Full Year 2022 HUTCHMED (China) Ltd Earnings Call

[music].

Okay.

Good day, and thank you for standing by and welcome to Hutch, not 2022 full year results conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be question and answer.

<unk>.

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Please be advised that today's conference is being recorded.

I'd now like to hand, the conference over to Mr. Mark Lee SVP, corporate finance and development of Hutch, Matt. Please go ahead Sir.

Thank you Andrew.

Welcome everyone. Good morning, Good afternoon. Good evening welcome to the Hudson Bay 2022 full year results.

Business update.

Presentation.

I just at this time, all I mentioned that the performance and the results of our operations.

That will be talking about today are historical in nature.

Past performance is not guaranteed.

This presentation does contain forward looking statements in relation to the safe Harbor provisions.

And anything that is had been discussed should be read in conjunction with the results that we published.

On rns.

The SEC filings and in our announced Hong Kong stock exchange.

Today, we have.

Broad management team to present and answer questions, including legal Sue <unk>, Our Chief Executive Officer, and Chief Scientific Officer, Johnny Chang, Chief Financial Officer, Kevin Kim Our Chief operating Officer.

Chen Chief commercial officer.

Mike <unk>, our Chief Medical Officer, and head of R&D.

<unk>.

Our executive Vice President of pharmaceutical Sciences and manufacturing.

Charles Nixon our general counsel.

So with that I'll hand over to Weibo.

Okay. Thank you very much mark.

Good morning, Good afternoon. Good evening, everyone. Welcome again to Hutch map 2022 full year results conference call.

A few hours ago, we announced our 2022 full year results.

Mark can you share the next slide please thank you.

And during 2022 Hutch, Matt made significant strategic changes.

To allow us to better deal with adverse external conditions and to focus.

On getting to profitability sooner.

On the pipeline.

We made significant progress, including the positive phase III Global registration study for ESCO tariff of <unk> Internet and are based on the strong data.

NDA submissions are planned for 2023.

Starting from the U S followed by EU and Japan.

In parallel our second wave of products.

Including several of planet <unk>, Elisa and test metastatic.

In registration trials in China also.

Made a significant progress China NDA submission as a plan for 2023 and 2024.

Finally.

On the China commercial despite all the challenges associated with Covid.

An unfavorable exchange rate, our China commercial team delivered strong numbers for our three approved products.

Now I'll pass it to.

Mr Chan, Hong Chief commercial officer of China commercial to lead it off to give you an update on the China.

Commercial operation next slide Mark.

Our channel.

Thank you wake well.

Hello, everyone.

I think that we will pay down debt.

Final comments the last two months.

So in all of our products.

We've looked at.

The most difficult year in the last three years.

Ill turn the call laid an excellent for the mall.

And you're right, it's unbelievable, even though our three marketed products.

So what's happening and Dr. James.

Significant sales growth.

So firstly I would like to update you with the Hudson either commercially.

And the capabilities.

On this slide we can see more.

Longwall 900 dedicated and experienced.

How much of that.

Are there any more that I think we saw that oncologists and we followed them to a hospital.

Limit the hospital pharmacies increased to 100% for more than 800.

Cool.

Okay.

We are there to mitigate COVID-19 candidates many more in the high highly effective academic events will help online we're covering more SBA team.

Next slide.

Well and unit.

It continued with some growth.

Yes, Randy was up to 93 5 million U S dollar.

In terms of in market itself.

2% growth.

Around the third hip you would call them, the new patient, what's hated with I need it.

Kathy.

We need to continue implicate leading position in.

In certain lines CIC market.

Paul Hudson patients here according to the latest accretive that taking study.

Next slide please.

<unk> was the first of the year, both Landa later into <unk>.

The 52%.

Tactful.

<unk> achieved 178% value growth.

Around the 17000 on the new patient.

We'll take him and what the commanded by important deadlines.

This call and Chicago et cetera.

The pesos rapid to be.

Net net market.

We last year, which is the path.

And.

So despite the later launch.

Next slide please.

Opposite.

The first <unk>.

<unk> met inhibitor in China.

Check it out on the 168% growth first of all commercial.

Meanwhile, sales value was up.

$41 million.

It's Nick mandated by five.

Houghton guidelines such as the.

Kolkata et cetera.

The more important.

This list that you can.

On the IDL Lithia and will it be officially group Budd.

Bus.

The late model.

With modest.

Excellent.

It can be if packets.

If I could take that many more patients will be benefited from Caitlin.

So overall in spite of the Colgate challenges, we continued to make good progress for all three months of a pullback.

Along with everything getting back to normal we are confident the stronger momentum right.

Great.

So that's all for the China commercial part thank you.

<unk>.

Thank you.

Yes, so on this slide number nine.

On the right hand bottom corner as you all can see overall with our oncology business. We have recognized a $164 million of revenue up 37% from prior year in line with our guidance for 2022.

As for 2023, our guidance revenue guidance for the oncology business subject to the closing of the Takeda deal is $415 million to $550 million.

This includes partial recognition of the $400 million upfront income from Takeda.

And we continue to target a high double digit growth from our product sales.

Moving onto the next page.

Page 10.

As you all can see we have over $630 million cash and short term investments.

And $114 million of Unutilized banking facilities.

In addition, as mentioned that we expect to receive 400 million of upfront income from Takeda at closing. So overall, we have very strong cash resources.

Moving onto the next page.

Page 11.

A quick summary of our operating performance.

Consolidated revenue up 20% to 400 $426 million.

All of which as I mentioned earlier, our oncology revenue up 37% to $164 million.

Our investment in R&D increased by 29% to $387 million, mainly focus on ultra 15 registration enabling trials.

Also our joint venture increased net income contribution by 11% to $50 million. So overall, the net loss the company increased to $361 million.

Pointed out is that we had a onetime gain.

Some parallel year on divestment of one of our equity Investees I will now pass on to Kevin.

Thank you Tony Good Slide 12 please.

Our partnership strategy is focused on three may not.

Okay.

First of all longstanding public statements.

Got it.

In all territories worldwide. So sequencing it we've already launched in China in partnership with Eli Lilly and we recently decided to revise our commercial partnership strategy to come to launch with a single global commercial partner outside of China.

Just quickly on that strategy to announce a licensing agreement in January with Takeda for the global development manufacturing and commercialization of frequent Smith in all territories apart from China, Hong Kong, Macau, where we will lead the commercialization.

The decision to include the U S alongside other territories and scope of partnerships has meant we attracted a great deal of interest and we were delighted to have selected this as strong partner Takeda.

Going forward, we will also seek partners with some of our earlier stage assets as you can see here for all territories outside of China.

So the kind of partnerships, but also actively seeking additional late stage products.

100 class oncology commercial team.

Let me go to slide 13 please.

The policy that we have with Astrazeneca for <unk> listen that was announced back in 2011 at a very early stage of development that is going from strength to strength with seven registration studies ongoing astrazeneca is leading the clinical development outside of China.

The nearest to NDA submission opportunity is it late 2024 in the U S subject to positive Readouts sort of Savannah study in non small cell lung cancer and the alignment with the FDA on the potential for accelerated.

<unk>.

Our newest global partnership you can see.

The top line and yellow was announced on the 20 <unk> of January sequentially with Takeda and is progressing very well.

Does takeda for their strong oncology commercial capabilities in the U S. In particular, but also in Japan and Europe .

So that's how they would leverage the recent U S product launch experiences together with our knowledge of the CLC space. They have in Japan to maximize the potential of sequentially for patients with refractory colorectal cancer, but also develop beyond CRC.

Takeda are hungry for a major oncology.

Product such as frequency Nathan they impressed us with their launch plans.

This is a really high profile landmark deal for us and subject to regulatory clearances, we will receive an upfront payment of 400 million U S dollars together with the potential to receive up to an additional $730 million in development and sales related milestones.

We have already started the rolling U S. FDA submission and we expect to complete it in a few months' time.

The FDA typically provides target review completion dates on acceptance of an NDA filing.

Subject to U S approval, we therefore have the potential to start to book royalties from this partnership from 2024 onward.

I'll now pass on to Mike for the R&D update.

Thank you Karen.

Slide 14 please.

Yes. This slideshow Hoffman is deep and broad pipeline advancing to the clinic and these compounds cover a broad spectrum of hematology oncology indications.

