Hua Medicine (Shanghai) Ltd. (2552) Earnings Call Transcript & Summary

Okay. Thank you for your patience, ladies and gentlemen. Good morning, ladies and gentlemen. Thank you for joining Hua Medicine's 2020 interim results investor presentation hosted by Institutional Capital Advisory, the company's Investor Relations adviser. On the call today are Dr. Li Chen, Founder, Chief Executive Officer, Chief Scientific Officer and Chief -- and Executive Director; and Mr. George Lin, JD, Chief Financial Officer and Executive Director; Ms. Emily Yeh, Director of Corporate Finance. Dr. Li Chen will give an overview of the company's highlights, including clinical trials and recognitions. He will also share updates regarding Hua Medicine's R&D pipeline. Mr. George Lin, JD, will go through the company's financials and analysis. Dr. Li Chen, Mr. George Lin and Ms. Emily Yeh will be available to answer your questions during the Q&A session that follows. During the presentation, you will be able to submit your questions in written format in Zoom's chat box or Q&A channel. Alternatively, you could virtually raise your hands on Zoom for an opportunity to speak with the management team during the Q&A session. I will remind you that this call may contain forward-looking statements. For details, please refer to the disclaimer on today's presentation deck. With that, I will now turn the call over to Dr. Chen. Dr. Chen, please go ahead.

