Everest Medicines Limited (1952) Earnings Call Transcript & Summary

Good morning. Welcome to Everest Medicines 2026 Earnings Call Interim. We have a statement before the moderator speaks up. This is from CITIC Securities whitelisted meeting. Only invited clients are allowed to attend. Without written permission of CITIC Securities and the speaker, no one shall disclose the content and relevant information of the meeting in any form. CITIC Securities reserves the right to pursue legal responsibilities in violation.

Dear investors, welcome and good morning. Welcome to the interim earnings call of Everest Medicines 2026. I'm Chen Zhu and [indiscernible] are online as well. We have this heavyweight management team attending the meeting as well, including our Chairman, Bill Wu; CEO, Rogers Luo; CFO, Ian Ho and all of us are on this call today. And we should say that for the first half of the year, we have strong growth in commercialization under IFRS. Non-IFRS, we're turning positive and we have earned CNY 97 million raw profit and revenue grew by 157% to over CNY 1 billion. So the R&D, ED commercialization have all seen great achievements. In R&D, we have already disclosed, and on EVER001, we have released excellent 52-week clinical data, more raw, and we have reached under BDR license with Travere with a value of CNY 1.14 billion. And then we have in vivo CAR, we have NovaBridge, all of these pipelines are going forward as we speak. In terms of commercialization, we have integrated Hasten pharma domestic marketing team, and it's going on for nephrology and autoimmune categories. Those are the strong suit of us, and we are adding more categories like cardiovascular and metabolism applications. We have huge potential for commercialization going forward. And we are continuing to build the platform of commercialization in China for novel drugs, and we are also going global. And it's one of the few companies with so many capabilities in biotech and biopharma. The overall performance for the first half of the year, that's all for me. And I'd like to now invite Ian Woo, the CFO, to introduce the details to you.

Thank you, Chen Zhu. Welcome, investors, for attending this earnings call for the first half of the year. Chen Zhu, thank you for your introduction and the summary. So first of all, I will report on the financial performance of the company and followed by Mr. Rogers Luo to introduce the operation summary, including commercialization and R&D progresses. Finally, we will have Bill Wu, the Chairman, to introduce the strategic progress of the company. And eventually, we will have a Q&A session. Management team will be here to answer the questions from our investors. First half of the year, the full revenue reached CNY 1.15 billion, growing by 157% year-on-year. It benefited from NEFECON for the second year in NRDL, maintaining a fast growth rate. For the first half of the year, XERAVA in-market sales also achieved great growth. Unfortunately, we had some tight supply issue for overseas CDMO, which has some impact on channel and sales. Accumulated loss of the shipment value is about CNY 150 million. So it means it should -- the revenue should be more than CNY 1.3 billion. And the gross margin after eliminating intangible asset amortization is 73.7 %. Under IFRS, net profit is a minor loss of CNY 5.94 million, reducing by CNY 244 million over the same period last year. Under non-IFRS adjustment, we excluded the salary expenses based on shares, intangible asset impairment and intangible asset amortization. Net profit actually reached CNY 97.23 million. Regular operating profit reached CNY 48.12 million. So between these 2 numbers, there is an adjustment because we have eliminated the fair value adjustment for Micot's investment and also our subsidiary, NovaBridge pharma's loss attributable to us. So the CNY 48.12 million of operating profit reflects the real performance of the company. So this number shows us that our company is entering a phase where we are turning loss into profit. By the end of June this year, cash balance is CNY 1.836 billion. In July, we have received the EVER001 out-license down payment, which is CNY 770 million. So we have a solid cash reserve. Now let's look at the 3 expenses, sales, R&D and general and administrative expenses. For the first half of the year, we expanded the sales team for NEFECON and VELSIPITY. We are also building capability for commercial platform. So sales expenses grew to CNY 458 million. But due to the huge growth of revenue and the improvement of operating efficiency, so sales expense rate actually reduced to 39.86%. R&D is similar. It's gone up from CNY 195 million to CNY 256 million this year. But the ratio actually reduced from 44% to 22.31%. SG&A grown up from CNY 111 million to CNY 149 million this year, but the ratio reduced from 24.84% to 12.95%. So overall, we are optimizing the expense structure. The ratio of those expenses have improved by a lot. This is the complete profit and loss statement for the first half of the year. While we are achieving rapid growth in revenue, we have increased our operating efficiency. Non-IFRS net profit is now turning positive. Cash balance is abundant, and we have shown the numbers already. Now I'd like to invite CEO, Rogers Luo, to introduce the latest updates of the operation.