The first three product Cara mentioned right, we already in the market and tour, but within global partnership and.

Our next wave of compounds, it's really entered.

Clinic toward a registration trial and two compounds.

Our <unk> and subtle planet.

Half of that.

CBE breakthrough designation stage and we are entering the finishing the clinical enrollment.

The extra inhibitor that.

That is all FERC license product and we're working with the partner.

You'll have the we have the global China rights and currently the breakdown study will co brand with a global.

China part of the study in the second half.

Bob.

The third way of compounded thoughts on being very rapidly.

The MTF our exhibitor.

<unk> six <unk> hundred two inhibitor, our first generation CDK inhibitor, <unk> thousand 60, <unk> and debt.

One our <unk> inhibitor like <unk> or potentially entering pivotal trial stage this year.

Next slide.

And colorectal cancer is the third most common cancer worldwide with over 900000 deaths and a 35 year survival rate is very poor.

And most of the reason our demands at CRC, our focus on more patient population with actionable mutations such as <unk>.

Rob.

MSI high for her to.

But the majority of the metastatic colorectal cancer patients to treat analysis up there.

Essentially they actually remained the same almost the same about a decade ago they'd rather robin that our long term that's approved for third line therapy.

Is that still very high unmet need.

In the late stage metastatic cancer patients next slide.

So our.

First global MRP practical II trials, what presented at ESMO last year and demonstrate the <unk>.

They can look around clinical and meaningful increase of the primary endpoint over the LIBOR key secondary endpoint PFS compared with placebo in late line CRC patients.

The magnitude of improvement on all clinical endpoints.

As PFS in PCR are clearly standing out for credit at comparable.

Okay.

And also because.

We're kind of at the very.

That JAK inhibitor 123.

Less off target toxicity, and its well tolerated safety profile consistent with previous therapy.

Slide 17.

The first coast trial, what started after consultation with the U S Europe and Japan.

<unk> health authority and composite across the globe.

And the results are highly consistent with the China pivotal trial for Agco and also Youre breaking study.

And we also believe this is a truly products Chengdu.

FDA previously granted a fast track destination for airline Pops CRC Park that has already started rolling submission.

We are planning to complete the submission.

In the first half of the year and also follow up with you on Japan completion this year.

Next slide.

In November 2022, we announced the topline results of another phase III trial in second line gastric cancer.

In China, the downstream cancer as the fifth most common diagnosis cancer worldwide with over a million new cases globally.

In China alone account about 40%, 44% of global cases, although very high prevalent in the Asian countries.

With you guys. The double blind second line trial placebo controlled trial in combination with Paclitaxel and the crowd that is one of the dual primary endpoint with a significant improvement and clinical meaningful PFS improvement.

And also would have other.

Secondary endpoint or ECR habits, fiscally improvement and also build durable response and the safety profile for <unk>.

In our particular trial, it's also very consistent with the previous reported Buddy.

Based on that perhaps you might is preparing to file a supplementary NDA with NMDA. The first half of this year.

Next one.

And this slide so the summit registration trial of our <unk> inhibitor <unk>, nor currently enrolling.

Three led by Astrazeneca globally on format by Heartburn.

And with the.

Robust the Savannah trial reported that that obviously healthy last year.

We the Astra Zeneca native to new cohort silvana to really aiming for Nevada with the potential accelerated approval.

Consolidated and also been granted fast track designation by FDA for the combination treatment resulted in a course of a refractory non small cell lung cancer patient.

And also reinforced.

First.

The stock one trial the second line third line are grateful cloud.

So I'll leave it there in the.

Refractory tiebreaker refractory non small cell lung cancer with met operation.

And also we've reached a milestone payment from Astrazeneca last year.

And the other registration trial Samira.

<unk> renal cell carcinoma is the and also the other cloud fraction carnival in lung cancer are all continue.

Hi, Matt.

And also we are entering the registration phase for the gastric cancer map application for travel.

Next one.

We are very excited about the second wave of compounds.

In the late stage Kabbalah.

<unk> is a highly differentiated or sick inhibitor with the breakthrough destination for ICP in China.

<unk> is a required autoimmune disorder.

Arthritis by low platelet Congress. Other quick question can be incur production estimate up to the 500000 person general population.

So we are very.

Courage trial phase two results demonstrate the robust or artwork, 80% and the Bureau for response rate, 40% of the relapsed refractory primary.

ACP Brexit this was really on par with the current existing widely used.

<unk> second line treatments like 248, and also the same response rate as shown in the patients who are refractory.

<unk> so.

So it's.

It's very robust.

Product.

We are very excited.

The enrollment for the phase III registration trial is Glenn one.

In December last year, and we prepare for the potential readout NDA file.

China data this year.

Slide 21.

The other compounds and develop that.

Is a differentiated <unk> Delta inhibitor is currently ongoing and two single arm phase III registration study in China.

Third plus line Follicular lymphoma, and secondly, our marginal zone lymphoma.

The data we published reports show the compounded not only promising with advocacy, but also have a favorable safety profile compared with the same class of compounds.

As highlighted in the lower incidents of interests such as diary on the brands that can create as well as lower discontinuation rate.

So of course this needs to be further characterized in the larger patient population and we are excited to report that we have completed enrollment for the pivotal trial in third line Follicular lymphoma yesterday, we reported yesterday and the clinical readout and potential NDA filing will be later this year.

<unk>.

And Thats net of that is our annualized <unk> two inhibitor from episodic.

And currently in the bridging study, we're anticipating to file next year and also Amazon.

<unk> reported.

The ash at the very robust patent matters that in combination with odd square in the second line.

Follicular lymphoma.

We are part of the global Symphony, one trial to really attractive in the second line setting.

So we are also exploring <unk> in combination with our <unk> Delta inhibitor and developed in the relapsed refractory lymphoma patient.

Next slide.

Our clinical the ballpark continue to grow and the in addition to the positive readout corporate credit in there.

Crowd, Linda the RPM gastric cancer. This slide show the 15 ongoing plus.

Ongoing registration crop in the six leading compounds.

Putting the lifecycle indications of market product and also a late stage asset.

With the anticipated NDA filing timelines in the next few years.

Right.

Slide 24.

So I'm highlighting the deliver 2023 for R&D.

On the regular activity where are they complete.

<unk> completed the registration filing for <unk> in all major global markets U S. Japan Airlines.

Marty.

We will initiate the supplementary NDA filing in the first half for the liquidity in the second line gastric cancer in China.

Well also initiate the <unk> consultation for suicide and Theyre in the mid year based on the Japan bridging study in the chronic trial registration in China.

And also importantly, anticipated data readout and potential NDA filing in China portfolio double planet <unk> ICP.

<unk> in third line Follicular lymphoma pivotal trial, both slated for later part of this year.

And also on the demand side Hot met all partner continued to complete enrollment for article registration trial for <unk> in non sports that lung cancer.

And also we will complete multiple trial like the liquidity that clock Telemark.

<unk> individual cancer and RCC.

So on the <unk> side will go onto that pipeline with Endo.

And perhaps not as a bridging study and will also have a four hour.

Fiber laser that modal therapies in that envelope.

Patients and also.

Planet.

IHA advancing replacement cost.

So I'll recap the R&D progress hot.

<unk> has a deep and broad portfolio and multiple near term catalysts for this year.

Our R&D team will remain laser focused on execution our mainline.

All of the product.

With that I'll turn to about LIBOR suit, our CEO and the CFO .

Okay. Thanks, Mike.

Just to sum it up.

Hudson took necessary steps in 2000, and I wanted to focus on getting to profitability.

Becoming self sustaining.

We have a lot to execute and deliver on our pipeline. We believe these launches of new products.

Next slide Mark.

Yes.

Yes.

Mike just showed you we have.

Many registrational trials ongoing leading two NDA submissions, both in China and globally in the next few years.

And clearly we have a lot to execute and deliver on our pipeline.

We believe these launches of new products and new indications will position us to continue to grow our China commercial and we also expect to start receiving royalties from all ex China sales of our partnered products several internet and frequent to nib.

Although we believe these changes will.

We will not only help us get through tough market conditions, but also ensure that we emerge.

We emerge a stronger company.

And with that I would like to thank you all for your attention and the management team is available to take questions.

