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

Hey, everyone. Good afternoon, and welcome to day 2 of the 2023 BofA Healthcare Conference. Thanks for joining the session with HUTCHMED. My name is Alec Stranahan. I'm Vice President and senior biotech analyst covering HUTCHMED here at BofA. And I'm pleased to be joined by Mark -- Mike, who's the CMO of HUTCHMED. And I think Mike's going to give some prepared remarks to set the stage, and then we'll jump into Q&A. So over to you Mike.

Yes. Thank you, Alec. Yes, it's a great pleasure to be here. And I just want to have a few words about HUTCHMED, is a biotech company based -- headquartered in Hong Kong. It's been for 20 years, and we have three products already marketed in China, savolitinib, fruquintinib and surufatinib. And we also have a full integrated discovery, development and the commercial pipeline in China. In -- extra China side, we have R&D organization fully integrated to develop a medicine in the global -- for the global patients. And we are also strategically look -- I mean, for the extra China marketing, we do the partnership with [ MNC ]. So it's great pleasure to be here, Alec. Yes.

Yes. Great. Great to have you. Thanks for the intro.

So we'll jump into the Q&A now. If anyone in the audience has a question, feel free to raise your hand, and we'll bring you a mic and you can ask your question throughout. But Mike, maybe just to start, obviously, you guys have a deep pipeline. You've got the big three, fruquintinib, savolitinib, surufatinib with approvals in China. But you're seeking international expansion, specifically with fruquintinib. FRESCO-2, I think, is obviously the most topical right now. Could you quickly remind the audience what's happened with this asset, your partnership with Takeda and where you are in terms of the filing preparation?

Yes. Thank you, Alec. So fruquintinib is a selective VEGFR inhibitor. It hit the VEGFR receptor 1, 2 and 3. It was a first developed and approved in China in 2018. It was in the third line plus colorectal cancer. And since then, right, we're looking for the international opportunity. Our clinical development team really, through the consultation with all the regulatory agencies with FDA, EMA and PMDA, designed FRESCO-2, which is the pivotal trial, global trial, involving all the international countries. These 691 patients Phase III study in the fourth line plus colorectal cancer patients with 90% of patients enrolled in the U.S. and EU and also including Japan and Australia. So last September at ESMO, we reported the FRESCO-2 data, which is method, is a primary endpoint over survival. It actually is a very significant finding, right, with the 2.6 month survival benefit, which is also gold standard in that late-line colorectal cancer patient. Because as people recall, colorectal cancer is actually very prevalent disease. It's the third most prevalent tumor type globally with a high mortality rate and the 5-year survival is very low. And the approved, the third-line treatment with regorafenib and TAS-102 is pretty much over there for almost a decade without new medicine really proving that indication. The latest development is really focused on probably the segment market like MSI high, the RAF and HER2, right, it's a small portion of the patient population. But vast majority of the patient, we still have a high unmet medical need. So I think the FRESCO-2 data really have a very significant impact in the field. A lot of the medical community, right, the KOL, really considered as a practice-changing clinical trial and set the stage for late-line development for these patients. And also not only the OS but the key secondary endpoint and the progression-free survival also is highly significant with 1.9 months improvement PFS. Also consider the safety profile, what we think because fruquintinib has selected the VEGFR inhibitor, it bypass some of the common nonspecific target toxicity. So if you look at the tolerability compared with the existing product, right, is actually very well tolerated. Because if you look at regorafenib, have a liver toxicity, black box. For the TAS-102 have myelosuppression. So from our clinical readout looks like the -- not only from the efficacy perspective, but safety profile really set the stage for this molecule for -- become a potential product changing molecule in this indication. So we engage multiple partner discussion because the company is thinking is really what we really want to have a global partner to commercialize and fully develop this molecule. And so early this year, in January, we announced the collaboration with Takeda to -- as our partner for the ex-China rights. So they're going to be responsible for the commercialization, future development for fruquintinib. And the deal has been closed. We received $400 million upfront payment and also with the $730 million potential milestone. So I think it is a preferred partnership for we to have with Takeda because their global presence, strong oncology pipeline and also their GI presence, right? So we think they're going to fully engage in the commercialization and the development of that program to have future life cycle indication to maximize the potential benefit to global patients.

That's great. And obviously, Takeda has got a large global footprint. Maybe we could talk a little bit about the market setup for fruquintinib ex-China. You mentioned regorafenib and TAS-102. Would fruquintinib be positioned base the FRESCO-2 population directly against those two assets? Or is there a little bit different?

So thanks, Alec, because I mentioned, right, the FRESCO-2, the -- is really including patients who previously treated as either regorafenib or TAS-102 is really reflecting the Western treatment paradigm, right? But the NDA for the indication submission, we have utilized is really using FRESCO-2 data as a pivotal registration trial, but also along with the previous FRESCO data, which is a randomized Phase III study conducted in China, getting the approval in the third line indication, along with one of our U.S. study -- U.S. 1 study, including patients with both third-line treatment and the 3 plus line treatment as a bridging study. So the total package is one of the -- we submitted to the FDA. So we started rolling submission last December. We have completed the NDA submission. We're waiting for the acceptance from FDA and the PDUFA date. So in terms of the indication, although we are now commenting, I think it's a review issue, but the total package is really the FRESCO, FRESCO-2 and the U.S. breaking study together.

