Everest Medicines Limited (6HN.F) Earnings Call Transcript & Summary

Good morning, everyone. This is Yang Huang, I'm China Healthcare Analyst at J.P. Morgan based in Hong Kong. Today, welcome to our first morning session for APAC Track. First presentation will be given by Ian Woo, President and CEO of Everest Medicine.

Thank you very much. Thanks for coming early morning on the last day of the conference, and also much appreciation to J.P. Morgan for organizing this event to bring all of us together, and thank you for the opportunity to present the Everest Medicines' story. So I'll skip the disclaimers. So here's a snapshot on Everest in case some of you are not familiar with us. So we are founded in 2017. We were listed on the Hong Kong Stock Exchange in 2020. Today, we have a market cap of roughly USD 2 billion. We're invested across multiple therapeutic areas. And today, we have 3 products that are already commercially launched. We have about 800 employees globally. Most of them are in China. We do aim to become a leading integrated bio-pharma company based in China. We want to do that with near-term very certain revenue growth, while at the same time, driving for long-term sustainability through additional in-licensing and our proprietary discovery platform. I think it's important to think about where we have come from, when we talk about where Everest can go in the future. So if you look at Everest, when we first started in the first 4 years or 5 years of our history, we very much focused on bringing products in from the U.S. and from Europe. In total, we're licensing 11 products for Greater China, Southeast Asia and South Korea. We priced a $520 million Hong Kong IPO and got a couple of products, XERAVA and Trodelvy approved in China. We had subsequently sold Trodelvy rights, which were brought in from a company called Immunomedics.,, When they were acquired by Gilead for $21 billion, we divested Trodelvy, our rights in Trodelvy to Gilead for about $480 million. The cash from IPO and the Trodelvy divestiture allowed us to enter into the current phase of development where we're very much focused on building our commercial organization and driving commercial sales for Nefecon, Xerava and additional product -- and laying the foundations for additional products that we can market. At the same time, after we went public in 2020, we have built up our own discovery platform because we thought to be a leading biopharma company, we need to have sustainability from our discovery platform as well. As you can see, we have pipelines across renal, autoimmune, infectious disease and cardiovascular diseases, and we have built up all of the necessary capabilities within the company. We also have a manufacturing facility, and this is important because for our discovery platform, we really own end-to-end from CMC to manufacturing, to development. Going forward, we want to continue to drive our dual engine growth by focusing on in-house R&D and continue to bring in products from in-licensing and very much looking forward to continuing to build our commercial platform as well. This is our pipeline. I won't spend a lot of time on it. You can see the 3 products, 3 commercial products we have, Nefecon for IgA nephropathy in the U.S., this is called Tarpeyo. Xerava is a high-end antibiotic product that we are using for, in the ICU. And Velsipity is already approved in Macau and Singapore. We're looking forward to getting the approval this quarter or this half in Mainland China as well. This will be -- the first indication will be ulcerative colitis. Behind that, you can see that we have a number of products in late-stage development and in mid-stage development. And of course, we have our early discovery pipeline that is very much focused on mRNA therapeutics. So this slide shows what we think is a core competitive advantage and the differentiator for Everest, which is our innovative pharmaceutical's commercialization platform in China. I'm sure you know a lot of Chinese biotech and pharma companies, many of them have been very productive with their discovery platform, which we'll talk about ours in a little bit as well. But we think the ability to commercialize innovative therapeutics successfully and effectively is a much more scarce capability in China. And how do we do this? It's with a platform that we call AMMS or A2MS. So we're very much focused on access. So getting products into the NRDL, that's the reimbursement system in China, focused on medical and marketing and focused on driving sales. And I'll give you an example on how we have done that with our first product, Nefecon. We think if we do this AMMS commercialization platform well, we can leverage this to commercialize additional products successfully. So Nefecon for IgA nephropathy is a very good example of what we have done with the AMMS platform. The product was approved in IgA nephropathy in May of 2024, and we were able to get the product into NRDL at a very attractive price, RMB 5,000, so roughly around USD 700 a month, right. The course of therapy is for 9 months, although a lot of patients use it for even longer than that. So it's an attractive price. This is also an indication where in the U.S. and in Europe, it's an orphan indication. But in China, we think that the prevalence population is up to 5 million patients, although the diagnosed patient population is probably a fraction of that. The incidence population is about 100,000 patients a year. So we have a large patient population, we have attractive price in the NRDL, and we're -- our medical and marketing efforts are very much focused on driving the -- highlighting the differentiation of this product while at the same time, getting the product listed in multiple treatment guidelines, right. And of course, the sales platform is covering about 