Thank you. Thank you, everyone. Good morning. Good evening. It's -- can't see I'm very excited to share Hua Medicine's progress in the last 6 months or so. We've been focused on diabetes. And we know it is a silent killer and then has a major impact with diabetes complications, not only just the blood glucose fluctuation, which lead to very serious medical conditions, diabetes kidney disease, cardiovascular disease, foot ulcer, loss of body functions. It is also lack of a good way of treat diabetes, not only from the medical point of view, but also from the medical practice. Over the last 10 years, Hua Medicine has been focused on to resolve this issue and working with our partners, Roche, WuXi PharmaTech, TigerMed and then Desano and then Covance and so on, to build this powerful engine to drive our product discovery and development. And then Hua have been reported over the last 12 months or so, a very, very exciting results from our regulatory filing our registration trial, HMS 301, and then HMS 302, right? All this very important aspect, and they have shown dorzagliatin has the potential to improve the glucose sensitivity and the protection of the beta cell. At the same time, reduce the insulin resistance. And this is the fundamental underlying cause of all Type 2 diabetes. Now, we have a very good solution to it. And of course, since I cannot sleep at night, is how can we make this innovation, medical innovation to the hands of our physicians and allow patient benefit in the broader way, and we're dealing with 100 million-plus diabetes in China with the poor awareness and a control situation, we are dealing with over 400 million diabetics around the world, right? How can Hua Medicine be able to bring this medical innovation to our patient, let them benefit from this in a fast broader way, right? Well, that apparently has resolved with the signing a contract with Bayer, right? This established the partnership that we can advance this medical innovation to our patient in the broader and a fast way in China, right? So this is, again, I think we spent 10 years, shooting for cure of diabetes. And I'm very glad that Bayer shared the common value on the same way because Bayer want to develop China into a diabetes-free nation. We also share very common practice that is follow the high standard, high quality and then create high value. At the same time, able -- we developing the first-in-class diabetes medicine, shooting for beta cell protection, and Bayer has been able to advance acarbose as the best seller in China over the last 10 years. We are working glucose homeostasis and Bayer recently just brought in a technology, allow us to then understand the diabetic situation and the blood glucose fluctuation and then managing the timing range in the clinical practice. And this gave us the confidence that we can, working together with Bayer, and also our shared common connection, the Chinese KOLs, Dr. Yang Wenying, Dr. Zhu Dalong, Dr. Li Xiaoying, who are the leaders to help us to understand the medical needs, to build the understanding around the medical community and then able to drive this great medicine, and then having Bayer has a powerful navigation system, be able to guide this powerful missile, target a diabetes-free nation. So that's so important and so exciting to me. And then I think George will tell you more about the deals and deal structures on this. But I just want to say this, again, reflecting the philosophy in Hua Medicine that is we innovate health care, not only developing a novel concept and then getting to the novel breakthrough technology in the medicine, but also leading the way of the business development and the business commercial model. Hua Medicine established with ourselves using the VICQ model, the VICQ model plus the high-quality in our operation. And now when we're working with Bayer -- now if you want to see the slide, Slide #4 now, we're working with Bayer, right? This is the shared profit model. Very different from the common licensing model, right? We are shooting for a long-term benefit on how Hua Medicine working with Bayer, together, as a partner, we continue to be the MAH holder, we will take care out of the manufacturing, drug distribution channel, and then Bayer will use this vast force and a network in the medical community, working together with Hua Medicine's team, where we have been working with over 100-plus clinical science and then developing dorzagliatin and be precisionally positioned the medical needs in China. And in this way, we will collectively generate profit for both companies for the long term, right? So I will not go into all the deals and the terms, and then this is very exciting. I think we are all looking forward at our signing ceremony, and then the marriage will go out, and then will be a happy marriage. And many of you may think about why I'm so optimistic and so happy, excited about this partnership. Some of you probably already know, Bayer, as main, and then most importantly, Bayer in China in the Medicare, especially in the primary care area, has established itself as the best partner for Hua Medicine. First of all, you can see that Bayer has established their product here, we talk about Glucobay, also where other hypertension product and then aspirin, the 3 As used to be the top seller in China. And then if you just look at the diabetes area, and then in the last 20 years or so, if you see the Glucobay have accumulated, treated over 30 million patients, and then they have over RMB 40 billion net sale in the last 10 years. And that's where, I mean, the long term, a sheer profit where Hua and Bayer have joined again, but that's not just the profit. And I think about 30,000 hospital, over 10,000 retail pharmacy. That makes our China patients be able to reach access this innovation. And that's where our patient will benefit from the medical innovation to maintain their health. And what is more important is as we're moving along, as we fully established the glucose homeostasis control concept, using dorzagliatin in the clinic, we are working on trying to control our patients' blood glucose in the range, where is the healthy defined homeostatic range. And the best technology to do that, to mirror that, to control that is the way using continued gluco-monitoring technology, and then really addressing the time that is not in the range, and that's bad. And then we have been able to address that. And both Bayer and Hua Medicine share the common understanding that will reduce the peak of the meal and reduce the trough when you thirsty and hungry, okay? That's the healthy range. And that's the way to prevent all the diabetic complications and then reduce the burden of the health care and also very important, the harmness to our life. So I think this is a very important milestone in Hua Medicine's history. And then similarly, I think, it's also very important to our partner, Bayer, that after their success with the Glucobay, and then they are now working with a super Glucobay. Not only be able to control the blood glucose fluctuation, but also treated underlying costs of the disease and then really be able to do the diabetes frame. Now let me give you a quick update on Slide 6. What we have done in the last -- the first half of the year, very important. I think there's 3 major breakthroughs of the management on this first half. First of all, we have 2 clinical Phase III trials, the pivotal registration trial ongoing in China. And then we have been able to complete that 301, the monotherapy treat for the naive patients in China, the whole 52-week study during the COVID condition. And with very high-quality of the trial management and excellent data and then results, in which we have been reported in the last couple of months. And then also, we have successfully completed the first half of the 302 trial, which is the double-blind placebo-controlled study on metformin failed Type 2 diabetic patients. Adding our drug and is showing the drug is superior over metformin use alone, and into to the patients who had used the full dose, 1.5 to 2 grams of