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

Hello, everyone. This is David Ng, Head of Investor Relations of HUTCHMED. Thank you for joining HUTCHMED 2025 Interim Result Presentation. Our result and presentation slides have already been posted on our homepage as well as on the Hong Kong Stock Exchange website. Just a quick moment on the disclaimer. The performance and results of operation of HUTCHMED Group contained within this presentation are historical in nature, and past performance is no guarantee of future results, and actual results may vary materially from those set forth in the forward-looking statements. So today, we are very glad to have our CEO, Dr. Su; our CFO, Mr. Cheng; our CMO, Dr. Shi; and our Head of Commercial, Mr. Yuan, to go over the results and provide the latest update on our performance and the projects under development. As usual, we will have a Q&A session at the very end [Operator Instructions]. So now let us welcome our Chief Executive Officer and Chief Scientific Officer, Dr. Wei-Guo Su to begin our presentation. Dr. Su?

Thank you, David. If we go to the next slide. So again, good evening, good morning, everyone. Welcome to the HUTCHMED midyear result conference call. The highlights for the first half 2025. Global commercial success. FRUZAQLA continues to grow first half, up 25% comparing to 2024. ORPATHYS or savolitinib, potentially our second global commercial product. There are filings ongoing based on SAVANNAH in some countries and also, obviously, the global registrational study, SAFFRON study is recruiting. We anticipate completion of recruitment later this year. And of course, ELUNATE in China new indications, endometrial cancer approved early this year and RCC already filed as well. We do have a lot going on. We expect in the next 12 months, our Phase III first-line non-small cell lung cancer, osimertinib plus savolitinib study called SANOVO [indiscernible] should completing enrollment very, very soon. If anything, I think we're already fully enrolled. SAFFRON, as I mentioned, should also complete recruitment shortly. Surufatinib Phase II/III study in first-line pancreatic cancer, Phase II readout and a Phase III transition is progressing. Our FGFR inhibitor NDA submission is in preparation, plan to file -- later this year. And the savolitinib SAMETA study for TRCC globally and gastric cancer in China, NDA submissions are also planned. Fruquintinib RCC, as I mentioned, NDA filed early this year and within the next 12 months, we expect approval. The SAFFRON study, of course, the Phase III readout should be sometime first half next year. Our next-generation innovation, very exciting ATTC programs, the first candidate IND filing coming up very soon in a month or so, and we have more to come later this year. And we are also exploring BD activities for not only our ATTC programs, but other programs as well. Without further ado, I will just hand it over to the next speaker, our CFO, Johnny Cheng, to give you a financial overview and update. Johnny?

Thank you, Dr. Su. On Page 6, we can see our balance sheet reflects a very strong cash position, over $1.3 billion in cash resources, which includes proceeds from the partial divestment of our joint venture with Shanghai Pharm. So, these resources will allow us to accelerate global ATTC development and explore potential investment opportunities. Further down the balance sheet, under other noncurrent liabilities we have deferred approximately $18 million of divestment gains as a provision for profit guarantee to the buyers. This will be recognized over the guaranteed period, subject to the joint ventures performance in the next few years. Turning over to Page 7, our P&L. So overall, the revenue for the first half of 2025 was $278 million, down 10% versus same time last year. Investment in R&D amounted to $72 million, reflecting multiple NDAs under review in China. On the bottom line, we have reported a record high net income of $455 million, mainly contributed by the partial divestment of our joint venture with Shanghai Pharm. Moving on to the next page, we have adjusted down our full year revenue guidance to between $270 million to $350 million, mainly to reflect a revision for the phasing of certain clinical and commercial milestones and also the delay of savolitinib commercial launch. I will now pass to our Head of Commercial, George Yuan, to share with us on the commercial performance.

