HUTCHMED (China) Limited (HCM) Earnings Call Transcript & Summary

Good morning, everyone. My name is David Lau from JPMorgan Hong Kong Investment Banking. Today, we are absolutely honored to have Mr. Christian Hogg from Hutchison Chi-Med to present at the 2021 JPMorgan Healthcare Conference. Chi-Med, as we call it, is an innovative, commercial-stage biopharmaceutical company that is committed to the discovery and development of targeted therapies and immunotherapies for the treatment of cancer and immunological diseases. It has a portfolio of 9 cancer drug candidates in clinical studies around the world, and a scientific team of over 490 people. Our speaker today, Mr. Christian Hogg, is the CEO of the company, who joined in year 2000 as the first employee of the company. He is, therefore, the best person to talk about the company. So without further ado, I will pass it on to Christian for the presentation. Thank you.

Thank you, David. That's a very kind introduction. Okay, everybody, we've got basically 23 minutes. I'm going to do a whistle-stop update on the business. We have a slide deck of about 40 slides, but I'm not going to touch on everything. I'll just draw your attention to the most important matters at the latest update, et cetera. So starting on Page #3, just a moment to refresh ourselves with Chi-Med's global strategy. Unlike many Chinese biotechs, we are really focused on 2 key areas. Because we are a discovery-driven company with a large team creating novel cancer drugs and drugs in the immunology space, in which we own the global right, our strategy is twofold. Number one is realizing the global potential of those wholly-owned oncology assets. So everything is in-house created, and so we own the global rights. And that value is very important to us. So we've built a big team now in the United States managing development in the U.S., Europe and increasingly in Japan. The second area of our focus is building an integrated oncology business in China. We just last week got approval -- or 2 weeks ago got approval of surufatinib, which is our second novel oncology drug approved in China. And we have savolitinib coming in Q2, likely to be approved in Q2. So our third novel oncology drug to market in China. So we've now built out a very large team on the ground in China to commercialize these products, and I'll update you all on that. So really a twofold strategy: Number one is realizing the global value of our assets; and number two is building a fully integrated operation in China, both of which we've made a lot of progress recently. On a high level, David mentioned 490. It's a little bit outdated. We're up to now over 600 people in our R&D operation. We were really the first novel drug discovery company in China. We started our discovery work in 2002. We started the company in 2000 but started focusing on discovery in 2002. That has led to a large pipeline of NMEs, novel molecular entities, all discovered in-house. 9 assets we have in clinic. We have another 4 oncology assets that are in regulatory talks at the moment. So IND is expected next year -- sorry, this year. And another 4 assets in immunology that there'll be an announcement in about 20 minutes. So you can see that when it comes. The 3 lead assets are all either filed or approved NDAs in China, and now our first asset was submitted, a rolling NDA was started in late December on surufatinib. So that's the first time that we, as a company, have submitted an NDA outside of China. And there's obviously not many Chinese companies that have done that. In the bottom right, a deep pan-China commercial organization. We've got 20 years of history. We started acquiring pharmaceutical assets back in 2001, and we've built a very large commercial presence in China run by us, Chi-Med. And so we know what we're doing in terms of commercializing products in China. In the last year, we've built a team of and now over 400 oncology commercial people to launch our various products. And on the bottom left, a seasoned management team that's been in place for a very long time, and we've been listed in London since 2006, listed on NASDAQ since 2016. So a long clean track record of governance. The pipeline, I won't go into it in a lot of detail. We don't have time. But savolitinib moving rapidly. If you look at the far right-hand column here, you can see the NDA was submitted on savolitinib for met exon 14 skipping non-small cell lung cancer last May. We expect approval around May of this year. And we would be first-in-class selected c-MET inhibitor in China. So that's a big deal for us. Moving back on savo. You can see registration in 10. We will be moving into global registration studies, Phase III in kidney cancer in the first half of this year. And that's something we have a long history in PRCC, and savo has outstanding efficacy there. The SAVANNAH study, I'll update everybody on that later, that's moving along quite nicely. And as you go further back, you see a number of other indications that we're exploring. Gastric cancer is