InnoCare Pharma Limited (9969) Earnings Call Transcript & Summary

[Audio Gap] InnoCare Pharma First Half 2023 Earnings Call. This is Ziyi Chen, China healthcare analyst at Goldman Sachs. Before we kick off this session, I would like to highlight that this call is strictly for clients at Goldman Sachs and InnoCare Pharma only. And this conversation is not intended for the media and is off the record. Participants will be removed from the call if they cannot be properly identified and this call is not for the purpose of sharing or receiving on public otherwise confidential information. Attendees are public and market participants who may not receive should not request nonpublic otherwise company information about issuers or securities about the market securities. So joining today, including company's Chairperson and CEO, Dr. Jasmine Cui, company's CMO; Dr. Sean Zhang; IR Director; Ms. Lu Xia and other management team. And before we hand over to Jasmine to kick off. [Operator Instructions] Now I'm going to turn the call to Jasmine to get started. Jasmine, please.

Sure. Thank you for the introduction. Hi, everyone. Good morning, good evening, and thank you for attending InnoCare 2023 interim earnings call. So InnoCare -- our vision is to become a global pharmaceutical leader that delivers developed innovative therapy for the patient worldwide. Our private innovation, focus on oncology and autoimmune disease therapeutical areas. So this slide highlights our -- the first half year of 2023, achievement and progress, commercialization, we achieved a total revenue of RMB 378 million and representing a 53.5% year-on-year growth. And orelabrutinib sales an increase of 47.8%, this year compared to last year, primarily due to orelabrutinib market penetration and hospital coverage after the NRDL inclusion. And of course, our highly experienced primary team in hematology. Our second drug orelabrutinib, approved for the urgent clinical yields in Hainan and also get market approval this half year -- the first half of the year in Hong Kong and followed by being able to access for urgent clinical use in the big bay area. In the middle panel, highlights our progress of our internal R&D pipeline. In orelabrutinib, we have made several progresses. First of all, the first half year in April, we get market approval for relapsed/resistant MZL and which is the first and only BTK inhibitor which got approved in China for the MZL indication. And also the r/r MZL was approved in Singapore. And in the U.S., we have finished the registrational trial for MZL and patient enrollment, and we anticipate to submit NDA in the middle of the coming year. In China, the first-line CLL/SLL, registrational Phase III trial finished patient enrollment as well. And we are going to submit the NDA in about half -- 6 months time from now. And the first-line DLBCL MCD subtype and registrational trial Phase III ongoing, and in the autoimmuno disease side of orelabrutinib, we started the Phase III trials for ITP, which is a registrational trial. And based on the excellent PoC Phase II results and for SLE previously, we reported Phase IIa positive results. And this first half of the year, we initiated Phase IIb. The enrollment has 20 to 30 patients and going very aggressively and we anticipate to finish full enrollment by middle in the coming year and interim results by end of 2024. And in the MS side, we previously reported 12-week results, we get over 90%, 92% relative new T1 lesion reduction at 80 milligram compared to placebo arm. Here, we reported a 24-week results, which we saw consistently and leading efficacy 92.3% in relative new T1 lesion reduction and at 24 weeks. And another other assets, we also made the progress and our BCL2 inhibitor, [indiscernible] in the first half year, and we got excellent efficacy safety read out in the first few patients. And our TYK2 inhibitor 332, we initiated the Phase II atopic dermatitis, and we are almost finished patient enrollment will be finished in a month -- in a couple of weeks. And the readout will be the results will be come out by end of this year. And 488, Phase I in healthy volunteers finished and now we started cohort enrollment in psoriasis and we also initiated the Phase II trials. For solid tumor wise side, ICP-723, the TRK inhibitor we are aggressively pushing on the registrational trial. By far, we have 20%, 30% patients entrolled. We anticipate the NDA submission by end of next year. And also this NDA also approved for pediatric use. FGFR inhibitor ICP-192, the registration trial for cholangiocarcinoma is ongoing. In terms of license and the collaboration side, ICP-B04 tafasitamab [indiscernible] in mainland China, we finished patient enrollment already and the NDA submission is anticipated in the second quarter of 2024. And in collaboration with the [indiscernible] antibodies, the bispecific antibody, ICP-B02, CD3xCD20, and we have finished 67 cohort, we observed excellent efficacy with IV dosing as well as subacute cohorts. And the CCR8 antibody in this one, those escalating on volume. In platform-wise, our Guangzhou manufacturer facility is producing a majority over 90% of commercial product orelabrutinib as well as all the other clinical materials for our internal product and the [indiscernible] CMC facility started to operate and also our -- we removed the fee in the Hong Kong Exchange and indicating we are transforming from biotech to biopharma. So the other employees in the company now focusing our concerted effort on company's 2.0 objectives and continue our corporate culture of cost-effective, strong