Thank you.

We will now begin the question and answer session.

To ask a question. Please press star one one on your telephone and Mike for your name to be announced.

To withdraw your question. Please press star one again.

Please stand by while we compile the Q&A roster once again to start one one full question.

Our first question comes from the line of Kelly shift from Jefferies. Please ask your question Kelly.

Yes.

Thank you for taking my questions and congrats on a great here.

Rd Hutch mass commercially infrastructure with our oncology franchise has achieved the optimal target in terms of the number of covered hospitals and health care provider.

And where would it be.

The early in 2023 to <unk>.

And also could you talk about when do you expect the company to become profitable. Thank you.

Okay.

Thanks, Kelly for the questions just very quickly on commercial structure I'll, probably give a quick answer on the ship channel home has anything else to add so basically we are around 900 ftes.

Supporting through quantitative and Sorafenib.

And we should be able to support even more indications for these two products.

With regard to further build out.

Think given that.

Our next wave of products.

<unk> planet does elusive in Tazemetostat.

Hematologic indications, so we actually plan to build up, especially with the team to support our next wave of compounds.

<unk>.

And <unk> indications.

With regard to specific timeline.

For profitability, we are targeting 2025, obviously.

We need to continue to grow our China commercial to increase revenues, but also.

I think the timing of.

Ex China products too.

To start to contribute.

The income I think of that meadows as well.

Including <unk> and through <unk>, we believe both will start to.

Contributor royalties to us late 24 and 25.

Again, our target is 2025.

Maybe chantal.

What Johnny.

If you have any anything else to add with regard to commercial structure infrastructure in China.

Are we covering all the hospitals now and anything else, where we need to to.

Beef up.

Thank you <unk>.

I think.

By law.

Commercial.

Plus the right.

Optimal call current.

Our that launch the product as well as indications.

We continue to improve.

For this team.

Two.

Okay.

Market.

Opportunities.

In May we will.

Increased with more opportunity coming or more products coming.

No.

Yes.

It's on your weight.

To do that.

A great team to achieve more.

Targets.

Yes, Thank you home.

Okay. Okay. Thank you.

Our next question comes from the line of Louise Chen from Cantor.

Please ask your question Lee.

Okay. Thank you and congratulations on all the progress quarter. So wanted to ask you a few questions first one just a follow up on the first question that Kelly had asked is are you expecting profitability for the full year 2025.

And then also wanted to ask you you have a lot going on this year very busy I wanted to ask you. What are your key most important readouts or approval that you are looking forward to this year and then last question is how are you thinking about operating expenses year over year. Thank you.

Okay. Thank you for these questions Louis I'll ask Johnny to.

To provide some more details on these questions.

Okay. So first regarding profitability.

2025 is consistent with what we have communicated to the market.

For the last couple of Es debt that remains our target to be to be able to breakeven in turnaround to become profitable in 2025 and as I said this is our target and we haven't changed our target.

For the last couple of Es and in terms of the old <unk> year on year.

I think for 2023.

You can expect the level for Opex operating expenses will be similar.

By and large overall will be similar to 2022.

The reason being we are continuing to grow our China commercial but at the same time, we have synergy and cost reduction in <unk> as.

As we are not building our U S commercial team.

Due to disciplined ship with the Takeda.

So so that just overall in terms of profitability and Opex.

Okay. Thanks, Johnny.

Thank you.

Yeah.

Yes.

Next question comes from the line of Alex Stranahan from Bank of America. Please ask your question Alex.

Hey, guys. Thanks for taking my questions just a few from us.

First one plus from a rolling submission.

Thank you.

Can you remind us whether you guys are handling the submission yourself wondering if takeda or a combination.

During the submission and second.

And basically making.

Yes.

OMA readout I think your second half of this year.

The pace of enrollment in the study started or is this a <unk> indication for you guys at this point and could you file and lifting of lymphoma next year.

Good morning would you wait to say, obviously, you're asking me.

As well and then just lastly.

On the business.

Okay, obviously, some tradeoffs as given that the economics.

While maximizing the revenue potential and same thing on.

Listen on the late stage pipeline, if you could just help us.

Any thought process, a little bit more that'd be helpful. Thanks.

Hey.

Thanks, Alex for the question, let me ask Mike too.

To take your questions first Mike.

Yes, so just I'm sorry your question for <unk> submission, we already started the rolling submission because we have the right.

Fast track that's in Asia. So.

As you know that Takeda deal has not yet been finalized. So we are a big hit on all cylinders right to do the submission.

The NDA submission that EU submission in Japan submission, where they've got started we also plan a lot of things for example, with the EU markets assets. All these program that's been ongoing and of course went.

Final.

Transaction.

Happen, we'll certainly discuss with our partner about how we can really accelerate.

Registration process for example.

<unk> has a very strong presence in Japan, we do think right.

Our expertise in all the markets, we kind of accelerated approval.

Registration process without slowing them down.

And.

You answered the question for it and develop it is.

We just finished the phase III political or inform our enrollment we are anticipating a readout again I'll remind you of this is the.

Third line Follicular lymphoma.

Previously have agreement.

About the trial design.

If the trial is.

How about.

The positive readout going to submit.

Later this year.

In the report.

Approval and.

I also mentioned right.

We are still.

We will have other combination cloud going on what the base of the submission will be all the data what we have right for that particular Follicular lymphoma and also all the patient data what we have to support the NDA package.

And the year.

For the.

At the bottom on prioritization, what we really focus on the late stage product, where we can all we can really.

In the near term driver of value for all of these are late stage product.

And what.

<unk> mentioned toward breakeven point by 2025, so we have multiple products in the development, we hope our registration and salary that the Bolivar will support about path to Florida, bringing the profitability.

Okay.

Mike maybe just a couple of color points, Alex we regard regarding amgen's Elisa filing strategy is certainly <unk> will be first.

Our marginal zone will be actually a second NDA will be.

Some time.

Unlikely next year or late next year.

So so so do you saw this will be filed separately.

Instead of together regarding prioritization.

Portfolio prioritization, we will plan a.

On R&D days sometime this year or two to.

Go over in detail.

The prioritization.

Yes.

Process and.

The priority is going forward with various trials in China in Enel side. Thank you.

Thanks.

Thank you.

Our next question comes from the line of.

Kuang from credit Suisse. Please ask your question Yang.

Thanks.

I have two questions first of all.

Management can you just guided to for this year oncology revenue will be 450 to 550 <unk>.

Some partial recognition of the.

Up from payment.

Give us some more color.

Youre going to.

Kind of recognize partially.

And whats going to be.

It kind of more color currently have in turmoil for product sales for this years guidance.

That's my first question.

Yeah.

Okay, maybe Jonathan.

Sure.

Provide some some.

Some details on our 450 million to 550 million guidance.

As well as our expectation for 2023 products sales Johnny Okay. Thank you sure so.

The full 400 million upfront income.

Accounting recognitions would have to.

Taking into consideration of the performance obligation under the terms of the licensing agreement.

So.

As the closing has yet to happen so.

Our auditor to determine when it actually happens and.

Degree of percentage of completion in terms of our obligation.

As a result, we have estimated.

A certain level of recognition in 2023.

Part of the performance obligation, we anticipate that will be completed in 2020 full and put some of which may be beyond so.

This is this is adobe received the full $400 million.

The accounting recognition with not allow us to actually recognize in full so in terms of the product sales.

As you have looked at our recognition of the product sales <unk> level is about 63% growth versus last year.

We continue to project a high double digit growth in 2023.

So basically.

In the range of.

Yes.

High double digit.

The estimation as such we are not giving specific guidance.

So you can estimate that the level of.

Of.

Projection growth.

You'll have to take into account basically you have to take into account.

And in Asia lender already entered into the LDL and process would be in the first year.

Nothing from March that they would be.

They would be able to the patients who will be able to gain access from the benefits from the NFL deal.

Okay.

Thanks, Johnny I think.

<unk>.

Given the opening of China.

The Covid impact.

The impact is it going to is it going to diminish this year and.

In January we had COVID-19 outbreak and also Chinese new year, as well, but we expect conditions to to become far better this year comparing to last year.

So we expect.

Similar levels of growth this year.

If not better.

Okay got it yeah that's helpful.

Second question is.

The company is going too far.

For <unk> in gastric cancer.

