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

Good morning, ladies and gentlemen. Thank you for participating in the 2021 Annual Results Conference Call for Hua Medicine hosted by ICA Investor Relations, the company's Investor Relations Adviser. Before we start this call today, please note that the call will be recorded. On the call, we have Dr. Li Chen, Founder, CEO and Chief Scientific Officer; and Mr. George Lin, Chief Financial Officer and Executive Director of Hua Medicine. Dr. Chen will start with an overview of the company's highlights, including key business and pipeline updates and Mr. Lin will give his thoughts on the numbers and the updated guidance before we open for Q&A. Please note 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. Please go ahead. Thank you.

Good morning, everyone. Thank you very much or coming in and then to Hua Medicine 2021 annual results presentation. Hua Medicine is a highly differentiated biotech company. We focus on diabetes cares and then in China for the world, the innovation in diabetes is a must and then it is a mission possible to get it done in China. Last year, Hua Medicine has been focused on the 3 major areas to ensure dorzagliatin commercialization is well prepared. First, we submitted our first-in-class glucokinase modulator dorzagliatin for diabetes in March 30, 2021. And then it got accepted by the NMPA, the Chinese regulatory agency, in April 23. In the same year, the company working with the regulatory agencies have completed 6 technical reviews in the divisions within CDE and completed 7 on-site outlet by the Chinese regulatory agencies, which include 4 clinical research centers and the 3 manufacturing centers and all those audit went really well. And then the technical review has concluded in 2021 at the end of the year. And then also at the beginning of this year and just before Chinese New Year, we have successfully completed the clinical KOL review meeting for dorzagliatin. And now we're under the stage of working on the drug label and related activities with agency and expecting this globally first-in-class glucokinase modulator get approved this year. And then for 2 indications: one is the monotherapy for drug-naive type 2 diabetes patients. The other is add-on to metformin for the metformin tolerated type 2 diabetes patients. And this is a very effective investment into this larger unmet medical needs in this area with 2 indications, approval and symbolize a very successful milestone for Hua Medicine. And then during the process of preparing the NDA approval, we have been working with our partner, Bayer, and preparing the drug launch in the areas of developing the first-tier distributors, the market access and most importantly, the education about glucokinase and dorzagliatin in the area of diabetes care to the physicians and the KOLs. And then together, when this activity aspires, we have formed alliance with SinoPharm, to get their supply chain aligned through a strategic collaboration. At the same time, we have announced recently we have the strategic agreement for the drug supply with UCSDA. And then as well as one, we're going to let people know that our partnership with Desano for the drug product manufacturing is going to be online. The manufacturing factory in Lingang is up on construction. This is in the anticipation or in the future, the additional requirement for the drug supply in the commercial activities. Well, as many of you have known that dorzagliatin is a really novel first-in-class antidiabetic drug. Well, it is really focusing on glucokinase. Glucokinase is a gluco sensor and the diabetes gene and a drug target and most important facts has been illustrated by Dr. Franz Matschinsky showing that glucokinase defects can cost permanent neonatal diabetes, one is a homozygous mutation in the patients and also can cause hyperinsulinemia with hypoglycemia when the newborn was born. It is a very important diabetes gene and once it get defect and the impaired, the glucocontrol system went off and then the system went down. So Hua Medicine, together with our partners, have been working on this very important drug target over the last 10 years, has been able to design dorzagliatin and then demonstrated in a series of clinical studies showing that dorzagliatin improves the glucose sensitivity and most importantly, be able to repair the glucose stimulated early insulin secretion and then be able to achieve effective glycemic control with a very good safety and tolerability. I won't go into details on the list of clinical trials and the results that we have been published during the course of our study, but just highlight that in the early studies, exploratory phase, and we have shown dorzagliatin improved early phase insulin secretion in type 2 diabetes patients, which means this repairs the glucose stimulate insulin secretion, the fundamental cause of type 2 diabetes when this function is impaired. And then in the Phase III -- 2 Phase III studies the SEED and DAWN study, we have shown that to improve the [ GSIS ] process, and we'll be able to achieve very good blood glucose control without any type 2 diabetes patients early suffer from the hypoglycemia or weakness when