Thank you. Like we said earlier, for commercialization, NEFECON is maintaining a great momentum, reaching almost CNY 900 million sales, growing by 94% -- last year, that is the first year for NRDL inclusion. And this first half of the year, we are maintaining great momentum. The XERAVA for infection, we can see there is a strong demand. In market, growth is 28% for the first half of the year. Like I said before, we had some supply chain challenges. We had a tight supply for over a month. If we had a supply chain stable, I believe there is another sales which is about CNY 150 million. But we have a plan for production capacity and which is ongoing according to the plan. The other one is VELSIPITY approved this February, and it now is commercially available on the market. We also started localization for manufacturing, and we have completed the technology transfer. VELSIPITY is a big novel drug, and we will talk about that later. For the first half of the year, we also applied for PCSK9 drug LEROCHOL, lerodalcibep. And for R&D, we have EVER001 going global for nephrology, a very important product for nephrology. EVER001 BD Ops is going to be a milestone event for Everest Medicines and we reached USD 1.14 billion out license. We are working with a partner, Travere. We are planning to talk to U.S. FDA, hoping to enter clinical trial Phase III directly. And in China, we have started basket trial already, including indications FSGS, MCD. Aside PNH, those are indications without treatment in China. We have enrolled patients already. The other one is VIS-101, which is for ophthalmology. We have started the IIb clinical trial. For our own R&D, aside from individualized vaccine, we reported earlier, we have EVM16, and we had Phase Ia clinical trial readout, and which is reported on AACR meeting in this April and we are hoping to release the data as soon as possible. The other one is EVM14. It's a general cancer vaccine, and we have enrolled patients in both China and the U.S. We also have developed immuno-related vaccine called EVM15. Now we are doing preclinical studies. For in vivo CAR-Ts, we have EVM18 and which is currently in Phase I. That's for R&D. For BD operation, like we said earlier, we have, BD ops. For licensing, we have MT1013 for Micot, and we have Bejescin and we also have licensed in DMX-200 to enrich our nephropathy leadership. In the meantime, for cardiovascular indications, we have licensed in CARDAMYST, Sumecigrel, which is an antiplatelet drug to treat ACS. We have some CSO pipelines together with innovative drugs, so we can expand our cardiovascular field. For ophthalmology, we have also licensed in this, an eye drop for presbyopia. Aside from that, we are going global. We have acquired Hasten Bio Asia Pacific business. It's going to be a solid innovative drug commercial platform going forward for Asia Pacific. Now I'm going to go deep diving on to the drugs. We talked about NEFECON. First half of the year, the revenue has been really a highlight. Year-on-year growth reached 194%. We have a few arrangements. And because we have now more accumulated real-world evidence, this medical evidence, not only from China, but also from European Union and the United States. On the conferences in Europe and U.S., we have published the papers. And this is very important because it's kind of reshaping the guidance of IgA nephrology. NEFECON is the first-line treatment for IgA nephropathy. And we are maintaining this position because of these studies. NEFECON is not just a treatment drug, but also we have seen that if treated earlier and longer, after 9 months, patients can benefit long term, which is a great opportunity and foundation for long-term growth of NEFECON. We have also reached agreement with Herui Hainan (sic) [ Hainan Herui ], and we are starting prescription in many places in China. And for sales, the growth -- part of the growth is coming from the strong demand, but also we are expanding the marketing team -- sales team, from 200 to 300 people. And hospitals network coverage reached 2,500. And we believe the second half of the year and next year, we will maintain the continued momentum of growth for NEFECON. We talked about VELSIPITY already. This March, it went public -- went to market. VELSIPITY is a preferential treatment for ulcerative colitis. There are 2 things going on, which are very important. First is to build our sales team. Secondly, we are working on many evidence-based studies. In September, we will attend the NRDL negotiation. The positioning of VELSIPITY is not only for ulcerative colitis with high healing effect on mucus. It's orally taken, much easier than traditional antibody on the market. It has to be injected. We have high healing effect for the mucus, and we expect to get into NRDL very soon. If we can be successful with NRDL, next year is going to be a huge growth point for us. We are starting localization