InnoCare Pharma Limited (9969) Earnings Call Transcript & Summary

Thank you for joining InnoCare Pharma 2023 Annual Results Earnings Call. This is Ziyi Chen, China health care analyst at Goldman Sachs. Before waking up the session, I would like to highlight that this call is strictly for clients of 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 nonpublic or otherwise confidential information. Attendees are public and market participants who may not receive [indiscernible] request nonpublic or otherwise confidential information about issuers or securities or about market securities. Today for the call, we are honored to have the management team on the call to discuss the results and also providing 2024 forward-looking for our investors. Joining to this call, including Co-Founder and CEO, Dr. Jasmine Cui, CFO Mr. Xing Fu; and also IR Director, Bonnie Yuang. And management is going to give us an introduction of the results, recapping some of the most updated business status, and then we're going to open the line for question-and-answer sessions. [Operator Instructions]. Without further ado, I'm going to turn the call to management team to get started.

Okay. Thank you so much, Ziyi and good morning, good evening. Thank you all for attending InnoCare 2023 Annual Earnings Call, and we are excited to share the results with you. InnoCare is a drug innovation company. Our mission is Science Drives Innovation for the benefit of the patients. Our wish is to become a global pharmaceutical leader that develops and delivers innovative therapies for patients worldwide. And our drug innovation focused on 2 therapeutic areas: oncology, autoimmune diseases. Those are 2 large therapeutic areas with a lot of unmet medical needs. Here is our key achievement in 2023 and classified into different aspects. In commercial, orelabrutinib revenue increased 18.5% compared to that of 2022. And we also in 2023 had R/R MCL NDA approved. This is the first and the only CDK inhibitor approved for the indication of MCL in China. And we also are very happy to say we get a successful renewal of our MCL, CLL, SLL indications and the addition of R/R MCL to the NRDL coverage without price cutting and keeping the same price. And also early this year, we strengthened our commercial team by changing the leadership and positioning for sustained long-term growth. In financial, our total revenue reached RMB 739 million, representing 18.1% year-to-year growth. And also our gross profit increased by 26.6% to RMB 610.1 million. And therefore our loss reduced -- the total loss of the year decreased by 27.8% compared to 2022 to RMB 645.5 million. And we are very happy that we still have the cash balance of total cash of RMB 8.2 billion, providing us a strong base for further development and flexibility. In operation, we got removal fee in the Hong Kong Exchange, indicating we are transforming from a biotech to a biopharma company. And our Guangzhou manufacturing site commenced majority of our commercial products of orelabrutinib, resulting in a cost reduction of the gross -- increased the gross margin. Also, we improved the ESG with environmental-friendly operations and were rolling out company 2.0 objective. In clinical trials, we made significant progresses on the left bottom showing NDA approval registrational clinical trial progress. Orelabrutinib, I just mentioned we got approval MCL indication in China, and we also get R/R MCL approval in Singapore and also we finished our first-line CLL, SL history patient enrollment in China and the positioning of our NDA submission in the second half of this year. And also, we finished the MCL enrollment in the U.S., and we are positioning for NDA submission to FDA in the third quarter this year. Our second drug tafasitamab, and we got approval in Hong Kong and the market approval in Hong Kong, and we've got early access program in Hainan and the Big Bay area. And also, we finished the registrational trial in Mainland China and the positioning of the BLA submission in May of this year. And we also made significant progresses in the key clinical trials. Orelabrutinib we got FDA's endorsement and initiated first-line MCL global Phase III trial. And for ICP in China, we are pushing through the Phase III clinical trial, and we will finish patient enrollment this year and hopefully finish before starting next year and preparing for the NDA submission by end of the next year. And for SLE IIb, we're targeting patient enrollment combination. We're already more than 50% combination by middle of the year and hope to get interim analysis by end of the year. And also, we get ID approval for the first-line treatment in CLL, SLL, the combo with BCL-2 inhibitor ICP-248. Our ICP-248 is a novel compound of BCL-2 inhibitor. And in China, we get excellent PoC data in treatment of lymphoma and also we initiated a U.S. clinical trial last year. Our two TYK2 inhibitor, the first one 332 and we finished the Phase II study and got excellent PoC data in atopic dermatitis, we'll share with you later. And our second TYK2 inhibitor 488 and we finished the Phase I. Also got a PoC data in the Phase I across this cohort. And the Phase II started and the enrollment went really well, and we anticipate to finish the 129 patient enrollment by mid of the year and get to the