execution as well as innovation. This is our pipeline related to cancer. As mentioned, orelabrutinib [indiscernible] in China, in Singapore and et cetera. And we have a few imitations ongoing and registrational ongoing including the one in the U.S. for MZL. And the other asset that we just mentioned, the CD -- tafasitamab plus len and will submit NDA in the next 6 months. And as well as our bi-specific mono antibody and small molecule drugs and et cetera. And this is our comprehensive coverage for medical oncology from multiple myeloma to AHL to leukemia. So our cornerstone product orelabrutinib approved and tafasitamab approved in certain areas and also will be approved in Mainland China. And around that, a number of our other smaller molecular compounds will be covering different indications in the different medical oncology in this areas. And to make us as a leader in hematology. And just to mention, orelabrutinib sale, this first half of year is RMB 321 million, is 47.8% increase comparing to the same period last year and primarily due to NRDL inclusion increase the market penetration, hospital coverage and also because our indication expansion I just mentioned in the first half year, we got MZL approved in China. This is considered to be a large indication in China in the NHL is the second largest in addition to DLBCL. And for DLBCL, it is a large indication, we have a variety of strategies to cover that from first-line orelabrutinib with excellent safety profile for [indiscernible] tafasitamab in combo with len, the CD19 antibody with improved [indiscernible] function for the second line and above, as well as of our molecular glue issue like this modulator and highly selective and can overcome lenalidomide cost resistant and will be used for MM and NHL as well as a bispecific antibody and our subQ formulation improved safety and convenience and for the late line of patients. And this is orelabrutinib in hematology and actually, the efficacy safety continuously improve and with the time this -- on the left is the efficacy reported in the first half of the year with 47 months follow-up and still, again, with excellent ORR and CR experiment very outstanding 30% CR with 47 months of treatment. And below also listed the MZL and we continuously follow -- continuously showing good efficacy as well as just prove the MZL and with OR of 58.9%, and estimated 12 months TFOS is 82.8% as well as 91%. So on the right side, it's continuously showing a good safety profile, particularly in all the target related adverse effects such as the diarrhea and [indiscernible] and secondary malignancies and major hematology and the orelabrutinib continues to show very good safety profile. This is our second product in hematology, tafasitamab, I just mentioned we submitted the NDA in Mainland China, in the second quarter of 2024, hope to get approved in the first quarter of 2025 and the below shows this is approved in the U.S. and Europe for the second line and above and DLBCL patients. And you can see it has a very good ORR CR, especially the study efficacy durational response as well as overall OS, an out rate of other treatment for DLBCL. Our third drug, we come out to a good surprise in the BCL2 inhibitor ICP-248, we started the first patient in the first half of the year. By far, we have enrolled 4 patients and in 3 evaluable patients, we see first 2 [indiscernible] with undetectable MRD and the indication the release of the disease. And this is our first dose of 100 milligram. And the patient -- the first 2 patients actually have been multiline prior treatment, and they all failed BDK inhibitors, so we saw actually the first evaluation of image. And so on the right-hand side shows our 248 has great synergy with orelabrutinib in antitumor. So the synergy with orelabrutinib indicates we have a strong scientific basis for the combo of orelabrutinib with 248 pursuing the CLL, especially for the fixed duration of treatment as well as MZL potentially for DLBCL as well. So we are very excited about the combo -- about this compound and also the potential of the compound for the global market. The fourth product is our CD3xCD20 antibody, and this is CD3 as a T cell [indiscernible] with CD20 and against the T cells. So we have finished the IV dosing of 5 cohorts and the first subQ cohort, and we observed a good efficacy in both IV and SC cohort in the follicular as well as DLBCL patients, and with a very good safety and no TRs observed by far. So the subQ formulation improved the safety and convenience. So we have high expectation for the bi-specific antibody for DLBCL and number of other NHL indications for mono and combo therapies. So this is our molecular glue compound ICP-490 and from [indiscernible] it can be used as a targeted therapy for multiple myeloma and is very potent and can overcome the lenalidomide cause resistance. And also from a magnistic point of view, it can be immune modulator and has synergistically with number of antibodies, such as CD20 CD19, CD38 to increase the efficacy and potentially the effect by immune response for a number of indications in NHL as well as MM. So shake that to our other immune diseases, we have 3 compound covering T-Cell pathway to TYK2 inhibitors and also BTK inhibitor for T-cell pathway. So we just mentioned the number of indications we are pursuing for orelabrutinib, SLE in Phase IIb, MS completed Phase II and ITP in Phase III. And NMOSD is now an indication now in Phase II trials, and we are also evaluating CSU and et cetera. The TYK2 inhibitors 332, we call it the JH1 inhibitor, and it's being