manufacturing. Technology transfer has completed. We believe by the end of '27 or '28, we can have local supply of VELSIPITY, which will reduce the cost of production. And we also mentioned earlier about XERAVA. Clinical demand is strong. In hospital grew by 28%. Again, we had some CDMO tight supply issues. So for almost 2 months, we could not get the product. So we had 0 inventory for that period of time. We believe if we had a better supply chain, the first half of the year should have another sales of CNY 150 million to CNY 200 million. That's why we are working on localization for manufacturing. We expect to locally produce it in 2028. XERAVA is for the treatment of various drug-resistant bacterial infections, mainly used in ICU and the respiratory departments. And for CSO, we have Hasten Pharma. With other drugs, we have very good synergy. And that's the CSO synergy we have achieved this first half of the year. In future, we will continue to focus on these areas. Another project this year is that we are going to attend National Medical Insurance program this year. If we are successful, XERAVA next year, we will also see huge growth potential. The previous generation of Tigecycline has huge volume in China, close to 10 million. And now it's out-of-pocket payment. So the demand is not high yet, but we expect to see huge growth next year. And in March, we had a CSO partnership with Hasten Pharma. The service revenue is CNY 145 million. And then you can see the number of the profit. We are actually improving the synergy, improving the sales efficiency. So firstly, we are integrating the resources, including compliance and academic operations. And we're also expanding the hospital network from 10,000 to 15,000 hospitals. So that's going to help us to scale up for XERAVA next year once we are approved for NRDL. CSO is not only for anti-infection and Rocephin but also for cardiovascular because we are entering cardiovascular and metabolism area. CARDAMYST, we expect that maybe by the end of the year, we will get approval. CARDAMYST is for cardiovascular indication and Hasten product includes pidopabacin. Those are also in synergy with CARDAMYST. And then we have introduced PCSK9, LEROCHOL [indiscernible] and these are a big role. And these are the 2 products for cardiovascular as well. The CSO service with Hasten Pharma are actually reinforcing our strategy in these 2 areas. Looking into 2028, you can see the Everest Medicines innovative drug. We have a strategy called a 3 plus 3 plus 1. The first 3 means we expect to have 3 products listed in NRDL, including NEFECON, XERAVA and CARDAMYST. The other 3 means in 2027, we will expect to have 2 new drugs including this eye drop for presbyopia and [indiscernible]. The other -- the other one is that we have a Gd-IgA1 detection reagent for IgA patients. It's for their diagnosis and for their long-term follow-up. It's a reagent. In 2028, we will have nephropathy drug of 1013 going public, going to the market to further enrich our portfolio. We have an objective that every year, we should have 2 or 3 new innovative drugs in the pipeline to continue to enrich our commercialization pipeline and to generate cash flow. Now, I'd like to introduce that in Q3 this year, we expect to get approval for CARDAMYST. The feature of this CARDAMYST, firstly, it's the only drug approved by FDA for the past 30 years for PSVT, paroxysmal supraventricular tachycardia. For PSVT patients, the heart rate can be very high. And it's agony feeling with severe symptoms. They need to be treated in the emergency room. So CARDAMYST changes the treatment paradigm. While, in the past, you have to go to the ER for treatment, now the patient can do their self-help, self-treatment. It's a nasal spray. So the patient can administer the drug by themselves in the nose. In 5 minutes, it's going to kick in. In 17 minutes, the median cardioversion. So 17 minutes is the median recovery time. So 60% of the patients or above could achieve cardioversion. And then that means the disappearance of the symptoms. So again, it changes the treatment pathway. So we believe it's a huge opportunity. Then for PSVT indication, once it's approved this year, we are working with our partner now. We are developing new indications, which is AFib-RVR. AFib incidence is very high compared with PSVT. AFib patients could be 100% more than the PSVT patients. So that means huge potential going forward. Now we are working with partner to get the Phase III clinical trials globally, and China is part of that. And so in future, it will also be approved for China market, and it is a huge growth potential for us. The next one is the LNZ100. LNZ100 is a consumer type of presbyopia eye drop. In the morning, you only get one drop. So it will maintain a good result for 10 hours and improves the 2 line vision. By the end of 10 hours, 70% of the patient or 60-plus percent of patients can improve