It looked like a larger indication okay comprehend comment.

Cause should we compare the commercial prospect.

For Clinton turnaround for gastric cancer.

<unk> current indication.

I see.

Sure.

Mike you can take this question.

Yes, so for the gastric cancer right and in the second line.

Current approved.

Our product is really Paclitaxel and also ramp up of the tax all right. So.

It was approved last year, the ramp plus paclitaxel and.

We look at I think the <unk> net but it's really.

I'll.

Started the trial when that possibly impactful was the.

Standard of care. So the trial was a positive and beat it.

If your primary endpoint is a large indication for second line gastric cancer. So.

As I mentioned.

44%.

Ah patient globally.

In China and also is representing is a huge opportunity in terms of patient volume.

And.

For the commercial side I think the company will plan accordingly, right for that.

For the NDA submission and to follow on.

Commercial part yeah.

So brief.

Briefly.

Second line GC patient patient population size.

Should almost double.

Third line CRC or later, allowing CRC and.

Less competitive treatments available also other than Paclitaxel, there's still stand of care.

And as Micromanaging, Paclitaxel plus ramp assuming that was approved last year, but but.

It is highly priced in.

And it's as far from standard of care in China. So.

We view a great opportunity.

Okay.

Just a quick follow up.

Have we got any feedback.

Calls and in meetings with the CBE in turmoil for gastric cancer refining.

No. The answer is no we are actually focusing on preparation of CSR.

Just to get ready for submission.

Okay got it thanks.

Great. Thank you.

Question comes from the line of Mike Mitchell from Panmure Gordon. Please ask your question Mike.

Thanks, Thanks, everyone and thanks for taking my questions.

Just wanted to know from your perspective, what the likely steps regarding the SEC in the U S accounting I would just like to see I know you've put the comments in today's statements.

But if you have any more on that that would be great.

Second question actually just a follow up to the previous <unk>.

And I just wanted to return to the Takeda deal just pointed partial recognition of the upfront.

Would there be material obligations still to be completed in 2020 relating to the upfront payment. So I'm just trying to understand exactly what those would be so any more color on that would be helpful. Thanks.

Okay, Thanks, Mike and Johnny.

Yes, okay.

Okay. Thank you.

No.

FCA.

From the <unk>, we have heard that from December last year that they have come to this side of the well and basically they have <unk> and they were able to gain access. This is what we have no and we do not foresee issuers in terms of the U S authorities are gaining access to.

The audit working paper of the auditors of the company that they have seen that.

As far as we have known we our.

Our resources and our auditors have have.

Have not.

Able to give us more color on this but we believe that this issue.

Based on the announcement by the <unk> loss last year actually.

We have no further negative news regarding this issue.

So in terms of the.

Revenue recognitions in terms of this performance obligation.

Basically by and large I think 2023 2020 full.

Is all related to directory submission.

Well as the sum of the approval.

Step that requires.

As to follow up so.

Some of which I think.

<unk> made it till 2023.

Also of course some some.

Items related to technical transfer for example.

They are the order consideration that the auditor will assess.

The coating.

<unk>.

The timing hasn't occurred yet so.

We are not in a position to actually come in.

Great detail about the recognition methods and to extent that we can recognize for this year.

I hope that's helpful.

Yes. Thank you thanks, Joe.

Okay.

Yes.

Next question comes from the line of Roderick Maher from Goldman Sachs. Please ask your question Roger.

Hi, This is Robert on for Paul and just two questions from us.

Since you already started our rolling submission for from Clinton anything to you.

In the U S and.

Have you heard of any FDA feedback designation and the second question is for the arc.

Ralph.

Great.

Just.

Is there any details around the price maybe will be provided at some.

Some point.

Okay. Thanks for the question for the U S NDA for <unk>.

I'll ask Mike to provide some feedback.

Yes, so we are it's ongoing.

Im going smoothly and we already have the.

The first module submitted and as what I said right.

It's all been through.

We'll continue to targeting too.

Finished dose.

The other modules.

The first half of this year, so so far it's been going on smoothly.

Okay.

Yes, typically you don't you don't hear anything until until you finish all complete the filing.

With regard to save and IDL.

We agreed with astrazeneca not to disclose that.

The price.

After negotiation.

However, it will become available to them.

Moreover, I assume much first.

You probably will be able to find out.

Then audio price very soon.

Got it thank you.

Sure.

Our next question comes from the line of Matthew Yang from CLSA. Please ask your question Matti.

Okay.

Alright, thanks for taking my questions.

Congratulate him doing yourselves.

I've got two questions.

Firstly is that regarding the supplementary filing for second line gastric cancer.

I Wonder what's your view regarding fatigue.

So that's the primary endpoint of PFS, but not overall survival producing SPD is very likely the agreed that PFS will be enough to support the filing this year.

And my second question is regarding the guidance.

Okay.

I Wonder can you elaborate more on how differentiated salaries in the China market.

Market, especially versus the more leading peers a program about to be approved from Hungary, yes.

My two questions. Thanks.

Okay.

Thanks for the questions and I'll ask Mike again too.

To provide his view.

<unk>.

Second line GC for frequent to them and also and as Elisa differentiation.

Alright so.

Second line gastric cancer.

No.

What the.

For the lot of that.

Trials, if you can see particularly in Asia right because that's the year.

The subsequent treatment.

It's very high comparable base that global so so far if you look at all the Asian.

Trials, including the subset of patients in the.

Rainbow trial right global crop.

That's all.

Even for ramped several of our popular tactical and Rainbow Asia Cloud as you can see is the PFS.

<unk> and <unk> not.

Taken difficult.

This is particularly related to the treatment paradigm in Asia. So we think this is a.

Yeah.

We have designed right we have a lot of factors.

Looking forward I think this is really.

Great blocking.

The practice in Asia and in China. So from what we have we do thing.

Is that.

PFS is the primary endpoint is one of the tiara implant we have built in the preclinical analysis really at Jos.

The opex.

For this.

I think what they buy and at what the trial design with the <unk>. So we do.

Tend to using these trial data to submit for second line <unk>.

And pretty much benchmark for the Greenville Asia. If you look at that data right and it's approved in China like what I mentioned.

Last year.

And go back to the village right. So the data will be reported as really.

If you look at the comparison with the competitor the safety profile is really.

Not only the efficacy is quite robust, but also the safety profile.

Some of the.

Aes <unk> lifestyle area.

They are very hands on increase we do see and develop that.

It looks very favorable.

In the treatment landscape again, right the single arm.

Registration call Phase II trial was discussed and agreed upon with the CBB Goodbye.

And the.

At the.

At the moment right. We also received the breakthrough designation.

<unk> therapy in China, right. So we do based on the safety profile and the robots clinical efficacy we are integral.

And of course, if you look at the scene.

Discussion recently, we are also preparing before.

Conditional approval and potentially confirmatory trial at <unk>.

This stage right based on the timeframe, what we how we do things because.

It's a good opportunity to file based on single arm, followed with the confirmatory trial.

And to confirm this.

Thanks, Mike.

Yes.

Yeah.

Okay. Thank you.

I am showing no further questions I will now turn the conference back to Mark for closing remarks.

Yes.

Okay. Thanks, Sam.

Michael any comments or.

Flows I think.

Well.

Ken.

Thank you everyone for attending the call.

Tony I wanted to we've made really significant strategic changes and now we believe we are well positioned to execute on our plan towards profitability.

We have lot to deliver in the pipeline.

Including our three approved products with additional lifecycle management indications as well as our second wave of products now reaching NDA stage.

Stage.

In parallel with our first wave of compounds.

Entering.

Into registration studies later this year, so we're really positioning too.

To grow.

Actually to accelerate our growth in China, and outside China, and this will actually to see us all the way through 25.

Beyond 2020.

<unk> 'twenty six 'twenty seven with all this.

Third wave of compounds lineup for Registrational studies, and the potential NDA submissions in China. So we're really confident that.

We will be able to to deliver on our pipeline and.

And also our China commercial team led by channel is really high performing very well.

Okay.

The conference will begin shortly.

<unk> you can dial star one one.

[noise].

[music].

[music].

[music].

Good day, and thank you for standing by and welcome to Hutch, not 2022 full year results conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be question and answer session.

You also had question during the session you will need to press star one one on your telephone.