evaluated in Phase II for atopic dermatitis, and we are getting the results in by end of this year. And also for JH2 inhibitor 488, we are evaluating a psoriasis patient in Phase I and Phase II. And also, we are evaluating other indications for the T-cell pathway inhibitors. So first of all, ITP I just mentioned, ITP actually is quite a severe disease and pretty prevalent in chinese patients. And BTK inhibitor can cure the disease by multiple mechanisms. So in the Phase II trial, we saw 40% of patients met the primary end point at 50 milligram once a day dosing. So the Phase III trials has been approved by CDE and has been initiated in China with a 50 milligram QD dosing. And this is orelabrutinib in the front line of BTK inhibitors get approved for other immune diseases and we are considering global market as well. So the second indication SLE previously, we reported the 3 months Phase IIa result, we saw those demanding increase of SRI-4 response, and we also saw the trend of reduction in proteinuria levels and also other biomarkers improvement. And so, so far globally, there's only BTK inhibitors of excellent efficacy in the Phase II trials. We initiated 100 -- across 200 patients Phase IIb for 48 weeks and interim, we will finish enrollment next year -- by middle of next year, interim will be come out by end of 2024. So on the MS, so previously, we reported the MS multiple sclerosis study. It's a global study involving 5 countries. And the 12-week primary end point, we saw a really excellent reduction of the T1 new lesion at 12 weeks. Here, we report the 24-hour results. And from the graph you can see on the top and from 4 to 24 weeks, the lesion, T1 lesion really control -- well controlled by different doses, and if you compare the 80 milligram dose with the placebo past 50 milligram, 12 weeks proper curve, we saw 92.3% improvement. And so no matter it's the 12-week or 24-week data, it is all leading best-in-class or BTK inhibitors as well as leading efficacy comparing to other therapies of MS. In terms of safety, the liver enzyme elevation has been -- we mentioned before, here is the data in the whole trial, 158 patients. So we saw 1 patient at 50 milligram BID, we still call it SAD. And also, we saw another patient in the 50 milligram QD with medium level elevation of ALT/AST and so if you consider any elevations about triple of normal level, we saw the 1 patient in the placebo group. So this is very common, actually, the moderate elevation of ALT/AST in the placebo group. And the 80 milligram actually treatment is 24 weeks, comparing to placebo 12 weeks treatment, we see actually the is comparable, the same as placebo. And the 50 milligram QD and BID increased to 2 to 3 other cases in addition to the 2 cases we saw in the previous graph. So the conclusion is the 80 milligram QD had excellent efficacy and also safety profile comparable, similar to the placebo. And we are going to move forward with the 50 milligram QD dosing for further clinical evaluation. And for all cases, the elevated enzyme levels were reversible compared to normal and with no symptoms from the patient. So the first indication is AD, atopic dermatitis. This is TYK2 inhibitor 332, we finished the Phase I in healthy volunteers. And gets pretty good results and is highly selective for TYK2 against JAK [indiscernible] for the selectivity. So the Phase II trial is 80 miligram and 100 milligram QD doses and we are finishing patient enrollment very soon and the results come up by end of the year. And so last one is ICP-488. It's JH2 inhibitor of TYK2 and for the treatment of psoriasis. We finished the Phase I in healthy volunteer. And now we move to psoriasis cohort in expanded baseline study as well as we are initiating the Phase II study for psoraisis. So the TYK2 inhibitor, no matter the JH1 or JH2 can cover numerous other indications, we are studying from [indiscernible] and to get PoC before we move to other indications. So for solid tumor strategy, our strategy is giving the right medicine to the right patients at the right time. So our approaches benefit a patient more by precision medicine, if the person carrier gene mutation fusion, we have a drug for that, that gives a very good response. For example, our ICP-723, and we are in the registrational trial at 80 milligram and we saw a really good OR response, 80% to 90%. So the trial is still ongoing. We are aggressively finishing it trying to submit NDA next year. And [indiscernible] and we are doing a registrational trial for cholangiocarcinoma at 20 milligram. So far, we also observed pretty good efficacy. And for another approach is benefit more patients by combo with different therapies. So we have 2 -- here is as an example, we made compound here, just as an example, ICP-189 is SHP2 is the [indiscernible] inhibitor. And it's the immunotherapy and also ICP-B05 is antibody CTR8 both are in phase I dose escalating, and we're considering combos with other targeted therapy and immunotherapy and for the cover of different patients. So 723 the second generation of TRK inhibitor that can overcome acquired resistance of first generation of TRK. And we finished the Phase I and we get an excellent safety efficacy readout and no DLT observed from 1 to 20 milligram and the registrational trial is on 8 milligram. and so far, we already finished 20%, 30% patient enrollment and by far, we observed 80% to 90% ORR. We also saw one patient and gave a very good response in zurletretinib resistant patients and IND for pediatric patients already has accepted -- approved and we are also exploring RAS mutation for this