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

Good day, everyone, and thank you for attending Hua Medicine's 2021 Interim Results Conference Call hosted by ICA Investor Relations, the company's Investor Relations adviser. Today's call is being recorded. On the call today are Dr. Li Chen, Founder, Chief Executive Officer, Chief Scientific Officer and Executive Director; and Mr. George Lin, Chief Financial Officer and Executive Director. Dr. Li Chen will start the call with an overview of the company's highlights, including clinical trials and recognitions, followed by a pipeline update. And then, Mr. George Lin will give his thoughts on the numbers and the updated guidance before we open up the call for Q&A. Management 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 hand on Zoom for an opportunity to speak with the management team during the Q&A session. For your information, 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. Please go ahead. Thank you.

Thank you. Good afternoon, good morning and good -- very early morning. Thank you very much for participating Hua Medicine's interim results report. Hua Medicine is a clinical-stage company working on the innovation solutions for the diabetes and neurodegeneration diseases. This is the area we set forth to work on because we are facing an aging world and much needed cares in the diabetes, neurodegeneration area is require innovations and then come up with new standards and new medicine. In the next slide, I'll give you an overview of recent progress on our endeavor to discover the world's first-in-class glucokinase activator for diabetes. And this is the dorzagliatin and its NDA has been filed to the China regulatories and then for the indication of monotherapy for drug-naive Type 2 diabetes patients and add-on to metformin for the metformin failed Type 2 diabetes patients. This is very important milestone, not only for Hua Medicine, but also for the medical care community that in the diabetes care upon the approval of this drug by the regulatory agency in China has become the first-in-class new diabetes drug. This is going to be the tenth class of the drug, but with 5 very important characteristics that are going to change the health care in the diabetes. First of all, this drug has a very novel concept by treating diabetes for the underlying cause of the disease through rescuing the early phase insulin secretion. This is a very important fact that the Type 2 diabetes is initiated by loss of the first phase insulin secretion functions and then developing to the disease as a prolong with new -- with the drug indication. The second area will be the new mechanism of action using the allosteric activation process to regulate the glucokinase enzyme. That is very important to provide sustained efficacy and the safety profile and making dorzagliatin as the cornerstone therapy for diabetes care. Of course, it is a novel chemical entity and also with a new formulation, most importantly, is bringing the novel benefit in improving the beta cell function and the reduction of insulin resistance and which is very important for the sustained glycemic control and a remission in the diabetes. So those 5 characters differentiated with the new drugs people really talking to, especially for the [ me-too class, ] where they only have the novel chemical entity. However, the novel concept, novel mechanism of action, novel formulation and an additional benefit to the clinic use will be very important for this first-in-class novel antidiabetics. And after the submission of our NDA to the NMPA in China, the regulatory agencies have the subsidiary divisions in CDE, CFDI, CPC and NIFDCs are all engage in full-blown inspections and reviewing process. And hopefully, that we'll go through this process and then get the drug approved in the near future. In respect to preparation for the approval of the NDA and also the launch of this new drug, our manufacturing capability currently run by CRO and CDMOs has fully validated and is ready for commercial production. Adding on this, in anticipation in the future market growth and product needs, we have established a new manufacturing company at Lingang, Shanghai area and to run these operations in 2025 time frame and provide drug supplies in China and the rest of the world. We have also established the commercial team, which while engaging our product distribution management and market entry. In China, as you know, it's very important to have an efficient drug distribution network that we able to send our drug to the different regions and provinces and cities. And this work has been established with our internal team in partner with the major distribution channel companies. And we are also working on the market entry, dealing with the drug in price and then the NRDL entries together with our payers, medical and the marketing team engaging on the product launch readiness. So as we've been moving along, you can see in the next slide, Hua Medicine is also building up our product pipeline and R&D focus with dorzagliatin as a cornerstone therapy