Ascentage Pharma Group International (6855) Earnings Call Transcript & Summary

Okay. Nice to see everyone here in the room today. I'm John Whittaker with the Citi Investment Banking team. Excited to have a discussion with Ascentage here this afternoon. And Veet, obviously, you're new to the sea. Congratulations. And I think it would be helpful, certainly introduce yourself. And I think it would be helpful to provide a bit of a background on Ascentage. The company overall. And obviously, you just had your first half update a couple of weeks ago and highlighted some key progress and milestones to be attentive to on the horizon. So maybe take a couple of minutes to talk about the company and some of your key updates from August.

Yes, sure. Thank you, John. Thank you for having me. Happy to do that. Yes, so I joined Ascentage as a CFO a couple of months ago, beginning of July. Been a couple of months, but it feels like it's been a couple of years' worth of activity. So very -- maybe I can start by talking about the innovative pipeline that we have. As it relates to the company now, we have 2 differentiated novel oncology products now being sold in China. So our first asset, olverembatinib is a third-generation BCL BCR-able TKI. So this is a very important area where the company got -- initially, it got what's known as conditional approval in China about -- in 2021. So this is very much like accelerated approval in the U.S. And eventually, the company got full approval and importantly, for both patients with or without mutations. And in fact, the label was quite favorable in that it's applied for patients who are resistant to first or second-generation TKIs and/or intolerant. So this and/or -- the intolerant part is important because these patients, as a result of these TKIs that are first generation, second generation, they have issues like diarrhea, et cetera, and they go on to another TKI. And so in our case, this is kind of considered near second line that would be -- one could even say considered as a 1.5 line. So very pleased with olverembatinib's progress. It eventually then got on to the NRDL which is, as you know, the mechanism in China for reimbursement, which is very important because initially, patients have to pay like RMB 10,000, RMB 15,000 a month, which is difficult for these families. So to get on NRDL opens up about 70% the population for market access. So that's very important for olverembatinib. And you can see that what's also very interesting about this asset and provide a lot of tailwinds for the company last year, which was one of the reasons why the company generate a momentum for the dual listing in the NASDAQ. Initially, this company was -- became public on the Hong Kong Exchange in 2019. During the wave of China essentially supporting innovation in general and in 2018, as you know, I won't take you through all the details. I'm sure you know it very well, but kind of exploited the exchange, allowing innovative companies to go public. So 2019 was when we did that. So in the span of essentially 5 years came a dualistic company, stock has generated good momentum, I believe, where the -- fortunately, the top-performing NASDAQ IPO in the last several years, and that's 30-plus companies going public. So, And that's olverembatinib and the deep pipeline in the clinic in China being developed during that time. So the last 6 months actually have been particularly exciting. We got the second drug approved lisaftoclax, which is select selective Bcl-2 inhibitor. So this is very important because prior to Bcl -- prior to lisaftoclax, venetoclax has been the mainstay, the only approved Bcl-2 inhibitor, and that was 9 years ago by AbbVie, right? So this was a very exciting time for the company. Pretty broad indication set in terms of what lisaftoclax can target as it relates to NHL subtypes. So the approval was in CLL/SLL. And also, we were fortunate on the label in that case as well, where it's directed towards patients who have taken at least 1 systemic therapy, including BTK inhibitors. So not refractory. It's not an RR population as well, right? So I'll bring back the same kind of consideration. It's like 1.5 or even 1.1. So very pleased with having that profile of approval. And of course, with the lisaftoclax, this is one that we plan on exploiting on our own. We made some heavy investments as it relates to commercialization and because we need to have this first mover advantage tailwinds and take -- exploit that. So we actually doubled our sales force in 3 months leading into that. And then we have a number, as I mentioned, active programs going on in the pipeline. I think one thing that's exciting is our triple kinase inhibitor, the FAK, ALK/ROS inhibitor. That actually opens up a foray into solid tumors along with 2 others, our MDM2-p53 inhibitor and the BCL-2, BCL-XL inhibitor going after NSCLC, ACC neuroendocrine tumors, ovarian and others. And then we also have an EED inhibitor as well. So we're going after an epigenetic targets, which targets both 2 key areas of anemia. We have patient data in sickle cell. But we're -- I think for the near term, we're exploiting the oncology lymphoma side. And that's not to mention what's beyond that, which is our protein degrader capability. So we're very excited about that. I'm going to be talking more about that in the months ahead. So please stay tuned.