compound. On the right hand, you see a young adult and I think a big tumor on the left side of the face, after 15 days treatment with 723 and the tumor almost completely disappeared. So I need to just mention the FGFR inhibitor, irreversible is the inhibitor and we finished the Phase I from 2 to 26 miligram, no DLT observed. And right now, the registrational trial is a 20 milligram for cholangiocarcinoma. We are also exploring multiple other indications with FGFR mutations. And overall, in solid tumor, 7.1% solid tumor carrying FGFR mutations. So 189, we just mentioned is a SHP2 inhibitor, and we have finished dose escalations from 10 to 120 miligrams and we observed the excellent safety, basically not any SAEs and its video safety profile. At the 20 milligram, we confirm the PR in the cervical cancer and in the QD dosing. And right now, we are doing a combo with the eGFR with ArriVent in the U.S. and eGFR combo study for small lung cancers, small cell lung cancers. And also we plan to do combo with PD1 and other things and cover the different indications. So this is our pipeline, autoimmune disease and solid tumor. We just touched on, and I'm not going to go over with it. So anticipated milestones and catalysts in the next 12 months. And for [indiscernible], we mentioned we will have 3 NDA package first-line CLL/SLL and will be in 6 months, the package submission and also the tafasitamab will be 6 months from now, submitted NDA packaging in Mainland China. And also in U.S., we have around maybe 12 months, submit the NDA to FDA in the U.S. and other related cancer, which as mentioned, exciting -- excitement in 248, just first dosing and we saw the CS for the patient to build multiple live treatment field BTK inhibitor treatment. So the BCL2 inhibitor, we internally discovered for sequential treatment with BTK inhibitor also for combo with BDK inhibitors and others. So autoimmune disease, we just mentioned orelabrutinib we are in Phase III for ITP registrational trial and Phase IIb for SLE. And we hope after the results, we discuss the registrational strategy and MS, we are working with FDA taking our path forward. And we mentioned about 332 by end of the year. we will have a data readout for the AD at 488 for PoC in psoraisis by later this year. Solid tumor we mentioned 189. We are finishing Phase 1, and we're starting combo with the eGFR and the 2 precision medicines candidate 723 and 192 for submission of -- finished registrational trial and submission for NDA. So we consider ourselves, finished the company Phase I and from start to end of last year, and we get drug launched in the market, and the company successfully IPO'd in Hong Kong and in STAR Board. And also, we built up a strong pipeline and the team experienced the driving innovation team and also platforms from discovery all the way to commercialization. So if we look forward in the next 3 to 5 years, we saw at least 6 drugs will be marketed in commercial stage. And this is including our already approved orelabrutinib for hematology, and we will be approved in the Mainland and also 723 and 192 in later stage of registrational trial and also if we move 3, 4 years from now, we see a number of indications orelabrutinib for autoimmune disease and will be approved and also the BCL2 inhibitor 248 and two TYK2 inhibitors with high possibility success for a number of indications. And this related our top 8 product. Of course, we have reached a pipeline in others that we feel something hopefully will also get registered within the time frame. And so by then, we will be a recognized leader in hematology and a strong competitor for autoimmune diseases and solid tumors. And in our internal R&D, in addition to above drug candidates, we are very carefully positioning our future drug and in the R&D stage. And so we hope those are the first in class or very unique in the indication therapeutic areas, and we also set up a very unique research platforms to get differentiated assets and also our drug innovation platform from research clinical development to manufacturing commercialization platform will be more completed. It will be more powerful. And also, we hope and we're striving to get 3 to 4 products get into globalization, including utilizing new partnership and launching common drugs ourselves and et cetera. And by then, we anticipate a significant increase of the revenue and the significant growth of our company in the stock market as well. So we are really confident we have a really good pipeline, a rich pipeline. We have a strong team and we have established the platform from research to commercialization and we do have cash enough for the next few years to develop our own asset potentially for licensing activity as well. So this is our financial numbers and the total revenue, just mentioned RMB 378 million an increase of 53.5% and a drug sale of RMB 321 million increased 47.8%. And our R&D cost increased around 30% because the increased clinical trials, especially the global clinical trials to RMB 358 million. But it is still a reasonable number for our R&D costs. We have been really cost-effective. So as such, our loss for the period for Hong Kong FRS and exclude the exchange rate of USD-RMB and RSU is around RMB 206 million and is around a 10% decrease from last year. Our cash and cash equivalent. And comparing to last year, we increased more than RMB 2 billion and primarily from the success of our IPO of STAR Board in September last year, and we have RMB 8.7 billion cash and cash equivalent in hand now. And I will stop here and welcome any questions you may have.