metformin, still cannot control their blood glucose. Now they can. And what is to me very important is when I talk to the physician, go to the hospital, and the physician asking me, "Li, the patients asking when your drug can be on the market and then they can continue to use it." Because once they get out of the treatment, when they're using other drugs add on to metformin, it's hard to account for the blood glucose. And that's what -- why Hua team is working very hard, day and night, with a high spend in driving our clinical study and then working on the regulatory path. And hopefully, we can get the drug approved and our patient can use it. Now the 2 pivotal trial is doing very well, and then we expect that in third quarter, we complete the patient in hospital study. And then we spent some time and clean up the data and then give you the report on the 52-week result on 302, which I expect to continue to be excellent. The other point, I think, is very important, is earlier this year, we reported that in our HMM 110, the 110 study. And this is the study we conducted in the chronic kidney disease at an end stage where the eGFR is less than 15%. And this is the patient has no drug treatment and then only way to maintain their life is through the dialysis, very late stage of the patients. And then as you know, all the antidiabetic therapy, oral or injectable, have a hard time to control the blood glucose for the diabetics who has kidney dysfunction. And then dorzagliatin have shown that in the end stage, kidney disease patients compared with the paired healthy volunteers and it's pharmacokinetic property maintain the same, which means for all stage of diabetic kidney disease patients, dorzagliatin can help them control their blood glucose level. This is very important because in China, at least 30% of the diabetics is that -- have the kidney dysfunction. And then in U.S., it's roughly over 40% of the diabetic has the kidney dysfunction. And then there's no drug can be effectively managing the diabetic kidney function and then control their blood glucose. And then that's where Hua Medicine will launch in the future, the clinical studies and then focus on this area and then able to help the patients that really need a good way to control blood glucose. And also along the line of life cycle management, as you already know, dorzagliatin fixed the underlying cause of the disease and then can work together with the existing therapy and then creating the synergy of the different therapies based on a different mechanism of action, and then collectively provide the better care to the patients. And we have shown you the 111, which is the combination of sitagliptin JANUVIA still currently the best seller of oral antidiabetic glycolate. And then we see the benefit, not only in the blood glucose control, but also improve the beta cell function and then indigenous GLP-1. Now consider that the opportunity to have a combination of dorzagliatin and sitagliptin orally as GLP-1 therapy. That's where the uniqueness of this drug, the ability in combination with existing therapies and then make it better, make it more beneficial to our patients. The other very important clinical advancement is obviously the success in combination with empagliflozin, a leading SGLT-2 inhibitor for treating diabetes. Recently, the medical community and the U.S. ADA has started recommending SGLT-2 inhibitors to be used effectively even in the first line to treat diabetes patients with cardiovascular risk. And then giving the mechanism of actions, SGLT-2 certainly has its potential risks in the ketoacidosis and other infections and especially in the blood glucose control area. Now working with dorzagliatin, the blood control synergy has very well-established in the patients in the U.S. And also, very importantly, the synergy of balancing the insulin and glucagon secretion in the patients who will use this SGLT-2 inhibitors that rising the glucagon that's leading to the ketoacidosis, right, very important clinical findings, very important advance in terms of understanding the mechanism of action and then creating the synergy with a novel therapy moving forward. So the 3 areas in the pivotal trial, we're making huge progress and an excellent data supporting the drug for the NDA filing and approval and then excellent opportunity in the diabetes kidney disease and provide a unique solution for those patients with the blood glucose control. And then third, dorzagliatin, working with the existing leaders in the diabetes area, bringing in additional benefit to the patients that making them have a better blood glucose control and then walking away from the side effects. So that's -- keep us very excited. And then Slide 7, I just remind you, our mission is to cure diabetes through restore the glucose-sensing function and then repair the glucose homeostasis and then keep the blood glucose fluctuation within the healthy range so that we can prevent and stop the progression of the disease and prevent advancing to the diabetes complication and then timing and range technology certainly is add-on benefits, and it is very important for us. So on Slide #8, it's basically telling you we're -- as we're developing dorzagliatin, we always keep in mind why we need dorzagliatin and how this is clinically differentiated from existing therapy. And this is how, in our last 12 months, the data showing that those questions has been addressed by the very solid clinical study results. And also now, I think, with the joint force from Bayer and then bringing the continued blood glucose monitoring and also addressing time in range, we'll all be able to provide a comprehensive solution in the diabetes care. Now Slide #9, showing that our current pipelines and then how dorzagliatin alone or through the combination with existing therapies and then helping our patients in a broader way, right? And then not only this, the trials we've been showing, and then additional trials, combination with GLP-1 insulin, and then PPAR and then AGIs are in the planning. And then soon after we complete 302 clinical operation, and then we will start launching our new clinical studies. But that's not the only part of dorzagliatin consider in the impaired glucose tolerance and in prediabetic patients, there's significant effect on the glucokinase and also repair their glucokinase function will have a prevention opportunity to prevent those prediabetes advancing to diabetes situation. That's the treatment of ITT, who -- guess what, who has experience to get ITT as an indication approved in China is Bayer. As a matter of fact, Bayer acarbose approved as ITT drug and later on as the Type 2 diabetes drug. And then our KOL, Dr. Yang Wenying, is a part of that process. And then we're very happy that we will be able to, again, join force to expand the horizon where dorzagliatin is just a diabetes therapy, but also, it's a technology that allow us to advance the diabetes care. So again, Slide #10 are the portfolios, and then you can see that the plan is ongoing, and then we'll report to you more about the progress on that. Again, you can see I'm very excited about our progress in the clinical study, further validating dorzagliatin as a novel therapy, who is a novel mechanism and formulation, able to address the underlying cause of the disease and bring benefit to the patients. And then even broader, when we're working together and in combination with the existing antidiabetics, antilipidemia and metabolic syndrome and then eventually can continue to expand to the area in the hypertension and cardiovascular, is a platform that Hua Medicine has been established and then has through the clinical study, further again, deliver on what we have said in this area. And then obviously, it's a great milestone for Hua Medicine that can partner with Bayer, and then bring the medical innovation to our patients in China and the rest of the world faster and more effective. I will stop here and then I'll let George give you an update on our financial situation, and then we can answer your questions. Thank you. Thank you, again.

