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

All right. Great. Hey, everyone. Good afternoon, and welcome to day 2 of the 2024 Bank of America Healthcare Conference. Thanks for joining this 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 Michael Shi, Chief Medical Officer of HUTCHMED as well as David Ng, Head of IR and Corporate Strategy. I believe that's right -- capital strategy. It's my bad. Thanks for being here, guys. Really appreciate it.

Thank you for inviting us.

Yes. Great. So I don't know, Michael, do you want to just run through a little bit of the most exciting things going on at HUTCHMED right now, what you're most focused on? And then we can maybe drill down to the different assets you have.

Yes. So yes, I think since last year, right, Alec, we have made tremendous progress, right, mainly FRUZAQLA was approved in the United States for third-line colorectal CRC and was under the priority review, is read out -- I mean it's really exceeded our expectation. And also last month, we got a European positive opinion. So it's absolutely on track for the approval this year. So this is a significant achievement with our partner, Takeda. And as you'll hear, probably David can drill down a little bit on the commercial side, is absolutely exciting. And also, we have some top line results on the -- related with the fruquintinib in life cycle indication development and also some of our new [ product ] line. We're going to drill down more about it, particularly upcoming EHA for our Syk inhibitor. And also later this year, we also think we have a very good opportunity as, Alec, you know, the savolitinib, AstraZeneca, our partner, has completed the SAVANNAH pivotal trial enrollment. We're waiting for events, hopefully, later this year. We're going to file the second ex China, the U.S. NDA. So this is for the company with really an exciting year and hoping for the next few years, we're going to hear more about our strategy to make a sustainable growth company. Yes. So absolutely delighted to be here.

All right. Great. So definitely a lot of ground to cover, so I want to jump in, but I will mention if anyone from the audience does have a question, feel free just to raise your hand and a mic will be brought over to you, and you can ask it. But Michael, maybe just starting on fruquintinib, recently approved in the U.S. with Takeda, third-line CRC, obviously most topical right now. Could you maybe quickly remind the audience what's happened with your asset, your Takeda partnership and where we are in terms of the launch?

Yes. So fruquintinib was originally approved in China for third-line CRC. It was approved 6 years ago, and now we're actually the market leader in third-line CRC with 50% of the market share and still continue to grow. It's a strong growth driver for the company. And we also run a successful clinical trial for the FRESCO-2, is actually a fourth-line CRC in the global extra China market with U.S., Japan, EU and Australia. And what we found that result is as exciting as the third-line CRC, so we were working with Takeda to actually file third-line CRC. FDA accepted. It was actually a very successful regulatory milestone for us, not only get approved the [ -- anticipate ] the fourth-line label, but actually, we were able to get the third-line CRC label in the U.S. market. So it was quite a successful story from regulatory perspective, and we are very excited about the commercial aspect. The EU approval is already right on target with the positive opinion. Yes.

Yes. Fantastic. And I think Takeda, in their recent quarterly filing, has started breaking out FRUZAQLA sales maybe around $50 million for 1Q. How is the launch progressing so far from what you've been seeing with your partner?

Yes, it was -- from our perspective, it is actually quite -- as -- actually exceeded our expectation because, certainly, in the third-line CRC, this is probably the first time we'll see a new entity was launched in close as 10 years, right? So it generated a lot of excitement in the physician and the patients, so the uptake is pretty successful. David, do you want to comment on that?

Yes. So I think the -- as Alec mentioned, Takeda break it down for the very first time. There's no specific guidance for the full year, but the ramp has definitely been very strong. And we've been monitoring some of the competing products, and it does actually imply quite a significant market share, even though it's just the very first full calendar quarter that we are in the market. And from what we heard, again, like the adoption as well as the education has been going on quite strongly. So this will definitely become a very strong drivers not just in terms of our, I guess, stock sentiment but also in terms of our fundamentals in the upcoming years. And we anticipate more to come, especially we have the potential European approval happening maybe in 2 months' time and then Japan approval for later this year. So this overseas sales will continue to be one of the key thing that will be supporting our fundamental.

Right. And obviously having Takeda as your global partner will help with all those geographies. And you mentioned some of the prior therapies or competing therapies. Looking at the data, fruquintinib clearly shows prowess over regorafenib and TAS-102, which seem to be the most notable comps out there. Could you maybe walk us through the strengths of fruquintinib over its competitors and where you see fruquintinib slotting into the metastatic CRC treatment paradigm?