Well, congrats on the -- all the progress and the breadth of the progress as well. I think we all appreciate just how deep the pipeline is and how productive the R&D engine has been at Ascentage. Obviously, getting the approval this summer, for Lisaftoclax was a big milestone for the company. And to your point on the label being broader, not limited to relapsed/refractory patients. And that opportunity to be used earlier in terms of line of therapy. How should we be thinking about kind of the go-forward milestones for the product? Obviously, we will now be looking at sales at each of your updates, semi-annual, if not more frequently. So I think the commercial launch and the uptake will be important. As you said, you've made a significant investment to really turbocharge the launch. But there's also some active studies that continue to create opportunities to expand the label. Is that right?

Yes. No, that's exactly right. So a very good question. Yes. So I think we have lots of, I would say, commercial and mature catalysts ahead. So I'll kind of walk you through it. So yes. So as it relates to sales, so let's take olverembatinib. Now it's on the NRDL for all approved indications, right? So there's a price set for that, that's a stable price -- so now I think we can give some good -- the market can get some good visibility on the growth of olverembatinib. We're very happy with the first half report where we disclosed that we had 93% period-over-period jump in sales. And that's driven by a 47% increase in hospital penetration because, as you know, in China, you got to get to the hospitals first, which is exactly what we're doing with lisaftoclax. So lisaftoclax, we are going to be similarly applying for the NRDL as well going into next year. So hopefully, we'll get the same -- give the same guidance there on timing. So that's the commercial area. Also, as you know, we got this very strong validation from Takeda as it relates to the option on olverembatinib. So that's ongoing. We have a very close relationship with Takeda, very collaborative as it relates to all the trials we're running globally. We're including in the U.S. And so those are kind of some key commercial late-stage assets or catalysts. And then, of course, as it relates to lisaftoclax, right, the -- a major call it lot, call it, also some foresight about preparing for a major market opportunity, which is MDS, right? So we got the Verona news from AbbVie, where the hazard ratio and overall survival was 0.904, and with GLORA. I think 3 things. It's important. They're GLORA-4 here in the U.S. So one is that we essentially now have clarity about how to execute GLORA-4 because of the news, growing news, it's a key thing because it was clearly -- it was a bit of an overhang on us, actually. We're kind of waiting for that to come out. And it was kind of rumored at ASCO that Verona would turn out the way it did and then the confirmation came in EHA. And I think that also is what contributed to our series of events that led to some good stock momentum. And we appreciate working with you on the -- taking advantage of that on the follow-on that we did in July. So kudos to the Citi team there, one of our partners. The second thing is, this is, I think, quite remarkable and perhaps even, dare use this word, which is the protocol. Protocol is identical as it relates to China, Europe, U.S. So this is also something we're very excited about here. So it's a pretty, I think, clear trial design going against Aza. We all know kind of the response rates with Aza, right? The OR kind of be kind of around the 25% range. And our data to date show that we well exceeded that. So that's another important point. And then, of course, MDS, right? So this is a disease category where there hasn't been a targeted therapy approved in 20 years. So we're -- now that we have very exciting registration trial going on in MDS and also validated kind of the differentiation we have as it relates to venetoclax, not -- that's besides the differentiation as it relates to dosing. But the toxicity profile much more favorable on the lisaftoclax end. Remember, it got approved as a single agent. So that's key here. And venetoclax also didn't make it similarly in multiple myeloma as well, not once but twice. So that's another opportunity. And to your question about catalysts, stay tuned there because I think we'll have more to say on the multiple myeloma side. Now of course, venetoclax is a good drug, right? It's a drug that's been very effective and potent. And another -- there -- I think they're going to continue to be a very important drug in AML, right? They're essentially a standard of care in AML. But we have very strong data that shows potency and a good safety profile in patients that are refractory to venetoclax in AML. So I think we're going to get some good opportunity there, and it's just going to continue to show the validation. And then, of course, there's CLL, right, where we have 2 other studies. We have GLORA and GLORA-2. And I think this is very important to spend like a minute on because I think we get the question a lot about how do we differentiate ourselves against our competitors, and it's no secret, like B1 is a name that comes up a lot. And how do you -- what is your strategy there given what all the good work that B1 is doing,. Well with GLORA, GLORA-2 and now with the single agent lisaftoclax proven ability to get approved. We're giving essentially patients potential choice here in terms of managing their CLL, right? We have lisaftoclax alone, and then we have patients that are -- already have a history with the BTK and want to work in lisaftoclax, and that's GLORA and also patients who want to have -- are having fresh start therapy with a BTK inhibitor. In this case, we're pairing with Acala by AstraZeneca. So this is -- I think this gives us -- these are all multibillion-dollar markets and gives us good -- we're pretty much hitting every important blood cancer, except for DL/BCL. So I think that's something that will provide lots of catalysts going forward.