Thank you, Jasmine. That's really comprehensive for the introduction of first half results. Now we're going to start with the Q&A sessions. [Operator Instructions] So I'm probably going to start with 2 questions first. We basically got a lot of questions from investors. So one is on the [indiscernible]. In the second quarter, we saw the drug booked about RMB 170 million sales versus first quarter is RMB 150 million. A slight increase, but first quarter, we actually know there was COVID [indiscernible] and also Chinese New Year. So investors feel like second quarter sales looks a bit weak. We're also looking into some of the competitors numbers bookings in China also second quarter versus first quarter is not growing. So does that mean the overall particular market is getting to a stage that it might not be able to push the penetration further? Or is there any temporary one-off things happening in the second quarter that are leading to the relatively weak sales numbers? That's the first question.

Okay. Thank you. Actually, this question also being asked earlier today. And our first quarter is RMB 151 million, and the second quarter actually is RMB 170 million increased 13%. And we think the second quarter is not really that weak, as we are still competitors, yes, maybe flat in the first second quarter. And we are still increasing the -- about 13%, 14%. And in the second quarter, after Chinese New Year, and we sort of made a strategy that we changed our geographic sales region and positioning ourselves to add more sales reps actually is starting from later of the second quarter until the June, July. And so in general, I think the first 2 quarters, we get RMB 321 million and we feel in third, fourth quarter, and in general, it's always the case. Last year, first 2 quarters, we increased quite a bit and to these first 2 quarters. We're also confident in the last 2 quarters, and we hope also increase -- you all know with any provision now from last month and have the efficiency affected a little bit with the meeting postponed, canceled and stuff like that. But even that, we are still confident to move forward with the last 2 quarters. And actually, we didn't mention much. And we feel in this environment, the cash is really important. Our sales costs decreased a lot actually this first half of the year. We feel our net profit is very important. And so we are going to continually striving to reduce the cost and increase profit of our commercial team.