Okay. So quite a strong totality of data and sort of that advanced third line plus population. But I think that there could also be a possibility in the frontline as well, right? What are you sort of your plans? I know you're focused on getting that initial approval by the FDA, but what would be sort of the label expansion beyond that?

Yes. I think this is a good -- very good question, right? So as you could imagine, right, this is a very significant asset. Since the deal closed, we already have lot of discussion with our partner, Takeda, for the global development, life cycle management. This asset is kind of a slightly different from the multiple other because they started in China. It was approved of 5 years ago. Not only we have the experience with that in the market in China, but also we have initiated multiple clinical development program. In addition to the original proof, the late line, single agent colorectal cancer trial. So we have done the combination study, both with the immune checkpoint inhibitor and also the chemotherapy. So I think a lot of the experience we have gathered and we have shared and discussed with our partner to really thinking about how we can not only strengthen the colorectal cancer, moving to earlier line therapy, but also other potential indications. So as you probably realize, because we announced, we submit China chemo combo, the fruquintinib with paclitaxel in second-line gastric cancer, that's, again, there's a Phase III randomized study with 701 patients treated. We submit the -- that study actually was positive. It met one of the dual primary endpoint, significant PFS. OS we -- although we did not reach the status significant level, but it's the over trend, we submit the NDA to the MMPI and it was accepted last month. So that's, again, in the gastric cancer, another indication with a combination with chemotherapy. And also, we have multiple pivotal trial also along with the PD-1. One of them is fruquintinib with sintilimab in the advanced endometrial cancer, is currently in the registration trial, is currently ongoing in China. And also, the other is fruquintinib with sintilimab in second-line renal cell carcinoma versus axitinib and everolimus, right? So that's also ongoing. So as you can imagine, we have done a lot of clinical development for multiple indications. So I'm very confident we're going to work with our partner, Takeda, to really fully design life cycle management trial to maximize the development capability this program.

Okay. Very good. Lots of progress for fruquintinib. So waiting for the NDA acceptance. Assuming that gets accepted, obviously, a part of the FDA's review process will be site inspections, right, in China, which with the COVID pandemic easing, this is becoming less of a barrier for Chinese biotechs. But maybe just taking a step back at a high level, do you have any thoughts on how China biotechs are emerging out of the pandemic, the lockdowns are fading, site inspections are back. With those hurdles now in the rearview mirror, could you maybe comment on the opportunities in front of us for Chinese biotechs?

Yes. I think China is fully back, right? Because I came back from China. I mean, actually, coming back and forth quite frequently now. It's almost back to normal. And I think it's just the last -- end of last year, we saw this spike of the COVID cases. And then there's really -- China is completely open up. I think in terms of our clinical trial development and also interaction with the agency, multinational companies, I think, is all kind of looking pretty positive. Like what you said is complete -- almost completely back to normal. I'm very confident in terms of the inspection. And as I hear some of these inspection readiness, we are fully prepared. And I think -- I don't think compared with the last several years, this is going to be pretty much ready. I don't think it's going to be any issue, right, in terms of the expansion. Yes.

Okay. So China's back. That's good to hear. Maybe turning back to the pipeline. We could talk about savolitinib next. I think the primary focus is probably on the savo/Tagrisso combo readout, which I believe is expected sometime next year. AstraZeneca has obviously been a great partner for you guys. Tagrisso is a huge asset for them. So they've got a lot of incentive to push this forward. Could you maybe talk about this combo, the rationale from a scientific level and also what sort of the market opportunity could be?

Yes. So the savolitinib and the MET is very important pathway for the EGFR resistant mechanism, right? So the key data from a scientific perspective, it was really presented that Tagrisso and savolitinib combo, the SAVANNAH trial was presented last year at the World Lung. And is -- the MET expression is a key resistant mechanism. From that study, we see 34% of the patients actually have a high MET expression. In those patients, combination patients who progress on Tagrisso if you add savolitinib, you actually see a very robust response rate, about 50% over response rate either in prior chemo or [non] treated chemo patient population and the response highly durable. And also the progression-free survival reach about 7 months. So that scientifically is a high unmet need, right, because a very significant portion of the patient will develop a resistance through the MET amplification or expression. So it's a very novel combination to really add possibility, right, for Tagrisso progress, the patient to have another mechanism to extend the response and progression-free survival. So based on that, AstraZeneca, again, they're the leading global development, right? They have extended -- opened a new cohort as a single-arm registration trial, Tagrisso with savolitinib. And the projection, as with I said, they're going to have full recruitment and the clinical readout next year. And if that data shows repeat the previous response data, is going to take it to a registration trial. And also based on the size of the Tagrisso, savolitinib combo, there's initiated SAFFRON trial. Again, it's the second, third line Tagrisso pretreated patients, that's a Phase III versus chemotherapy. That trial has already started. We have the first patient, first visit last year also. That also triggered $15 million milestone payment from AstraZeneca to HUTCHMED. So the trial is continued ongoing. So this is, again, in the MET treated patient population. This is going to be strengthened, the lung franchise. I think AstraZeneca has a lot of experience not only in the clinical development, but also commercial presence in this field. So we are very confident, this is a very good combo moving forward, is going to set new standards.

Right. You can't ask for a better combination partner, probably given the strong.

So far, we've been working very well with AstraZeneca.