the vision by 2 lines or above. So it not only improves the presbyopia patients, it also helps the older people to engage more socially. It's a heavyweight drug in the future. We expect to be approved next year. MT1013 has been introduced earlier. It's a first-in-class bispecific drug for SHPT. It's redefining the SHPT treatment paradigm with huge market potential. The significance of this drug is that not only it is highly effective in therapy, it's actually helping us to expand our product pipeline from primary glomerulonephritis to chronic kidney disease. Glomerulonephritis patient in China is 10 million, but chronic kidney disease patient is close to 100 million. That's a new field for us. EVER001 is also significant. First of all, we are developing more indications. It's a pipeline with multiple indications with very good pMN data. A basket trial has started in China. We have enrolled patients for FSGS. So far, there is no treatment for FSGS. Then you have pMN, MCD, these are the new indications. Then we are working with our partner, Travere, based on their development capabilities. Now we are working with them to talk to FDA to get into Phase III clinical trial directly. And working very well and the nephrology treatment is improving, and they have the capability to bring it into Phase III clinical trial. DMX-200 is for FSGS. It's a CCR2 inhibitor. We are doing some licensing. FSGS globally, there is only one drug approved. There is no drug approved in China. So another big potential for us, looking at the Phase II readout, and we have seen good readouts. And global Phase III trial is ongoing, and we expect to be approved in China. That's going to be a groundbreaking drug for FSGS in China, further consolidating our leadership in nephrology. For nephrology, we have glomerulonephritis treatment, NEFECON and then we have other primary glomerulonephritis. For PMN, FSGS and MCD, we have new treatment indications. We have DMX-200 for FSGS. We have licensed the Bejescin as a brand-new antibody. Then we are also expanding into complement inhibitor and B-cell inhibitors to further enhance our position of leadership in primary glomerulonephritis. And then for clinical chronic kidney disease, which is a bigger patient audience, it's more than 100 million. We have MT1013 already. We are evaluating new opportunities for licensing like ETA and CKD comorbidity complication management. We are trying to introduce new products to consolidate further our leadership in nephropathy. Next, let's touch upon R&D. We are a globally leading mRNA platform. We have end-to-end capability from antigen design algorithm. We have iterated this [ MiaoShuan ] system 4 times, and we have ALNT target technology and ADC technology. We have the IP ourselves as a platform. From this platform, we have developed 2 types of treatments. One is vaccine treatment. The other one is mRNA CAR-T treatment. And we have individualized vaccine and the pathway vaccine and immunoregulation types, EVM16, 15, 14. EVM is still in preclinical phase. The other ones are all in clinical phases. The other one is ImmunoCAR-T, EVM18. We are doing -- working on IND application globally. For autoimmune indication, we have developed another bi-target ImmunoCAR-T, EVM20. EVM20 is a double target ImmunoCAR-T, which can deeply clear B cells, which can be used for autoimmunal and hematological tumors in future. Now it is in a PCC stage. EVM18 is in human test now. We have reported many times before on the data. IT is in progress. Double target CBM. We expect to finish PCC by the end of the year. Next year, we can apply for clinical trials at appropriate time. EVM14, we got R&D from both China and the U.S. We are starting the clinical trial, enrolled patients for both China and the U.S. This is for relapse squamous, non-small cell lung cancer and head and neck squamous cancer as well, which is a huge demand as well. Then EVM16 is individualized treatment plan. IGME-1A clinical trial has readouts, and the immunogenicity is great with great response. So for EVA trial, we have very good clinical effect. Some patients have seen partial remission with SD, stable disease. We are applying for R&D with FDA and CDE by the first half of next year. So that's our overall R&D strategy and commercialization strategy. So we have been building the capability for the past 2 years. We have a great A2MS platform, trying to achieve the best outcome with the most efficient investment. Now on this platform, we have the success of NEFECON, success of XERAVA. And going forward, we will focus on VELSIPITY. And then as CSO, we will introduce some classic drugs and brands. That means we will have full life cycle capability, and this capability can be easily replicated and evolved so to propel our future new products and enable the team for long-term and stable sales growth. Now I'd like to invite Bill Wu to introduce the corporate strategy.