Great. Just a follow-up to that. In terms of the guidance this year, I think at the beginning of the year, company gave a guidance about potentially RMB 800 million to RMB 900 million or RMB 1 billion sales this year for orelabrutinib. Do you have updated guidance for that? Or you do think the guidance is achievable? And also over the next few years, how should we think about the potential sales trump up trajectory for orelabrutinib, let's say, in 3 years' time, where the drug sales can be landed in your view?

Right. Actually, we gave an objective for our sales team, not really for the market guidance. We never give market guidance. So we always put the high objective for our team and for making up their bonus, their objectives, et cetera, we obviously use a higher number. So last year, we did RMB 566 million. And this year, even we do RMB 800 million, that's still a lot of increase and we did plan in the second quarter, I just mentioned that we changed the structure of our sales team and tried to get more sales rep, you need more labor to get significantly higher. So we are still in the need of a ramp up -- we plan to ramp up around 90 to 100 sales reps. But we finished around half of it and we will see whether there's a need later of the year to add more sales rep. And right now, because the meeting postponed and et cetera, and we slowed down a little bit the activity for adding additional manpower, but again, we are looking at both parameters, the top line as well as the ROI return on investment. So we are very cautious, and we have -- we want to make sure all our strategies will pay off. So if we add people, we want to make sure we still keep our profit and while we're getting the higher revenue, if because of a side effect of the recent environment, and we'd rather keep our profit unchanged. And even reduce a little bit of the revenue. So that's our thought. We still feel the cash and the profit is very important for the sales for the commercial team.

Got it. That makes a lot of sense actually. Reading into the first half frames of a lot about the company looks like everyone consistently value cash and a profit more than the top line in this type of environment. And well, I think another question probably you also got to ask a lot is anti-corruption probe in China, the ongoing ones. And because this is really now leading to a bit of disruption to sales reps and doctor's interaction? And also in terms of some of the marketing activities like media conferences got delayed or canceled. So we're trying to also understand a bit from InnoCare's view that how this is going to be evolving? And how do you feel like the overall feedback from the frontline salespeople and how you're actually managing the discussion or communication with doctors in this type of tough time. So I'm trying to get a sense from you about how InnoCare is being positioned in this kind of policy changes.

Right. So you are right. And this policy, I think in long run, we really welcome this kind of anti-corruption policy. And we feel that where China can get really the novel medicine, encourages the growth development of novel medicine. This year, you probably know, early this year, the NRDL have some policies, really favorable policies to sort of reduce the price cut and also other -- a number of other things to encourage the new medicine launched to the market. We think anti-corruption is another move that's really favorable to the innovative companies like InnoCare and to the innovative medicine back to the really normal track for the sales and be sort of mitigated the gap with the global market. And despite of that, in the short term, because the interpretation of the policy, everybody of different understanding and a different geographic locations, they have different emphasis. So there is definitely disruption in our field medical education and sales activity and the majority of the media is 95% -- 90% of media schedule already canceled and also the activity level reduced quite a bit. I heard from the field, it reduced 70% and so we hope this is the short-term plan and for long-term benefit. So we will see probably in the activities will be back to normal. Other price activities will be back to normal and the whole could get back right to the track. But definitely, there will be -- we are quite sure there will be short-term disruption and from late July and to now and the activities reduced significantly.

Got it. Well, I think we're also encouraged to see they put out the safety data and a 24-week data on the multiple sclerosis. And if we were looking into data there has been 2 cases of elevated liver enzyme well, but the interesting is that, that was in the 50-milligram BID QID group instead of 80-miligram QD. And it's pretty interesting that it looks like it's not a dose-dependent liver toxicity. How should we explain that? And well, you have been working on this for a while. So is there anything about the potential mechanisms or any new findings you can share your insights with investors?

Yes. We also look at the data actually only one case is for SAE. And this case is very complicated in [ Ukraine ] with a number of confounding factors in there. And the second case in 50-milligram QID actually is mild. It's not SAE. Just elevated AST or ALT and back to normal. So we feel the MS patient, as we previously mentioned, and they do inherit it because of the disease, liver is very sensitive and all the other -- many other MS drugs with different MOA's and they also have almost a majority of them all have labor issue or need specific detection after marketed in the field. And you -- so we also see 12 weeks placebo and we see very -- the mild change, the threefold you see also in 1 patient. So we feel the compound will have good efficacy somehow and you mitigate -- yes -- you reduced your the labor incident, even a mild change of AST or ALT like 80-milligram is actually better than the placebo. And I think a 24-week treatment. And if you see all the cases AST/ALT is much better than placebo. And so we have been communicating with FDA and also our IDMC Committee, our head committee, they are all supportive, they are very excited about the efficacy, and they also see the wild 2 cases with many other confounding factors. And the situation is naughty and [indiscernible] and they also see, I guess, also very few cases. And so I guess they want to ask, also identify, definitely the confounding factors. So we saw confounding factors in 1 case. A lot of company factors including cholestasis on the patient hands. And so they want to look into whether some biomarkers like actually [indiscernible] contributed to it. So we are making a strategy to move forward. We are also testing the very few cases with given mild elevation of AST/ALT comparing to the placebo group, trying to get whether we can identify a definite factor, that we can use exclusion in the enrollment. So we are taking out and we are still doing some tests for some patients. And since the study is already finished, and we still need the probable revision for retesting of some lab samples.