Well, I will look forward to the update on MM and I think bringing that more into focus. Your commentary on MDS being a very underserved market and a large market opportunity. Is there a defined time line for any updates on that MDS specifically?

Yes. No. Like at this point, we just launched a trial that you bring up a very important point. I think this is going to be an important catalyst for the company in the next few years, the progress there. So I think it's only right that the market is focused on how is the progress going with enrollment. What's the cadence there. So we'll be giving an update on that when appropriate.

Yes. Okay, great. Well, we all look forward to that. And you actually preempted my last question around lisaftoclax around the competitive dynamic. And Sonrotoclax from B1, obviously, coming out as a second generation. Those competitive dynamics, but I'm sure we'll be very much in focus. And your comments around where we might see the different lisaftoclax versus Sonrotoclax get used in these patients. It's obviously a large market. There's room for multiple therapies. Is that something that will -- you'll be speaking about in terms of can we expect to see areas where lisaftoclax will hopefully be the drug of choice perhaps not all of them, but talking about those specific opportunities in patient groups where we can win, so to speak?

Yes. No, we ensure, without a doubt. I think you'll see the narrative play more towards what we've been trying to set the stage for with the development programs that we have right now. That's probably the best way to put it. We wanted to -- the company has -- this company essentially the work here with lisaftoclax goes back to -- if you go back to Bcl-2,this is a target that was first identified, I believe, in 1984, right? And it wasn't until the 2 co-founders, Dr. Wang and Dr. [indiscernible] Wang and our CEO and Chairman, Dajun Yang. Going back to 1996, 1997, is where they first contemplated going after Bcl-2. So I think this company -- the other thing I think is not too well known about this company is that the company has really focused a lot on the U.S. when people think that first INDs that were filed with the FDA as opposed to the CDE. That was certainly the case with lisaftoclax. So the company has always had its eye on the ball of being global. We're conducting trials in outside of China, in Australia, Europe, India. So now it's more about, I think, as approvals happen, registration studies, readout, the differentiation is shown, physicians and families are more informed about the type of regimens and patient populations where these drugs a single agent or in combination can be exploited. So we're very excited about that because it's very much community disease categories as well as specialty categories as well.

Right. Well, and your question, bringing me nicely to just a question or 2 around olverembatinib around that globalization. And obviously, it's super encouraging to see the uptake and the utilization in China. And obviously, the opportunity to continue to see that grow. But maybe spend a minute just about the relationship with Takeda and what should we be looking for in terms of any updates on the global development?

Yes, absolutely. So a few things there. One is really appreciate the validation that Takeda provided. I mean this is a company that has the third generation -- the other third-generation TKI ponatinib, which they have been very successful in getting to the market to patients. And of course, Novartis has cinemib, but that's a different mechanism of action, that's an allosteric inhibitor. So with Takeda, we didn't disclose obviously the full agreement, but what we disclosed is that when we entered into the -- when Takeda entered into the option agreement with us, that was associated with 100 million upfront, 75 million equity investment. So we appreciated that support, provided good momentum into the NASDAQ dual listing. And Takeda, between the potential option exercise and milestones, that essentially totals $1.2 billion, what we disclosed and royalty ranging from 12% to 19%. So the relationship, to answer your question, we're operating almost as if we never even entered into the agreement in terms of the resources that we're applying. We're assuming that in full faith and exploiting the potential of olverembatinib, making all the necessary investments. I think in one of the trials that speaks to that in terms of hard evidence is the GIST trial, the GIST trial where this company did a really good job identifying the STH mutant patients and showing particular efficacy, and we're investing in China to run that trial as well. So yes, very close communication with Takeda, Polaris 2, increasing number of sites, enrolling well, Polaris 1, good discussion with the regulators here with the FDA as it relates to giving more details on that one as well in PH-positive ALL, which is obviously another, I think, catalyst that investors are going to be looking for there. We expect to deliver good news there in terms of rolling that out.

Okay. Good to hear. I mean it sounds like there should be some good data flow coming from the asset. I won't ask you for the specifics on milestones, but presumably, after they are received, you'll be communicating about that.

