Half Year 2022 HUTCHMED (China) Ltd Earnings Call
So Linda.
It was included into the <unk> this year with a 52% price reduction.
Yes sales grew 69% aided by much improved patient access.
I'll pass this.
Also delivered strong sequential growth compared to second half 2021.
On the pipeline.
While we were disappointed by this super fast and in the U S FDA <unk> and now <unk>.
A withdrawal.
Our deep and broad pipeline continues.
<unk> continues to progress.
Our first.
<unk> National MRC T pour through quaintness global registration will readout shortly in August .
And if positive NDA filings will begin towards the end of the year starting from the U S.
Followed by EU and Japan.
For <unk>.
Multiple registration studies, including global end market. It is a matter for Trc and set from pronounced small cell lung cancer enrolling.
The Savannah study.
Data to be disclosed W. CLC shortly.
It is also continuing to enroll.
With potential for filing for accelerated approval.
Registration studies for our second wave of products and as a listed solve the planet and Tazemetostat.
All in enrolling.
And NDA submissions in China are expected during 'twenty, three and 'twenty four.
Finally, managing changes and challenges and challenges.
Ultimate has gone through many difficult stretches in our history.
The management team is very experienced in dealing with challenges.
Such as our <unk> setback or the Covid disruption in China or the overall unfavorable cap market right now.
<unk> has a solid cash balance and.
And our cash generative commercial operation in China and.
And we are confident we will be able to emerge from these challenges stronger.
Next I'll ask Mr. Peng Chan Chief commercial Officer, China.
To give an update on first half China oncology commercial performance chat.
<unk>.
Thank you Michael.
Hello, everyone.
Hudson that already had three in house.
Innovative products a product in market in China.
And attended to.
So the second year for Hudson added commercial lives.
<unk> and <unk>.
Amortization platform.
From this slide.
After successful Dl renewal with only 5% price decrease.
And then it continued to grow strongly first half of this year.
The first six months and lots of the sales was more than $15 million with 6% growth versus last year.
By the end of May.
The accumulative in market yourself sales of any of it already achieved more than 1 billion RMB.
And on it.
Already benefited.
More than 50 solvent CIC patients.
And it continued to expand our leading position.
In certain line CRC patient share to 43% in the latest post the launch of <unk>.
Next slide please.
First Orlando.
The inclusion of loss.
Much wider patient access for surrender.
Despite.
52%.
Hi, Scott.
Annual sales.
<unk> increased by 69% to 13 6 million in the first half.
Of this year.
Which was already over the whole year sales of 2021.
The growth was up to 280% in terms of the new patient numbers.
<unk>.
Next slide please.
This is the first year anniversary for southern Italy since its approval in June last year.
The first half of this year in market sales increased by 40.
6% to $23 three.
$3 million versus the second half of the year.
As the first in class selective met inhibitor in China.
So the Internet is not recommended for treatment of non small cell lung cancer with exon 14 skipping in five times treatment guidelines.
And Matt diagnostic testing is already recommended as the new standard of care for patients with late stage.
Now some wholesale in cancer.
Our commercial partner Astrazeneca is now proactively working on the preparation for the coming year negotiation at the end of this year.
Next slide please.
Okay.
This slide is high level summary of Hudson add commercial capabilities.
We have the rest of the team size increasing to model.
<unk> hundred stuff.
More and more hospitals and etch stay piece.
Can be covered as well.
More than 500, new hospitals were covered in the first half of this year, especially in tier two and tier three cities.
More and highly effective promotional events executed.
In first half.
Especially through online and digital communications to mitigate the coverage challenges.
For example, we can see.
We held more than 3800 annual eight events with more than 100% growth versus the.
The first half of last year.
And we covered more than 43 solvent at U C piece by Solander.
Events with also more than a 180%.
Gross.
So overall in spite of the colleagues challenges we continue to make good progress to commercialize our three marketed products in China in the first half of this year.
I am very confident this momentum to continue to go from strength to strength as our commercial team continues to build over the balance of this year.
Thanks.
Okay great.
Go ahead Mike.
Thanks, Jim.
Moving onto the pipeline progress.
Our clinical development program pipeline continued to grow.
Our anti CD 47 antibody <unk> III entered into phase one study and.
And our first in license a product Tazemetostat initiated the bridging study for China registration.
Next.
This slide lists 13 ongoing registration studies, both China and globally.
With estimated timeline for possible NDA filings.
Generally speaking the COVID-19 outbreak in the first half has some impact on enrollment and we are anticipating some delays.
Studies in China.
Next slide.
Again, the seven Registrational studies for <unk> and they are all enrolling three globally and a four in China.
Next slide.
<unk> is to highlight the interim.