probably the most relevant, as that will lead to a registration study starting up also in the first half of this year. So we've got a number of registration studies kicking off on savo this year -- early this year, hopefully. Surufatinib, you can see the -- on the far right, the approval that we received in December 2020 on nonpancreatic NET. We will prescribe our first prescription -- the first prescription will be written on January 18. That will be when we start actually being able to sell surufatinib in China. But we have a pancreatic NET NDA that should get through approval this year, also to complete the full spectrum in that approval. And then you can see the red box there, P-NET and non-P-NET, that's the rolling NDA submission in the U.S. So that's just started, and we should complete that rolling NDA shortly, probably in March or April. And then Elunate, we took over on-the-ground marketing from Eli Lilly in October. We've had a good October, November, December. We'll publish the sales results at the time of our full year results in March. But tripling the size of the commercial team is really important. We're now getting up to 400 people on fruquintinib. So I think this year, for fruquintinib, will be a big year. You can see colorectal cancer, FRESCO-2, that's the global Phase III on fruquintinib in third-line or above colorectal cancer, enrolling close to 700 patients in -- closing in on 15 countries around the world, including Japan, U.S., Europe, et cetera. So that's our global registration study on fruquintinib, and we're very excited about that. The Phase III gastric cancer is moving along. And as you look further back on proof-of-concept for both surufatinib and Elunate, you see a lot of PD-1 combos and exploratory work going there. So we're very excited about what we're seeing on the PD-1 combos, so I'll touch on that later. Further down the pipeline, we're starting to get some really interesting data emerging on our PI3K-delta inhibitor. I'll touch on that later. We expect to be in multiple registration studies in 2020 on our PI3K-delta. We believe it is the cleanest, most potent PI3K-delta inhibitor in development globally. And we're not seeing any of the toxicities that other PI3K-delta see, but we're seeing the efficacy. So a terrific asset. The Syk inhibitor is moving along. ITP looks very good on the Syk inhibitor as well as a number of BTK refractory indolent non-Hodgkin's lymphoma patient populations. 306, our IDH 1/2 dual inhibitor, it's early, but it's just kicked off development in China as well as our INDs have been cleared now in the U.S. for hematological malignancies as well as solid tumors. So we are moving quickly on 306 as well. So overall, the pipeline of 12 discovered assets, 4 of which, as I said earlier, will be hitting INDs this year. So it's a big portfolio, a synergistic portfolio. And most importantly, aside from the partnership with AstraZeneca and Lilly, we own the global rights on all of these assets, which is very different from most Chinese biotechs, who tend to licensing the rights for various markets, but we won the rights for everything. So it's up to us to have in place the organization to develop these assets. And the organization is big and growing, has been in place for a long time, in general, aside from the areas we're building out. And we've got a great share register and a long history of transparency. So looking at savolitinib. Just briefly, obviously, you can see there the NDA accepted on exon 14, but we've got the Tagrisso combo coming. We've got kidney cancer moving into a second Phase III registration study, and gastric cancer coming along. But the -- I'll go into a bit more detail on each of these areas. So savolitinib in exon 14 skipping, this data was presented at ASCO last year. And you see pretty similar efficacy to capmatinib and tepotinib. The difference being -- a similar efficacy being around 50% response rate, high 40s. The difference being that the Phase II study for savolitinib, as you can see in Box #3, was conducted in difficult patients. So 36% of the registration study of savo was in pulmonary sarcomatoid carcinoma patients, who have a terrible prognosis. Whereas you can see there, capmatinib and tepotinib, they had 1% and 5% PSC. So it's not apples and apples -- apples-to-apples to compare all of these Phase II data. And I -- we believe that savolitinib is -- has great advantages, and we'll let the -- once we get to market, we'll let physicians determine and patients determine the advantages. On SAVANNAH, a brief update. This is a really important study of Tagrisso plus savolitinib in Tagrisso failure patients. You can see there, SAVANNAH has got 3 arms to it, savolitinib 300 milligram QD along with Tagrisso 80 milligrams. That part of the study is fully enrolled and now maturing. The 2 other arms that are still enrolling are savolitinib 300 milligram BID and savolitinib 600 milligram QD arms of that study. The reason we're still enrolling multiple dose levels is the chart down at the bottom there, you