and then adding on the existing antidiabetic medicines to create a portfolio of the drugs that with different indications in the Type 2 diabetes care treatment, which is a part of agreement with our Bayer colleagues that upon we achieve approval for the new indications with a new milestone payment that will be received by Hua Medicine, and then Bayer will be also responsible for commercialize and then promote those products into China market. On top of the antidiabetic medicines using dorzagliatin and the combinations, and then we're also expanding our capability in the areas of neurodegeneration, metabolic diseases using dorzagliatin platform and additional project mGLUR5 and fructose kinase inhibitors. And we are very pleased to let you know that following the Phase III study, the SEED work and the subject who engage in the DREAM study has come to the end. And the top line data will be presented by our leading investigators in the 6 China BioMed Innovation and Investment Conference to be held in September 25-27 in Suzhou, China. And this is very important milestone to demonstrate that after dorzagliatin treatment, our subject can sustain -- maintain their blood glucose level without further drug treatment. And then this reach to a very important control aspect and also be leading the change of the standard of diabetes care. And we are looking forward to see you in Suzhou at that time. Now with moving forward on the diabetes and Medicare, and we have discovered the connections about the diabetes glucose homeostasis in connection with glutamate homeostasis, and then mGLUR5 as the glutamate regulator is actually contributing to the neurodegeneration diseases, not only as in the PD-LID we're having studied but also recently discovered in the Alzheimer's diseases. Addition to this, we also have discovered that GLP-1 has a natural connection from the pancreatic and intestinal function to the central nervous system that regulates the neurodegeneration process. We call that neuroendocrine regulation. The next slide have shown that in the clinical studies that we have demonstrated that dorzagliatin involved in the GLP-1 regulation in the Type 2 diabetes patients. We're actually showing that the Type 2 diabetes patients upon receive GLP-1 have -- received dorzagliatin, have a significant increase of the total GLP-1, which is very important in the signaling pathway to managing not only the peripheral network, but also important in a central neurosystem management. On top of this, we also see the synergistic effect of the DPP-4 inhibitors with dorzagliatin, which significantly increase the active GLP-1. The active GLP-1 is very important in the regulation of beta cell function and insulin secretions. So this finding certainly is very important to support our future expansion in the disease indication and diabetes care and neurodegeneration pairs. In next slide, we're going to briefly show you why we take diabetes and -- as a major area that Hua Medicine put us the last 10 years to work on. Actually, if you look at what's happening in the diabetes field, even until today, the current treatment paradigm for Type 2 diabetes is not satisfactory because it cannot contain the disease progression, it cannot prevent diabetes complication. And we have to focus on the diabetes complication because it costs much more medical care expenditures because that we cannot control the blood glucose. In order to better control blood glucose, ADA and [ CDS VA ] are the 2 major diabetes economic and society and community provided guidelines to regulate the blood glucose fluctuation using timing range and also asking the physicians to use SGLT-2 or GLP-1 receptor agonist to control the diabetes complications. Now with this, we can see in the next slide, the impact of the diabetes in the global medical expenditures and also the cost in China related to the diabetes and diabetes complications. And all these complications is clearly related to the timing range for the blood glucose post-meal and under the fasting below the range. And the time-in-range lost in diabetes is very important factor to lead to the diabetes complication, and dorzagliatin is here to correct that. That is dorzagliatin through regulating the glucose homeostasis and then put the blood glucose fluctuation into the healthy range so that we can prevent the diabetes complication and then contributing to the global market. Next slide was showing that why we think glucokinase activator can address the underlying cause of the diseases and become the cornerstone therapy for the treating diabetes. Diabetes have 4 major factors that contributing to the disease onset: genetically, environmental inflammation as epigenetic factor, and also insulin resistance. At the end of the day, they all contribute to the final common denominator, which is lost the beta cell secretory function for beta-cell mass. And that is in the clinic, we lost the first phase insulin secretion. With existing therapy, metformin or GLP-1 plus metformin or insulin plus metformin cannot rescue this defect because in this process