Savanna data to be presented at the <unk>.
The most important information among other things is the <unk>.
Biomarker definition.
The data is.
193 patients all.
Progress onto Griso with met activation, both high and a moderately hot.
In this study 34% of patients who are identified with high activation, namely IH C III plus greater than 90% of the tumor cells or gene copy number greater than 10.
And then additionally, 28% was moderate.
Net activation Iht's route plus less than 90% or GCN between five and 10 copies.
You can see there is a clear difference in efficacy for these two subgroups of patients.
Including overall NPL.
And PFS.
These data supported and inform.
The global severance registration study, which is now underway.
Next slide.
In addition to targeting net driver of genetic alterations such as mutations exon 14, skipping or amplification.
Another area of strong interest is to target the immunosuppressive role of <unk> net.
Net signaling pathway.
Last year, we published the Calypso study in which the met driven PRC patients.
Peer to derive.
Robust clinical benefit from the treatment of several internet the value out of a combination.
Currently.
The global registration MCT is ongoing.
<unk> study.
We and our partner Astrazeneca and now preparing to explore the same combination met driven non small cell lung cancer.
The study is expected to start in row.
Later this year.
Next slide.
Moving onto <unk> and through clinical development outside China.
Let me ask my colleague, Dr Numeric, Kenya, managing director and CFO of <unk>.
To give you an update.
Thank you.
Hello, everyone.
I will give you a quick update on our late phase development.
Globally.
See on the slide Hutch might continue to focus on colorectal cancer and really helping patients.
Hi, Brendan and high unmet medical needs to find solution.
Therefore, <unk> opinion.
Our main focus in driving that.
The second most common constant type and post second line.
Patients on run quickly Aldo option only two approved options.
Third plus line.
In the long term.
Pension.
That highlights.
And so the rationale for <unk> being developed.
Next slide please.
As you've seen this slide.
Few times in the past.
The last six months with strong partners.
Driving our fresco.
Is that contingent on Sunday.
Multinational.
<unk>.
Florida <unk> line.
Ask narrowing our predictions.
It will be in personal.
Top line results in August .
Presenting at upcoming medical conference resolved very soon.
Just as a reminder.
Our.
Discounts with all major regulatory agencies before.
Finalizing the protocol on top of.
Contact and therefore it is positive.
We'll be filing.
While we were talking last night.
Both nuanced.
Europe .
Europe , MAA and Japan PMD.
The MBA discussion, Japan has strong participation.
The global truly global airports.
Yes.
Positioning.
As of last night point of view.
Our.
As a reminder, U S GAAP.
You guys have been granted fast track designation, therefore, Ebola product rolling submission.
Starting in <unk>.
Okay.
Again.
I'll be talking more about my first go to Jon.
Next slide please.
So without any quick updates.
We have discussed.
Yeah.
April may.
<unk> NDA.
Please respond.
U S.
I'm not going to highlight tomorrow.
We announced.
All of our MAA in Europe .
Main reasons some of them.
Right.
Life with one of the highlights similar concerns.
Limitations on objections from the European.
Lots of respect.
In addition to that.
A limitation.
Come back in.
Excellent.
Hum.
Let's now discuss one.
Susan I towards slow and focusing on portfolio with both regulatory agencies to bring sort of popping too.
Next phase development.
That thing MLC.
For Japan, we are conducting a bridging study.
Nine project pivot.
Got it.
Japanese like lots of return.
And we are in part to below will be approaching <unk> for pre NDA discussion.
The conclusion of that project.
Next slide please.
One thing you won't be covering them.
Yes, Thanks, Matt Thanks Mary.
Now, let's move on to our second wave of compounds in late stage development.
All in Haemonchus space.
Hutch, Matt has.
Six assets in clinical development with several more programs in discovery.
We believe this is a highly valuable haemonchus pipeline covering pretty much entire T amongst spectrum.
And Mds elicit solve the planet, both with breakthrough therapy designation in China.
Next slide.
And as a listener.
Our differentiated geos a good delta inhibitor with a good safety profile has continued to enroll into registration phase III studies.
Third line plus Follicular.
And the second line.
Or above marginal zone lymphoma.
Data for other subtypes of lymphoma, including Mcl and <unk> are still maturing.
And it will be evaluated for possible additional registration studies.
Outside China in light of the April FDA, Oh deck on tier three delta class of compounds.
We are expanding patient enrolment in several subtypes to demonstrate or confirm the differentiation.
With a priority.
<unk> posted <unk> mcl and <unk>.
Let me remind you that our intention when <unk> was discovered.
To improve upon the existing theatrical delta inhibitor safety profile.
Which is now the center of over the question.
The data, we published at Ash last year.