Thanks, Johnny. The first half year of our commercial results is relatively flat. Fruzaqla posted a very strong growth, 25%, offset by a weaker China performance in -- for 3 brands, ELUNATE, SULANDA and ORPATHYS. Next slide. If we look at Fruzaqla, we note that CRC is the third most common cancer and also the second leading cancer for the fatality worldwide. And with [ indiscernible ] adding to the launch market and also include reimbursement, we see Fruzaqla deliver a very strong solid growth in the first half year, especially Japan with Takeda's strength and know-how in the CRC market as well as the benefit and the value of Fruzaqla in CRC being highly recognized by NICE recommendation. So these product will continue to gain market share and through the expansion of the reimbursement and the new launch countries. Next slide. The China CRC market become very competitive in the later line. We see more fruquintinib generics and TAS-102 generics launched in the past 12 months. Also, there's uptake of the combo regimen in the third-line beva combo become cross-line treatment become more popular than before. And also, we faced a final push by the fruquintinib before the [ VBP ] . And so we adjust our market strategy, and we gain back some of the share from the Q2 -- this year. And we still believe we are the strong market leader in the third-line CRC, and we will continue to be the market leader in the CRC. And the EMC launch as well as the future RCC approval will further drive our growth. Next slide, this year, the MET TKI -- the MET market went through a strong turbulence with additional 4 NRDL listed products starting from the year beginning with all of the 4 with the first-line indication. ORPATHYS actually lost some market share in the beginning of the year. But through the middle of this year, we get full approval first line as well as the SACHI approval before the middle of this year. ORPATHYS has been well positioned for this year's NRDL renegotiation. Of course, SACHI is certainly the key differentiator versus others TKIs. Also, we will strongly leveraged the AstraZeneca's expertise in the lung cancer. The combo treatment will be the first and the best oral dual precision medicine to offer to the lung cancer patients. Next slide, if we look at the MET market, we also have some kind of headwinds. We see the octreotide generics launched in the market. Also, we saw this year lanreotide gain to the NRDL and multiple nuclear medicine, the PRRT treatment is under clinical development, which is fighting for patient share in the top centers. We do see a short-term hiccup for our business. But if we look at the future, we still believe we are the market leader in the TKI segment, and we have an obligation to gain the market share for the whole segment as well as [surrender] in the NET treatment. The diagnose and the know-how of the treatment is for the NET is still growing, and we believe there's a lot of education opportunity as a leader in this -- in the TKI segment, we will further drive the category. Next, I will hand over our Mike.