of the beta-cell secretory dysfunction, GK played the major role in this whole process. That is, if we do not fix and repair glucokinase as the gluco sensor function, we'll not be able to address the underlying cause of the Type 2 diabetes, which will lead to the complications and unsustained treatment. So next slide basically showing that over the years, after 17 clinical studies and many preclinical studies, we have demonstrated dorzagliatin as a dual-acting glucokinase allosteric activator, be able to remodel the glucose homeostasis because it improves the beta cell secretary function and it immediately acting upon the pancreatic islets function. On the right side, you can see the most recent study from the Godfather of Glucokinase, Franz Matschinsky, showing in the study using the islets from Type 2 diabetes patients that dorzagliatin dose dependently improves the insulin secreting function in the Type 2 diabetes patients. And then this is a further evidence in supporting that glucokinase activator dorzagliatin acted on glucose sensor GK in the pancreas and also driving the insulin secretion to the next level where this will help to repair the glucose-sensing function for the Type 2 diabetes patients. So next slide, basically showing and updating you what we have discussed and shared at ADA on the most recent work that dorzagliatin in a SEED study will be able to effectively not only control the blood glucose A1C and a 2-hour postprandial glucose, but also controls very well in the beta cell function improvement and the reduction of insulin resistance. In the next slide showing in the DAWN trial where add-on metformin to treat metformin failed patients that blood glucose control done very well. At the same time, with the improvement of the beta cell function and the reduction of insulin resistance, the root cause of Type 2 diabetes. Next slide, basically showing that in the combination study of dorzagliatin with sitagliptin and empagliflozin, we're showing that in both combinations, dorzagliatin adding to sitagliptin or empagliflozin improve the beta cell functions over either single drugs. Next slide, showing the benefit of improving the beta cell function lead to the improvement of the gluco reduction. And you can see that in the combinations, the gluco reduction is also in -- not only in the total glucose of the AUC represented and also the Cmax of blood glucose, which were -- is very important to contribute to what we call the time-in-range in the study. So with this, you can see that dorzagliatin, as an important therapy, targeted on the underlying cause of the Type 2 diabetes and be able to importantly contribute to modifying the disease conditions. And therefore, in the next slide, we're basically showing that with this cornerstone therapy and then we'll be able working with metformin SGLT-2, DPP-4, GLP-1, or insulin to treat Type 2 diabetes with different patient populations and indications and also bring us into the new territory of the NASH and the Type 1 diabetes as we indicated that the discovery work and clinical design work has been initiated and the areas that we've been working on will offer a much important indication in the disease treatment community. So in the next slide, and you can see that we have a continuing a lot of work to do. Our partner, Bayer, we have an anniversary for announced our collaborations. And then we are marching toward the next milestone that the NDA approval and the product launch. And obviously, we have joint efforts for many medical community educations and then KOL discussions to how to position this drug into China market and then best help the patients in China. And also, we'll work optimizing our manufacturing capabilities, working with WuXi STA, TigerMed, Desano and so to improve our capabilities and the cost of goods for the dorzagliatin and then bring a better benefit to the company and investors. We are also working on the new drug discovery, as I mentioned, that mGLUR5 NAM and PAM are the very important regulators in the neurodegeneration diseases in PD-LID and the potential AD. And then the preclinical work and the basic science discoveries has been conducted within Hua Medicine and our academic collaborators. And then hopefully, in the near future, I can report you a breakthrough paradigm for managing the neurodegeneration diseases through glutamate homeostasis. And fructokinase is a very important enzyme in the metabolic diseases and dyslipidemia, and Hua Medicine has a long time investigations in the fructose kinase area and now we're engaging the fructokinase inhibitor discovery in collaboration with partners and so on. We hope to bring you the benefit in this area. Now we are very well positioned financially. We have a very strong balance sheet with 8 million -- CNY 800 million in cash [indiscernible], right, in cash and then also additional milestone payment will be received upon the NDA approval and the product launch in 2022. So with this, I would invite my dear colleague and company's CFO, George Lin, to give you an update on the financial review. George?