they treated with insulin or insulin [indiscernible]. And this was not -- not seen with dorzagliatin. So the composite [indiscernible] that means blood glucose control, very well, no hypoglycemia, no weight gain impacts a very good among all the OADs. That means the oral antidiabetics. So this is further demonstrating the mechanism of actions through repairing the glucose sensor and able to restate the glucose hemostasis and then which leads to the diabetes remission, that was shown in the DREAM study that the patients who completed the SEED study and achieved blood glucose control with A1C less than 7%, went down for 1-year follow-up after this 12 months follow-up without any drug. 65% of the subjects maintained very well blood glucose control, which is what we call drug-free diabetes remission. And this has further demonstrated that after repairing the glucose stimulated early insulin secretion will be able to repair the glucose homeostasis and then control the blood glucose without drug. And obviously, the later mechanistic study with the sensitize study and then HMM0111 and the 110 study has further demonstrate the mechanism of action of this drug and also this benefit in repairing the GLP-1 secretion in the type 2 diabetes patients and be able to extend its application to all stage chronic kidney disease subjects with glycemic control needs without any dose justification. So this is a very important achievement showing that dorzagliatin is going to change the diabetes care and then drive the care to the diabetes remission. In the next slide, we're basically showing that in the process of managing diabetes, there's 2 fundamental factors that required to control diabetes. One is the essential factor, which is repairing the glucose stimulated insulin secretion. As I mentioned before, the other sufficient factor is basically to control blood glucose at the same time, control the body weight. There's a lot of attempts in the past that in the right study, we can see with metformin or TLP1 plus metformin or glargine, which is insulin plus metformin, you can control the blood glucose. And then we also know that we can control the body weight with exercise or GLP-1. But when you stop the drug and then -- the patient went back to the condition, basically the relapse of blood glucose and last, the effects in the beta cell function improvement was seen in the right study. And then in the other study called the DIRECT study, which is the weight loss-driven diabetes care. Now if the patients lost 15 kilogram of body weights, at the same time, lost the liver fat and the pancreas fat. And then the determined factor for whether you'll get diabetes cured or remission or not is whether you can repair the glucose stimulated early phase insulin secretion. If you cannot fix this GSIS and you will not be able to get the remission or the blood rogue control. So now through our study and the studies in the [rise] and direct, we can clearly see that diabetes, although there's a lot of factors related to the type 2 diabetes and a lot of genes in there, and then the fundamental root cause of the gene is glucokinase. And then repair dysfunction, restore the GSIS is critical for treatment and cure diabetes. So next slide, basically showing that what we have done for our understanding, achieving the diabetes remission and what is required. So in this study, we took the subjects who participated in the SEED study. The SEED study, as you may remember, is the monotherapy treat drug-naive type 2 diabetes patients. We get 40 centers enrolled in this. Overall, 310 subjects get treated. And then after 24 or plus 48-week study. And at all 40 centers, we get 45% of the subjects have reached glucose control, which means their HbA1c is now less than 7%. And then out of this 45% of subject, 69 subject in 5 research centers with average A1c 6.61% and a 2-year disease history running to this DREAM study. And then the DREAMeR studies can follow-up results without any blood glucose control agent for a year. And then we can see that after a year, there 65% of the diabetes patients remained in remission. And that this has firmly demonstrated that the drug treatment can induce the diabetes remission, and then the root cause of this was shown in the next slide that when the subjects in the DREAM study, when they entered into the SEED study, and they have an average A1cs and then they have a very important factors in the early phase insulin genic index, which related to the 30 minutes C-peptide over 30 minutes [glucose] ratio, a very important measure for the glucose sensitivity and early insulinogenic capability, and then you can see that quarter 1 achieved a remission and they have significant higher in the ratios, in the glucose sensitivity ratios. And then on the other side, we've also seen that this group of patients who achieved remission has a very good dispositioning index, which also measures the body's capability of controlling blood glucose. So which means after the SEED study, there are a portion of the subjects who has achieved a much better glucose sensitivity improvement and disposition index improvement. And this improvement are important for the remission. And this is -- it is very