You don't hear an automated message advising yohan its raced.

To withdraw your question.

Please press star one again.

Please be advised that today's conference is being recorded.

I'd now like to hand, the conference over to Mr. Mark Lee SVP, corporate finance and development of Hutch, Matt. Please go ahead Sir.

Thank you.

Welcome everyone. Good morning, Good afternoon. Good evening welcome to the Hudson Bay 2022 full year results.

Business update.

Presentation.

I just at this time I'll mention that the performance and the results of our operations.

That will be talking about today are historical in nature.

Past performance is not guaranteed.

This presentation does contain forward looking statements in relation to the safe Harbor provisions.

And anything that is set and discussed should be read in conjunction with attachments with results that we have published.

On rns and in our SEC filings and in our announced Hong Kong stock exchange.

Today, we have.

Our broad management team to present and answer questions, including legal to our Chief Executive Officer, and Chief Scientific Officer.

Johnny Chang Chief Financial Officer, Kevin Kim our Chief operating Officer.

Chen our chief commercial officer.

Mike <unk>, our Chief Medical Officer, and head of R&D jumping who's our executive Vice President of pharmaceutical Sciences and manufacturing.

Charles Nixon our general counsel.

So with that I'll hand over to label.

Yes.

Okay. Thank you very much mark.

Good morning, Good afternoon. Good evening, everyone. Welcome again to Hudson that 2022 full year results conference call.

A few hours ago, we announced our 2022 full year results.

Mark can you share the next slide please thank you.

And during 2022 Hutch, Matt made significant strategic changes.

To allow us to better deal with adverse external conditions and to focus.

On getting to profitability sooner.

On the pipeline.

We made significant progress, including the positive phase III Global registration study for ESCO two for <unk> and are based on the strong data.

NDA submissions are planned for 2023.

Starting from the U S followed by EU and Japan.

In parallel our second wave of products <unk>.

Including silver the planet <unk>, Elisa and test notice that.

In registration trials in China also.

Made a significant progress China NDA submission as a plan for 2023 and 2024.

Finally.

On the China commercial despite all the challenges associated with Covid and unfavorable exchange rate, our China commercial team delivered strong numbers for our three approved products.

Now I'll pass it to Mr.

Mr Chan, Hong Chief commercial officer of China commercial to lead it off to give you an update on the China.

Commercial operation next slide Mark.

Channel.

Thank you wake wall.

Hello, everyone.

I think that we will pay that debt compared to China, how much of that two months.

Oh, Paul lets me know wall products.

We've looked at potential bank, who was the most difficult year in velocity.

He opened the call they'd be impactful for the mall performing formula rate is unbelievable.

Our three market products will continue.

And then Dr. James.

Significant sales growth.

So firstly I would like to update you on the Hudson medical modeling.

And the capabilities.

On this slide we can see more.

More than 900 dedicate and how.

How much of that.

Are there any more than that you can install them oncologists also this and the sniff ballroom at the hospital.

Limit the hospital pharmacy increase a 100%, but more than 800.

We are that will mitigate COVID-19 talent as many more in the high highly effective academics events will help online we're covering more SVP.

Next slide.

Well Andrew Nate.

It continued to some calls.

Net sales lending was up two license III quantify million U S dollar.

In terms of in market itself.

2% growth.

Around the third hate to call them, the new patient, what's happening with any of it.

Kathy.

They need to continue to keep leading position.

In fertilizer market.

Okay.

<unk> According to the latest cleanup taking study.

Next slide please.

And they tended to whats the first of the year both lander.

Dr <unk> a 52%.

So.

<unk> achieved 178% revenue growth.

Around the 17000 on the new patient.

We'll take him and what they commanded by important headlines such as Cisco and the Cotai central.

The patients that need to be the second net market.

Last year, which is the path to attain and opinion.

Turning to the slides in the late in the lungs.

Next slide please.

Opposite.

First in.

<unk> net and <unk> in China.

Tim I was on the 168% growth plus the full commercial year.

Sales volume was up.

One 1 million U S dollar.

Got it.

It's Nick mandate by five important guidelines, such as the coal coke and pitch them.

And the more important.

This means that you can.

And that deal I know will be officially goodbye.

But that extra make model.

With modest price at Epsilon.

It can be a packet.

I can take that many more patients will be benefited from Caitlin.

So overall in light of the Colgate challenges, we continue to make good progress for all three months before that.

Along with everything getting back to normal we are confident the stronger momentum in Coca Cola right.

So that's all for the China commercial part.

Yes.

Thank you.

So on this slide number nine.

On the right hand bottom corner as you all can see overall with our oncology business, we have recognized $164 million of revenue up 37% from prior year in line with our guidance for 2022.

As for 2023, our guidance revenue guidance for the oncology business subject to the closing of the Takeda deal is $415 million to $550 million.

This includes partial recognition of the 400 million upfront income from Takeda.

And we continue to target a high double digit growth from our product sales.

Moving onto the next page.

Page 10.

As you all can see we have over $630 million cash and short term investments.

And $114 million of Unutilized banking facilities.

In addition, as mentioned we expect to receive 400 million of upfront income from Takeda at closing. So overall, we have very strong cash resources.

Moving onto the next page.

Page 11.

A quick summary of our operating performance.

Consolidated revenue up 20% to 400 $426 million.

All of which as I mentioned earlier, our oncology revenue up 37% to $164 million.

Our investment in R&D increased by 29% to $387 million, mainly focus on ultra 15 registration enabling trials.

Also our joint venture increased net income contribution by 11% to $50 million. So overall, the net loss the company increased to $361 million.

Pointed out is that we had a onetime gain.

From title year on divestments of one of our equity Investees I will now pass on to Kevin.

Thank you Tony Good Slide 12 please.

Our partnership strategy is focused on three may not.

Okay.

Well longstanding public statements.

Got it.

In all territories worldwide. So sequencing it we've already launched in China in partnership with Eli Lilly and we recently decided to revise our commercial partnership strategy.

To launch with a single global commercial partner outside of China.

Just quickly on that strategy to announce a licensing agreement in January with Takeda for global development manufacturing and commercialization of frequent Smith in all territories apart from China, Hong Kong, Macau, where we will lead the commercialization.

Taking to include the U S alongside other territories and scope of partnerships has meant we attracted a great deal of interest and we were delighted to selected strong partner Takeda.

Going forward, we will also seek partners for some of our earlier stage assets as you can see here for all territories outside of China.

For the kind of partnerships. We're also actively seeking additional late stage products to <unk>.

100, plus oncology commercial team.

Let me go to slide 13 please.

The policy that we have with Astrazeneca for <unk> was announced back in 2011 at a very early stage of development that is going from strength to strength with seven registration studies ongoing astrazeneca is leading the clinical development outside of China.

The nearest term NDA submission opportunity is in late 2024 in the U S subject to positive Readouts from the Savannah study in non small cell lung cancer and alignment with the FDA on the potential for accelerated.

<unk>.

Our newest global partnership you can see.

The top line and yellow was announced on the 20 <unk> of January consequence, nib with Takeda and is progressing very well.

Takeda for their strong oncology commercial capabilities in the U S. In particular, but also in Japan and Europe .

So that's how they would leverage the recent U S launch experiences together with our knowledge of the CLC space. They have in Japan to maximize the potential of frequency medical patients with refractory colorectal cancer, but also develop beyond CRC.

Takeda are hungry for a major oncology.

Product such as frequency may have under impressed us with their launch plans.

This is a really high profile landmark deal for us and subject to regulatory clearances, we will receive an upfront payment of $400 million U S dollars together with the potential to receive up to an additional $730 million in development and sales related milestones.

We have already started the rolling U S. FDA submission and we expect to complete it in a few months' time.

The FDA typically provides target with your completion dates on acceptance of an NDA filing.

Subject to U S approval, we therefore have the potential to start to book royalties from this partnership in 2024 onwards.

I'll now pass on to Mike for the R&D update.

Thank you Karen.

The 14th week.

This slide shows the hotbed deep and broad pipeline advancing to the clinic and these compounds cover a broad spectrum of hematology oncology indications.

First three product Karen mentioned right, we already in the market and tour, but within global partnership and.

Our next wave of compounds, it's really entered the clinic.

Clinic for the registration trial.