Thank you, Rogers. Okay. A base update of the strategy. Rogers talked about A2MS platform, which is our core competitiveness. Going forward, we will continue to enhance our A2MS platform. And secondly, we are upgrading and escalating A2MS. So we are covering the full life cycle of the products and all the channels. The A2MS model will also be replicated to overseas market. For BD, we are insisting on our plan from the beginning of the year. Every year, we introduce 3 to 5 heavyweight products. That means peak sales of over CNY 2 billion each. And in 2, 3 years' time, we're trying to go put them to the market and reaching peak sales in 5, 6 years from introduction. Currently, we see that we have achieved those objectives. After a year of effort, aside from BD pipeline, which is being enriched. In the pipeline, we have almost 20 projects. By the end of the year, it's going to be more than 20. By the end of the year, we expect that in China and outside of China, we are going to have 20 pipelines each. Aside from the product already on market in China, we have 5 to 6 projects in Phase III clinical trial stage and 2 or 3 new products will go to market. For BD strategies, we have licensed in and licensed out at the same time. Then we have early-stage BD and commercialized BD. These are going hand by hand. So the chart on the left, we have 2 positive feedbacks. We have introduced the study R&D and introduced the study. And once we have cash generated, we can support R&D investments. We call it EVER001 model. So the right-hand side is the NEFECON model. We introduced commercialized pipeline with high quality, so we can upgrade our commercialization capability, which generates sales returns. With higher capability of sales and cash flow, we can continue to enhance the next round of BD assets. So that's the 2-way BD, early BD and commercial BD for 2 positive feedbacks. For overseas operation, one is in the Western world, the more developed market. We have a 16% of stake at NovaBridge. So we have synergy with them for commercialization and development. NovaBridge is responsible for Europe and U.S. Everest is focusing on the resources from China. We have data, we have cost benefits, so we can enable, empower NovaBridge global strategy and we are responsible for China and the emerging markets for commercialization. In Southeast Asia, we established a new platform for emerging markets called Ever Arc. We have 120 people in the team and the sales value is more than USD 80 million. And we are expanding our capability for overseas self-operated commercialization. And our milestones envisioned, for the first half of the year, we have delivered a few. First is VELSIPITY, which is approved in China. The other one is EVER001 for out-license. Lerodalcibep, we have submitted a BLA application. VIS-101 is entering Phase IIb clinical trial. Second half of the year, we will have further milestones. First is CARDAMYST. And maybe August, September, it will be approved in China. And VELSIPITY and XERAVA, we are hoping to get some success with the negotiation with NRDL. MT1013, we have completed -- we will complete the clinical trial, and we will apply for application in first half quarter next year. And then we have the EVM18, submitting FDA IND. These are the milestones going forward. Then the Strategy 2030, again, we aim to achieve a revenue of CNY 15 billion to become Everest Medicines 3.0. We will become a leading comprehensive biopharma technology company in Asia. We have N+X portfolio. We have 3 capabilities, R&D, BD and the strategic cooperation. So one step at a time, we will deliver our milestone according to the plan to reach our goal. Well, that's pretty much for the presentation. Thank you.