consistent with the CRE where Dr. Franz Matschinsky has proposed that glucokinase is a glucose sensor and play a key role in the gluco homeostasis. Well, the next slide will talk a little bit more about glucose homeostasis, right? The glucose homeostasis, by nature, is to control the blood glucose in a very narrow range between 3.9 to 6.5. That's the normal range. And then recently, ADA, the American Diabetes Association and the Chinese Diabetes Society has published the guidelines for the new cure for the blood glucose control instead of using HbA1c as an average measure of the blood glucose. It is important to note the fluctuation of the blood glucose during the day, right? And then this is the concept of being able to control the blood glucose in the healthy range. That's the time portion in range, which means how much time of one's blood glucose is within the normal range within 24 hours. So important new concept to address the diabetes and the impact of diabetes, which means the blood glucose fluctuation can cause diabetes complication, 10-plus major function organ disaster, okay? So here now in the SEED study and the DAWN study, we have done a subgroup analysis using our algorithm. We find that the type 2 diabetes patients with the subtype C have achieved a very good timing range improvement, starting from 33% to 61% in the SEED study. In the DAWN study from 14% to 50%. So this is why it's so important when we fix the sensor and then we control the blood glucose homeostasis and then reduce the blood glucose fluctuation and it will lead a much larger benefit to our patients. Now in the next slide, we're going to show a few other advancement with this drug, right? The important thing for the drug development is that we understand the root cause of the disease. Now we know dorzagliatin can address the root cause of type 2 diabetes, but that's not probably sufficient. We also need to repair the system, right, the sensor, glucokinase and the surrounding system that control the glucose homeostasis. That's where the combination of dorzagliatin with existing therapy, DPP-4 inhibitors citicoliptan or SGLT-2 inhibitor, [indiscernible] to see how well they all work together to control blood glucose. Well, no surprise, right? Both combination offers greater than 30% more blood glucose reduction over the single agents. And this will give us the potential to developing the fixed dose combination with these agencies and then using that to trade different stages of type 2 diabetes patients and then help them to get into the remission. Before this, the other factors I've shown in the next slide is that our ability to extend our application into the DKB. That means the diabetes kidney disease patient without an adjusted dose. Why is that? For many oral antidiabetic drugs based on the disease skyline who have find that because the secretion of the drug. Many of them go through kidney. And then when the kidney function is impaired, the blood glucose level of the drug cannot be very well controlled. In this case, the drug level will be fluctuated depending on the stage of the kidney function, but dorzagliatin is not secreted to the kidney. It's less than 10% goes to the kidney and majority goes to liver. So in that case, the kidney function will not impair or impact on dorzagliatin's usage. So it can be used directly into the PKD patients and control their blood glucose. So this is the additional benefit to our drug with its very novel chemical structure and the formulations designed to this drug. So now we look at the overall strategy of doing dorzagliatin in next slide, we can see that dorzagliatin because it's trading the underlying cost of the disease and then restore the glucose homeostasis through fixed the glucose sensor, and it can be used nicely in the diabetes prevention, where, by the way, the new report from the International Diabetes Federation is that the global impaired gluco tolerant subjects has now reached to 541 million, very big population, just as big as the total diabetes population, which I believe is around 540 million diabetes. So collectively, impaired glucose tolerance impaired glucose time insulin release have caused 10 -- well, basically it is a billion patient population, right? So in this, we have shown that dorzagliatin is effective for the drug-naive patients, which is early patients to the study and DREAM study showing we can reach the diabetes remission. And also, we're showing that through the combination, we can work on the diabetes complication. And we are now expanding the opportunity of the diabetes secure to the diabetes prevention by looking to dorzagliatin for the IDT patients. Now through dorzagliatin, alone or in combination with existing diabetes therapy, which is listed over here on the slides, we'll be able to provide a systematic solution for the diabetes care, which lead to the prevention, remission and rejuvenation. So this is a strategy where Hua Medicine will continue as we're moving along. And then most importantly, when we launched dorzagliatin this year, so that will be fully realizing the potential of dorzagliatin and glucokinase platform. So in the next slide, I will quickly show you that what we're going to do in