Yes. Thank you, George. I'm going to give you an update about our pipeline. So, we have made tremendous progress in our late-stage product development in addition to the global approval of the CRC, fruquintinib also expanding into the new indication in China, such as endometrial cancer and RCC. And our another brand, savolitinib also achieved label expansion approval with multiple new indications in the late-stage development, again, with our partner, AstraZeneca. As Dr. Su also mentioned, surufatinib is in the late Phase II development with a late phase readout later this year. And our first heme product, tazemetostat has been approved in China with additional new indication development in the follicular lymphoma. Later on, I'll also give you an update on our first Syk inhibitor in sovleplenib for NDA and also the wAIHA development. And our third wave product, ranosidenib and fanregratinib also at a pivotal registration trial stage. All these products will propel our future growth. Next slide. And this slide also give you a update of our early-stage pipeline advancing or will be entered into the clinical development. First, 760 is our third-generation BTK inhibitor, currently still in the Phase II development in the refractory DLBCL -- and our new Menin inhibitor 506 also entered the clinical development is in the dose escalation stage in the AML. Also today, I'm going to give you update some of our new class of agent. Dr. Su mentioned ATTC Antibody-Targeted Therapy Conjugate product. 3 early pipeline, A251, A580 and A830 will all enter clinical development later this year and also next year. Next slide. Here's our update about the ATTC platform. During the last conference call, we disclosed our new platform. And so now we're actually making pretty advanced progress in our first 3 molecule and targeting enter clinic pretty soon. And so I think the ATTC have several key differentiation shown here because we really leverage and maximize the synergy between the target therapy antibody and also our small molecule know-how as a payload and really through the linker optimization to really overcome some of these physical chemical property of small molecule as a payload. And so by doing that, it could have a better efficacy through antibody and small molecule combination will target specific mutation, can overcome drug resistant and potentially support a combination with other target therapy, particularly in the frontline setting and also improve the safety given the low target -- on-target and off-tumor toxicity than the small molecule. And also, unlike other toxin-based ATTC, it has less myelosuppression and also have a better quality of life and also have a favorable pharmacokinetic profile resulting from antibody-guided delivery to the target sites, improved bioavailability and reduce drug-drug interaction compared to oral small molecule TKI. Next slide. So mechanistically, the ATTC can target protein required for cancer growth. It has a synergistic effect with the combination with functional antibody and also has the ability to combine with other chemo target therapy or standard of care chemotherapy and which is particularly important in the frontline setting. And also, there are numerous report the chemo-based ADC is working less effectively with the tumors with [indiscernible]. So this will have the opportunity to really establish a better therapeutic window and through the reduction of on-target and off-tumor toxicity. And also it have other -- less other compound-induced toxicities such as liver QT, lung QT, et cetera. So it can be dosed long term with improved safety window and with a reduced systemic toxicity for small molecule. And more generally, the ATTC platform can also be expand to incorporate high molecular weight drug payload. So this is actually a platform to have multiple opportunity. Next slide. So this is the design of our first ATTC candidate, A251. So on the antibody side, it use a clinically proven, well-established humanized IgG1 antibody and with a small molecule payload with a drug-to-antibody ratio of 4. For the proof of concept of this platform, the antigen we selected is expressed in multiple tumor types and the antibody is internalized favorably. And on the payload side, it really leverage our small molecule expertise and with a highly potent against kinase family [indiscernible] alteration and has the potential to synergize with the antibody to overcome resistance and improve the efficacy. We also show you some of the bystander effect to kill the antigen negative cells. And also on the linker side, it has a pretty stable in the plasma and will be cleared by the protein highly expressed in the cancer cells, so have a very precise target delivery in the tumor cells. Next slide. And this slide shows some of the preclinical data for A251. In the panel of the tumor cells, we actually see a very potent activity with a sub-nanomolar range of IC50 for tumor cell lines with high antigen expression. And in the middle figure, it shows the bystander effect. For antigen expressed tumor cells, it has pretty good tumor killing, but low or no expressed antigen, right? The A251 has no antitumor activity. But if you co-culture the antigen positive and negative cells, it actually have activity to kill both the negative and the positive cells. So it really demonstrates the bystander effect. And also it preserve the ATTC activity as same as the naked antigen antibody showing on the right-hand figure here. Next slide. And this is a proof of concept -- preclinical proof of concept for our- A251. The target antibody is linked to a target therapy payload with a special linker. And the left figure show here is the target one antibody showing in green and the small molecule payload with showing red here with a biweekly dosing. And it shows tumor growth inhibition. And also the single dose target 1 and ADC shows a robust antitumor activity compared with the antibody alone or the small molecule payload alone or the combination of both payload and antibody. So this is very important proof of concept showing a single-dose ATTC deliver a sustained tumor inhibition over a 14-day period of time and show good tolerability because on the right-hand side, we can see the payload itself or payload plus antibody, although have the tumor effect, but they also reduce the body weight, but the A251 itself dose at the 30 milligram per kilogram has no weight loss. So it's very important to show not only induce tumor regression, but also have a very good safety profile. Next slide. And also, the A251 also show very good synergistic activity with the standard chemotherapy. The left panel here is the tumor xenograft model. The combo with chemo show a synergistic effect. And also on the right-hand side, we have seen the tumor cell line study also show the chemotherapy plus A251 have synergistic activity. So this is quite different from the other toxin-based ADC because in all the clinical development setting, you can see most of the ADC toxin-based ADC cannot actually combine with the standard of care because the toxicity. Okay. Next slide. Also, I'm going to highlight some of the progress on our key asset, savolitinib and both in the global and the China development really going to drive the future growth. So at the ELCC 2025, we have reported the data [ASCO] reported data for SAVANNAH study and showing the durable response -- overall response rate. And in the same conference, we also showed the -- our savolitinib in MET Exon 14 