Thanks, Dr. Chen. I'll now provide the quick summary of the first half financial results. This will be rather quick. We ended cash for the period. At RMB 949 million, as contrasted with RMB 1.1 billion, as of year-end 2019. Net cash used in operating activities was approximately RMB 167 million, of which about RMB 91.3 million was used for R&D purposes. Administrative expenses comprised the second largest expenditure of RMB 76 million. Next slide. Loss before tax was RMB 173 million for the period as contrasted with RMB 235 million, for the same period last year. R&D expenses was about RMB 112 million in the first half of 2020. Compared to RMB 166 million for the same period last year. The decline in expenses can be attributed to 2 principal factors: one is winding down of both our Phase III trials, as we reduced also expenses from CMCD-related costs that were incurred in the first half of 2019. Next slide. Administrative expenses was RMB 66 million in the first half of 2020 as compared to RMB 74 million in the first half of 2019. A decrease in share-based compensation and consulting fee in 2020 are the principal factors for the decline of administrative expenses in 2020. And then adjusted by a corresponding rental increase as we establish our global headquarters and R&D center in Shanghai this year. Now for the expected forecast, it's fairly consistent with what we've told you, we've had some cost savings, but our expected cash burn for the second half of 2020 will be approximately RMB 450 million. And obviously, this partnership that we just announced will definitely, in a very positive way, impact our financials going forward. Four takeaways that you really should think about how this partnership really impacts us. From the very beginning, right, there will be a nonrefundable, nondilutive cash injection of RMB 300 million that we will receive this year. So that's the first easy thing. And so that would increase our cash position back up. We have a huge cost savings and it's due to the massive investment that Bayer is going to put into this partnership by the fact that we no longer will have to go and spend a lot of money in building our own sales force from the ground up, and covering these 13,000 hospitals, this massive group of retail pharmacies. And these are people that are proven at Bayer. They bear all the cost of that. That will be completely eliminated from us. One of the big reasons why we're so excited about choosing the right partner is somebody that has done it before and has had a drug that in 2019, had sales in excess of RMB 5 billion, and total sales in the last 10-year alone of RMB 40 billion, of which, if you think about our drug as being a version 2.0 of Glucobay, a better version of what they have done, they've generated RMB 40 billion of cash over the last 10 years. Well, we get 50% starting from the day 1 of that, and it would be adjusted as normal contract for commercial agreements. We are the owner of this compound, and we are investing in the additional enhancements through labels. And then, of course, there's another RMB 4.1 billion of milestones up for play for us. If you think about our company, the RMB 4.1 billion of milestones, what would they be? They would be, obviously, for very simple things, which are low-hanging fruit of approval milestones, also commercial milestones and then other label expansions with these various combinations, those all seem very achievable given what you have seen of our execution abilities. And we've already talked about it. The big point is actually the 50% of all the future upside. If you think about our drug as being the first-in-class with this novel concept, third generation, it is very exciting from that perspective that we do have a very long-term agreement with Bayer, who actually has been selling Glucobay as a generic drug and was able to achieve such massive sales. This is something that is of high-value to us. So I think with that, we'll conclude the remarks from management and maybe leave the remaining time for any Q&A.