Phase II readout results by end of this year. And this is a 3-month study for psoriasis. And our solid tumor 723, ATRK inhibitor, registration trial going very well, and we are almost finished patient enrollment. We are targeting NDA submission by end of this year. And our first-in-class asset, TYK2 inhibitor 189, and we are -- got approval for combo with EGFR -- third-generation EGFR inhibitor, and we already got the first patient enrollment. We targeted to get a PoC by end of this year and to see whether we can provide a novel treatment therapy for the lung cancer patients after resistance to the third-generation of EGFR. In addition to above, we get 9 IND approval in 2023, in China, in U.S. and the other countries of the world. And now we are presenting you the hemato-oncology franchise. We strive to become a leader in that. So in that franchise, we have a comprehensive coverage and from multiple myeloma, non-Hodgkin's lymphoma as well as leukemia. So in NHL, we have 2 cornerstone products, as we mentioned: Orelabrutinib covers multiple indications and works really well; Bevacizumab a first-in-class DLBCL treatment and works really well. On top of that, we have just mentioned a BCL2 inhibitor 248, can use in combo for AHL and also can be used for the treatment of leukemia such as AML. And also we have our novel molecule glue, molecule ICP-490, which we are [indiscernible] we get approval for the combo with that for the treatment of multiple myeloma. And so we also have 2 antibodies, bispecific antibodies, CD3, CD20, co-developed with Keymed and has excellent potency both by IV and subcu formulation. And also our novel CCR8 antibody, and we tested in the T cell-based lymphoma and demonstrate excellent efficacy by far. So this is Orelabrutinib and approved 3 indications. Orelabrutinib demonstrates best-in-class profile for the B-cell cancers, and it has excellent efficacy such as CLL, SLL. We observed exhibiting the CR 31.3% is out -- is much better than the competitors, less than like around 10%. And for -- like for MCL, it has really nice PFS and MCL showing excellent over survival of 12 -- 9.1% at 12 months. Importantly, it showed a great safety profile. It avoids -- completely avoid a grade 3 atrial fibrillation, which is the lethal really serious cardiovascular liability for other BTK inhibitors. But we have given this to over 1,000 patients in the clinical trials, we don't have anyone showing atrial fib history. And we also have a much reduced diarrhea and grade 3 infections. Here, so, in addition to the proof of the 3 indications, we have a series of first line of Phase III trials ongoing, including the first-line CLL, SLL in China. We will be submitting NDA this year. First-line MCL global multiple concrete trial already endorsed by FDA. We are going to get the first patient again in May. And also MCL confirmatory trial and the first-line MCD SCL, BCL and also first-line CLL, SLL in combo with a BCL2 inhibitor. And this is our novel BCL2 inhibitor, and we've seen with a lot of clinical advantage. As you know, by far the BCL2 is apoptosis inducer, and it's not easy to get a good drug from there. The only proof of the drug is the venetoclax from AbbVie. And in venetoclax, there is metabolic soft spots that results in quite a bit disadvantage for the venetoclax pharmacological properties, such as it has major metabolite M27 representing 80% of AUC of the parent drug within 24 hours. And both M27 and the parent drug had significant inhibition of say 2C and 28, 29 as well as the transporter PGT and BCRP. Thereby, it has concerns with drug-drug interaction. So our novel inhibitor ICP-248 and with novel design, we eliminated the soft metabolic spot in the venetoclax. Therefore, we limited the major metabolite, reduced drug-drug interaction. The parent drug doesn't have a safety inhibition or any exhibition of the transporter either. And of course, it has improved PK and excellent efficacy and also we observed the good safety profile by far. Here is our clinical studies of 248 in Phase I and Phase II, and so left-hand side shows dose escalations have finished 50, 75 as well as 100 milligrams, and we observed excellent efficacy in 100 milligram, and we are doing a dose expansion at this 100 milligram with different indications and the combo with Orela. And also we are starting U.S. trials as well as we are exploring AML indication. Meanwhile, we are still continuing the dose escalation, trying to see whether we can get even a more efficacious dose than that. This page shows the expansion at 600 milligrams, 6 out of 6 patients showing excellent efficacy or 100%. And among that, 3 patients, 50%, they're showing complete remission, the CR. And also 2 patients, 33%, showing MRD under-detection. And this comparing with the venetoclax and also the BCL2 inhibitors in the clinical trials, ICP-248 shows excellent efficacy, better efficacy. And on the right-hand side showing 248 has great synergy with Orelabrutinib in the preclinical models in antitumor activity. Based on this result, we have got an IND approval for the combo with Orelabrutinib for the first dose for the first-line CLL/SLL indication, and we are planning for the fixed dose -- fixed duration of therapy as a global trial and also we are exploring AML mono-drug as well. So this is our