skipping non-small cell lung cancer also show a very good response rate and also the sustained overall survival. So this also lead to our approval, not only get a full approval for late-line MET Exon 14 non-small cell lung cancer indication, but also expand the first-line indication. Very importantly, George also mentioned about our second-line EGFR TKI refractory patients, ORPATHYS plus osimertinib in MET amplified patient. This one, we achieved the NMPA approval in the June and also has been selected in the ASCO presentation during the annual ASCO meeting. Dr. Su mentioned our PRCC, the SAMETA trial will finish -- also finish recruitment and the readout for this trial will be early next year. And for the China side, we also achieved the recruitment for the SANOVO first-line trial. And also, we are trying to finish the SAFFRON trial recruitment this year. And the gastric cancer in MET-amplified patients also are preparing NDA for later this year. Next slide. This is also showing the key results for SACHI trial. And in the overall intent-to-treat patient population, the PFS osi plus savolitinib reached a hazard ratio of 0.34 and the PFS improvement versus chemo from 4.5 to 8.2 month. And also regardless the first, second-generation TKI treatment or prior third-line TKI progressed patients, the hazard ratio is very consistent. And in particular, for third-generation TKI refractory patients, as you can see, the control chemo arm have only have a PFS 3 months and the savo plus osi reached the PFS almost 7 months. And also the response rate, disease control rate and durability of response also has been extended by osi plus savo combination. Next slide. And interestingly, we also observed the publication for amivantamab in the MARIPOSA-2 trial, as you recall, the AMI plus chemo versus chemo trial, they also have a biomarker subgroup analysis. MET-amplified patients only identify about 40% of the patients in the MARIPOSA-2 trial. And unlike our study for SACHI, we observed about 50 --30% of the MET amplification by FISH analysis. And so in the patient population, as you can see, the chemo arm, actually both trials, the MARIPOSA-2 and the SACHI trial are very consistent. Remember, these patient have MET amplification, progressed on the prior third-generation TKI and amivantamab trial showing the PFS of 3.1 months, but their improvement is only to 4.4 months PFS with a hazard ratio of 0.51. So the patient population in this population, what we can conclude, just like the SACHI MET-amplified patients have a very poor prognosis, their PFS only 3 months. But savolitinib plus osi reached the PFS almost 7 months with a hazard ratio of 0.32. So this is quite significant difference. We believe in the biomarker selected patient population, -- savo plus osi really demonstrate superior activity, really addressing these patients with poor prognosis. And also, both the SAVANNAH and SACHI trial demonstrate the combo has a very effective effect in the patient with the baseline brain metastases. So these are the key difference between the osi plus savo compared with other study because this is the only biomarker selected patient population and also with the only chemo-free regimen. So we believe this will have a very substantial usage in the clinical setting. Yes. Next slide. And SACHI approval, I also want to mention it enable us to go through the NRDL negotiation this year. And also, we presented our savolitinib MET exon 14 trial at the ELCC. And we have observed very substantial improvement of OS. So the patients with the prior treated with patients with OS of 25 months and the patient with the frontline setting, the treatment-naive patients, the OS with a long follow-up have OS with 28 months and the upper level has still not been reached. So among all the MET TKI, the savolitinib actually demonstrated the longest overall survival repeated so far. So we are very excited about this data. Next slide. And also, fruquintinib has been extending into the other indications. So we already got early approval for the endometrial trial. We have the overall response rate of 35% and also the median PFS reached 9.5 months. And we are also going to present our Phase III FRUTIGA 2 trial at the upcoming ESMO later this year and showcase the activity has been chosen as a meaningful oral presentation. So we'll highlight the data. And the NDA has already been accepted and under review at the MMPI. Next slide. Our first hematological product, tazemetostat also get the third-line follicular lymphoma approval. It showed a high consistency with the global trial. And so at EHA this year, we showed the patient in the third-line follicular lymphoma with IRC over response rate of 63.6% and investor assessed ORR with 68%. So it's very consistent with the global trial leading to the approval in the U.S. and Japan. Next slide. Surufatinib is our combination study in the pancreatic cancer is going very well. Pancreatic cancer is a highly deadly disease. It have a 5-year survival rate of less than 13%. In general, the PDAC is a cold tumor -- immune cold tumor and not responsive very well with the immune therapy. From our preclinical work and IT study, we actually demonstrate surufatinib as a VEGF inhibitor not only inhibited the VEGF FGFR pathway, but the CSF-1R inhibitor pathway also has an immunomodulating function. So this is a Phase II/III trial currently ongoing in combination camrelizumab, PD-1 and the chemotherapy for the treatment naive PHC. So this will -- at the ASCO 2025, the investigator initiated trial also showed this suru plus camrelizumab with chemotherapy in the first line demonstrated ORR of 51% versus 24% of chemo. And also there is a significant improvement of the PFS. So the Phase II portion of this trial is going to read out later this year. What will trigger -- if the results is good, will trigger the decision making to the Phase III portion of the trial. Next slide. Also, I'm going to give you an update about the ESLIM-01 study. So we presented the data at EHA last year, demonstrated a robust overall response rate of 71% and the durable response 48%. So because the dual mechanism not only inhibited the macrophage digestion, but also stimulating that inhibit the B cell production. So the dual mechanism of SYK inhibition really provide advantage, particularly in patients who are refractory to TPO/TPO-RA treatment. During the review of course, as you recall, we submitted NDA and MMPA stimulated a lower [indiscernible] limit. So this requires further CMC validation and stability test. So we target a resubmit with the additional data in the first half next year 2026 and with additional rolling data will be next -- later part of the next year. So here is the update of our sovleplenib in the ITP NDA status. And next slide. And we also have another trial in warm autoimmune hemolytic anemia. The Phase III trial, we have shown previously that sovleplenib reached an overall response rate of 66% and the durable response of 77% because the wAIHA is very deadly disease and no target therapy has been approved. So it represent a high unmet need. So we are very excited that Phase III registration trial has already completed recruitment and with the data readout next year. So I think we make a very strong progress in the R&D, and we're really hoping our R&D team with our novel ATTC platform will develop new treatment modality for the new development and our late-stage pipeline will advance and propel for future growth. And so with that, I'll turn to Dr. Su.