Great. Thanks, Dr. Chen. As is customary, this section will be very short. I think you guys have heard this through before. So very quickly, let me take you through our cash balance and our spend for the last -- this last reporting period. So to be very specific, we had cash balance of CNY 846.9 million of cash at the end of June versus just slightly over CNY 1 billion last period, 6/30/2020. The total cash decreased CNY 185 million, of which most of the amount was in operating activities. As some of you know, we did move into a new headquarters, and we'll explain some of the expenses, but the remaining expenses fairly nominal, around CNY 10 million was for that. You can see the financing activities, CNY 5.8 million and exchange rates as the renminbi strengthened also caused a net exchange rate change of about $5 million (sic) [ CNY 5 million ]. Next slide. For the loss before tax, CNY 165.3 million in the first half of 2021 versus CNY 173.5 million in the same period last year. Our research and development expenses were approximately CNY 98 million in the first half of 2021 versus CNY 112.3 million. So CNY 98 million of CNY 165 million is from R&D. Most of the expenses, as you can probably surmise was -- the decrease was due to the completion of the 2 Phase III trials in 2020 that amounted to a total of about CNY 28 million. An increase in CNY 2.8 million for CMC work related principally to the chemical and process research for our fructose kinase inhibitor. I can tell you that this is a fraction of the cost that Pfizer has actually spent on this program, and we are moving very quickly on finding a lead candidate for this. So that's very, very exciting. And an increase of CNY 3 million for dorzagliatin nonclinical studies, as you all know, principally related to the NDA filing and also FDC efficacy studies in combination along with animal studies for cognitive disorder, as Dr. Chen was talking about neurodegenerative. Next slide. So the R&D expenses, an increase of CNY 10.2 million for others. This was primarily attributable to the allocation of rental fee moving out and then moving into our new headquarters as we had discussed. And you can see the comparison here from the previous year, which is CNY 112 million. So we actually decreased that from -- in this period. Next slide. And administrative expenses, again, pretty much the same this year compared to last year, CNY 63.5 million in the first half of 2021 versus CNY 64.2 million in the first half of 2020. Decrease in labor costs attributable to share-based payments of about CNY 4 million under the accelerated amortization method and a decrease of CNY 4.7 million as we got very favorable rates going forward with our new headquarters, even though it's much larger space and brand new. Again, we're hoping that this also extends to our further Lingang showing the Shanghai government support of our company. And then adjusted for the increase of CNY 2.6 million in D&A mainly due to, again, new headquarters, more meetings compared to last year, which was lockdown. This year, we're definitely moving about and especially with the commercialization team and also additional work related to DREAM, et cetera, a lot more activity has increased. So that's the financial situation. I'll summarize it up with the next slide with a summary. Again, we have global rights to dorzagliatin. That includes the composition of matter, process, formulation and then multiple products in FDC with other OADs. Those FDC patents and formulation go all the way out to -- some of them to 2039. We have the commercialization partner. We consider to be the best. And for the last 20 years, it was #1 in China with Bayer. We've met our primary endpoints and submitted our NDA, which was accepted in April 2021. As a reminder to people, the technical rule is 200 working days. So we're presuming about 1 year from a time line perspective as kind of a target, as people know the NMPA can do what they do, but this is what we've been giving guidance. First-in-class drug to significantly and sustainably reduce HbA1c, which targets, right, the underlying cause. So that's the first novel concept. And I think what's really exciting, as Dr. Chen mentioned, for the first time ever in Type 2 diabetes, we'll get to see some controlled sustained rate of glucose control without our drug, after treatment of our drug, which is going to be a new indicator and will cause people to think how exactly are we leaving this very lengthy lasting effect on patients. That's very, very exciting for us. The combination with DPP-4 and SGLT-2 is very exciting, especially with the new data on SGLT-2. So that's going to definitely have a long-term space, especially as it relates to heart. DPP-4, our excitement with the GLP-1 secretion with our drug combined with DPP-4 could be a very formidable potential oral GLP-1 competitor. So that's exciting. And then our drug is suitable for Type 2 patients with chronic kidney disease across all stages. So very, very large market and, in anticipation of our commercialization, as Dr. Chen mentioned, we've established a new drug manufacturing company to support really the commercial supply that we expect to receive once the drug gets rolling, starting within the third year we can expect -- third to fourth year, we could expect up to 1 billion pills of requirements is kind of our current modeling. Who knows whether that will be, but that's our current anticipation, and we must be prepared for it. And then, of course, very strong balance sheet of CNY 846.9 million cash as of June 30, 2021. So with that, that concludes our presentation. We're open for Q&A.