1,500 hospitals in China, which we believe is over 80% of the potential for the product. So you can see that in 2024, which is a partial year and where we don't have reimbursement, we did about RMB 350 million in sales for Nefecon. And when we have NRDL coverage last year, our guidance for the year is RMB 1.2 billion to RMB 1.4 billion. So that's at the high end, roughly USD 200 million in sales. And just to give you a sense, and some of you may not be familiar with how this benchmarks with other products. Today, I think by our calculation, there have only been about a handful of products prior to Nefecon that have achieved over RMB 1 billion in sales in its first year of NRDL coverage. And all of the other products are oncology products. So Nefecon is the first non-oncology product to exceed RMB 1 billion in sales NRDL, and we're very proud of that. And as you can see, in 2026, we have given guidance for Nefecon for RMB 2.4 billion to RMB 2.6 billion. So we expect this product to continue to ramp up significantly. And it really is the foundation for the company that upon which we are building a renal portfolio and the cash flow will fund a lot of the business development and discovery work as well. Velsipity, this is Eravacycline that we brought in from Arena Pharmaceuticals. And today, we are partnered with Pfizer on this product. Again, we have Greater China and APAC rights. It's approved in Macau and Singapore already, although those territories, the sales are pretty de minimis. We're very much focused on getting the product approved in Mainland China in the first half of this year and be eligible for NRDL negotiations at the end of this year, so that we hope to have NRDL coverage in 2027. We have already started on building the medical and marketing efforts, and we have already started building our sales team. This is a product that we think is truly best-in-class in the -- for treating ulcerative colitis. It has very high -- very good efficacy. It's very safe. It's oral, very convenient. Chinese patients oftentimes have a preference for oral therapies even more than patients in other parts of the world. And it is recommended as a first-line therapy for UC. So Nefecon and Velsipity are 2 products that are -- products approved from our own portfolio. As I mentioned before, we will also use additional in-licensing and potentially M&A transactions to expand our portfolio as well. And we did a transaction with a company called Hasten Biopharma in December of last year that included two parts. The first part is a CSO for a mature product portfolio of 6 products, and the second one is an in-licensing of a PCSK9, LEROCHOL, which is already approved in the U.S. It's approved in the U.S. in December, and we are expecting to file a BLA in China in the first half of this year. So what does this mean for Everest? So first of all, within the CSO portfolio, there will be Rocephin, which is the third-generation cephalosporin. Stilamin for GI hemorrhage, both products are used in the ICU and is very synergistic with the ICU portfolio that we currently have, which is Xerava or Eravacycline, the high-end antibiotic -- that -- in our commercial portfolio. And then LEROCHOL and Edarbi are going to be the foundational portfolio for our entry into the cardiovascular therapeutic area, which is a very high potential area in China in our view. Financially, the CSO portfolio will add about RMB 500 million to RMB 600 million in top line. That's our CSO fee. We expect that it's a 3-year CSO with the ability to extend. So we expect about RMB 500 million to RMB 600 million of incremental revenue for those 3 years. We are also working on getting a GSP license. And when we have the GSP license, we can book the full sales and the top line will increase significantly as well. So why are we so interested in LEROCHOL? We think it's a best-in-class PCSK9 inhibitor. It's highly potent. Again, as I mentioned, it's already approved in the U.S. And we just met with our partner. They're starting their commercial activities in the U.S. It is indicated for on a once-monthly basis, so very convenient for patients. It's very safe. And -- the product is stable at room temperature. And there will be auto-injector option for this as well. So we think these are differentiators that would allow us to carve out an attractive market share within the PCSK9 market. And obviously, the unmet needs are very significant. The number of patients in China is also very, very high. LEROCHOL, as you can see in this chart here, our partner, LIB Therapeutics ran a head-to-head against Inclisiran, and we were able to demonstrate, we think, superior LDL-C reduction compared to the siRNA options. Again, we're looking to file the BLA in China in the first half of '26 and approval in the first half of 2027. This is our schematic of our dual-engine growth strategy. So on the one hand, continue to in-license products through business development and collaboration. We've done this many times. We've brought in 11 products already. We will continue to do this. And we think the the opportunity set has expanded significantly for us, whereas when we first started, we were looking for products -- innovative products almost exclusively in the U.S. and Europe and maybe Japan as well. Today, we're looking across the globe and have built up a business development team in China as well. All of you have heard about the innovation, the level of innovation in China. And a lot of those products have been part of ex-China global licensing deals. But we think a lot of those companies who own China rights, may not want to build up commercial organizations themselves, and we will be an ideal partner for them in the therapeutic areas that we are focused on. But of course, we want to supplement in-licensing with in-house discovery. And again, this