Thank you, Mike, and also thank all speakers for the update. Before we get on to the Q&A, I just want to highlight and give you a sum up. So in the first half of 2025, we completed SHPL partial divestment with the proceeding of over USD 600 million. We also worked on 2 major products, savolitinib and fruquintinib in an effort to expand their indications. Savolitinib, we achieved -- we obtained SACHI approval in second-line EGFR mutant non-small cell lung cancer with MET amplification. We anticipate following the treatment with third-generation EGFR TKI, about 1/3 of patients will develop resistance due to MET amplification. So this combination -- the approval of this combination, savolitinib plus osimertinib offers a treatment potential for these patients. And MET amplification, as we know, is a driver and patients and these patients do very poorly on standard chemo. And this combination by precisely targeting the 2 drivers, EGFR mutation and MET amplification demonstrated very strong clinical benefits and also chemo-free. And additional trials are ongoing, including the first-line EGFR mutant non-small cell lung cancer with MET overexpression in China called SANOVO study as well as the global Phase III study in second-line EGFR mutant non-small cell lung cancer called SAFFRON study. So we look forward to data readout of these trials. We believe MET activation plays a major role in driving cancer growth and proliferation. In addition to lung cancer, as Mike pointed out, we also anticipate NDA submission for savolitinib in China in gastric cancer. And we also expect data to read out in the global TRCC study in combination with IMFINZI. Fruquintinib, we obtained approval in second-line endometrial cancer early this year, and we filed for RCC. So, these additional indications will continue to drive the commercial performance of fruquintinib in China. Outside China, FRUZAQLA continues to grow, delivered 25% growth in the first half. And we expect launches of this innovative product in other countries around the world in coming months. So the launches -- these launches will continue to drive the growth of FRUZAQLA outside China. So midterm, strategically, we are exploring how we can leverage our cash to accelerate growth, both in commercialization and potentially R&D portfolio as well. So, looking for opportunities to acquire products or commercial products or pipeline candidates. And of course, we are highly focused on our ATTC platforms, very innovative, globally first-in-class molecules. Really, I look forward to the first molecule initiating clinical trial later this year and with more to follow. Longer term, we need to -- if ATTCs reach clinical proof of concept as demonstrated in preclinical setting, we expect these ATTCs to positioning us for the long-term future growth. These programs will -- as you know, right, will have potential to be positioned in earlier lines, particularly front lines in combination with chemos, in combination with IOs and in combination with targeted therapies. So we expect that these platforms will deliver multiple, multiple products in the future for us. Next slide. I think this -- you've seen this before. We remain on course. We are committed to profitability, and we look to the future with our next wave of innovation. Thank you, and thank you very much. I think we are now open for questions. David, you want.