This concludes our prepared remarks. We will open the call up for Q&A. [Operator Instructions] So now we will open the floor up for questions. So first, we have an investor, [ Lu Ming Dau ]. His first question is latest progress in HMM0303 comparison against sulfonylurea and DPP-4 inhibitor and HMM0304 comparison against alpha-glucosidase inhibitor.

Very interesting questions. I think one of the questions that you're talking about in the comparison against sulfonylurea and DPP-4 inhibitors. And then, those are the previous discussions in prior -- the Bayer collaboration. And after the Bayer collaboration, our pipeline has been updated, geared toward the common interest in our future pipeline and milestone development. So we are currently focusing on developing the -- our combination with DPP-4 inhibitors and also not developing a direct comparison with alpha-glucosidase. The decision from the alpha-glucosidase acarbose is a major product from Bayer and then it has been a big sales in China over the last 10 years before they entered into the new procurement regime. And the Bayer team considered dorzagliatin as a super acarbose. And they would like to replace the acarbose in the market, and then really considering how acarbose and dorzagliatin will eventually working together is a separate approach, where we're considering, in the longer term, dorzagliatin will moving to the disease prevention, to prevent the prediabetics IGT patients developing into the diabetes. And that's where I think the acarbose alpha-glucosidase inhibitor will be beneficial in working with dorzagliatin. Thank you. And the second progress in the global license now, there is several discussions ongoing with companies around a global license out, and George has been working very hard on this. George, do you have comments on this?

No, nothing material to report, except for what Dr. Chen said is that we continue to have conversations with various parties, including road and belt countries. I think just to give people a sense of kind of some of the navigation route is having done our Phase III registrational trials in China, China has never had a first-in-class drug. And so it's not a reference country for most of these other countries. But as people saw with the COVID and vaccine, we're seeing new precedent. And so from that perspective, we are getting some traction in these other countries. And so we will continue having these discussions. We expect with more data and with more time, as we see the things like DREAM, there will be more creative ways to potentially get accelerated approval in some of these other more mature markets that have very high impediments. But that's pretty much all we can disclose right now.

Okay. Great. We have [ Matthew ]. So your question here, and this is a question, I want to know how quick the manufacturing capability can scale up? And then what's the cost curve might look like? This is the manufacturing, as you all know, we have been working with WuXi PharmaTech STA and Desano in the drug development stage. And then based on the MAH process and the current China drug administration law, our drug launch is based on our CDMO partner, WuXi and Desano. And their capability at this moment is getting up to, what's that, by 800 million pills. I got to get this thing straight, 800 million pills, that's the current capacity, which was trajected at the third year in the commercialization. And then fourth year, and then we're getting to 1 billion pills, and that's where our new manufacturing sites will enter into. And then this will be in the investment of the land and then in the equipment at this moment. And then that will be involved in the investment in the next couple of years for establishment of this new facility.

Okay. Thank you, Dr. Chen. We have another question coming from investor, [ Lu Ming Dau ]. His question is, any progress in dorzagliatin global license out?

I think we have answered that already.

Yes. I think Lai Chen too has a question, right? Hand raised.

Yes, from Goldman.

There's another one, okay? Hand raised.

Can you hear me?

Yes.

I have a few. Maybe I'll just first follow on the manufacturing site. How do we plan to fund the construction, what's the CapEx for this one?

The detail the CapEx plan was in the development. I think overall, that's a CNY 1.9 billion investment total over the next 5 years.

You said CNY 1.9 billion?

RMB, right, right.

Of which, a substantial amount would be subsidized through loans by the government as well, right, Dr. Chen? Just...

Yes.

Up to 50% to 60%.

So how do we plan to fund the CNY 1.9 billion investment for the manufacturing site?

The finance, as George mentioned that one is that from the government subsidized the loan -- bank loans and then the debts. Then some investment from the Hua Medicine global.

And also, Bayer milestone specifically linked to manufacturing as we validate the manufacturing as well.

The milestone payment from Bayer.

As it relates specifically to manufacturing, yes.

How much roughly were that...

We haven't disclosed that, but it won't be an issue once we are building that. As Dr. Chen said, this is over a 5-year period of time, which is very actually back-end loaded. In terms of the land, it's not a significant amount. And then the actual factory being built, a lot of that will be funded by the government. And by then, we would have good visibility as to the actual need.

Okay. Because the -- or maybe just put another angle. We have about CNY 800 million cash, right? So we have a CapEx of CNY 1.9 billion for the manufacturing site. I just want to get a little color, how do we plan to use our cash on hand? If that's the case, do we plan to maybe raise additional money either through debt or through equity? Just want to have a little more color on this.