Sure not only this promising efficacy data, but also much more favorable safety profile, obviously needs to be further confirmed in larger patient population and also in U S patient population.
In addition, we're also considering combinations such as <unk> two inhibitor tazemetostat.
Next slide.
Solve the planet.
<unk> inhibitor in China, the phase III registration study in ITT is enrolling very well.
With little impact from Covid, suggesting.
Strong on that medical need in this patient population.
Another indication, where we have <unk>.
<unk> therapy designation.
We hope to complete enrollment of this phase III study.
By the end of the year.
Behind the ITT.
Two and these have been cleared in China.
One for auto immune hemolytic hemolytic anemia, and another for COVID-19.
To exploit its anti inflammatory activity to reduce death rates being severe to critical patient population.
Outside China the dose expansion.
In lymphoma indications.
Continues to.
To enroll.
With a priority in Hodgkin's and opposed to PTK.
Hello.
In addition, based on the encouraging POC data from the China, Itt's study and strong on that medical needs. In this space. We are preparing to submit an <unk> to explore the potential.
Next slide.
Our.
We in licensed <unk> two inhibitor tazemetostat.
<unk> is approved in the U S for Follicular.
And.
Epithelium.
Silly orders Tacoma indications as a monotherapy.
<unk>.
2022, <unk> the safety run in data in combination with our square will be presented in a second line Follicular lymphoma.
The efficacy and safety were very encouraging together with our partner <unk>. The global Phase III study the Symphony <unk> has been initiated in second line Follicular, comparing our square plus test versus our square.
China will be part of the global MCT.
To support China registration.
In parallel we've just kicked off the bridging study in China to support initial registration of Testament of Tazemetostat as a monotherapy.
Taz Hasnt been approved in Hainan Province.
In China.
Through a special registration pathway based on the U S approval.
Multiple combination proof of concept studies are also being planned.
So this.
Update on the life on the late stage assets.
Next I'll ask Johnny Chan CFO to give us an update on the financials Johnny.
Thank you Michael.
So moving on to the next page please.
So as of June company maintains a strong balance sheet.
We have cash and short term investments of over $800 million unutilized banking facilities of over $170 million.
In addition, we have another 58 million cash in our joint venture with Shanghai Farm.
So overall, our target is to extend our cash run rates to three years.
Move onto the next page.
The strong performance of our commercial teams, resulting revenue up by 28% to over $200 million.
Of which our oncology business revenue increased by more than double of.
Last year to more than 90.
$19 million. So we continue to increase our investment in R&D to over $180 million.
In China, Australia and.
In Europe .
So the profitability of our equity invested investees increased by 17% to <unk> $73 million.
Moving onto the next page please.
Our non core assets continued to do well.
So as you all can see it has contributed more than half a billion net income growth.
We continue to explore ways to unlock the value of this asset to provide additional cash resources to support our R&D investment.
Moving onto the next page.
As you all have heard from our hometown earlier.
With our strong performance commercial performance.
We'll maintain our guidance to the market we gave earlier.
160 to 119 million for oncology and immunology business.
I will now pass onto the Waco.
Okay. Thanks, Johnny.
To recap.
While the macro the macro environment continues to change.
<unk> strives to stay focused on our commercial operations and pipeline progression.
We expect that the strong momentum in China commercial to continue in the second half.
On the pipeline in China, we continue to expand the lifecycle indications behind our three approved products through coincident sufentanil and several isn't it.
And at the same time, moving our second wave of with drug candidates <unk> solve the planet and Tazemetostat towards registration.
Outside China <unk> Sufentanil.
Has it been a disappointment.
We believe it is a unique case.
And it won't have a significant impact on the <unk>.
Rest of the pipeline.
And we do have a deep pipeline and a robust registration strategy starting from Farooq maintenance switch.
A multinational MCT will readout shortly in August and the NDA filings if positive.
In the U S EU and Japan, starting from the end of the year.
And as illicit and solve the planet are both generating POC data and it will be engaged.
With the FDA to discuss and define the registration pathway in the next six to 12 months.
Finally.
I would like to point out.
That even though we have a solid cash balance we.
We are prepared.
To manage through potential potentially long lasting unfavorable equity market <unk>.
Viewing our clinical programs.
And operations carefully.
To make sure that we spend cash prudently.
We will also look to grow our China business further.
To generate more income.
And finally, we plan to up all efforts in licensing and collaboration activities.
Our current environment is challenged.
We are confident that we will be able to leverage our well experienced management team and emerge from this difficult period, even stronger.
This is not the first time that we have managed through difficult market conditions.
So this wraps up our presentation the management team will be happy to answer any questions.
Ladies and gentlemen, we will now start our question and answer session.
Okay.