the exploratory research area. Now -- we have successfully completed the DREAM study led by Professor Ma Jianhua, [indiscernible] . And then this is a very important to show that fixed sensor, repair glucose hemostasis and then be able to treat the underlying cause of the disease and then lead to remission. And also, we have successfully completed the SENSITIZE study led by Professor Juliana Chan in Hong Kong. Well, what Dr. Chan has done is that -- we all know the multi patients is the heterozygous mutation of GCK in patients. And then in those patients, they get one good copy of GK protein and then one bad copy of GK protein. And in these patients, we conduct the mechanistic study and showing that dorzagliatin be able to improve the glucose sensitivity and insulin secretion, and it is going to report its own in the ADA meeting this June. And what is important is that we know MODY-2 is the defect of GK, right? The GKA with a single dose will be able to correct the defect. That means dorzagliatin can directly act on the fundamental root facts of the diabetes, right, mastic glucokinase act. And this is very exciting work, and then Juliana Chan is going to talk about it in the ADA and then you guys are very welcome to getting into this. And then the other mechanistic study is going to be initiated by Professor Rita Basu and then it's an NIH brand. And this is the study we need to investigate how glucokinase activator works back to year 2000, Dr. Rita Basu, together with her mentor Dr. Bob Rizza, the Head of ADA at the time, have shown that in type 2 diabetes patients, there is a defect in the glycogen formation and glycogenolysis. And in this defect in type 2 diabetes, the patients cannot convert glucose into glycogen in the liver and store it. And this effect was proposed to be related by the defect of glucokinase in the liver. While that was the hypothesis in year 2000. Now finally, Dr. Rita Basu will be able to have dorzagliatin to study this and improve his scientific hypothesis showing that Dorian google kinase activator will be able to enhance and repair the glycogenolysis and then control the hepatic glycogen metabolism and then eventually is going to compare this effect with metformin and insulin. So we're looking forward to show that outstanding results come from the study. And then most importantly, and Dr. Basu's lab has most exciting technology we call the triple treater technology that really be able to use a noninvasive technology to understand that gluco metabolism in the human body in the disease setting. So we are very excited to looking forward for that result to come out. So in the next few slides, I will quickly discuss our outlook. Well, intellectual property is the lifeline of biotech company and pharmaceutical companies. And then over the years, while we're managing dorzagliatin into market. And we also strengthened our patent portfolio, working with leading intellectual property firms and then have established the patent families around the compound, intermediate process, most importantly, the formulation and the fixed dose combinations, which has been all branded in China and some already in EU and the U.S. Now in advancing our understanding of dorzagliatin, its role in the glucose homeostasis and in the patient population, we have also developed the second-generation dorzagliatin. And the priority patent has been filed, and then we are working on with several agencies to now expediting this patent application around the world, at the same time, looking forward to developing the first generation and second generation with a different focus. So the next slide while showing that after we got a patent settled down, we really start looking to which are the patient population with the unmet medical need now can be benefit in the diabetes care and then can benefit from the dorzagliatin. So the type 1 diabetes in U.S. is the group of patients that require more care from us. For the type 1 diabetes, as many of you know, they are insulin-dependent diabetes. They have rely on insulin for their treatment. However, the problem with insulin treatment is that for the Type 1, they have very fragile blood glucose control capabilities and their beta cell function have gone. So in this case, the blood glucose fluctuation with insulin therapy is a problem, and that has a relationship with the high risk of developing the complications in the micro and macrovascular system. So we historically can be able to control the timing range, and then we are working with the Michael Rickels a professor at the University of Pennsylvania and [indiscernible] and going to start on the established type 1 diabetes patients in the U.S., and then we plan to file IND this year. We already had a pre-IND meeting with U.S. FDA. And then through this study, we would like to reduce the effect of hypoglycemia, the low blood glucose defect and also see the opportunity to slow down the progression of the type 1 diabetes in the Stage III diabetes patients. And this is a new area where in the type 1 diabetes patients, if we can preserve their beta cell function at early stage of disease, which we call the Stage 3 and prevent them going to stage 4, right? That's going to provide