Yes, yes. It's very important now that we have potentially 3 U.S. registration studies that are going to be essentially -- 2 of them already ongoing. It's going to be very important to give updates as it relates to the progress but we fully intend to do that. It is important to get this financing done. I think it's given us now cash through 2027. So it's given us another year. And we're now very much, not to sound too cliche, but all these things we have ongoing, it's all about execution, right? The trials, commercialization rolling out the protein degrader candidates. So that's all in plan fully funded.

Is it fair to say as we look at the way you're developing just in China and expanding those indications there that we will look to see a similar framework followed for the global development as well?

Exactly like China and also other countries as well like India and Australia. This company has been very good at derisking in multiple ways. We know now, obviously, in the commercial side, which is no small feat. So -- and as you know, we're going up for solid tumors as well with 3 of our disclosed pipeline assets. So we get a lot of information as it relates to patient populations, which actually is applicable in other countries, including the U.S. And as long as we develop the later-stage trials according to what the regulators want in terms of balance, in terms of population and country representation. These are the lessons that we've learned along the way that will apply going forward.

Right. It makes a lot of sense. And obviously, the significant efficiencies to include Chinese sites and patients in any global registrational trial. And it does seem like the way you've generated the clinical data to date, getting some of the approvals and perhaps in some of the later line, heavily pretreated patients continuing to see opportunity to expand the addressable population as we think about pulling this forward. And then that's true on the lisaftoclax side, too. But...

And also the combo of olverembatinib and lisaftoclax. So as you all well know, this is particularly exciting because we've got 2 drugs that got approved on a single agent basis. And it's important to understand that for younger patients with ALL, PH-positive ALL, we have generated data. Yes, the end is small, but the response rate very high as it relates to complete responses. The combination of the 2 in a particularly young pediatric population, that's meaningful. And it's really what that particular segment wants. So I think that's an important area to point out as well. In addition to also in that same population showing strong efficacy in venetoclax refractory patients.

I know something that we talk about -- you talk about is the ability to spare some of these patients from chemotherapy and just the burdens that come along with that. To date, I believe most of the combination data is in the relapsed/refractory patient group, right? Is it appropriate to think that there could be an opportunity to bring that into a frontline PH-positive ALL setting at some point?

Yes. So it's interesting, like, these patients, I think we have enough data where the combination of lisaftoclax plus low intensity chemotherapy very much suited for a pediatric population. So we can go straight to that. And then as it relates to -- it's kind of a barbell, right? Where there's also the elderly unfit AML population as well. So as it relates to the combo of Lisa and Bleno. And by the way, these patients also take ponatinib as well. So they go through the ringer no question about it. But fortunately, so far, we have to prove this out in the long run. We may have an effective approach for the elderly unfit as well as it relates to Bleno. And then as I mentioned, the combo with Lisa and olverembatinib as well. So thankfully, we have some interesting menu of alternatives here on the ALL side. We get questions about that a lot because it's very important because given the conversion of ALL to MDS, right? So yes, so we have a number of active pipeline programs here. So these types of decisions need to be made as it relates to combination approaches.

Well, it's clear with the 2 now approved products, there's a real depth of expertise on the hematology side. Maybe shifting a little bit to the solid tumor side. You mentioned the GIST study. But I think at the outset, you talked a bit about 2449. And maybe we would just spend a minute, I'm not sure we have time to talk about the entire pipeline. But if there are a couple of assets that we should make sure people are focused on where we have the opportunity to do something that is first-in-class, best-in-class. I started with 2449, but feel free to start with another, if you prefer.

Well, absolutely, happy to start there. So 2449, very interesting because more and more, I think, there's increased awareness as it relates to -- so 2449 is our triple kinase inhibitor for the listeners. As it relates to -- so it's a FAK ROS/ALK inhibitor, we're carrying out a study in China as it relates to NSCLC in ALK-resistant patients. So in ALK therapy directed patients. So I think the awareness now is, obviously, the ROS pathway is heavily exploited. Lots of companies to variations on pan-RAS, G12C, G12B, et cetera, no matter what the particular RAS candidate is, I think there's increased view that it should be combined with the FAK inhibitor. So this is going to be, I think, exciting for us to prove that out because both the RAS and FAK pathways, eventually, they converge into the program cell death downstream pathways. But FAK, particularly upregulates the YAP proto-oncogene, which has a blocking effect program cell death. So in order for RAS to really realize its potential, I need to have a strong RAF partner. And so far, we've shown the data we've amassed a very strong activity even with our FAK inhibitor, even with companies that have FAK inhibitors currently improved. Not to name names, but that's kind of steering the excitement on our end.