But yes, I guess, one of your key assumptions is this drug won't be approved, and we won't have revenue, and we won't get any milestones, so we need to raise money through equity. And that's not an operating basis, right? If you look at our Bayer contract a year ago, we have over CNY 3 billion of milestones still to be collected, of which some are off of clinical development but others are based off of sales milestones. And then we also get revenue as well. So some of this will be equity funded, potentially. But as Dr. Chen mentioned, the first 3 to 4 years of supply comes from our CMOs, which is WuXi STA and Desano, right? And then we've got [indiscernible] as a backup, which we've indicated in the press release. Where the factory really comes into play is actually to, I think Matthew's question, is that it would significantly drop our COGS and especially by that time, ideally, the drug supply would be needed for ex China as well, which then would come from this factory. So it's not like today, we need to come up with CNY 1.9 billion or tomorrow we need to come up CNY 1.9 billion. I think that's kind of like a big number that Dr. Chen has in his budget, but we actually would not need a lot of that payment until probably the fourth or fifth year. And a lot of it is funded initially by the government. They have our plans as well, which is why they would either agree to let us be in Lingang, which is the same area as Tesla rather than anybody else.

Got it. So what do you think the CapEx...

CNY 1.9 billion is the total investment. And then I think the CapEx is around half of that. So -- and then 70% of that will be in the bank loans and then government subsidy. So that's where the plans aren't going. Obviously, what George mentioned is that additional milestone bonuses -- not bonus, payment from the Bayer related to the drug approval, product launch and also our capacity in the manufacturing, although it's part of the income set in line with the development of this manufacturing capability. And then you may ask, why do we need to have this own manufacturing capability. This is really the pill factory, right, for the solid dosage not only for the dorzagliatin but also for the fixed dose combinations that come in line in the time of 2025, 2026, and additional research and development and also process development going to be engaged in the future manufacturing needs. So overall, I think with the -- that's one part. The other part is the security for the drug supply chain. We as the primary drug providers and once we get launched, we'll need multiple sites to manage the drug supply. Desano is one of them, and then we need early internal capability to have the drug supply around 50% of the overall drug supply, at the same time, really be able to using our internal practice to drive down the overall cost of this cost of goods. So that will bring us additional benefit, and then the profitability will be significantly improved when this product manufacturing factory get online.

Understood. Yes. That was helpful. So maybe just a follow up on the latest update on the regulatory side. So what's the latest status now? And when do we expect a potential approval?

The latest update is that the regulatory agency, as I listed, is all very busy doing their work. First of all, we have getting the CDE's request with different type of documents that -- for their internal review. And also, we get CFDI, which is the drug site, manufacturing site, inspection, clinical site inspection, central labs, and also the research and development facility inspections ongoing. And this is also part of this drug approval process. On top of this, and there the drug name validation approval from CPC. And the methodologies for validating our quality control and analytical masters and so on is also under the evaluation of national institute for metric environment. So on a yard of the activities is currently ongoing. With the China new regulations and then from the -- effective from last July is that for our drug, there's an expected giving feedback -- the regulatory feedback approval in 200 working days, roughly a year, a calendar year period of time. Now the caveat is whether the COVID will pose a pressure for the regulatory agencies conducting the work in the 5 area. I think the site inspection certainly is something that may be impacted. But so far, everything is moving smoothly. So that's -- we continue expecting that the drug getting approval sometime next year. And then we'll update with you guys when we have more definitive answers and updates.

Great. So what's the commercial preparation right now in collaboration with supplier?

Commercial collaboration is very important as Hua Medicine transition from R&D biotech into a biopharma, as everybody talking about. Internally, we need to have our commercial team established to manage the national distributor companies who move our drug from our pill factory to the -- each province or cities. So that's one thing. The team is in place and partnership with the 4 major national distributors is ongoing, discussions. And then the second area is working with the experts and then the KOLs in determining our price and then speed our strategies. And then those are the things with the team now within Hua Medicine and then working with Bayer and developing that to prepare for launch. The third thing, obviously, used to be part of Hua Medicine's work. And now is the major efforts from Bayer is the marketing and the medical education. And where Bayer now join force with Hua Medicine on the medical education conferences, meetings with KOLs and discussing the market entry and then best practice treatment with dorzagliatin in the clinic. So those are the 3 areas that are ongoing. However, with the Bayer's major efforts is in the marketing, is on the medical education and preparing the sales force and getting engaged for the commercialization.

So maybe just last one from me. What's our data presentation or publication plan forward to Phase III study, the 301 or 302?