a huge benefit to those patients, right, which suffers later treatment. And this work is also being initiated in my -- with my colleagues in the United States. And then we are working with agencies and developing protocols and then with the physicians to come up this strategy, evaluating the potential door to delay or preventing the disease progression into Stage 4. So that's the work that we think is important that to help diabetes patients, not only in the type 2 diabetes, which we have shown and demonstrated in the Chinese population. But now we want people to continue to benefit in the type 1 diabetes population. So next slide, showing that as we're moving along and then we are very much getting engaged in the business development, we like to partner with the very capable hands in U.S. and Europe and also Japan, Southeast Asia market and "Belt and Road" market, right, to really realize the value of this innovation, and we would like to collaborate to innovate healthcare around the world. So in partner with Bayer in China and achieve commercial excellence in diabetes care, we're providing a very good drug, and Bayer now with their experience in the Chinese diabetes market and also they are introducing a really new novel continued blood glucose monitoring devices also in China that you can see the combination and the synergy in the future to really write the standard of the care in the diabetes. And then I think in partner with the local leaders in China, we have good drug development clinical opportunities. We really want to think about how are we drive the remission to the next level, right? And then this is opportunity not just in China, but in the Southeast Asian region because this shares very close genetic and environmental similarities as well as the food structure and the dietary structures, right? So that's the opportunity we want to work with partners to achieve. The third area is [indiscernible] we are working very closely, working very hard to work on the U.S. and the EU partners. And then for the FTC on is the day tablets or the second generation dorzagliatin so that we can benefit the patients in type 1 and type 2 diabetes, right? So this are the opportunities that we are working, looking for partners and sum up on the discussion, Others are in the relatively remote discussion. But what we want to do is make this innovation accessible to the world, which is the mission of Hua Medicine, we innovate health care in China for the world. Thanks for your listening and then I will pass the financial section to Mr. George Lin, our CFO, to tell you a bit about our financial situation. Thank you.

Great. Thanks, Dr. Chen. Thanks, everyone, for attending. I hope everyone's staying safe, either in China or in Hong Kong. I'll keep this very short so that we have at least, let's say, 10 minutes for Q&A as we have to transition over to our China-based -- China version of this presentation at 09:00. But as you can see here, our cash balance remained very strong at RMB 675 million of cash at year-end 12/31, which is slightly over $100 million. Our cash burn was very well controlled as usual at RMB 356 million, with most of it spent on operating activities, which is consistent with our past practices. You'll see this increase of investing activities, which is due to this initiation building our manufacturing plant in Lingang that Dr. Chen has talked about it. The operating activities, as you can see here, RMB 273 million, and the investing activities was about RMB 68 million, which really involves paying for the land in the Lingang factory. You can see on the next slide, loss before tax was RMB 325 million for the year 2021 as compared to a loss of RMB 393 million for the year 2020 because of our controlled cash burn. Our R&D expenses, as you would expect, declined in 2021 from expenses of RMB 221 million in 2020 to 2021 expenses of RMB 186 million. The decline in clinical trials expenses was offset by increases in expenses related to CMC as we accelerated our preparations for increased commercial supply in anticipation of NDA approval and commercial launch. So that's really the bulk of the adjustments you see in the R&D expenses. Administrative expenses also declined, as you can see here in 2021 when compared to 2020 from RMB 140 million to RMB 134 million. For admin expenses, we maintained those activities required to continue growing our company while continuing controlling or eliminating expenses that were not needed. And as forecast for 2020, we expect our cash burn to be -- continue to be very controlled. If you'll recall, the selling and marketing and promotion expenses are borne by Bayer, including any sort of Phase IV trials that will be ongoing, they will bear those costs. So we don't expect our cash burn to exceed RMB 300 million for 2020. And that does not include -- think about it, the cash burn does not include any milestone payments that we would expect to receive from Bayer of up to RMB 400 million upon approval of dorzagliatin NDA and also launch of commercial utilization sales. So that kind of gives you the forecast and the financial situation. So I will pause there and let ICA see if there's any questions from those that are attending.