I'm [ Zou Zongyin ] from CITIC Securities. It's time for Q&A. I'd like to start first. We've seen that you have created a great pipeline. You're making progress with the N+X strategy. What is the BD plan for the second half of the year? You said that you all have synergy with NovaBridge. What are the new focuses going forward in the second half of the year?

For BD, we will continue to have 2-way BD. For OPT, on top of the mRNA platform, we will continue to consolidate our capability through global partnership. We hope to get some success as soon as possible. We will continue to work with NovaBridge through strategic synergy for licensing and then for indications. We are talking about cardiovascular, metabolism, nephrology, ophthalmology, autoimmune and immunotherapy. These are the most of the growth opportunities. For the second half of the year, for Phase III or beyond stages, we will have 1 or 2 deals in the second half of the year. And then for the earliest R&D project, we will have 1 or 2 deals as well. Thirdly, we are enriching our portfolio in Southeast Asia. So in the second half of the year, we will have 1 or 2 BD deals as well. That's basically the plan for the year. We're looking forward to bigger deals going forward.

Now from Guosheng Medicine, you can ask questions.

I'm from Guosheng Pharmacy. My name is [ Huiyao Hao ] as a researcher. For commercialization, this year, looking at your portfolio, we are enriching the coverage of departments and you are enriching the pipeline echelon. The structure is more of higher scale now. The first half of the year, based on your commercialization achievements and then going forward, every year, you will have 2 or 3 new products approved and then you're going to get an NRDL coverage for China. Maybe you can tell us the commercialization outlook for the year and for next year in China.

Thank you, [ Huiyao Hao ]. For the first half of the year, NEFECON maintained a great momentum of growth for IgA nephropathy patients. It's a huge potential because it's more than 1 million patients. Every year, there are newly diagnosed patients of 100,000 for kidney patients. NEFECON penetration, I think there's a huge potential for us to penetrate into the new patients, let alone the IgA patients, where the protein urea is between 0.5 to 1 gram. That's the patients that need to be treated. So IgA patients need to be treated. NEFECON is for them as a first-line treatment cornerstone regimen. So we believe the huge potential is still there for NEFECON. We know there are bio agents being approved. I think they're approaching to be approved. But still in this field, it's very hard to shake the position of NEFECON. And for the severe patients with protein urea over 3 grams, there is still room for combination treatment. In critical guideline -- guidance, there is a clear statement. Aside from NEFECON, we have CSO service as also another potential for growth, for synergy, for emerging critical disease, cardiovascular field. Next year, there will be an NRDL negotiation. If we can include XERAVA and VELSIPITY into NRDL, next year is going to be a year of scaling up. In UC field, in ulcerative colitis, the patients being treated, there are already 450,000 of them and then potential patients can be another 800,000. And then a bio agent is treating 100,000 of them. So many of the patients are not treated. VELSIPITY is orally taken. It's very effective, very convenient for the patients. So we believe we can enter both 5-ASA patient group. Aside from these 2 products getting on to an NRDL by the end of the year, we expect the CARDAMYST, like I said earlier, CARDAMYST is a consumer -- kind of consumer-grade product with huge growth potential and huge demand. Then there are new products to be approved. Next year, we will see huge potential. Then we have acquired Hasten Pharma Asia Pacific business, which will continue to grow steadily. So the revenue scale of the company will continue to expand to become a company with huge revenue scale. In the meantime, we will continue to expand our pipeline. And that's the growth momentum of the company, and that's the outlook.

Next, I'd like to invite from Guolian Minsheng.

I'm from Guolian Minsheng, analyst [ Flo Bi ]. As you mentioned, in CAR-T, you have some products. Maybe you can update ImmunoCAR-T. What is the cadence and the milestone for the readouts. You have gene IAT. There are -- there are disclosed risk events for ImmunoCAR-T. Is that going to affect your subsequent experiment progress?