If you wish to ask a question by phone. Please press <unk> one on your telephone keypad to enter the queue for the question and answer session to cancel the queue. Please press zero two.
We have some questions coming in the first one come from comes.
Comes from Caliche from Jefferies. Please go ahead.
Congrats on the progress and thank you for taking my question.
So regarding the regulatory pathway.
Yes based on alcohol bore phase III.
Vasco trial, you ask this one trial.
China trial, which should provide a comprehensive information, but again the next chairman.
Do you see any potential issues regarding that applicable to you today you ask patient population and also like I'll turn our client, yes medical practice.
Potential data package to support.
Yes approval in CRC and while this topic of does.
<unk> from the previous meeting.
Thank you and also have a follow up.
Okay. Thanks Kelly.
Well, obviously you know the.
The strategy for <unk>.
Registration in the U S.
And elsewhere for that matter, obviously will be centered on the <unk> two study which is a.
Obviously, <unk> and <unk>.
Representative patient population.
I think the China study the fresco original Fracs fresco study and also all other early stage.
<unk> clinical studies.
Well so as supports.
So we don't expect.
<unk>.
Any issues.
Suddenly had previous discussion with the agency as well.
Before we actually kicked off the <unk>.
<unk>.
So.
Now we are actually quite confident that this MRC T shirt.
<unk> cover.
Issues.
Completely different from the Super fast pace.
Maybe on America.
One.
If you have anything else to add.
Yes.
I would just add.
Hi, My voice of confidence.
And as you well.
First call on proppant than not.
Nothing to do our patent cases, where it is unique.
No more formal discussions with New York that an end of phase two meeting I've seen anything and.
We are very transparent in.
And EBITDA was very collaborative in the way how we designed it.
My main pivotal study practical.
Let's go through will be considered in the totality of the package as well.
We are very confident impractical to positive that would be based on three continents.
Lots of discussion.
We are as I reported before we have also scientific advice NEMA.
It provides us.
Comment.
The design.
When you go.
Two will be our primary pivotal study at the same time, when we had the same discussion with <unk>.
Yes.
We remain very confident.
And our strategy.
Great to hear thank you very much I also have a follow up regarding the <unk>.
Yesterday kinase inhibitor and how should we think about the market opportunity.
Lymphoma indications in China, Montana game, then CD 19 car Ts and also <unk> <unk> Bispecific antibody.
And for the market.
I also feel and try them I cant how defense of the competitive landscape in China versus India.
Are you at all it does make small box zones.
Yeah. So.
And obviously it all comes down to two the safety and Tolerability of proven.
Now lets safe and efficacious.
We believe.
Just forget Delta should have.
Yeah.
Very.
Very strong competitive.
Hedge.
Because it's.
It can be used before or after these biologics.
Treatment and also its oral as you know these are relatively.
Indolent diseases.
Patients will have to stay on treatment for.
It's a very long time, so safety and Tolerability is extremely important.
Some of the Biospecifics.
As show some.
Strong data.
But again these are all single arm studies.
Still.
Remains to be confirmed.
Car Ts.
What.
And it can work for some patients, but not for all and even patients benefit.
Ultimately.
Progress or have recurrence so.
All in all we believe.
Indolent lymphoma patient population, it's a big population and they live patients.
They've got for a long time and they need to rotate to two new therapies.
Repeatedly.
A good efficacious and safe tolerable.
Forget Delta inhibitor, we believe it has its place.
These patients.
Very helpful. Thank you.
Thanks.
Yes.
The next.
Yeah.
Operator.
Hello, Paul Choi from Goldman Sachs. Your microphone is open.
Thank you good evening and thank you for taking our questions.
Just a couple of quick financial ones to start and then one pipeline question first was there any.
Inventory build at the end with regard to some of the newer products that were included on the <unk> and then with respect to the guidance being maintained can you maybe speak to how you view the current macro environment and what would sort of be the pushes and pulls that might drive your full year results to the lower end versus the <unk>.
Is the higher end and then I had a pipeline a pipeline question to follow up.
Yes, Paul.
With regard to the inventory.
We believe it's at the moment is it's a normal inventory level.
Thing.
During the Lockdowns.
April may and into into into June .
There was some kind of depletion some level of depletion of inventory so at the moment and we think it so it is a normal level.
The inventory in the.
And we're quite confident in the second half.
We think the momentum will continue.
And with.
With regard to the push and pull.
Again.
I think.
We are.
Concerned about the COVID-19, whether it can now have another outbreak somewhere else or somewhere.
It can be quite disruptive basically.
That remains a bit uncertain nobody can predict.
The situation over there.
We have been.
<unk> gone through one center.
<unk> team is.
Putting place multiple measures, including the online doctors visit online conferences.