Our prepared remarks have ended. We will now move on to Q&A. [Operator Instructions] We have one question regarding can GLP-1 or SGLT2 induced diabetes remission, if not, why?

Thanks. This really a very interesting question. I think in the data that supporting the diabetes remission is threefold. One is the surgical treatment for the stomach [indiscernible] study. In that study, they're showing that improvement of the GLP-1 secretion and improve the beta cell function. And so the connection of the GLP-1, which improved the glucose sensitivity has been illustrated also in the RISE study. Here in this left-hand bar in the middle bottom right, you can see that out of the lines that stagger together, that's 1 line lifted up. That's the GLP-1 arm and showing in that acute response to glucose the C-peptide change, right? But that change was not sustained after the drug gets stopped at 15 months, right? So that's where we see that the effect on remission, at least in the RISE study was not achieved. And the same thing on the central panel of this figure, the blood glucose level during the treatment with the GLP-1 arm seems that had a very good reduction of the blood glucose within the first 12 months. And then after you stop the drug, and then they all went back in the 15 months. So in that publication, the RISE consortium suggesting that maybe the treatment of 12 months, 1 year is not long enough for the GLP-1 to induce the remission. So there's efforts in to do continuously to address this GLP-1 in user remission, I believe. The third aspect on the diabetes remission is related to the insulin. The intensive insulin care in China has bordered in the remissions for the drug-naive but very severe insulin diabetes. That was the medical practice in China and is very important. Now the theory, underlying theory on this is that using intensive insulin care and then you can let the beta cell to rest and recover so that it's glucose stimulated insulin secretion function can be restored. So the bottom line is the remissions, well also with the DIRECT, you can see that all related to the glucose time insulin functions, that function restore is required for what I call essential for the diabetes remission. Now we have not seen reports on the SGLT2 because SGLT2 is not directly worked on the central core of insulin secretion as of the pancreatic pathway. However, this might provide additional benefit with reduction of blood glucose, reduction of fat, reduction of blood pressure, and this will offer an environment to reduce glucose toxicity or lipid toxicity that is harmful for the diabetes remission, right? So there's opportunities, I think, as dorzagliatin add SGLT-2, right, work on the essential factor, the other work on the sufficient factor, 2 combination will give the best outcome. So those type of studies, we have initial study in the U.S., showing the benefit on the blood glucose lowering and also in the early phase insulin secretion improvement in the combination of dorzagliatin with empagliflozin SGLT-2. So we believe for the drug-naive patients, we can very lucky to see this remission and a very good remission, very solid data. And then for the other patients who is already on drug and then the diabetes, history is about less than a 5-year-ish. and then the combination of dorzagliatin with sitagliptin for empagliflozin be able to collectively managing the remission process. Thank you.

I think Dr. Chen, just one thing to add. This is a key question, right, is can any of the other drugs do it? And I think Dr. Chen answered it very, very clearly. But I think from a patient perspective and just from an investor perspective, there's a lot of science that was just given. But if you just think about it, insulin about 100 years, right? And then now there's 8 other classes and they all have very wonderful benefits. Any day, any one of those patients can actually try the DREAM study by themselves. They can just stop medication and see if their blood glucose go up. And here, you see it in our DREAM study, the patients did it in a controlled observation setting by investigator-initiated study after a seed study, and they did it for 52 weeks and still well controlled. So I think from that perspective, the remission is a super important positioning aspect of dorzagliatin right? Because Dr. Chen, as you know, has been talking about beta cell and underlying cause. But if you can do that, you should be able to show remission. And that's why for SGLT-2, right, Dr. Chen, we saw some more good data that came out from Eli Lilly on kidney, well, that makes sense because the drug is designed for kidney, right? So from this perspective, combination would be wonderful. But remember, our drug was designed for underlying cause of type 2 diabetes. We expected to see a remission, and we did see it in DREAM. I think there was -- we have 1 -- time for one more question, ICA.

