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

Good morning, good afternoon and good evening, everyone. Welcome to HUTCHMED's Special Webcast following our announcement earlier today of the BD transaction with GSK. I'm Frederick Cheng from HUTCHMED Investor Relations, and I'm pleased to moderate today's discussion. [Operator Instructions] Please note our safe harbor statement and disclaimer. The performance and results of operation of the HUTCHMED Group contained within its organization within the nation historical in nature and past performance is not a guarantee of future results. Joining us today from HUTCHMED's management team are Dr. [indiscernible] Chairman and Non-Executive Director; Mr. Johnny Cheng, Acting Chief Executive Officer and Chief Financial Officer; and Dr. Guangxiu Dai, Executive Vice President, Head of Discovery and Global Portfolio Management. Without further ado, it's my pleasure to invite Dr. Eldar to deliver the opening remarks. Mr. Eldar, please?

Thank you, Fred. Today's agreement with GSK clearly embodies HUTCHMED's strategic vision to build a globally competitive oncology portfolio and called by differentiated innovation centered around a first-in-class novel ATTC payload platform assets with meaningful combination potential with standard of care for earlier line treatments. GSK is a leading biopharma company, world-class multinational partner with a global development reach and expertise to maximize the potential of HMPL 30. The strategy of HUTCHMED is to generate a platform, which can produce a number of drug candidates using AI. And the experience accumulated by many years of drug discovery development and production. We understand that we cannot bring all our candidates to global markets by using internal resources only. And therefore, we choose the best strategy to maximize the value of each ATTC drug candidates. At times, we shall maintain all rights. At other times, we intend to license ex China rights knowing that an excellent partner like GSK has the ability to accelerate development. Sometimes, you would see us embarking on joint development and sometimes licensing global rights. This partnership we announced today is another validation and acceleration of international access that is central to our strategy. It also demonstrates how we can create the most significant shareholders' value as well as the greatest impact on the lives of patients globally. Fred, please proceed.

Thank you. The next, Johnny, please.

Okay. Thank you, Fred, and thank you, Chairman, for sharing your vision and view of this platform and also the direction of the company. So now we just have a quick highlight of the key terms of this transaction. Our A830 is a first-in-class preclinical asset, which is a KRAS-EGFR antibody conjugate. We are licensing A830 China routes to GSK. This is a co-development deal in which Hamed will be responsible for the global Phase I development and GSK will take over the ex-China development post Phase I. The total deal size is around USD 1.3 billion, including upfront of USD 110 million and once commercialized HUTCHMED will receive tiered royalties. The benefit of Hazmat in doing this deal is that we can accelerate the global development of and unlock multiple indication opportunities. As mentioned by our Chairman, this also serves to validate our ADC platform by reputable multinational company. As for GSK, this transaction will expand their global oncology rich as well as extend their expertise in this area. It also enriches and advances their next-generation R&D portfolio from ADC to ATTC. I will now pass Dr. Dai to share with you all the details of A830.

Thank you, Johnny, and thank you, everyone, for your time today. While KRAS is a key protein that drives cell growth when mutated, it causes cells to divide uncontrollably, leading to tumor development. In fact, KRAS mutations are found in about 30% of all human cancers, particularly in hard-to-treat solid tumors like CRC, pancreatic and lung cancers. These tumor types also frequently overexpress eGFR. While first-generation KRAS inhibitors have been a major breakthrough patients often Phase II big issues. Number one, the on target of tumor toxicity in how much drug we can safely give to patients and for how long. And secondly, the cancer quickly adapts and find ways to bypass the treatment frequently by turning up the upstream tyrosine kinase receptors, such as EGFR. Then this brings us to our ATTC-HMPL-A830. 830 consists of EGFR antibody attached to a novel small molecule KRS payload via a cleavable linker. A830 is a novel therapeutic designed to hit cancer cells from 2 directions at once using targeted delivery. The EGFR antibody acts as a homing system is specifically targets EGFR, which is heavily overexpressed on the surface of tumor cells. Once on the drug interest of cancer cell released the KRAS payload and shuts down the interest cellular signaling, driving tumor growth from the inside. And importantly, the cancer the antibody is more than just a delivery factor it functions as an active drug on its own by directly blocking EGFR saving pathway. By combining dual EGFR and KRAS inhibition in 1 drug, we aim to achieve simultaneous pathway blocked right where it is needed the most. So why is this strategy so powerful for patients? First, it overcomes drug resistance. Up regulation of EGFR is a well-established mechanism that cancers used to escape stand-alone KRAS inhibitors. By turning both EGFR and KRAS at the exact same time, A830 blocks the bypass pathway before the tumor can escape. And secondly, 830 offers an improved safety profile. By delivering the payloads directly into EGFR-expressing cancer cells will reduce systemic toxicity in normal tissues. This means we can potentially achieve better efficacy at doses that patients can tolerate. And thirdly, early expands our combination potential. Because of the improved safety, 830 can be combined with frontline send-of-care treatments like chemotherapy, opening up broader clinical applications early in treatment. And finally, 830 is not just a single asset. It validates our broader ATTC platform technology by pairing novel target payloads with antibodies, we are building a pipeline of precision medicines Beyond 830, which targets KRAS and EGFR, we are also advancing programs targeting IKK pathways across HER2 and EGFR targets, including A251 and A580. So with global Phase I trials underway, we are well positioned to deliver a powerful new class of targeted cancer therapies. Now back to Johnny.

Thank you, Dr. Dai. So just to recap our recent announcements of 2 positive Phase III without. HUTCHMED and Astra Zenica are very happy with the results of both of these trials. The excellent results in terms of PFS and OS and the relevant data of these trials will be presented at the forthcoming academic conference. More importantly, in addition to milestones income. HUTCHMED will received royalty income once all these indications are commercialized, including for the SAPN trial, a tier royalty of 9% to 13% on global sales. We estimate around 1/3 of MET amplified over-expressed patients that build resistance to EGFR treatment will benefit from this combination therapy. On the China side, as you can see, we have 3 indications already commercialized. Together with Senofo, once approved. Savolitinib will expand its benefit to first-line met overexpression and EGFmutation patients. For all these indications in China, HUTCHMED will receive 30% royalties from AstraZeneca. I will now pass it to Fredrick to coordinate the Q&A session. Fred?

Thank you, Johnny. So we're going to take some questions from the attendees. First of all, let's have Paul Choi from Goldman.

Okay. Great. Congratulations on the deal. I had 2 questions. First, in terms of clinical development time lines, currently, the trial on clintrials.gov is indicating relatively limited information. Can you maybe comment on how you're thinking about prioritizing lines of therapy, whether treatment experience or not across the 3 tumor types you've disclosed on pancreatic and colorectal? And then my second question is, given the recent approval of [indiscernible] directorantinib. Can you maybe comment on how you're thinking about where the clinical bar is, maybe starting with pancreatic cancer and other solid tumor types?