For the gene treatment risk events, I think it's not related to us. To my knowledge, it's AAV lentivirus mechanism, not our mechanism. Our ImmunoCAR-T EVM, we have completed preclinical steps. We are applying for IND with FDA. Human IND is initiated. Now it's for autoimmune indication. The other one is the double target EVM20, B-cell and plasma cell are both the targets. It can deeply induce the remission and reconstruct the autoimmune system for oncology indications. We expect to complete PCC by the end of the year. That's the update.

I'd like to now invite from [ Changjiang ].

I am from [ Changjiang Pharma ]. My name is [ Changhong Liu ]. I'm happy and thrilled to see that Everest Medicines has very good highlights in this interim result. My question is on oncology vaccine, tumor vaccine. What is the clinical progress update for tumor vaccine? What is going to be the future guidance readouts, for instance?

As we said earlier, we have 3 vaccines. Two are in clinical trial. One is an EVM16 individualized vaccine. On AACR April meeting, we have announced, published the results. And in the hospital it has IAT. The complete data set will be published on important international conferences. And now we are working on Ib trial. By the fourth quarter, I think we will have our non-small cell lung cancer maintenance treatment. The first patient will be enrolled by the end of the year. And so it's an expanded indication cohort exploration. By the end of the year, we will submit IND to FDA, hoping to get approval next year. That's individualized tumor cancer. The other one is general vaccine, EVM14. U.S. and China are both in clinical trial -- Phase I. Single dose escalation -- monotherapy dose escalation is in the first half of the year to determine the dose. IAT combination drug -- we expect by the end of the year, we will enroll the first patient. Second half of next year, we will have a dose escalation completed. That's the cadence of the trial. The other one is immuno regulation tumor vaccine, which is in P4 stage, PCC stage.

Now I'd like to invite from Northeast Securities.

I am [ Si Donpin ] from Northeast Securities. I want to ask for VELSIPITY going forward. What is the sales plan for VELSIPITY going forward?

Thank you for the question on VELSIPITY. Like I said earlier, in March, we completed the commercialization. We have a commercial team, sales, marketing, academy -- academic. And we are vigorously promoting VELSIPITY. One thing to mention is that for ulcerative colitis, the patients that are treated number is 450,000. Most of them are using 5-ASA. There is no evidence for the healing of mucus. Then 80,000 to 100,000 patients are treated with bio agents. It's very limited. And then for VELSIPITY, it's a 3-in-1 treatment. Efficacy, safety and convenience are both available. So deep mucus healing effect is 51%. We don't have head-to-head study, but it's the best in class. And in terms of safety compared with the bio agent, which has secondary infection issues, JAK inhibitor has black box warnings. Then convenience, it's orally taken. Another update on that is that VELSIPITY indication is for moderate to severe indication. Our partner, Pfizer, expects to apply for mild to moderate UC in the upcoming September. And in China, we will also do that. We expect to submit application for mild to moderate ulcerative colitis. So that is expanding from severe to mild patients. Now, this product is not only similar to bio agent for severe -- moderate to severe patients, but also for the mild to moderate patients who are currently using 5-ASA. And for those patients treated on 5-ASA, there is another 300,000 patients of them and they can use it as a first-line treatment. If that's the case, you can see the potential can be huge. Aside from HMS we expect by the September next year, we will negotiate with NRDL. If it's successful, it is going to give us huge growth momentum. And thirdly, for NEFECON, XERAVA had a shortage in supply. That's why we are doing local manufacturing for VELSIPITY as well. We have completed the technology transfer. So the technology is transferred from the U.S. to our factory in Jiaxing. And no later than 2028, we will be able to make it locally so we can stabilize the supply chain and reduce the cost. That's the guidance. We have HMS team. We have medical insurance negotiation. We have new indications and expansion of the indications that is pretty much it, aside from the local production.

I'd like to invite a colleague from [ Donghai Securities ].