Yes. So just a little bit of background, fruquintinib actually was designed to be a very specific VEGF inhibitor. It inhibit VEGF receptor 1, 2 and 3 unlike bevacizumab, but is -- the other agent is more VEGFR-2. And what we believe set as a part is really the VEGF receptor R-3 because not only involved in the angiogenesis but also lymphangiogenesis. If you look at the -- I mean, the regorafenib or the other anti-VEGF therapy, what we observed, it is not very effective with patients with liver metastases, which is really common in the CRC patients. So we'll see the patient with liver mass in the FRESCO-2 trial is similar -- equally benefited from the fruquintinib treatment. So that's really exciting kind of a clinical validated this VEGFR-3 mechanism of action and also looking at the absolute increase of overall survival because in the FRESCO-2, you can see the 2.8-month improvement of OS really compared with the rego and TAS-102 is pretty much like a 1-month difference. And also the PFS for the fruquintinib arm, we see a 1.9-month PFS versus 0.2-, 0.3-month PFS improvement for rego and TAS. That's really -- even though this is not direct head-to-head comparison, you can see the clinical outcome benefit for fruquintinib. And the other part is also related with the specific target inhibition. We don't see this out-of-target effect. So if you look at the liver safety, is actually quite good. Rego has this black label for liver toxicity. Fruquintinib doesn't have restriction. We don't have myelosuppression like TAS-102 with the chemotherapy. And also the hand-foot syndrome is less. And it's -- the physician and the patient is really thinking this very highly tolerable. So not only from the safety -- efficacy perspective but also safety really set us apart compared with the other competitor. That's why the market -- I mean the physician, patients are very excited about this new product launch in the United States.

Yes, very differentiated product profile, which could be directly feeding into the uptake we've seen so far to date, right? You also have a few other possible areas of label expansion. You've presented data that shows potential to move to first-line CRC as well, but you also have second-line gastric cancer NDA under review as well as in combination with sintilimab for advanced endometrial cancer in China. Maybe walk us through the potential in these other treatment settings and framing around time to approval.

Yes. So this is again related to this safety profile for fruquintinib. We found from the early studies, we find is a very good safety profile combined with the chemotherapy, immunotherapy. That's where how these new indication expansion was based on the clinical POC study. So for example, for the gastric cancer, with the FRUTIGA trial is China second line combination with paclitaxel. So we did have the top line result reported February 6 at ASCO plenary presentation, really show this highly robust, the PFS improvement, double the PFS compared with placebo arm. And the overall survival, we do see the numerical increase, although from the trial design for [ that ] is a dual primary end point. If you hit either PFS or the OS, is considered positive trial. We do see the post hoc analysis, the -- there's an imbalance of the post-treatment arm compared with the fruquintinib plus pacli compared with pacli. We do see the placebo arm have a higher, like 20% of the difference, higher posttreatment therapy, which probably explain -- is complicated OS explanation. But from the trial perspective, we see the longest even compared with the RAINBOW-Asia, RAINBOW trial is clearly showed that [ 9.2 ] the OS, which is the published data is the longest OS data in the gastric cancer. So there will be a subsequent additional analysis, which also selected at our presentation at ASCO next month. And also the full manuscript will be published online simultaneously in Nature Medicine. So it's really an exciting data from our perspective. The data has been accepted by NMPA. We're continuing to provide more analysis, and we expected this reaching the decision point by Q3 this year. And also, there are a few other indications you mentioned with fruquintinib plus sintilimab in the endometrial cancer second-line setting. We also reached the positive end point. We already -- this is a single-arm registration trial with pMMR status. And the application has been accepted by NMPA. We're expecting the decision somewhere towards the later part of this year or early next year. Also, there's another sintilimab combo trial in second-line renal cell carcinoma. So that's also based on the very positive Phase II data. We have this randomized Phase III study versus axitinib or everolimus in the second-line setting. The trial is fully recruited. It's event driven. We're waiting kind of anticipated readout maybe end of this year and then, if positive, will follow NDA. So there are quite some life cycle indication to fully expand, and we hope to really maximize the value for fruquintinib. Yes.

Yes. No, that was a great summary. I want to jump now to savolitinib. And I'd say probably the most prominent focus here is the savo-Tagrisso combo, SAVANNAH, which I believe is expected later this year followed by an NDA submission. This is your AstraZeneca-partnered program. Could you maybe walk us through the rationale for going after the combo first and what we should be looking for in the readout?

Yes. So the MET amplification is actually quite common in the EGFR-resistant non-small cell lung cancer. That's what we are looking at the first stage of the SAVANNAH trial. We're really looking at the patients with the MET amplification response very well, even though in patients progress on Tagrisso have a high response rate. So it's savo plus Tagrisso achieved an overall response rate above 50% and with the median PFS over several months. So that's pretty much the rationale for the SAVANNAH registration trial. So it has been communicated and discussed with U.S. FDA about the regulatory path. With the SAVANNAH, AZ has fully recruited patient by February. So if looking at the events driven, so if we anticipate repeat over [ 7 ] months PFS data, so we anticipate later this year, we'll have the top line readout. Hopefully, it's going to repeat or even exceed our expectation. That will put a second China innovation to the global stage of approval. So it's an exciting time for us, again, to bring more innovative molecule, drug to register globally to benefit patients globally. Yes.