[Operator Instructions] I see from the audience that we have 2 questions. So I'll allow Ziyi Chen from Goldman Sachs to raise his questions.

Great. And congratulations to Hua Medicine, Dr. Chen and George, on this great partnership with Bayer. I think this is more like a new milestone for the company to moving into the next stage. A few questions, trying to get more sense on this deal. First of all, in terms of revenue split, because you mentioned in the announcement that the sales percentage will be adjusted. So going forward, when the sales is going to ramp up. So for Hua's part, will that percentage going to be bigger than 50% or it's going to be smaller?

Again, this -- that's a very important point, and we are bound by confidentiality. So I don't want them suing us the second day after we announce. But it starts with 50%. The idea is they will make that commitment. It was very important for us that they commit to a certain number of army and sales force, right, which they have and they know. And they know how to go to the hospital, but that would be a big cost for us, especially the first couple of years. So they would bear that cost. And in return, we would give them 50%. And then we would bear all the other costs. We're the owner, right? Dr. Chen is the MAH holder. So we have to invest in our baby, if you will, all the label expansion. We know what to do with that. That's our expertise. So we bear those costs as well as manufacturing, and we get 50%. But the view for all these commercial agreements without spilling out more, is as the owner and as -- and that's the key. We're the owner here of the compound. We're making investments and deciding how to expand and enhance this over the next 10-plus years of this agreement, right? As it increases, the owner typically would get more of the incremental revenues enhanced because we are the ones investing in it, and we are actually the owner. So I'll pretty much leave it at that, but that's fairly consistent with commercial arrangements as opposed to some of these other rights that other companies are doing, where they in-license China rights exclusively and they handle everything. That's a different situation. Effectively, we are renting their sales force. But the partnership is that we will leverage all of their know-how and all of their access and their reputation, all of that stuff, the Bayer logo will be right there next to ours on the package, all of that will just really eliminate a big execution and other sort of risk that a small company like Hua would face without such a partner.

Just a follow-up here because you mentioned that Bayer have a very strong commitment for -- to keep the team size and expand the team, commercial team for dorzagliatin. So can you give a sense of how big the team is for now? Because the reason I'm asking is that Glucobay has been cut -- the price of Glucobay has been cut significantly in the volume-based procurement. So I guess, there potentially be some key changes in the first half. So trying to have a better understanding of the team size and how that team is going to expand over the next few years.

Well, very, very good question. Dr. Chen's #1 question when -- with the numerous meetings that we had. And the reality is, it will all, for sure, be impacted. They're a rational organization. Acarbose's pricing was cut significantly. What's important, though, isn't their current size. What's important is actually probably about 6 months before we launch, what their size will be. And the agreement is very clear about the sort of commitment. We've kind of given people a sense of what kind of size we would target our own sales force. And when we were talking with people, right, initially before reimbursement, and you have to go around and access all these hospitals. We wouldn't be doing that from scratch. They already have these access. What is in the agreement is that they will commit to a specific number. And that number was bigger than we would be willing to spend for our own, and they know how to do it. And they are completely incentivized to launch this drug in the proper way. They are a big pharma. They are not looking for small number incremental sales. They see this as something that will certainly be bigger than Glucobay. And what gives them that confidence is our shared KOL and shared mission, right, having Yang Wenying as the person who made acarbose #1, having run that SMART trial in 2011 and published it, and really proving that this drug really works in China, is what gave them that confidence, which we really love. That is the essence of this partner.

I just want to add a comment on this. Think about when we work with WuXi, right? And then over the years, the capability of having our APIs and then drug products supporting Phase I/II to where we are now supporting the commercialization. The capability expansion is followed very well with -- for market projections. So again, that's another very important synergy that Bayer have, all the know-hows and capability in the fields and then the connections over the KOLs, key opinion leaders, very important. And then their branding, very well recognized with our leaders in the diabetes and in the drug community. I just hear my news to our investigator group last night, everyone is safe. Well, that's the best way, right, because with the reputations and the spending and then I said a lot of things that can work together. That's where I think the expectations from our investigators and the physicians. And in those -- remember, we have 110 clinical sites around China. And then the investigator are the local leaders in the diabetes and the biology [indiscernible]. That's where I think the synergy comes together. And then most importantly, the benefit that we generated and created are going to steer among ourselves and a bigger we go, both party benefit more. This is just excellent business model, I think, the way in this environment, in the diabetes area, primary care, where the major market leaders come from the foreign companies, multinationals. Now with this 500 company with Hua. And then just like we have WuXi on our back in the manufacturing and technology development. This is just a great win-win opportunity.