section for tafasitamab, a CD19 antibody, and this is approved in U.S. and Europe, and we licensing from Incyte in the U.S. And so after we acquired the CD19 tafasitamab, we have got approval for targeted use in Hainan and Big Bay areas. We get approved in Hong Kong for market use. And we have formed a collaboration with [ CDY ] for the development of the drug in Taiwan. In Mainland China, we do need a registrational trial to build in the efficacy from global to Chinese patients. And in Mainland, we already finished the clinical study, and we are going to submit BLA in May this year, and we anticipate approval in next year. Also note, tafasitamab plus lenalidomide has excellent efficacy compared with different mechanisms, such as ADC, such as bispecific antibody. And it's not only in ORR and CR rate but also the outstanding efficacy demonstrated by duration of response, especially in the overall response, OS, overall survival. So our next asset related to the cancer is the CD3, CD20 antibody and it is showing excellent efficacy both in IV and subcu formulation and it is codeveloped with Keymed. And so at 60-milligram, no matter by IV and by SC, we observed 100% efficacy. And among that the CR rate is 78%. This is in the patient with DLBCL and follicular lymphoma. On the right-hand side showing that subcu formulation demonstrates excellent dose proportion of PK. And also it has a great improvement of the sick days especially in the tumor in the patient with large tumors. Next. So this is our another -- so there's a little bit of glitch. For the next -- this slide shows our another molecule or new mechanism, molecule glue, that can be used for treatment for multiple myeloma and also for AHL. For multiple myeloma, it has a superior potency and efficacy and can overcome the resistance caused by lenalidomide. And also, we got approval -- clinical approval for combo with Dex to pursuing the first-line treatment of multiple myeloma, and we have first patient in. And for patients as a direct target for multiple myeloma, also -- it is also immunomodulator. And it actually increased IL-2 production. In there, we have a combo -- we can use this as combo with our other assets for the treatment of AHL such as DLBCL, MCL, CLL, and et cetera. So that has potential of the potency of other compounds and also get a much better improved PFS and OS and et cetera. So now let's switch to our well-positioned portfolio in autoimmune disease. And in there, our approach with in T-cell pathway and B-cell pathway. In T-cell pathway, as we mentioned to you before, we have 2 typical inhibitor, 332, 488. And we are really glad to show you we disclosed another pathway, another MOA, another molecule ICP-923. This is a small molecule of IL-17 inhibitor for multiple indications of T-cell based autoimmune diseases. And this 923 already went to the IND-enabling study and was submitted for clinical IND next year. And so 332 we finished the Phase II for atopic dermatitis. We will show the results later. And 488 we are going to -- we are finishing this year Phase II for psoriasis. And also, we are initiating [indiscernible] for the 332 and as a second indication, and we are also choosing indication -- large indications for development of these 2 assets. For BCL pathway orelabrutinib, we already just mentioned that we have SLE in Phase IIb [ ICT ] registrational trial. MS finished the global study, MST Phase II and also we are considering other indications as well. So actually, autoimmune disease is a really hard area with enormous unmet medical need. If you look at indication, there are more than 150 indications in autoimmune disease and affects over 500 million people worldwide and over like 40 million in China. Autoimmune disease indication's classified into 6 different categories such as nephrology, gastroenterology, dermatology, hematology, neurology and rheumatology. Among the 6, we already have 4 categories covered, and we are going to cover -- progressively cover other categories and other indications. So orelabrutinib just to mention, we are at Phase III for ITT. And we are finishing patient enrollment hoping to finish the clinical study by end of the next year. SLE, we are finishing the Phase IIb patient enrollment by middle of the year and hope to get interim results this year. And for the treatment MS we finished global study and observed the best-in-class efficacy of 92.3% of the new lesion reduction at 80 milligram QOD and [indiscernible]. So this page shows on the left, ITT Phase 2, we get a positive result, we get efficacy from 40% to 83% based on which population and which type of population of patient, at which dose. So Phase III will use a 50 milligram QD and the registrational trial, 195 patients. We hope to finish patient enrollment and get the study done next year. And the BTK inhibitor involves multiple steps. You remove the inhibitory effect for the platelet production. On the right-hand side is SLE Phase IIb design and progress. Actually, in the 3-month Phase II study SLE, we observed very positive results. And based on that, we started a longer study, a 48-week study, and each group with much more patients. We have 3 arms, each around 62 patients, placebo versus Orelabrutinib 50 and 75 milligram QD. And just to mention, we already dosed more than half