today is very much focused on mRNA therapeutics, and we also have a BTK inhibitor that I will talk about in a little bit. The BTK inhibitor that we have, we call EVER001 or Civorebrutinib. This is a product that we -- so we -- in between doing regional licensing deals and setting up our own discovery, we brought in a product where we have global rights, and that is Civorebrutinib. We are initially developing this product in primary membranous nephritis. And as you can see here, the trial design is -- we're testing 2 different doses in -- this is a Phase Ib/IIa study for 36 weeks with follow-ups up to about 2 years. And this is a little bit small, but hopefully, you can see -- and this is also on our website. Hopefully, you can see that the chart on the bottom left is showing auto-antibody reduction, so anti-PLA2R reduction. You can see that by 36 weeks, actually by 24 weeks, you're seeing 95% reduction in auto-antibodies, which if you talk to physicians who treat pMN patients, this is what they want to see as quickly as possible. And you can see that those reductions are really sustained, out to 2 years, even though 2 years is a small number of patients. On the bottom right, we're looking at proteinuria. So we're looking at kidney function. Here, you can see that by week 36, you're looking at about 80% reduction in proteinuria. So this is a very exciting data for us. And you can also see that proteinuria reduction is also sustained through 2 years. Based on this exciting data, and what I didn't show you on this slide is that EVER001 is also safe and well tolerated, which is also very important particularly for a BTK inhibitor, that we want to aggressively move this into a pivotal study in 2026. Based on the data, we also are very excited and really want to test this product in additional indications, right? So we have a basket study designed and ready to go for IgA nephropathy, FSGS and MCD, and we hope to initiate that as soon as possible in the first half of this year. And as we have always said, we are very much focused on China, Southeast Asia and South Korea for commercialization. Since this product is fairly late-stage, we're also in ongoing BD discussions for rights outside of our commercial focus areas. Just one slide on mRNA. Again, most of you may know that we have end-to-end capabilities in mRNA therapeutics. And this is an area where we have really heavily invested into over the last 4 years. We have a research lab in Zhejiang. We have our own CMC capabilities, and we have our own manufacturing capabilities at our site as well. We may be one of the only mRNA companies other than the large pharma companies that have gotten into it, that have end-to-end capabilities in this space, right. Focused on two areas. And today, we're really only showing some slides on in vivo CAR-T, but we have also a couple of clinical stage assets in the mRNA cancer vaccine space, which, by the way, we're getting more and more inbound calls in those areas as well. So I think people are all waiting for Moderna and Merck's data in this space, right? I think it will be an interesting area for us to continue to invest into. So you can see that on the chart -- charts on the left that these are nonhuman primates data. Again, for in vivo CAR-T, for those of you who don't know, so we are conjugating antibodies that recognize T cell surface receptors to LNP that deliver the mRNA payload directly to T cells, right. So we haven't disclosed which target that we are going after. But the mRNA sequence is coding mRNA -- is coding CD19 CAR, right? We also have BCMA and other molecules, but the lead program is CD19. You can see that in monkeys, again, this may be a little bit hard to see, but the gray line is control and you can see that there's no impact on B-cells. But if you give our in vivo CAR-T molecule, within 2 days, you've seen -- you're seeing very rapid and complete B-cell depletion. And if you look at in the low-dose group, there is a bit of a rebound of B-cells by week 2, by the end of second week. But in the high dose, you really have sustained reduction in B-cells throughout the month. And this is in peripheral blood. The chart on the bottom is looking at tissue, so lymph node and spleen. You can see that after 2 doses, there's really a complete B-cell depletion in the tissues as well. So we're focused on two things in 2026, driving data -- clinical data from [ IIT ] and getting the product ready for a U.S. IND filing. Hopefully, actually, this is not just the '26 goal. This is a first half '26 goal, okay. Again, I think in vivo CAR-T is highly competitive. A lot of companies in China are working on this, but I think we are actually one of the leading companies in this space globally. I just noticed the time. I'll go quickly here. This is some of the areas that we're focused on expanding. I'll skip that. We're -- this is our goals for 2030. We want to drive over RMB 2 billion in revenue. We want to have a large portfolio. And in addition to mRNA, I think we will build up additional capabilities on the R&D side as well. A lot of catalysts, a lot of achievements for '25. But on the catalyst side, it's really three things, right? We're driving -- first and foremost, we got to drive our commercial platform, expand the commercial footprint even more, right. That is a foundation to the value proposition to the company. While at the same time, we're very much focused on bringing in additional assets, additional products into the company, and also focused on driving productivity out of our discovery platform and potentially executing a couple of out-licensing transactions as well. Thank you very much.

As we are kind of running on time. So maybe next, we're going to skip the Q&A. But anyway, thank you very much for the nice presentation.

Thank you very much.

Thank you, everyone.