I guess, Ziyi, again, to add on this, it's so important to note this is that one of the key things as an investor of Hua medicine, if we can do what we're going to do, then we would need to go sell. You just look at this slide, right? 13,000 hospitals, 10,000-plus retail pharmacies. Over the last 20 years, they've been selling this drug with the Bayer logo, with acarbose, with Yang Wenying and all these conferences. And for us to kind of replicate that would be very, very difficult. So -- and even if we could do it just by physical activity and covering and showing that our people were doing it, would you have that sort of same impact as Bayer? And the answer is definitely not. If you look at another great company in China focused on diabetes, Gan & Lee, right? They do insulin. I mean it's a great company, but that company still -- its revenue is still not RMB 3 billion in sales, I don't think, in 2019, which was actually the sales of acarbose in 2009. So you just think about kind of that muscle and power that we have. And from them in the agreement was that in time for the launch, right, we definitely need them to help us establish that sales force to go. We don't really need it right now. In fact, you need it right now, you have all these people that are not really doing anything. We haven't submitted the NDA. But definitely, in preparation for a great launch to overtake the trajectory of acarbose, right, and to be the most successful launch ever in China, they are very incentivized, and they have the economics to get it, but we will, too, which is what we're very long -- I guess, long term, very greedy with this deal with now the commercialization risk effectively removed. When I was a banker, I would drop this discount rate on this company tremendously because of this deal. And so from our perspective, that's really exciting.

And a final question on small one, it's more about pricing. And when it comes to pricing, after we launch it, we're trying to get access to like national reimbursement list. So who's going to have the final say on the pricing? It's going to be Hua or it's going to be Bayer?

Well, again, it's confidential, it's not in the press release, but as the owner, as the MAH and just from the fact that this is a commercial contract, you would think that we would be smart enough and then you would be correct in thinking that, we would never agree to a price that would not be profitable for us. As the manufacturer and as the owner, we just would not do that. Both sides are very incentivized to price this properly, and that was a lot of discussion. But at the end, as the owner, you would think that, if push came to shove, that would be an important thing for us. It will be very collaborative. I think initially -- there's two ways to think about that, Ziyi, right? The initial price, which, obviously, I don't think there'll be a fight about that. It's when the third party, the government comes in with NRDL. And then that's when the pressure comes. And that comes with all pharmaceutical companies in China. But as the owner -- and that's why Dr. Chen insisted on being an MAH owner. And we bear some of the costs associated with that, but we're not going to give up that. That would also impact global pricing implications for us, in our view. It's a very important point.

Yes. I think very important that Hua Medicine as a leader of a China innovation company and also bring the benefit to the Chinese patients with the global first-in-class launch in China. And that's very important to our people, to our government. And the most important thing at the end of the day is whether you can quickly expand the patient population that getting the treatment. And then that's where for the primary care think initially. And then we have the price strategy. And then once we get an NRDL, that's another -- we are doing that, considering this is the -- in our business term [Foreign Language] and then this opportunity on the business over the next 15 years using our patent life. It's a lot of things that we can really build up. And then actually, now is in action. That's what I'm getting excited about this. It's not on the paper anymore. It's impact being a partner.

Dr. Chen, there's a question, and it kind of leads to this from one of our investors that how does Bayer fit into the long-term plan for customized diabetes care. That's a great question. And just how they think about it holistically. And even before the announcement of our deal, they had actually done a medical device deal that Dr. Chen was talking about with WaveForm. And WaveForm provides a medical device for continuous glucose monitoring. And if you think about it, right, especially with COVID-19 impact and all these various things, this -- and the ADA now really focusing on time-in-range, right? Well, with time-in-range, you need to fix the person through the glucokinase fixing. But then actually to verify, you really need a CGM, right? And then the benefit is kind of a cure. And that's how they kind of think about it is holistically, this is all very wonderful. And I think from that perspective, later on with our personalized medicine approach and all this stuff, it's just going to fit very well into how they think about it with the shared mission and shared view. Can we cure everybody? The answer, I think, everybody knows is not. But of what current drug even tries, and that's the sad part. And so if you can get 5% or 10% or prediabetic IGT, why would you not do that? And why would you not take dorzagliatin first, especially with its wonderful safety and tolerability profile, right, and try to give people a chance to fix and restore glucose homeostasis? And if you can't, then go further on. Dr. Chen was talking about it. I mean we're seeing amazing differences between 301 and 302 outcomes, right? 301 is very different from 302, where people have taken other drugs. And after they finish 302, they really need to go on some other drugs. And 301, we're not seeing the same. So these are the wonderful kind of things that is very consistent, I think, with our science, but it's not just let's lower blood sugar, right, like everybody else.