And two compounds.

Sure and as Elisa and solve our planet a Boe.

<unk> have that.

CD.

So with that Nathan stage, and we are entering that finishing the clinical enrollment.

The X two inhibitor.

That is all personalized product and we're working with a partner absolutely you'll have the we have the global China rights and currently the bridging study. We're also partnering with a global.

China part of this study are in the cycle.

Bob.

The third way of compounded thought lending very rapidly.

The FTF art exhibitor.

The <unk> two inhibitor, our third generation <unk> inhibitor, <unk> thousand 60, <unk> and CF.

CSF Oner.

Inhibitor, six likely or potentially entering pivotal trial this year.

Next slide.

And colorectal cancer is the third most common cancer worldwide with over 900000 deaths and a 35 year survival rate is very poor.

And most of the reason that advance at CRC I'll focus on more patient population with actionable mutations such as BRAF Mek.

MSI high for her to.

But the majority of the metastatic colorectal cancer patients to treat analysis up very limited.

Essentially they absolutely can make the same almost the same about a decade ago, we had rubber robin that our long term as the approved third line therapy. So there is still a very high unmet need.

In the late stage metastatic cancer patients next slide.

So our.

First global MRP practical II trials, what presented at ESMO last year.

Demonstrating that <unk> has the statistically significant clinical and meaningful increase of the primary endpoint overall survival and key secondary endpoint PFS compared with placebo lay lines the RP patients.

So the magnitude of improvement on all clinical endpoints.

As PFS at ECR, clearly standing out quite a bit.

Comparable.

<unk> therapy.

And also because.

Okay.

That JAK inhibitor of one to three it has less off target toxicity and its well tolerated safety profile consistent with previous therapy.

Slide 17.

The first trial was started after the presentation.

U S Europe , and Japan Health authority and composite across the globe.

And the results are highly consistent with the China pivotal trial for ESCO and also to Youre breaking study.

And we also believe business like truly products Chengdu.

FDA previously granted a fast track destination for their laptops CRC parking that has already started rolling submission.

We are planning to complete the submission.

U S. MBIA first half the year and also follow up with the New York Upon completion this year.

Next slide.

In November 2022, we announced the topline results of another competitor.

Phase III trial in second line gastric cancer.

In China, the downstream cancer as the fifth most common diagnosis can't go worldwide with over a million new cases globally.

China alone Commvault, 40%, 44% global cases, although very high prevalent in the Asian countries.

With you guys for the double Blind second line trial placebo controlled trial in combination with Paclitaxel and the problem that is one of the dual primary endpoint with a significant improvement and clinical meaningful PFS improvement.

And also would have other secondary endpoint or ECR habits, basically improvement and also we are doing.

Our response and the safety profile for <unk>.

<unk> is also very consistent with the previous reported Buddy.

Based on that document is preparing to file a supplementary NDA with NMDA. The first half of this year.

Next one.

And this slide show the summit registration trial of our met inhibitor <unk>, nor coronary enrolling.

Three led by Astrazeneca globally on format by Heartburn.

And with the.

Robust Cabana trial reported that obviously <unk> last year.

We the Astra zeneca.

There's a new cohort for monarch, two really aiming for Nevada with the potential accelerated approval and solid has also been granted fast track designation by FDA for the combination treatment resulted in a course of a refractory non small cell lung cancer patient.

And also reinforced.

<unk>.

The backlog trial, the second and third lines have resold Wow.

Saba led in there Doug refractory tiebreaker refractory non small cell lung cancer with mass operation.

And also we have reached the milestone payment from Astrazeneca last year.

And the other registration trial has some data in renal cell carcinoma.

And also the other cloud Sachi Carnival in lung cancer are all continuing led by Hudson that.

And also we are entering the registrational phase for the gastric cancer mapped application for example.

Next one.

We are very excited about the second wave of compounds.

In the late stage Kabbalah Sowell planet is a highly differentiated or sick inhibitor with the breakthrough destination for ITT in China.

IDB is a required autoimmune disorder.

Arthritis by low platelet count resulted for quick question can be incurred production. There are pilots estimate up to the 500000 person general population.

We are very.

Courage trial phase two results demonstrate the robust 80% and the Bureau for response rate, 40% of the relapsed refractory primary.

This was really on par with the current existing widely used ICP second line treatments like <unk> and also the same response rate as shown in the patients who are refractory what peers treated the CPR.

So it's.

It's very robust.

So we're very excited.

The enrollment for the phase III registration trial is Glen there or what.

In December last year.

Prepare for the potential readout NDA file.

China data this year.

Slide 21.

The other compounds and develop that.

Is there a differentiated <unk> Delta inhibitor is currently ongoing two single arm phase III registration study in China.

<unk> Follicular lymphoma, and second line marginal zone lymphoma.

The data we published reports show the compounded not only promising with Africa paper.

Thank you very safety profile compared with the same class of compounds.

As highlighted in the lower incentives.

Interest such as diarrhea, they're brands that can create as well as lower discontinuation rate.

So of course this needs to be further characterize the larger patient population and we are excited to report that we have completed enrollment for the pivotal trial in third line Follicular lymphoma yesterday, we reported yesterday and the clinical Readouts and potential NDA filing will be later this year.

Next one.

And Thats net of that is in line with the extra two inhibitor from episodic.

Currently breaking study, we're anticipating to file next year and also Amazon.

<unk> reported.

At the Ash, it's very robust.

That in combination with all square in the second line.

Follicular lymphoma, and we are part of global Central one trial.

Testing in the second line setting.

So we are also exploring <unk> in combination with our <unk> Delta inhibitor and developed in the relapsed refractory lymphoma patients.

Next slide.

Our clinical they both continue to grow and the invitation to the positive readout for credit in there.

Crowd.

RPM gastric cancer. This slide show the 15 ongoing plus.

Ongoing registration trial in the second leading compound.

Including the lifecycle these occasional market product handles a late stage asset and with the anticipated NDA filing timelines.

Next a few years.

Right.

Slide 24.

So I'm highlighting that deliver for 2023 or R&D.

The regular dry activity where are they complete we'll complete the registration filing for <unk> in <unk>.

Global market like.

Japan Airlines TRP.

We will initiate the supplementary NDA filings in the FERC have for the liquidity in the second line gastric cancer in China.

Well also initiate the <unk>.

<unk> consultation for suicide and Theyre in the mid year based on the Japan bridging study and the <unk> cloud.

Registration in China.

And also importantly, anticipated data readout and potential NDA filing in China ports fault double planet <unk>.

<unk> ICP and develop that third line Follicular lymphoma pivotal crop both slated for later part of this year.

And also on the development of fly Hot met all partner continued to complete enrollment for article registration trial for <unk> in non sports that lung cancer and.

And also we'll complete multiple trials like the <unk> plus <unk>.

<unk> individual cancer and RCC.

So on the <unk> side, we also advance our pipeline with Andrew.

And perhaps not as a bridging study and we'll still have heard read out.

Fiber laser that modal therapies in that envelope Skype patients and also.

Planet.

IHA advancing the phase III trial.

So I'll recap the R&D progress hot.

<unk> has a deep and broad portfolio and multiple near term catalysts for this year.

Our R&D team will remain laser focused on execution our mainline.

All of the product.

With that I'll turn to <unk>, our CEO and the CFO .

Okay. Thanks, Mike.

Just to sum it up.

Hudson took a massive steps in 2000 and I wanted to focus on getting to profitability.

Becoming self sustaining.

Now we have a lot to execute and deliver on our pipeline. We believe these launches of new products.

Mark.

Yes.

Yes.

Mike just showed you we have more.

Many registrational trials ongoing leading two NDA submissions, both in China and globally in the next few years.

And clearly we have a lot to execute and deliver on our pipeline.

We believe these launches of new products, new indications will position us to continue to grow our China commercial and we also expect to start receiving royalties from all ex China sales of our partnered products.

<unk> and <unk>.

We believe these changes will.

We will not only help us get through tough market conditions, but also ensure that we emerge.

We emerge a stronger company.

And with that I would like to thank you all for your attention and the management team is available to take questions.

Thank you.

We will now begin the question and answer session.

To ask a question. Please press star one on your telephone and white for your name to be announced.

To withdraw your question. Please press star one again.

Please standby, while we compile the Q&A roster once again to start one one full question.