And also the inventory and distribution management so.
We believe we are now better positioned to deal with.
Any potential co.
Covid outbreak in China Lockdowns potential.
But nevertheless.
<unk>.
It can be it can be an issue depending on the scale obviously.
So.
Hum.
We are cautiously.
Optimistic that we'll be able to.
We'll be able to deliver.
Within the guidelines.
And hopefully hopefully we can do better.
Towards the higher end.
So I think the only only pool.
The headwind it would it be the uncertainty of Covid.
Okay. Thank you for that.
And then as a follow up my pipeline question is I know youll have the fresco too.
Imminently here in August .
There are plans to present the data more in detail at a medical meeting here in the second half of 'twenty two.
We have to wait until 2023, thank you for taking our questions.
Yeah.
Okay, Hi, Ken Yes, I can take it.
So Paul obviously our principle.
Disclosure of important data.
And then.
On some level.
Industrial fleet, but also in our call today.
Yes.
Profitable at the medical conference.
And our position to confirm what's conference.
If anything it kind of go and speculate but our end all the way.
After about 90 gel compounds.
How does the start of doing that.
And sometimes we'll have a separate announcement when we have exact location and timing for that.
It will be better this year.
This year this year, okay. Thank you very much.
Yes.
Okay.
We have another question from Mike Mitchell from Panmure Gordon. Please go ahead.
Thanks, Good afternoon, everyone. Many thanks for taking my questions.
Just have a couple I just wondered in terms of the current commercial organization and are you continuing to add significantly to the oncology clean I think you said 800 people now, but the number of oncology physicians cover it is starting to flatten out somewhat.
Just wanted to have October commercial organization now just in terms of structure.
And then a question on frequency understood global strategy clearly the Presto to data is important in terms of paving the way towards the regulatory process outside of China.
The worldwide levels hopefully.
Mobile strategy for the business, but if that doesn't play out as we hope.
And I think you'll probably then looking at the global settlement NIPSCO reached 72 in subprime to request the global story, which are a little way out in terms of potential NDA. So I just wanted to look at the rig count.
Global claims in that in that context. Please.
Okay. Thanks, Michael with regard to the commercial organization in China, We are now around 800 staff.
We believe this is a.
This is the optimal scale.
For the current portfolio.
<unk> so we don't.
Intent to.
Grow.
Further however, we instead will focus on driving efficiency and driving productivity from the current staff.
So.
With regard to.
Your second question on a frequent and global.
Registration.
I think it is.
There can be all kinds of scenarios, but but.
First things first we need to wait until the fresco two data to readout and.
Personally.
Just like you all.
Anxiously waiting.
For the fresco two.
To read out.
And.
I think go through quantitative we have accumulated a wealth.
The amount.
The amount of data.
This global MRC T.
Sure so as a pivotal I don't know if.
Do you have anything else to add.
You said that well.
Given the proximity of the outcome.
We are thinking and like all of your line about positive negative outcome, given the wealth of data, including one positive something in addition to a number of other standards our cohorts from.
On the U S.
Matt across different lines of prior lines of therapy with the solid results.
And the clinical benefit demonstrated there's nothing it's Mike.
I don't know about anticipation we are doing this for a reason.
And in a normal circumstance right.
The first pivotal study.
Approximately 70% probability of success.
Given our already positive.
We are confident that again and there's this cost.
Cross the finish line.
We are planning for.
For now.
While our job.
Yeah My constantly.
And again when I got the outcome was.
Right.
At this time.
Yeah.
Okay, that's fair.
Yeah.
And I think our next one.
Right.
Uh huh.
Uh huh.
Maybe that and kind of last question I'm sorry.
Okay.
Well, obviously post.
The FDA CIL and also.
Considering that our recommendation.
And Marci.
Are you talking about suicide to Niccolo.
I'll now I think question was okay.
Well our focus.
Shift.
<unk> global development from that perspective.
Both both programs are important correct.
Obviously, if it's negative it will be a major setback.
I mean it.
Just similar tissue effects.
The CIL.
Obviously, we remain.
Yeah.
We remain confident that you saw.
Valuable drugs that can help patients.
The setback that basically is a timeline when you push pushback.
Significantly yes.
Talking about three or four years.
For the first.
Approval so.
We will be.
Evaluate very carefully.
Same level into what we what we are doing flushed through a fascinating.
And during.
During the same for frequently.
If negative.
Again.
The NPV is can change greatly.
<unk>.
And if the timeline continues to be pushing back. So that's an area we need to be very very careful.
Understood.
That's what I was thinking.
Yes.
Next question comes from John <unk> from Credit Suisse. Please go ahead.
Yeah.
Yes.