Yes. Certainly, a very important aspect to continue the standard of the care. Many years ago, when I work at Roche and then we come up with a personalized medicine in cancer care, and now become the standard of the industry. I think diabetes will be treated in the same way, it's more processional or personalized treatment and an algorithm that Hua Medicine has developed to classify Type 2 diabetes and working with existing more [indiscernible] alone, be able to control the disease and then not letting the complication to happen, not letting the disease to progress or cull down, that created a huge value to the patients and the medical community. And I think that using dorzagliatin earlier, using the combination earlier, is what the industry is in the practice, not only in U.S. and also in China, the medical community has been raising the request to having a combination serve here earlier. So that's where Hua Medicine now having dorzagliatin as one of the products, and then we'll quickly be able to launch kind of other products in the fixed-dose combination masses. And together with the existing therapy and then bring the balance to the personal needs in diabetes care. And then Bayer certainly has been preparing for that over the last 10 years, not only just selling packables, but also think about what's the best way to achieve diabetes-free in China. And the technology is brought in with the diagnostic and glucose consider -- continued monitoring is the way to enhance our capabilities of working together to bring more value to our investors.

So I see there are a couple of more questions, and there's waiting online. So the next question comes from Tony Ren of CLSA.

Congratulations, Dr. Chen and George. So Ziyi actually asked a couple of questions that I also had on my list so I'll skip through those. So what I want to ask right now is basically just 2 questions. So one is about the regulatory progress for those in China. We are estimating that you guys are going to get data at the end of this year, follow China NDA in 2021 and starting to generate some meaningful revenue together with Bayer in 2022. So does the partnership agreement with Bayer changes this at all? Does the -- perhaps the halo effect of Bayer would allow us to move the regulatory filing a little bit earlier. So that's question number one. And the second one is that right now, it appears to be a China-only agreement. So perhaps, could you guys give us a sense about whether you guys are talking about taking it global? Or how are the discussions with other partners progressing, to the extent that you are able to?

Okay. Thanks. This is a very good question. I think Hua Medicine has working with our advisers in the regulatory and also our internal team preparing the dossiers for this in the filing and network I said a couple of years ago with documents in the CMC and the preclinical and bringing them in the clinical form and so on and in place end of the year. And then what is waiting for the total [indiscernible] is to be submitted is the Phase III study results. And then we have agreement, as you know, with the regulatory agencies of our filed NDA with the 2 52-week results, and that will happen pretty soon. I think the projection is that this month and there will have the last patient now for the 52 weeks and then September, we'll finish up the whole 52 weeks for 302, the metformin [indiscernible] . So that gives us the time to analyze, clean up the data and then database log for the top line end of the year. And then have the dossier ready for early next year and file in the first half, roughly time frame. So that's the time lines and, I think, what we've been more to date and then from the partner point of view, from Hua Medicine point of view, I think we all want to get us -- put our hands on patients early. And then I think the time line, we mutually agreed as we previously said. And then in terms of global partnership, diabetes is a disease, has a lot of factor related to the genetics, lifestyle, prescription and also medical conditions. I think Hua Medicine is always looking for the best partner in the country and the regions as the medical practice. And then the policy and then the medicine may have offered unfair advantage. And we're in this now throughout the market and this is medical position and then philosophy, and then we do believe Bayer is our best partner in China. And then they are our partners, we believe, in the States and in Europe. This is things that we've been working on. And George is taking the leadership on that. I think at the end of the day, we would like to consider and launch the product, right? The product itself, the price, policy and then [indiscernible]. And then the channels, right, the distributors, who also [indiscernible] all four teams are very regional and are related. And then so to be more precisely define the target and define the success of being a commercialization and in the partnership development as based on our company strategy and philosophy, right? We are always looking for a fast sourcing strategy, instead of outsourcing, so that the best partner will be identified and then we can look together for long term. George may have more insight on this that he want to share with you.

No, I think that's good. There was one question somebody had posted, which is how long does the patient expect it to have to be on dorzagliatin to be cured. I think the -- we only have anecdotal evidence on this we've shared with people before. So it isn't how long you are on the GKA or on dorzagliatin, it's actually what condition and what state that patient is. So the more beta cells that they have, the earlier they take it, then obviously, the sensors that we fixed there, then they would be on. So the only real -- the only data anecdotally at the most is from our Phase II where after 12 weeks in the drug-naive patients. There was a percentage up to like 10% of a very -- of these drug naive that after 12 weeks, they haven't been taking drug for 2, 3 years. We'll be following that after our 52-week. But that certainly something very exciting and interesting, but it's really after launch that we will see kind of this difference in demographics. It's a great question to ask because that's what we're aspiring for. But you're not going to get everyone and it's not going to be a fit thing. I think Dr. Chen, some of the doctors were saying to you, can some of the patients instead of taking it twice a day, let's switch to now to once-a-day because they've gotten better or their conditions and things like that are very exciting and how it should properly work, given the diversity and the difference in variability of the patients that are diabetic. And some of them will need combo. That's our whole personalized -- and that's why we're a cornerstone, right? We're not looking to -- we're not looking to completely displace these other drugs. They're good drugs that are there. It just depends on the patient.