Got it. Then a quick follow-up to that is any update on the FDA communication. So what they are looking for and what we are looking for to moving forward with our potential Phase III studies.

Yes. We submitted all the Phase II results in -- actually in late June -- July and they came back and they have questions and we see them back okay, and they have further questions. Yes, we are very -- we are communicating with FDA quite frequently and the back kind of first and also with all the recommendations, and to FDA from our expert from IDMC head committee and et cetera.

Got it. Well, since you're already talking to FDA frequently, do you have any clear guideline coming from FDA about, let's say, what kind of data they need to see?

Yes, they do. We are still -- we are trying and providing further word together regarding more data from the existing patients.

Got it. A question coming from investors would like to know because Jasmine, you mentioned about you actually change the sales strategy a little bit in June, July, any more sales reps for better coverage. So the clients would like to understand company's consideration to adjust the sales strategy and increased number of staff under current anti-corruption probes because we start to have more confidence instead of taking about adding more sales reps. They are talking about cutting down their expenses. They're talking about being freezing their headcount. So what has been the thinking logic behind your strategy change?

Yes. Thank you. We changed that from 3 large regional to 6. And so the reason is -- actually, this strategy was made by the beginning of the year, the first quarter, and we plan to add like 90 -- over 90 sales reps to cover it. Since we get more hospital coverage, we get more cities covered and also the company level and we expand a lot. So we want to try sales reps covering more hospitals and areas. And to increase the sales. And so we made our strategy in the first quarter, and we will go to finish the enrollment by middle of maybe third quarter and the second quarter. We did quite a bit. We added around 50. So you are absolutely right since then, and we are still now suspend the activity of adding more. We finished half of that. And like we just mentioned InnoCare's tradition, we really be very careful about what's the profit to top revenue and profit, we balance that very carefully. And you are right, right now, we are still -- we finished the half of the expansion. And so we will see in the next month or two hopefully, and we will see whether we still need to finish the rest of the half or that's good enough for now.

Got it. And I think there's recently, there are also being CDs changing. It's not changing but more providing a bit of update for the new regulation on conditional approval. And how does that change could potentially affect your clinical strategy, for example, for ICP-192? Or other assets are running potentially we're thinking about condition pool pathway? How is that going to affect your clinical strategy?

Yes. Actually, this is also moved sort of close to the regulation ICH globally. So now CDE is -- the policy is when the clinical value it's the center of the whole approval. And if there's a drug, no matter it is from -- where is it? It's from [ MNCs ], from the domestic companies or where. As the last Phase III approval drug already have a Phase III result of Phase III approval and then you are not qualified to do the single-arm as -- a single-arm registration conditional approval. So this is very clear. Either you need a very fast and to move forward, get the conditional approval and while doing Phase III or you start the regular Phase II, Phase III, the controlled trial earlier. So now you are absolutely right. Every clinical trials, before we decide what the regulatory strategy, we always discussed back and fourth, all the competitor, compounds and the time line and to give a best guess. We are going to finish the Phase II or not. So now for our -- we have a few single-arm registration in oncology, but in autoimmune disease basically almost everything we are doing Phase III. And for oncology, in general, we -- even we do the Phase II conditional, we always start Phase III, not too far away from the Phase II. So we can make sure and we have increased the single-arm, has a problem, we also have the Phase III come up very shortly. So you are right. And this is -- the standard is higher and higher, in some way, I think it's also good to make sure the drugs are truly beneficial for the patient and don't have it by chance, the efficacy. And also, I think the Chinese regulatory agencies is much more closer to all the ICH global, I think in the U.S. and other countries and follow the same rule as well. You are right, now become more and more closer to the global registration policy.