Thank you, Dr. Su. So we are now open for questions. [Operator Instructions] So for the first question, can we have Matthew Yan from CLSA.

I've got 3 questions. First is regarding our very exciting ATTC platform. I wonder, is it -- am I right that we will likely to see what drug targets it is in the second half this year? Firstly, regarding A251 and also the development strategy, it seems that -- am I right that you will go directly to the frontline combo chemo standard of care, right? So this is the first question regarding ATTC. And second is about -- still about the performance and the sales decline because I think you mentioned in your report that there's some reasons related to the transitional effects of the change of sales team and marketing strategy. Can you get more elaboration on this? And this is my second question. Third question is regarding the SYK inhibitor Sovleplenib because my original expectation is that to have finished the instability test by end of this year and received NDA approval. So what's the new message from CDE regarding this new change of new submission required next year? Yes. That's all.

Okay. Thank you very much, Matthew, for your questions. I briefly touch on your questions and maybe Mike can chime in later. So regarding ATTC targets, the plan is to -- for A251, which IND submission expected in September, early September, just about a month from now. We expect to -- our plan is to disclose the structure of the antibody and the payload at the upcoming EORTC conference. So, you will see -- you will have all the information, all the preclinical development or preclinical data at EORTC. Yes, development strategy, clearly, I think they have -- these molecules are very different from chemos. They will have very different from chemo or toxin-based ADCs. They will have very different safety profile. And we expect that these molecules can be -- will be able to be combined with a variety of therapies, as I mentioned, including chemo, SoC or IO or even other targeted therapies. So, the development strategy for these molecules will obviously look for signals in the early development. Certainly, they have potential to target tumors with either the genetic aberration or genetic alteration, which our payload targets or high overexpression and so forth as a monotherapy. However, that might be a strategy for rapid biomarker selected pathway for registration. But much greater potential is in combination in first line in combination with chemo IO or even other targeted therapies targeting all comers without even genetic alterations. And we will explain the rationale at the EORTC conference. So that's about ATTC sales decline. Team transition certainly had some impact, but a lot more than that. As you know, the anticorruption trial -- anticorruption activity has been going on in China for some time. So compliance is now becoming more and more important. Physicians are fully aware of compliance issues. So there is a practice change in the field or in hospitals. So there's certainly much less or much more careful off-label usage prescribed by the doctors. And so that certainly will shrink the off-label contribution to the total sales. So team is in transition. I think now we are over with it. The off-label usage dropped but now stabilized. As a matter of fact, first quarter was bottomed out and the second quarter start to grow. We are pretty much back to where we would expect in June and July. So we are very optimistic in the second half, the momentum will continue and will perform to our expectations. So we believe the sales decline in China is transitory, and we are already seeing a recovery, and we are quite optimistic about second half. Your last question about SYK. So it went through a lot of discussion -- we went through a lot of discussions with CDE on this particular impurity and how we address it, both in terms of using tox studies to qualify the level and additional CMC studies to bring it all the way down to a minimum or to below the target or allow the target level. So the activities went on in these 2 areas in parallel. And recent communication with CDE, they guided us to focus on CMC. And now we are full speed ahead in the CMC area, where we have to complete the PPQ batches, accumulate the stability data, but we expect to have the data available for initial submission March or April next year and with additional or longer-term stability data to be rolled in since the program is under breakthrough therapy designation in China. So that's where things are. I know it's -- we are all disappointed of the delay. But at least now we have clarity, we can drive with our activities. I also want to mention about potential out-licensing outside China. This program, as you know, because of these issues, we pretty much stopped the outside China clinical development, even though U.S. FDA was okay with the level of the impurity and allowed us to proceed, but we felt we wanted to explore ways to sort this out. And I think this force issues in China forced us to look into other ways. So I think we are -- we potentially have a strategy to go forward with -- in the U.S. with a new chemical entity with full patent life. So, I think it will make a lot of sense to switch the molecule outside China completely and with a much longer LOE for the product, but potentially it could be a very short development time line because of the known target-- known. And so I think outside China, it could actually present a very attractive out-licensing opportunity once we finish some clinical -- early clinical development. At least now we think it's a great target for these indications. It's probably the best in ITP and why we have done so far, and it could be potentially useful for other indications as well. So I think this -- with regard to ATTC and SYK, maybe, Mike, if you have anything to chime in.

Yes. So thanks, Dr. Su. I just want to mention that for the clinical development side, I think we're very excited about this 251 development. And what we're trying to do is really the global development simultaneously with the U.S.-China development because really not only leverage our synergy, but also take advantage of some of the regulatory approach, particularly in the United States. The FDA is really kind of encouraged for -- through this project frontrunner, right, you can actually start the combination in earlier line setting much sooner compared with actually the CDE. So I think this is a part of the development strategy we're going to undertake. Even when we have the dose escalation, define the dose, we could actually move to the frontline combination earlier. So that will be the key for our development strategy. And we think also, right, you talk about the target and we are planning to close at a future scientific conference later this year. But I think the most important, like I mentioned, our antibody part selection is a well-known target and have a well-established drug in the clinic. But the payload is really the innovation part. And we think our target therapy payload with the linker will be developed really leverage our in-house small molecule expertise can really deliver a lot of potential first-in-class molecule. If this -- if it is a clinical proof of concept is reached, this will be a very robust platform for a lot of new generation molecule to come, yes. So I don't think I have too much to add on the SYK part, the SYK inhibitor, yes. So thank you.

