amounts utilised, supporting the scaling of the company’s revenue-generating commercialisation operations across the region.
Algorae said it remains focused on disciplined capital management while progressing both its AI-driven discovery platform and its pharmaceutical commercialisation strategy.