Credit Suisse. Thanks for the opportunity for me to ask question first of all I have today.
Just want to cover.
I have a follow up.
Fresco too I know some upfront PFS already asked I apologize starting I think given the study actually.
Trial started.
I think our second half for next Wednesday.
We all know FDA certainly changed their position too.
Building blocks from China.
So it will all be aware very helpful. If we can get some more color.
About what kind of communication.
Pat.
Before we start the fresco two starting with <unk>. So what we talk about it without T X before we started up the.
The <unk> trial.
Of note.
The company is noticed any kind of potential change in Fda's view after 2021 events sacks.
Follow up on financial too.
Yes, I think we already touched on this August .
He had.
And on phase II or III phase III.
<unk>.
Discussion with the U S FDA in Angola aligned on the study design for <unk> two.
If positive obviously, we will have another.
Opportunity.
Pre NDA discussion language.
Also note that this.
This particular indication we have fast track designation.
We can now.
We can we can discuss it with as you can see everything in time.
Jim.
<unk>.
With regard to FDA kind of.
Physician.
Yeah.
I'll ask maybe America two two.
To chime in.
Do you see.
As.
More.
Involvement in discussion being had discussions with them.
Eric Yes.
Thank you.
Just to clarify yes.
Here are some confusion in the system here.
Overall challenges always sort of hard to NIM.
And any other sponsors related.
Situations I want to relate it to.
And just to confirm.
Our application to NDA is named wave one countries.
Hi.
Our phase III trials.
Core.
Concern, bringing one country and China and non China.
This is a broader review of the brain to one country specific not necessarily applicable.
Our populations at the core of their concern.
First Scott.
The term Ken proclaimed payment is very different as well.
<unk> said, we have pre NDA.
Okay.
End of Phase one meeting all crane phase III, whereas another type b.
Very similar in anything this year and we are preparing oncotype doing anything very shortly.
Top line results.
So far.
They move very consistent.
Uh huh.
Therefore again important sign.
Our running global Sunday Global study conduct and carton contracts.
160 sites and nuanced.
Contributing to this other in the segment taken away so it cannot be more than multinational and lower than original stomach. It says exactly.
Thanks, everybody.
Every other studies supporting a part of the package wanted to play important on the wall as well.
Yes.
Play.
Overall.
And our concerns with the SAP and so everything moving forward got it.
It's not a good thing.
Okay.
Thank you Okay got it.
Yes. Thank you.
And then my second question is on our financials. So we notice.
First half.
Our total revenue, but it has a pretty well go to Carlos.
Gross about 30%, but the cost revenue only realizing a 10% or more.
Sure.
Much slower than our total revenue.
Do you think because the trend is going to continue or what cost.
It was kind of slower growth or the cost of revenue.
First half sales a year.
Okay. Thanks for the question I'll ask Johnny to two two provided provide the answer.
Okay. Thank you Michael I think it's a composition of our products.
If you compare to the last period.
We did not have a tablet in it in the first half, which we now have cabozantinib.
In our first half of this year.
As you all know we recognized.
Four separate entities in market sales record and recognize them.
30% of the royalty.
So that actually improve.
Terms of our gross profit margin.
And on the other hand of course, we have invested.
Into our sales force, which are part of basically capturing the cost of sales.
Combining all the data.
The product mix actually makes a difference.
The analysis that you just referred to.
But going forward I think.
We will continue hopefully I think we are pocketing. It continues to do well in our M&A and so we're taking it at the same time I think the proportion of a separation of the sales to increase over time.
I hope that answered your question.
Okay, that's very helpful. Thanks.
Next question comes from Louise Chen from Cantor. Please go ahead.
Yeah.
Hi, This is only our for Luis and thank you for taking our questions. So our question is on <unk>.
Indicate that these studies were not representative of patients and medical practice in the EU. So why do you think this wouldn't be a potential complication in Japan and just to clarify will you still pursue global paths lowered to reflect in the light of the U S and EU and need for local trials.
Thank you.
Well I think it's.
Okay.
It's understandable that debt.
That particular.
Humans.
Is almost identical from U S C O L which is.
The patient.
A representative patient population I think Japan is quite different first of all obviously the Asians right secondly.
It's on a different registration path.
Uh huh.
They requested us to do a bridging study so that study is.
Ongoing and obviously will.
We'll continue to discuss it with the MTA in Japan.
Clearly I think it's on.
I think it's understandable between Asia and nickel occasions that in terms of patient population difference.
Japan.
Yes.
Yeah Asians.
But also on a very different.
Registration path.
Ed.
Anything else to add at Barrick.
No I would only add.
I'll highlight.
We can't see what's happening.
Yes.
That kind of case is a unique case in action in Japan.