Understood. And just to confirm, the registrational studies that are ongoing are currently in China, how do we think about potential globalization of the product over time?

Yes. No, I think we can get there. It's just a matter of, I think, finding the right partner as it relates to candidates. But yes, no, it's our full intention to -- we're happy with the progress. That's why we have a disclosed pipeline here. I think that we'll be talking more about in time.

Okay. Great. Well, clearly, opportunity -- first-in-class opportunity there, right? And it sounds like we're getting increasingly focused on who the most likely patients to respond to ours. So hopefully, we're going to see that play through with higher probabilities of success going forward. Being mindful of time, I had jotted down a question or 2 around 115. But if -- maybe it would be helpful to provide a little bit of background on that asset. If there are other pipeline assets that you want to make sure to highlight by all means, take us to those as well.

Yes. So I mentioned a few things about 115. It's an intriguing approach, right, because -- as it relates to MDM2-p53, it's now kind of been proven out through prior attempts that 1 of the issues is when you knock out MDM you get a feedback loop as it relates to p53 upregulating MDM. So degrader approach actually could actually solve that. But as far as our current 115 program, we've shown that it's shown strong oral availability. It's been highly selective. And we've gotten 6 orphan drug designations from the FDA just on that compound alone and 2 RP DDs as well, pediatric disease designations. So we're evaluating this actually in multiple tumors, melanomas, T-PLL, or NHL and also liposarcoma, neuroblastoma and also ECC adenoid cystic carcinoma, we're -- that's also a meaningful side of the population -- part of the population set -- targeted set here. Very good disease control rates that we've demonstrated so far kind of in the 80 to 100 range. And particularly with ECC and also shown in combination with PD-1 as well. So still more kind of refinement to do with that asset, but we like the profile of it so far.

Great. It clearly sounds like an exciting opportunity. Another demonstration of the efficiency and the innovative nature of what the R&D team is. Yes, we're very excited to play.

All these targets, right, like MDM, BCL, BCL-XL. I mean, these are I think now over the last -- go back to the 80s to now, these are proven to be very difficult to draw targets. And just a real testament to the co-founders going back to Georgetown, University of Michigan, intellectual property, leading to this. It's a real pleasure to see this saving lives and getting drugs approved.

Yes. I was going to ask one more question, but if there's anything else in the pipeline that you think we should certainly be attentive to and be on the lookout for updates over the next several months or quarters, go ahead and flag them. My last question for you is I know you mentioned about cash runway after the recent financing into '27. Maybe just clarify what your current message is on that as it relates to -- does that include milestones from Takeda? Does it not include milestones? And how we should be thinking about your capital formation strategy going forward?

Yes, absolutely. So I'll get the most important point out on the table right now, which is that it does not assume option exercise by Takeda. So we're independent of that. We got cash through 2027, which is where we want to be, right, to invest in our potentially, like I said, soon to be 3 registrational studies in the U.S., the global trials we got ongoing. We got close to 40 trials ongoing globally. So I'm happy to say that our current cash runway takes into account all of those activities without the any sort of other overhang or anything like that. So yes, we are really appreciative of the following of investors that we've had over the years. hopefully, they feel like we've delivered. And we did the raise not too long ago and the stock is up meaningfully since that point. We think it's through execution and smart deployment of capital, but at the same time, prioritizing where to spend and taking advantage of an efficient cost structure overall in China, that's all across the supply chain. And obviously, very strong overall global clinical R&D to translational to discovery all the way to clinical ops team. Here in the U.S., we've hired from big pharma. Just to see all of this come together in a global effort. We -- as a company, we are always, of course, looking to be opportunistic as it relates to raising capital and partnering. And that's -- we have the I think, a world-class team here that's doing that right now.

Great. Well, it's -- I;m mindful, we're up at time. It's really been exciting to see the progress to date. Congrats on the strength and the execution. It's nice to see the stock price showing and recognizing the execution, as you noted, it's a rare bright spot on the biopharma radar to see the IPO performance over the course of the year. So it has been an exciting year. We certainly look forward to an exciting year ahead for Ascentage and thank you very much for the time today.

Thank you, John. Really appreciate it. Appreciate your support.