of the patients. We will finish patient enrollment by middle of the year, and we are starting to see an interim result and may or may not disclose to the capital market, but we are going to use the results to communicate with CDE for further registrational requirements. And this switch to our TYK2 inhibitors. We have 2 inhibitors based on the final move and the JAK I inhibitor 332 binding to the JAK 1 so called kinase domain and also JAK 2 inhibitor 488 binding to the allosteric pseudo kinase domain. Both binding inhibition inhibits the activity of TYK2. And so 332 has great activity on TYK2 2.5-nanomolar. It has no activity 90 nanomolar, and it's a weak [indiscernible] TYK2 around 44, and it has great selectivity against JAK 2 [indiscernible] activity. Generally, JAK 2 is the one people think across the AEs for the JAK-family drugs. And ICP-488 and it is JAK 2 inhibitor 5-nanomolar and without activity of any JAK family. So 332, I just mentioned is major TYK2 inhibitor with minor JAK 1 inhibitor. Our hypothesis if this is considered first-in-class TYK2 inhibitor, why we choose atopic dermatitis, AD. First of all, from mechanism-wise JAK 1 is downstream of IL-4. And you know IL-4 is a well used drug for the treatment of AD antibody. And also, the IL-13 downstream is TYK2. And so those pathways are really important for AD. So with our blockade of the 2 pathways, we will cause synergistic effect, therefore, offer superior efficacy for the treatment of AD versus small molecule [indiscernible]. So also the second reason, AD is a very serious disease, very heavy disease burden and worldwide over 200 million patients suffering from AD especially young people and the itching caused the low quality of life, loss of sleep and also causes [indiscernible] et cetera. So it has a huge market and globally. So 332, we did a Phase II study and 4 weeks and each group around 25 patients, placebo versus 80 and 100 milligram QD of 332. And the primary endpoint of the Phase II is the percent change from baseline in the user group. And we nicely do see that both groups' treatment 80 and 100 milligram QD result the basically highly statistically significant difference from placebo. The principal arm is 16.7% change, and the treatment arm is 78.2% and 72.5% for the 2 doses. Right-hand side, I show you the time course of the change from baseline of [indiscernible]. And we see the change already significant at the first week and it continuing into the second week and also showing a very further decrease at the week 4. And here showing, we look at the different efficacy endpoints such as 50, 75, the patient improvement reached 50 or 75, the higher percentage of score the better. So comparing placebo on the left-hand side with 50 we see a very significant increase of 88%, 72% versus the 20% placebo. And using 75 generally is the endpoint for the Phase III study, and we see quite a significant change, both those reached 64% versus 8% of placebo. On the right-hand side, we compare the leading drug for AD treatment is the JAK inhibitor, upadacitinib. And they also did Phase II for 4-week study. And we look at -- we compare it at using 75, using 90 and as well as the itching score so-called NRS. And at each of these endpoints, we see a better response than [indiscernible] in the Phase II study. Now we align our results 332 Phase II forward results and comparing to all different MOAs for the treatment of AD. And this number subtract the placebo. From here, you can see our 4-week results, the percentage change using 75 is better than the large molecule IL-4, IL-13 and also better than the JAK 1 inhibitor. So we are really happy to see that. But others have even longer treatment. So our Phase III will be 6 weeks treatment as well. So another thing we look at is how quick the response was because for like molecule IL-4 and 13, they have a problem, they have an issue that when patients receive the therapy injection, there is no response for the first 2 weeks. It's a big issue for the patient because this is a very -- the itching is very hard to tolerate. So we see whether our compound can have a quick response and we look at day 2, day 3, day 4 and day 14 and surprisingly we see from day 2 already showing a significant decrease of the issues in NRS and that continuously decreased on a daily basis until day 14. Of course, by end of week 4 we see further decrease of that. This is that significant change in NRS and the quality of life has significantly changed from week 1, week 2, up to week 4. So this is a safety and tolerability of 332 at these 2 doses. We look at the total [ TRE ] as well as [ TRE ] related to infections generated the problem for JAK1. So we don't know JAK1 inhibitors. And we see, overall, both doses are comparable to placebo. If you look at the details, actually, 330 at 80 milligrams seems even slightly better than the placebo group. Of course, we didn't see any adverse effects and mentioned in the black label of [indiscernible]. Now we switch to 488 and 488 is JAK2 inhibitor of TYK2. And we finished the Phase I [indiscernible] this year, SAD from 1 milligram to 36 MAD 3 milligram to 12 milligram. And we observed excellent dose proportional PK in both SAD, MAD studies and also we observed good safety profiles in the study. So in the Phase I study, we also add