There will be as unique as it can be I don't recall personally to phase III start discounting from Japan.
And our plan for NDA submission in I'm, sorry from China.
And to submit in Japan for high unmet medical need as well as outside with bridging study phase ones will engage pulse come back.
Which we expect in 2000 and trying to train and discounts.
Or what.
And again.
Discussion.
Or it won't.
As of now.
Japan, all the way <unk> also looked at NDA approval.
Approval in the U S.
There may be some some buyouts.
Persistence in that context.
Just woke up with bridge, one that I haven't been data.
Yes.
Got it thank you.
Next question comes from Matt Young from <unk>. Please go ahead.
Hi management, Thanks for taking my question and congratulation on the result, I got two question regarding literally virtually stopped.
Notice on your presentation material you mentioned that you file the NDA based on step front in 2025. So that's.
Does this mean that the savanna data not support an NDA filing.
In the near term.
And my second question is regarding savanna readout.
I appreciate how you see this how by selected niche differentiated in terms of establishing clinical profile versus a pure salary proof like a typo with any bank come out to me.
Those are my questions. Thanks.
Okay. Thanks, Thanks Matthew.
Hum.
Well the cellphone NDA timeline tie in 25 years in August and estimates.
I think well we just got started so it all depends on the enrollment speed and also the PFS falloff.
Which.
Sometimes.
It can be longer than normal.
What we expect but the Savannah, I think it would be probably half.
More clarity right so.
Obviously, we need to get aligned with the U S FDA on the potential.
For example, the Internet.
Ah study.
Support.
Accelerated approval.
But we think.
Both Hutch and Astra's Astrazeneca, our assessment is that savanna can be.
At least what the approval timeline can be.
12 to 18 months ahead of schedule.
For us.
Now your second question on the.
Regarding the.
[noise] differentiation with our partners and others.
<unk>.
Obviously, we have not these two compound to bonnie amount of cutting out.
They are not improving in China.
They've been exposed to.
Limit the number of Chinese patients.
Just looking at the profile I think Oh.
Old potent selective C met inhibitors.
However desert.
They vary.
Significantly in terms of our chemical structures.
I would expect.
Differences.
In pharmacokinetics or in.
And compounds phase.
Safety profile so.
Yeah.
Because they are they have limited exposure to Chinese patients it's hard to.
<unk>.
The difference that you can compare it from the study.
From other Chinese studies versus.
Two partners or can imagine studies outside China.
Regarding two with regard to other other studies.
I think.
Clearly astrazeneca has it all simultaneously.
And they know the patients very well now we have the biomarkers figured out.
So we think we are.
Not in a pretty good competitive.
Have a pretty good a competitive edge over the other two two products in terms of India.
And the Egfr TGI refractory patient population.
Other studies I think.
The only only where you have the only combination in PRC.
And.
We are also the only.
<unk> is the only component now exploring exploring gastric as well so I think we have a much broader.
Yeah.
Program than the other two.
I think the challenge with that is it's very fragmented it has multiple.
Types of.
The driver of genetic alterations, including point mutations.
Exon 14, skipping amplification and fusion and so forth.
And they all require different diagnostics to support.
And just very tedious to do.
Because of low incidence and difficult.
And all sticks.
At least the Astrazeneca.
<unk>.
<unk>.
They made good progress in.
In non small cell lung cancer gastric mpls is I'm sure there are other.
There are multiple other tumor types, such as CRC for instance, head and neck as well.
Yet to be explored.
Okay, that's very clear thanks Tucker tool.
We have a question from Alex <unk> from Bank of America. Please go ahead.
Hey, guys good morning.
Thanks for taking my question. This is John on amongst I'm on for Alex.
Kind of a two part question from us so.
So on the first go to trial.
In your conversations with the U S regular regulatory agencies, so far in your experience.
How do you think theyre going to be more or less viewing the data are they going to view it in kind of the grander landscape of the current U S market or are they going to kind of also look into.
Comparisons with the first cohort one.
Chinese trial.
That's the first part.
And just to build off of that.
If they do look into the comparison with the initial first go through Chinese trials do you think that they will be factor in the fact that an MRC T with a harder to treat population in the U S and internet national landscape will potentially be a factor at play.
That's my question. Thank you.
Oh, Yeah, I think that's a.
Really clear messaging.
I think you all have a brief response and then American can chime in.
The fresco versus trustco too. Obviously these are very different studies right different patient population and different prior therapies.
So, but the bulk of it.
Both have embarrassed and they can.
For each other.
I think Thats my initial.
Initial read on this.
I think of the <unk> and all other Chinese studies will form the basis to support.
The fresco too.
Both in terms of efficacy in different patient populations in different settings or some subset.