I can tell you that we are -- we have submitted our manuscript to the leading journals and now receive the reviewers' comments, and then we are doing the revision. So this is one very important progress, obviously. And then there are additional publications on the pipeline relative to the AI-driven data mining, additional learnings from the subgroup analysis and as well as the additional clinical trials where we have this metformin add-on, we have the sitagliptin add-on, we have empagliflozin add-on, these are all add-on trials. We have learned very important information on the pharmacokinetic and pharmacodynamic relationship, which help us to better position dorzagliatin to the patients with more precision and with more personalized approach. So yes, there's a handful of papers now is in either drafting or in reviewing or in the preparation.

So we're going to see the detailed data from the 2 Phase III first in a publication rather than present at the medical conference. Is that the plan?

Yes. Obviously, well, we're going to have more data in the publications. And this is actually, as you know, in those leading journals and you can't just publish the things you already disclosed, right? So there are things that we'll share with you. Where I think the point that I gave you on dorzagliatin, the 5 characters as the first-in-class drug; the concept; the MOAs, the mechanism of actions, right; and then the benefits in the PK for the renal impaired patients related to the structure; and then additional efforts in the formulations and really be able to let the drug reach to the 3 target organ where GK stay there and then managing the gluco hemostasis in a systematic work. All those aspects will gradually be released through the publication.

Thank you, Dr. Chen. We have a question from [ Vincee Yip ]. The question is, any updates on the plans of U.S. Phase I trial to test fixed dose combinations? Are we on track to find a global partner to co-develop dorzagliatin?

The global partner thing is ongoing, as George and I has been discussed, that we are working with the appropriate partners that, first of all, will really have the capability to help and develop dorzagliatin in the region and that has the muscle to launch that. On the other questions, as the Type 1 diabetes, we have identified the key investigators, the KOL who we are working very closely to developing the protocols, and then we'll soon announce our IND filing in the fourth quarter in U.S. That's the new indication. And then what we believe in working with our KOLs is that because dorzagliatin work on the sensory function in the pancreas and in the intestinal and also working on the liver be able to improve the glycogen storage. And in this way, it will reduce the post-meal blood glucose and also reduce the hypoglycemia under the fasting conditions, especially for the Type 1 diabetes. For the Type 1 diabetes, the major needs is not get the blood glucose down, is to prevent the hypoglycemia. That means the blood gluco goes too low when using insulin. And then the current insulin pump will not be able to help to respond quickly enough to maintain the blood glucose go below the standard. So with the improvement of the pancreatic and also the liver function, dorzagliatin has the potential with the prevention of the hypoglycemia. You have seen this anti-hypoglycemia effect in the Type 2 diabetes and also the mechanism of action has suggested that the improvement of the post-meal gluco reduction has clearly related to the gluco uptake and storage in the liver. So that's important for the Type 1 diabetes, and then we hope that we'll be able to come up with a new paradigm for the treatment of Type 1 diabetes in combination with dorzagliatin. At the same time, we'll have the opportunity to testing dorzagliatin in working on the Type 2 diabetes in combination with insulin in China. That's a 2 separate trial. And then in both trials, we'll work on the subject has a relatively poor pancreatic beta cell functions but we would like to understand how dorzagliatin to improve the GK function in the pancreas and in the liver that able to restore the homeostatic control. And this is a very important aspect. And then the time line for the Type 1 work will be filed IND in U.S. and then initiate a study early next year.

Thank you, Dr. Chen. Due to time constraints, we're going to take one last question from [ Davey Leu ].

I have a really quick question. I think last time when we talked, it was -- you guys mentioned there was an investigator initiative study regarding the study for clinical remission. I understand that we're actively looking for that subpopulation where we're able to see that specific benefit from dorzagliatin. I wanted to get an update in terms of when we'll be able to see data from that? And what further steps we will take after we have the data?

Yes. The -- so we have received the top line data from the investigators, and -- because this is the investigator-sponsored trial, and then the investigator is planned to give a talk at one of the biomedical conferences in the Slide #5, I believe. If we can go to the Slide #5, the information for the conferences. This is the conference run by [indiscernible]. It is the 6th conferences. And in that conferences, we have engineered a session we called a global first release of the clinical data. So the DREAM study, that's the study you just mentioned, and we'll be the first around the presentation in that session. And the investigator, Professor [indiscernible] will representing the other investigators from 4 other hospitals, he will talk on that. And this is basically, as George also mentioned, for the first time as the oral agents able to show that after period of treatment and then the patients who reach the glycemic control point and then sustain that for a year result further medication. So that's a very important conference that if you are interested, we can provide you more detailed information from IR network.