Our first question comes from the line of Kelly shift from Jefferies. Please ask your question Kelly.

Yes.

Thank you for taking my question and congrats on real quick here.

Arty Hutch mass commercial infrastructure for our oncology franchise have you achieved the optimal target in terms of the number of covered.

Health care providers.

And where would it be.

The early in 2023 to <unk>.

And also could you talk about when do you expect the company to become profitable. Thank you.

Okay.

Thanks, Kelly for the questions just very quickly on commercial structure I'll, probably give a quick answer on as you have channel home has anything else to to add so basically we are around 900 ftes.

Supporting <unk> and Sufentanil.

And we should be able to support even more indications for these two products.

With regard to further build build out.

Think given that.

Our next wave of products.

<unk>.

<unk> and Tazemetostat all in.

Hematologic indications, so we actually plan to build up, especially with the team to support our next wave of compounds.

In.

And <unk> indications.

With regard to specific timeline.

For profitability, we are targeting 2025, obviously.

No.

To continue to grow our China commercial to increase revenues, but also I.

I think of the timing of.

Ex China products two to start to contribute.

The income think about meadows, as well, including <unk> and through <unk>, We believe both will start to.

Contributor royalties to us late 'twenty, four and <unk> 25, so.

Again, our target is.

2025.

Maybe channel or what Johnny.

If you have any.

Anything else to add with regard to your commercial infrastructure.

<unk> in China.

Are we covering all the hospitals now and anything else, where we need to to.

Beef up.

Thank you Alicia.

I think.

The law.

Commercial.

Yes.

Okay optimal curran.

Or that launched the product as well as indications.

We continue to improve that because.

Z <unk>.

Understood.

Okay.

Market.

Opportunities.

And that May we will.

Increased with more opportunity coming or more products coming.

<unk>.

Okay.

It's on your weight.

To do that.

Great.

To achieve more.

Target.

Thank you yes. Thank.

Thank you home.

Okay, great. Thank you.

Next question comes from the line of Louise Chen from Cantor.

Please ask your question Larry.

Okay. Thank you and congratulations on all the progress quarter. So wanted to ask you a few questions first one just a follow up on the first question that Kelly had to ask you are you expecting profitability for the full year 2025, and then also wanted to ask you you have a lot going on this year very busy I wanted to ask you what are your key.

Most important readouts are approvals that you are looking forward to this year and then last question is how are you thinking about operating expenses year over year. Thank you.

Okay. Thank you for these questions Louise I'll ask Johnny to.

To provide some more details on these questions.

Okay. So fair.

Regarding profitability.

The 2025 and is consistent with what we have communicated to the market with.

But the last couple of years that that remains our target to be to be able to breakeven and turn around to become profitable in 2025 and as I said this is our target.

And we haven't changed our target.

For the last couple of Es.

And in terms of the Opex year on year.

I think for 2023.

You can expect the level of Opex operating expenses will be similar.

By and large overall will be similar to 2022.

The reason being we are continuing to grow our China commercial but at the same time, we have synergy and cost reduction in U S.

As we are not building our U S commercial team do.

Due to discipline the ship with the Takeda.

So so that just overall in terms of profitability and Opex.

Okay. Thanks, Johnny.

Okay.

Yeah.

Yes.

Question comes from the line of Alec Stranahan from Bank of America. Please ask your question Alex.

Hey, guys. Thanks for taking our questions.

Sorry, just one last from a rolling submission.

And just remind us whether you guys are handling missing your software is takeda or a combination.

During submission.

Second an ambition.

Yes.

Informal readout I think your second half of this year.

To date the pace of enrollment in the study started or is it a prioritized indication for you guys at this point and could you file an <unk>.

Lymphoma next year.

Yes, I agree with you.

Eight per se.

As well and then just lastly.

On the business.

Obviously, some tradeoffs as given that the economics of partners.

While maximizing the revenue potential and same thing on.

The number of late stage pipeline can you just help us walk through the thought process a little bit more.

Thanks.

Okay. Thanks.

Thanks, Alex for the question, let me ask Mike too.

To take your questions first Mike.

Yes, so just I'm sorry your question for <unk> submission, we already started the rolling submission because we have the right.

<unk> in Asia So.

As you know that Takeda deal has not yet been finalized. So we are a big hit on all cylinders right to do the submission.

The NDA submission that EU submission in Japan submission, where they've got started we also plan a lot of things for example, the EUR gas assets. All these program that's been ongoing and of course went.

Final.

Transaction.

Happens, we'll certainly discuss with our partner about how we can really accelerate.

Registration process for example.

<unk> has a very strong presence in Japan, we do think right.

Their expertise in all the markets, we're going to calibrate that.

Our registration process without slowing them down.

And.

You answered the question of what <unk> is.

We just finished phase II pilot Columbian product roadmap, we're anticipating a readout again I'll remind you of this is the.

Third line Follicular lymphoma.

We previously have agreement with the CD about the trial design.

If the trial is.

Hello.

Positive readout.

Ed.

Later this year for the CVA.

Approval and.

Also mentioned right.

We are still we also have other combination trials going on but what the base of the submission.

B or the data what we have right now.

Particular, follicular lymphoma, and also all the patient data, what we have to support the NDA package.

And the year.

For the.

At the bottom of prioritization, what we really focus on the late stage product, where we can how we can really.

In the near term drive the value for all of these late stage products.

And what what doctors who've mentioned towards the breakeven point by 2025. So we have multiple products in the development, we hope our registration and salary that the Bolivar will support that path with Florida, bringing the profitability.

Okay. Thanks, Mike maybe just add a couple of color points, Alex we regard regarding M. Does Elisa filing strategy is certainly <unk> will be first.

Marginal zone will be actually a second.

It will be.

Sometime.

Unlikely next year or late next year.

So so so you saw this.

This will be filed separately.

I think instead of together rigor.

Regarding privatization.

Portfolio prioritization, we will plan a.

On R&D days sometime this year to two.

Go over in detail.

The prioritization.

Yes.

Process and.

The priority is going forward with various trials in China in Enel side. Thank you.

Okay.

Thank you.

Our next question comes from the line of.

Young Kwon from credit Suisse. Please ask your question Yang.

Thanks.

I have two questions first of all.

Management is just guided to for this year oncology revenue will be 400.

50 to 550.

With some partial recognition of the.

From payment.

Give us some more color.

Are you going to.

Kind of recognize partially.

And whats going to be.

It kind of more color can we have in turmoil from product sales for this year's China.

That's my first question.

Yeah.

Okay, maybe Johnny can.

Provide some some.

Some details on the 450 to 550 million guidance.

As well as our expectation for 2023 product sales Johnny Okay. Thank you.

No.

The full 400 million upfront income.

Accounting recognition what they have to.

Taking into consideration of the performance obligation under the terms of the licensing agreement.

So.

As the closing has yet to happen so.

Our auditor to determine when it actually happens and.

Degree of percentage of completion in terms of our obligation.

As a result, we have estimated.

A certain level of recognition in 2023.

Part of the performance obligation, we anticipate that will be completed in 2020 full and put some of which may be beyond so.

This is this is adobe, we keep the full $400 million.

The accounting recognition with not allow us to.

To actually recognize in full so in terms of the product sales.

As you have looked at.

Our recognition of the product sales.

<unk> level is about 63% growth versus last year.

We continue to project a.

High double digit growth in 2023.

So basically.

In the range of.

High double digit.

Estimation as such we are not giving specific guidance to this so you can estimate that the level of.

Of the.

Projection growth.

You'll have to take into account basically you have to take into account.

And in Asia lender already entered into the LDL and the process will be in the first year.

Nothing from March that they would be.

They would be able to the patients who will be able to gain access from the benefits from the NFL deal.

Okay.

Thanks, Johnny I think.

<unk>.

Given the opening of China.

The Covid impact.

Impact is it going to is it going to do.

Diminish this year and.

As soon as you know in January we had COVID-19 outbreak.

So Chinese new year, as well, but we expect conditions to to become far better this year compared to last year. So we expect.

Similar levels of growth this year.

If not better.

Okay got it yeah that's helpful.

Second question is.

The company is going too far.

For <unk> in gastric cancer.

It looked like a larger indication okay competent comment.

Cause should we compare the commercial.