With or without prior VEGF.
Jeff or Egfr treatment.
China Chinese versus Caucasians.
So I think that they will complement each other basically.
So that.
Maybe American now that you can you can you can have further comments on this.
Yes.
Jonathan Good question, but obviously, one one statement I would make obviously cross study comparisons out there right now.
Scientific although everyone is doing.
No.
But the study is designed to address uniquely and independently question designed and built in the downturn.
Our 90% powered to detect primer endpoint so.
Yes.
If positive this Sunday.
<unk> stand alone.
Uh huh.
Right.
All without price call back in.
Policy, we always look into <unk> the data so far we haven't seen any so called big discrepancy.
Prior lines of therapy.
As I mentioned before we conducted a number of.
Heavily pretreated in our U S.
I actually want to cohort mimicking exactly alike, while I know it may make them alive and get that contract two populations are more heavily pre treated.
And we see consistency in the clinical benefit.
I mean.
Again to speculate here, but.
But FDA.
We are asking them to come up the site.
That's correct yes.
We have those discussions been expanded.
Design Okay.
<unk>.
Pivotal study.
The ones do their job.
Hum.
One of the municipalities of the data too.
Okay.
The multifamily market.
And that's the reason why mark.
Clinical investigators and running 'cause leaders in the field.
Very strongly and supportive.
Okay.
That wireless.
Also our crudes almost.
14, 15 months Julian call that limitation.
I was up here.
Okay. Thank you. Thank you for the color.
Okay. Thanks, Sean.
Oh.
One last question, so ladies and gentlemen.
Dear speakers I'd give you back the floor to recent questions.
Hi.
Yes.
Question, So I will read them out.
On the online system, we have several questions.
The first is.
Regarding.
The holding company's capital right.
Several companies have appointed USD.
Does the company have an update on this too.
Regarding.
Regarding dividend.
Has the China regulatory authority.
Regarding single arm design.
Management also had a dose selection strategy.
Michael.
Yes at the moment at the moment.
We've had multiple.
Regulatory interactions with China, CPE and the other two registered single arm studies ongoing and without.
Modifications.
So with regard to the dose.
The China study.
It's.
30 milligram QD flat dose.
Without any dose modifications basically I mean.
Similar as you know I guess parse occlusive and Zen Illusive disease.
These compounds modify their dosing regimen throughout the study.
And are there still it can be taken basically.
30 milligram QD flat continuous.
Yeah.
Okay. Thanks, Michael.
Maybe.
Question that Johnny.
In the past or the question is what is the funding mechanism for the factory.
But we budget that's not true.
Thank you Mark so for the factual in terms of the bigger question also so the question is how we fund the factory in terms of the total cost of the factory and so forth.
We mentioned earlier the total project for the new packaging and Shai is about $130 million.
We have so far been spent.
About 30 odd million. So this year, we target to spend $60 million, but we have a a fixed asset.
Infrastructure alone with their local bank in China.
With respect for 10 years.
For the arrangement or payback and withdraw.
Withdraw the drawdown of this alone so Dan Hyatt factory will be drawn out of this.
Infrastructure loan provided by the local bank and.
The amount total amount of $130 million. So the project we target to complete by next year end of next year. So within this year next year, we will be drawing down slowly drawing down the requirement for this capex.
Okay. Thanks, Doug Gulling, perhaps I could ask you to answer the question on HFC.
Okay. So sorry, the question before was that related to some of the other companies have changed their audit at U S based auditor.
Two our circumstances, which is different to other companies and some of these companies are for us.
40 of our operation assets rapidly would generate it.
All based in China, so even by changing the auditor to a U S. Based auditor, we will not meet that requirement.
Those are U S based auditor they are not.
Quantified two will have license to you.
Orders in China, and therefore, they would not be able to provide the supporting documents.
P J O P.
We continue to monitor.
Yes progress up their development between the two countries.
But in the meantime, I think everybody knows our listing in Hong Kong and UK.
Sure, it's a fungible with the U S. Yes.
Thank you Mike.
Okay. Thank you Johnny.
Okay. There is another question does the takeover of <unk> by some change.
Change anything for development the person at the start.
Okay.
We don't think so.
No we don't think so.
Okay.
Okay. Thanks, I think I think.
I think we're running out of time now so maybe limit your lines yet.
Tom.
We'll go to you.
Do you have any closing remarks.
No just just wanted to say.
We continue.
Two folks.
On the execution.
We look forward to a good second half.
Hopefully starting from.
I think in most important.
Fresco too.
We'll be in touch.
Okay. Thanks, Michael.
Thank you everybody for joining the call.
Okay. Thank you. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you all for participating you may now disconnect.
Okay.
[music].