Yes. That's a very good point. I think as we say, diabetes is a very complicated disease, genetic, lifestyle, full structure and then medical conditions and the environment. However, in the current clinical setting, we only monitor blood glucose and then polymerase study space is one point. Blood glucose [indiscernible] you have this condition, which is not the best way to define the disease. And also it's not to treat a disease vector. So over the years and then Hua Medicine has been developing the dynamic environment and then define the way of understanding the cause of the disease. And then we also identify certain sub patient population will benefit from dorzagliatin immediately, and it may have a long-lasting potential, and we see this in the Phase II study. And now we see this anecdotal evidence in the Phase III study, and which fits our initial hypothesis for the drug-naive patients. And then if you treat it early and then they already will have their remission. And then on the other side, I know if we can prevent diabetic patients getting to get over the hill and then into the Type 2 diabetes and then that's even better. So that's where a huge opportunity will start, but it offers the hope, right? The drug alone is able to treat the diabetes in a relatively short period of time. However, if you have a 5- to 10-year disease history, has been used many other drugs and then over the time and then still come out of control the diabetes. And then this is not just [indiscernible] beta cell more function as a multiple, more functions in organ. And in this situation, I think, through the fixed sensor and then adding the other therapies and address the systematic issue so that we can control the disease progression from the diabetes into diabetes complication. And that's very valuable because at the end of the day, the damage, the irreversible damage to your organ and then lost of body function is the diabetes complication, and then we don't want our patients to get into that. And unfortunately, this is the severity in China when people find they're diabetic, they find -- first, they want to -- the other functional disorder and then they have to go to hospital and accidentally they find they are in the late-stage of Type 2 diabetes. So I think with the improved medical environment and then regarding policy that enforcing the diabetes hypertension to be taken care of at a community state. And then while working with Professor Zhu Dalong in Chinese Diabetes Society, expanding the diabetes day into diabetes months and then increase awareness, and then I think that will increase significantly the market size and then market accessibility, especially working with Bayer as the troops around the territory, okay?

I think due to some limit, we will allow one last question. But I think the question is being partially answered. Maybe Dr. Chen or George, see if you could add more comments to this. So the question comes from Kemp Dolliver of Cherrystone Hill Capital Management. His questions are, assuming that you find partners for markets outside China, how do we intend to invest in the business? Would you expand the pipeline and/or build an integrated business in China?

Yes. Like I already mentioned that the medical community in the diabetes world has a different medical practice and also the disease and disease cause or primary cause of the disease may be different from the Western and China and Eastern, and this has been published by Professor Yang Wenying in this New England Journal of Medicine, has been further reported over the last 10 years, that we need more personalized diabetes care coordinations. So I think, as I said, we will define the best partners in the region who have access of the patient population and understand the fundamental medical community needs and then -- so that working with our own KOL, Dr. Dr. Franz Matschinsky, and then [indiscernible] and our advisory Board collectively to find the best partner in the region and especially in the major country, Europe, United States and Japan. Now that said, there's other regions in Southeast Asia and then Middle East has an increasing diabetes incidents. And then they doubled their diabetes population in the next 10 years. And there's huge unmet medical needs in those areas, and we would like to offer our help to those people. So there are going to be a very different strategy of addressing them. And then if you look at the diabetes care environment, then very few multinational company covers their global business. And then they always partner with the local partners and then gather medicine to the hand of the patients locally more effectively and also be able to have a sustained long-term benefit around the global business. So that's what we're thinking. And our medicine has been working with our partners over the last 10 years and established where we were today, become a leading biotech in diabetes care and then having the breakthrough technology. And technology platform and then more products will come out from here and the technology, diabetes care technology will come out from here. And then we will continue to working with people like WuXi, now like Bayer, to drive our business forward.

Okay. Thank you, Dr. Chen. So from our side, I think that completes the Q&A session. So in closing, on behalf of Hua Medicine's entire management team, we'd like to thank you again for your participation in today's call. If you have any further inquiries in the future, please feel free to contact Hua Medicine's Investor Relations team or ICA team. Thank you. Thank you for your time today.

Thank you. Thanks.