Our next question is from Chen Chen of UBS. We can't hear. Maybe we'll come back to Chen Chen. Let's take the next question first. Paul Choi of Goldman Sachs.

Congratulations on the progress. I want to maybe just address the commercial side a bit first. And Dr. Su, you talked about your confidence in the second half recovery. But I wanted to maybe just ask how you're thinking about potential economic sensitivity here affecting end demand in your -- for oncology products in the China market and just sort of what your thoughts are on sensitivity to the economic -- broader economic situation? And then following up on your comments on the Syk inhibitor and partnering potentially for next generation or follow-on molecule here. Can you maybe just comment on how -- what your timing you think could be for initial entry into the clinic there? I know that's contingent upon a partner, but just sort of what potential time frame you're thinking about there, that would be helpful.

Thank you, Paul. On the commercial --China commercial, as you know, it's been a bit turbulent because of the anticorruption and compliance requirements and also for HUTCHMED in particular, obviously, the team -- the commercial team has gone through a lot of changes as well. Overall, I think the market remains there. Competition may be up, as George pointed out, particularly in CRC -- but if anything, actually, the on-label CRC, we actually saw growth over last year, first half of last year for fruquintinib as well as for surufatinib in neuroendocrine tumors. So I think what we need to -- I think George's team is now sorted out the marketing strategy, and it's working. And I think we just need to take -- to adapt the team needs to adapt to the marketing-driven strategy and help physicians understand our products and also to help patients, obviously. I think I obviously expressed optimism for the second half, and that's built on the strong performance or strong recovery of these products in China in the last -- in the past 3 months. So it's been challenging. We just want to be transparent, but we are seeing good momentum at the moment, and I believe that the momentum will continue in the second half. The demand obviously is there. On the SYK, yes, this is going to be a very interesting approach. I think I hope we can talk more about it. It will be very rapid. I -- we expect the new entity will be in clinic or IND submission maybe second quarter next year. So hopefully, in the clinic before end of second quarter. And most important is that this is going to be a -- we believe it's going to be a very rapid clinical development. Mike sometime will be able to share with all of you. And clearly with high probability of success because this is a known target, and we have a lot of data to support. So, the probability of success should be very high. So, I think, yes, by the time we are ready to go into clinic, hopefully, we have a partner to either codevelop or license, yes.

We just have one last question because of time. We'll try UBS Chen Chen once more time.

My first question is on tariff. And earlier this week, Trump said that pharma tariff is going to be imposed starting from small next week and then up to 250% ultimately. So can management please comment on the impact of your fruquintinib sales in the U.S.? And my second question is for your savolitinib, when can we expect its NDA submission in third-line gastric cancer in China? And also for your EZH2, well, will you consider like NRDL negotiation or commercial insurance drug list this year?

Okay. Thank you for the questions. tariffs, to be honest, we don't have any idea. But given the exporting or the manufacturing cost for the fruquintinib is relatively low. So to be honest, I don't have any idea about the impact. I'm sure it's going to be higher. They have to pay something have to pay the tariffs. But I think the -- personally, I think the impact won't be that much. But until we actually understand the details, I think it's very difficult to estimate. Your second question on GC for savolitinib NDA filing is planned later this year, likely end of this year. This is for late-stage gastric cancer with MET amplification. EZH2 product, TAZVERIK, of course, we are preparing for NRDL discussion later this year. And obviously, this is a very different product. At the moment, it's still imported drug. The cost is higher. So -- and the patient population it serves the first indication we got approved for is third-line follicular cancer, follicular lymphoma, which is a relatively rare form of lymphoma. So overall, I think we have a lot to talk about when we go up to the -- we engage with NRDL. But yes, that's our plan at the moment.

Sorry, we ran over time a little bit, but -- and I noticed there may be some questions still outstanding. So do feel free to reach out to us, and we will try to answer your questions maybe offline. So thank you, everyone, for supporting us and listening to the call. Thank you, Dr. Su, Dr. Shi, Johnny and George for attending the call. And that's all for the call. Thank you.

Thank you.

Thank you all.