can see it's actually not filled in. The SAVANNAH data will support filling in this chart when it's available. Meanwhile what's evident is the FISH positive -- c-MET gene amplified patients. Savolitinib 300 milligram QD is no doubt an acceptable dose. But once you start expanding into IHC 3 plus, a broader patient population post-Tagrisso, you're likely going to need to have higher doses, 300 milligram BID or 600 milligram QD. So we're exploring it all. And all of this will be used to determine our global Phase III strategy. Do we go for a narrow FISH positive patient population with a 300 milligram QD dose? Or do we go for a broader FISH positive and/or IHC-3 plus population, but we have a higher dose, maybe 300 milligrams BID or 600 milligrams QD. So all of that will be determined by SAVANNAH. And as I said, it's enrolling very rapidly, and we'd hope to be into that level Phase III this year, that's the intention. In PRCC, we published the SAVANNAH data, the SAVOIR data, I won't rehash that. But on the savolitinib/imfinzi combination in PRCC, this is the area we see some great opportunity, and you see there a 40% response rate. And these are in IHC 3 plus patients. So these are not in c-MET gene amplified patients. So we will present that data at some point in the future. Surufatinib, 3 NDAs submitted, 1 obviously rolling in the U.S. and the 2 NDAs submitted and 1 approved in China. And obviously, you can see coming behind that, a number of life cycle indication programs. The difference that surufatinib and what's already approved in the next phase is quite stark and suru is likely to be approved across all tumor settings. Page 23, you can see really good efficacy post Afinitor and post Sutent. So that's one of the reasons that the U.S. FDA has been so supportive of our rolling NDA and Fast Track Designation on surufatinib. And some terrific -- on Page 24 some terrific early Phase I data of the PD-1 combo with surufatinib. You're seeing in neuroendocrine carcinoma, which is very difficult tumor type, we're seeing some great efficacy. Page 25 shows the chart that summarizes how we are developing surufatinib. How we've used Phase III China data to support U.S. filing along with a bridge -- small bridging study in the U.S. So this is -- there are not many Chinese companies that are able to do this. BeiGene has done it. I mean, Legend is doing it. And obviously, we've done this now. So increasingly, high-quality China data should lead to potential for approvals outside of China -- submissions outside of China. Fruquintinib, first half last year performance, this data is pretty old. We'll update it obviously shortly, but the launch of fruquintinib and the take back in October by Chi-Med of all on-the-ground marketing activities is making a difference. So Elunate, or fruquintinib, is a superior drug relative to Stivarga in terms of efficacy, in terms of safety, in particular, safety. No black box warning on fruquintinib, just on Stivarga. And you can see here a really interesting chart on Page 32 that shows in the U.S. Phase IB study where we've been treating patients that are either intolerant or refractory to regorafenib and Lonsurf, Stivarga and Lonsurf, you can see the median duration of therapy on fruquintinib is much longer. It's more tolerable drug. It's cleaner. It's got better efficacy, and so I think will be very attractive to patients, third-line colorectal cancer patients outside of China. And that's what the FRESCO-2 study is looking to develop. Next wave of innovation is the Syk inhibitorPI3K-delta, as I mentioned. Just a quick look at the PI3K-delta on Page 35. You can see this is the Phase I data. Only 9 patients with the recommended Phase II dose, but you're seeing, for example, in CLL/SLL, 40% complete response, 40% partial response, for 80% overall response, granted it's a relatively small sample size. But follicular lymphoma, 14% complete response and 30% partial response. Remember, this is for all treatment levels doses, so cohorts. So this starts off at a very low dose, all the way up to the recommended Phase II dose. So the efficacy is terrific, and we have expanded development in multiple indolent non-Hodgkin's lymphoma subtypes, and we'll start registration studies in those this year, probably 3 or 4 of those. The safety is -- you need time to look at this chart on Page 36. But 689 really doesn't have the GI tox or the kidney -- liver tox that is seen by many of the other PI3K-delta's in development. So in summary, a busy year. Page 38, you can see the multiple approvals in China with surufatinib, savolitinib. The NDA submission completion of that in 2021 on surufatinib. Multiple Phase IIIs starting across many assets. So we've got a busy year ahead. I think it can be a step change year for us, which started off very strong already, and I think that's set to continue. So that's 9:25. I've reached the end. It's been a whistle-stop tour, but happy to speak to any of you that would like to follow up. So please just reach out to the company. Thanks very much.