Prospect.

For.

In parallel for gastric cancer.

Apparel was kind of an indication.

I see.

Sure.

Mike do you can take this question.

Yes, so for the gastric cancer right and in the second line.

Current approved.

Our product is really Paclitaxel and also ramp up of the tax all right. So.

It was approved last year, the ramp plus paclitaxel and.

We've looked at I think the <unk> net but it's really.

As you know.

Started the trial when the pathway to tackle was the.

Standup care. So the trial was a positive and beat it.

If your primary endpoint is a large indication for second line gastric cancer. So.

As I mentioned.

4%.

Ah patient globally.

In China and also is representing is a huge opportunity in terms of patient volume.

And.

But the commercial side I think the company will plan accordingly, right for that.

The NDA submission and the follow on <unk>.

Commercial part yeah.

So.

Briefly.

Lying GC patient patient population size.

Should almost double.

Third line CRC or later, allowing CRC.

And.

No.

Less competitive treatments available also other than Paclitaxel is still standard of care.

And as Mike managing Paclitaxel, plus Ram suing that was approved last year, but but.

It is highly priced in and it's as far from standard of care in China. So.

We view it a great opportunity.

Okay.

Just a quick follow up.

We've got to do backhaul.

<unk> was the CD until model for gastric cancer filing.

No. The answer is no we are actually focusing on preparation of CSR.

Just to get ready for submission.

Okay got it thanks.

Great. Thank you.

Our next question comes from the line of Mike Mitchell from Panmure Gordon. Please ask your question Mike.

Thanks, Thanks, everyone. Thanks for taking my questions.

Just wanted to know from your perspective, what the likely steps regarding the SEC in the U S accounting I always like to see I know you've put a coincidence that your statements.

But if you have any more on that that'd be great and just a second question actually just a follow up to the previous.

Q&A.

We tend to the Takeda deal just pointed partial recognition of the upfront.

Would there be material obligations still to be completed in 2020 call relating to the upfront payment. So I'm just trying to understand exactly what those would be so any more color on that would be helpful.

Okay, Thanks, Mike and Johnny.

Yes, okay.

Okay. Thank you.

So.

FCA.

From the <unk>, we heard that from December last year that they have come to this side of the well and basically they have <unk> and they were able to gain access. This is what we have no and we do not foresee issuers in terms of the U S authorities are gaining access to.

The audit working paper of the auditors of the company that they have selected.

This is as far as we have known we our our resources and our auditors have have.

Have not.

<unk> to give us more color on this but we believe that this issue.

Based on the announcements by the <unk> loss last year actually.

We have no further negative news regarding this issue.

So in terms of the.

Revenue recognitions in terms of this performance obligation.

Basically by and large I think 2023 2024.

That is all related to the regulatory submission.

As well as some of the approval.

Step that requires us to follow up so.

Some of which I think.

<unk> may have made it through 2023 and also of course, some some items related to technical transfer for example.

They are the all the consideration that the auditor will assess as I said.

At the closing.

Timing hasnt occurred yet so.

We are not in a position to actually come in.

In great detail about the recognition methods and to extend that we can recognize for this year.

Okay.

Thank you Charlie.

Okay.

Yes.

Our next question comes from the line of Roderick Maher from Goldman Sachs. Please ask your question Roger.

Hi, This is roderic for Paul and just two questions from us.

Since you already started our rolling submission for from Clinton anything that you are in.

In the U S and.

Have you heard of any FDA feedback.

And the second question is for the <unk>.

Promotion of several late Tonight.

Yes.

Is there any like details on the price maybe will be provided at.

At some point.

Okay. Thanks for the question for the U S NDA for <unk>.

I'll ask Mike to provide some feedback.

Yes, so we are.

Im going smoothly and we already have the.

First module submitted and as what I said right.

It's all been through.

We'll continue to targeting too.

Finished dose.

The other modules.

The first half of this year so.

So far it's been going on smoothly.

Okay.

Yes, typically you don't you don't hear anything until until you finish all completed the filing.

With regard to save in our Dl.

We agreed with Astrazeneca not to disclose.

The price up.

After negotiation.

However, it will become available tomorrow I assume.

First.

Probably we'll be able to find out.

An audio price very soon.

Got it thank you.

Sure.

Our next question comes from the line of Matthew <unk> from CLSA. Please ask your question Matthew.

Okay.

Alright, thanks for taking my questions.

And congratulate him do it yourself.

Two questions.

Firstly is that regarding the supplementary filing for second line gastric cancer.

I Wonder what's your view regarding strategic crash.

So that's the primary endpoint of PFS, but not overall survival producing SPD is probably likely to agree that PFS will be.

Enough to support the filing this year.

And my second question is regarding the.

UK entities.

I Wonder can you elaborate more on how differentiated salary in the China, IC market, especially versus more leading peers approve and about to be approved.

Yes.

Those are my two questions. Thanks.

Okay.

Thanks for the questions and I'll ask him Mike again too.

To provide his view.

On the second.

Second line GC for frequent to NIM and also M does Elisa differentiation.

Yeah, so for the <unk>.

Second line gastric cancer.

<unk>.

What the.

For the lot of that.

Trials, if you can see particularly in Asia right because it's the year.

The subsequent treatment.

Very high compare with the global so so far if you look at all the Asian.

Trials, including the subset of patients in there.

Rainbow crowd right global crop.

Or.

Even for a ramp down of our popular tactical and Rainbow Asia Cloud as you can see is the PFS.

Significant and <unk> not.

Significant.

This is particularly related to the treatment paradigm in Asia. So we think this is.

<unk>.

What we have that design right, we have a lot of factors.

Looking forward I think this is really.

Great Blackening.

The practice in Asia and in China. So from what we have we do think this is.

Is that.

PFS is the primary answer is one of the tiara implant, we have built and statistical analysis to really at Jos.

The opex.

For this.

I think what they buy and it was the trial design that we would hope so.

So we do.

10 to using these trial data to submit for second line GC.

And pretty much benchmarked with what they're doing both Asia. If you look at that data right.

And it's approved in China like what I mentioned.

Last year.

And go back to the village right. So the data will be reported as really.

If you look at the comparisons that the competitor the safety profile is really.

Not only the efficacy is quite robust, but also the safety profile.

Some of the.

ADR increased lifestyle.

They are very hands on increase we do see and develop it.

So the very favorable.

And.

In the treatment landscape again, right the single arm.

Registration phase II trial, what discussed and agreed upon with the CPU design and the.

At the tree.

At the moment right. We also received the breakthrough designation.

<unk> therapy in China, right. So we do based on the safety profile and the robust clinical efficacy we are integral.

Of course, if you look at the scene.

Discussion recently, we are also.

Repairing required.

Conditional approval and potentially confirmatory trial. So at this stage right based on the timeframe, what we how we do things.

Yeah.

It's a good opportunity to file based on that single arm.

Followed with the confirmatory trial.

To confirm this study yes.

Thanks, Mike.

Okay. Thank you.

I am showing no further questions I will now turn the conference back to Mark for closing remarks.

Yeah.

Okay, Thanks, and the wiggle any comments or.

Flows I think.

Well.

Again.

Thank you everyone for attending the call.

Tony I wanted to we've made really significant strategic changes and now we believe we are well positioned to execute on our plan towards profitability.

We have lot to deliver in the pipeline.

Including our three approved products with additional lifecycle management indications as well as our second wave.

Of products now reaching NDA.

Page.

All in parallel with our first wave of compounds.

Entering.

Into registration studies later this year, so we're really positioned to grow.

To grow.

Actually to accelerate our growth in China and outside China.

And this will actually to see us all the way through 25.

Beyond.

26, 27% with all of these.

Third wave of compounds lineup for Registrational studies, and the potential NDA submissions in China. So we're really confident that.

We will be able to deliver on our pipeline and.

And also our China commercial team led by channel is really high performing very.

We worked through 2022 with all all the difficulties in.

They are.

Again also positioning.

So very very quickly very rapidly with new launches of new indications and also new products in the next few years.

So.

All in all we are.

Got through two very difficult year, but now we believe we are on our way to profitability and.

We are.

Much stronger company today. Thank you all for your attention and if you have any further questions reach out to us to Mark's team Ultra myself. Thank you.

Okay.

Yes.

Alright. Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.