Yes. Just to supplement that, I mean if you go on their website, they've already indicated the conference dates. And then as Dr. Chen mentioned, dorzagliatin will be presented by our principal investigators. This is their trial. Our trial ended at 52-, 53-week with both SEED and DAWN. DREAM study is their observation without our drug, without any other drug for a fairly long period of time, and then they will finally be able to release that data after full validation.

Okay. Thank you very much. And in closing, on behalf of Hua Medicine's entire management...

I'm sorry.

Sorry, is there...

Yes. I might add further question, but really quick, I'm sorry. So in terms of how do we kind of utilize the investigator-sponsored data going forward?

Please, the question again?

How do you plan to utilize the data from the DREAM study?

Okay. There's threefold of significance on this. First of all, as we have been looking into the literature, any antidiabetics and so-called blood gluco lowering drug through the intensive blood gluco lowering control and then be able to control the blood gluco A1C around 6%, which is close -- within the safe, healthy rank -- healthy people range. And then restore that and then blood gluco level rebound back to before the treatment. So that's the -- what we have learned. And in one of the slides showing that using metformin or using metformin plus GLP-1 or insulin plus metformin, they cannot get this remission. So that's very important for a new class of drug, and then when it fixed the sensor is able to bring the benefit to control the disease progression. That's one thing.

Yes. I mean, Dr. Chen more specifically, right, what we talk about we are the only drug that targets the underlying cause, the root cause. And people ask for a biomarker. I can't think of a better biomarker than getting our drug and then stopping all drug treatment and then seeing the lasting effect for, say, 1 year, right? So that will definitely change the paradigm of how patients, the medical doctors are. So...

So this is one part, right? From the clinical practice in the Type 2 diabetes area and then it's a very heterogenic disease in the spectrum of Type 2 diabetes. And you get Caucasian type, you get Eastern type, you get IGT-driven, and impair fasting, IFT-driven and then both driven or you get obesity driven, right? The complications offers you a very different picture on how to treat them. So with the SEED and then we see the signature of the subject who has performed well in the SEED study, which means in a drug-naive patients, they responded well in this 52-week treatment by dorzagliatin, right? So that's one information. And then this group, right, the subgroup of those, roughly about 60, 70 of those are followed up by the investigator. So that means this group respond well and then continue respond well. And then their disease get control. They do not relapse. So that's very important to help us in validating part of our algorithm we were developing for subclassification of Type 2 diabetes patients and then looking for a target therapy. And that's number two. Number three is this is for the drug-naive patients. There's also metformin treated tolerated patients. There's also metformin plus other therapy treated and tolerated patients, right? So those sort of patients would probably require a different paradigm with metformin and then adding together with the existing therapy, looking for a sustainability and then prevent the disease progression and so that we can eventually prevent the Type 2 diabetes complications. That can miserable diseases associated with the organ damage that comes from diabetes. So that's the 3 areas very important for us to decide what are the disease patients that dorzagliatin can effectively treat and also achieve the prevention disease development into later. And then obviously, this is also telling us that for diabetes treatment, we will, in the likelihood, through combination with dorzagliatin with existing therapy getting to the early-stage relatively intensified blood gluco control, and then making that available to the patients and then helping them to control and sustain the disease without further medication. So that were giving us different standard of the diabetes care.

Yes. I would just supplement that probably -- Dr. Chen, we should probably not speak any more about the principal investigators, what he's going to present because we don't know. So definitely try to attend this conference. And then as soon as this comes out, Davey, just mechanics-wise, as soon as it gets published, then it's -- as long as -- as soon as he's presented it and it becomes in the public domain, we will definitely put out a press release. And then there -- my understanding is the PIs are very excited about writing something for a medical journal, and that will follow as well. But that should be a very exciting milestone.

And Dr. Chen?

At the end of the day, it's basically showing that how important to fix the sensor because in the past, a lot of therapy can control the blood glucose very well. But if you take the drug off, the disease relapse. And here, we see the sign of retain the drug effect and without the drug. So that's exciting.

Okay. Great. Thank you, Dr. Chen. Thank you, George. 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 IR team or ICA. Thank you. This concludes today's call, and you may now all disconnect.