We have received a question from Mr. [ Matthew Cheng ]. Mr. Cheng, you may raise your questions now.

I was hoping maybe you could briefly touch into the maybe broad trial design in the U.S. for type 1 diabetes and maybe how that's going to look different to Type 2 that we're so used to hearing from you, maybe kind of the size, other risks like cardiovascular endpoint.

Okay. George, you can flip over to the slides where we have that Type 1. For the Type 1 study, the most important thing is to understand why we need another drug for type 1, right? Type 1 diabetes, the patients have suffered from the auto immunity. Their own antibody target on their own beta cells and then lead the dysfunction of beta cells. So type 1 diabetes as a character of the antibody against the beta cells. So those are the character to see whether they're type 1 or type 2 at early stage. And over the years, the type 1 diabetes was patients was discovered when they were young, they usually discovered that age of 10 to 18. And then -- and those subjects and then once they are diagnosed, they already had a very poor blood glucose control. So they were on insulin right away, right? So that's the current medical care. And then there are complaints about the insulin price and so on. That's why they require healthcare reform on the type 1 diabetes treatment. Now in our case, this is actually a study come up by Dr. Michael Rickels who I visited at University of Pennsylvania 3 years ago, Michael say, "Hey, say, Li, we have been working on type 1 diabetes. And then we know the beta cell is in bad shape, but it is not completely done. What your data showing is that you can rescue the beta cell, right?" From the [indiscernible] and then to come back, and that's the study we've shown published in the diabetes research. And he said, "That's my uniqueness of rescue the beta cell function in the type 1", but that's not the only fact is interested. It's also interesting that our drug also regulate [alpha cell] and GLP-1 function right? So the L-cell function. So now with the alpha cell functions really control, right, the hypoglycemia when a blood glucose is low, the alpha cell senses it and then secrete glucagon and act in the liver and then increase the blood glucose. So this is improved the fragileness of blood glucose fluctuation in type 1 because in Type 1 patients, their hepatic liver glycogen storage is really done. Now if we see glucokinase activation and then gather blood glucose, storage in the liver goes up and then they will reduce the hypoglycemia. So that's the idea. Now our design is to 2-phase design. The first phase is basically take a small group to center in University of Pennsylvania and the University of Florida and 2 research institutions to conduct Ib study to do a dose ranging for the type 1. Now we all know we did dose ranging for type 2 in Chinese patients for the type 1, we need to do a dose ranging. So that's going to be a quick 1-week study. And then after that, we'll conduct a proof-of-concept Phase II trial may be consideration depending on the 1b data, whether we're moving to a [ 2 3 ] trial. Now during the whole study design, all the subjects will have the continuous glucose monitoring device and using that to monitor their blood glucose fluctuation and also importantly, to see how our drug be able to reduce the hypoglycemia. So that's where to improve the real unmet needs for the type 1 diabetes care, right? Because of the artifactual pancreas and insulin pump, coupling with the CGM, the continued glucose tolerance that the closed loop design now, you can lower the blood glucose pretty well. And then the challenge is the hypoglycemia. The 1 suffers the lower control because lack of glycogen storage in the liver. So that's the concept, and that's how we're going to do that. We do the first stage, and then we're going to initiate this year and then complete next year. And then we start the second stage really gearing to the Phase II/III study to show these confirmed their efficacy.

I think we're now out of time there for the call, but thank you again for your participation. If you have further questions in the future, please contact Hua Medicine's IR team or ICA. This will conclude our call today. Participants may disconnect now. Thank you.

Thank you.

Stay safe. Thanks.