Got it. Well, here's another question coming from investors. Are you still looking for -- actively looking for partnerships for multiple sclerosis indication of BTK. Well, last time when you communicated to investors, you mentioned about I have to wait until there's a clear cut with the pickup with [indiscernible]. And now this is pretty much done. And are we going to reinitiate or is InnoCare's BD team is actively working on just kind of looking for partnerships?

Yes. Since rollout branded, we have the oncology arm, which works pretty well, and we are in the registrational NDA submission stage. And we also started a Phase III of MCL and we have plans to do the combo with BCL-2 inhibitor for the large indications like CLL, DLBCL and et cetera. Yes, we are looking for partners on that. For MS, and as we mentioned that we're communicating with FDA, and we are also -- we are developing different strategies with communicating with FDA, collection more data and collecting more data for the liver-related and the liver-elevation thing. And we are still -- we are looking but we still want to make sure we know the path forward before we form the partnership. So that will be a different value from partnership with current status with future status, we have a very clear path forward. We do, but I think we -- ourselves would prefer to wait a little bit to get the -- pass-forward the career.

Got it. Well, in terms of, what kind of partner you'll be looking for? Are you still going to be really searching in the big pharma space? Or you're going to be more openminded about picking potentially global biotech, midsized pharma to work with?

Yes. So actually, in the first round, when we looking for partnership, we exclusively look at big partners. And we did not look at any one, the small partners. And actually from Biogen, the partnership, we learned a lot and also we learned the license as well. We do want -- our goal at this stage, we have cash, we have a very good pipeline. We want to have a drug launch as soon as possible. So we are looking for somebody who is really on the same page with u. and take this back and agree with our interpretation of the data, have confidence with the compound, and will move forward together with us. So now we are open minded and we do feel important to add partners who put this asset on the top of their risk, rather than after the upfront payment and then you don't know the time-line for the common [indiscernible].

Got it. Well, on the BD front, investor also interested on TYK2 inhibitors because we're going to have some of the data readout towards the end of the year. So after that, or is looking for a partner is already getting initiated for those 2 assets?

So we are -- for TYK2 we are sort of in early stage looking for partners, but we do want to have the data readout before we have a serious partnership. The TOC data, the Phase II data with team who is really important to derisk of the compound. So we still prefer to have a partner after like 332, we should have the readout in the year or few months -- by end of the year.

Great. David, an online investor would like to ask questions. David, you can unmute yourself and ask questions.

I'm David from UBS. And I would like to ask one question about any colors about this new NRDL negotiations process, orelabrutinib has passed the formality for the contract renewal. And since we have new indications, do we have any colors for the potential, maybe the simple pathway of negotiation or any colors about the price cap, please?

Yes. This is important question. And surprisingly, the whole data, nobody mentioned about the NRDL. Now we think this is a much better policy now. And Indeed, we do have the NRDL new indication. And this year also, the second year of other NRDL and we are doing -- we are in the path to do a simple negotiation. And we still hope to keep the price well and doing the simple negotiation. We should know that actually by middle October and about it. And now still in the application stage but we passed the first round.

I think the reason a lot of people asking about R&D are probably, no one is expecting so there are going to be huge price cuts anymore. So the people are taking more positively. We are running out of time. It's already 1 hour. So before closing the call, I'm going to turn back to Jasmine for any closing remarks.

Sure. Thank you for host meeting. We really appreciate early morning or late evening for this meeting. And so InnoCare, I mean, we do have -- I'm really confident actually with our pipeline and with our excellent assets and differentiated assets and with our internal discovery innovation platform and with our strong team, we have 1,100 employees and covering all aspect of drug innovation from our own uses and research target identification, our own clinical team carry on all those critical and speed -- high speed of clinical trials and our own manufacturing bundle producing all the materials and established 2 big manufacturing, 1 in Guangzhou and 1 in Beijing. And also our commercialization team as highly effective. And so -- and also, we'll always be very cautious with spending. And in the first stage, the company value increased dramatically 100 -- we only use RMB 100 million of R&D to carry the company's -- just investors' money, and we are confident with the version 2.0 -- version 2 and we will achieve our objectives. I need your continue --we need your continuous help and support. And hopefully, you all have confidence on us. And thank you so much for your attention, and good night and have a good day. Bye.

Thank you, Jasmine. We're closing the call for now. And any questions, please reach out to us or to the IR team of InnoCare. Have a good day. Thank you.