a cohort of psoriasis patients, and this is a 4-week study. Actually with a small number, placebo and the 488 6 milligrams, so 7 versus 12 patients. And this is double-blind study actually and 1 month and with 1 month of safety observation. So we got the results in February. And also, we are really glad to report that even if it's a very small number of short treatments of 4 weeks, we observed significant differences at 6 milligram QD comparing to placebo, 38% versus 14% of percentage change in placebo. And for psoriasis it takes much longer. In general, it takes 4 to 6 months to see the maximum effect. And we also compared the Phase I study of actually Takeda 279, the licensed compound from Nimbus actually $5 billion. And they also see the Phase I cohort of 5 patients. And they also observed some change in the 50 and we see comparable similar efficacy or even -- this is small patient number and better than Takeda 279. So this is a new mechanism, IL-17, a small molecule program. Also IL-17 has a form of 17A, 17F, 17AF, et cetera through the pathways and cause inflammatory signals in the body. It involves multiple indications such as MS, asthma, COPD, cirrhosis, Parkinson's and psoriasis as well. And so now it's very hard that people are looking for small molecule replacing the large molecule for the easiness of avoid of injection. Injecting time is always an issue in the clinic. And the market is big enough to afford a small molecule. Actually it could replace all biologics of IL-17. So this is the early program and we have clinical data. We're doing IND-enabling study now. ICP-923 is a novel small molecule inhibitor of IL-17 and for the treatment of multiple autoimmune diseases. And so in the clinic so far, only one company Dice has a small molecule of IL-17 in the clinic. They have -- they are [indiscernible] compound as a reference. And we think our compound has 3 advantage comparing to Dice's compound. Dice's compound is 853. So first of all, our potency is much better in IL-17AA and IL-17AF and also their compound since has evolved IL-17AA is more potent than AF. For ours, we have equal potency almost, inhibiting both the homodimer and heterodimer. We think this will be much better efficacy in that. And also, the third advantage is also avoid [indiscernible] inhibition and Dice's compound has [indiscernible] inhibition equal to 3 micromolar. Ours is above 50 micromolar. So in the preclinical models, we have several models and we all observed good efficacy and at 50-milligram per kilo we do see better efficacy in the model. So now let's switch to the solid tumor assets. For the solid tumor, our approach is either precision medicine that has really good efficacy and we have a couple of assets, ICP-723 NTRK inhibitor and also [ pan-TRK ] inhibitor. Another is first-in-class compound that is the immuno-oncology immuno target and SHP2 inhibitor 189 and also CCR8 inhibitor antibody and that can be used for combo with multiple targeted therapy or immunotherapy. And so by this, we will have couple broad indications. So this is our precision medicine ICP-723. It is second generation of NTRK inhibitor. It can overcome the mutations caused by first generation of NTRK. And there are still advantage for this inhibitor. It's very efficacious and we have in clinic and we already observed we are closing to finish patient enrollment. By far it's open-label study, we observed ORR 80% to 90% and also very long duration of response. And we see the patient already on the drug for 3 years and the effect is still very good. And also this TRK is used in pancancer for all the different types of cancers. And the [indiscernible] is very commonly seen in pediatric patients, children 2 to 12 and also the young patient 12 to 18. So we are covering not only adult but also the children and we observed -- we developed the formulation for the children and we also developed -- we also see the good efficacy in both adults and children patients. So we're striving to finish patient enrollment as soon as possible and we submit NDA by end of this year. And another is SHP2 inhibitor, the first in class. We are in the front line in the clinical trials. And we have done dose escalation basically from 10 millimolar to now 160 millimolar actually. And the drug is very safe. By now, we don't see any Grade 2 and above TRE. And at 20 milligrams we observed the [indiscernible] in ovary cancer. And also we are doing combo with third-generation EGF inhibitor [indiscernible] and at 80 milligrams. As you know, the EGFR third-generation inhibitor, EGFR has been efficacious for the treatment lung cancer. But once developed resistant by now, there's no further therapy for the patient. There is a huge unmet medical need. We are doing a combo in the patient already developed resistance to third-generation EGFR inhibitor. We hope this year -- we already got IND approval. We already had the first patient in for the combo, and we hope to see PoC this year for the chemotherapy. So by the way, our anticipated milestones in the coming year, and we separate into hematology, autoimmune disease and solid tumor. So in hemato-oncology we have -- all the 5 assets will have significant milestones. For Orelabrutinib we're going to sign an NDA. The first line CLL, SLL in China is important for our commercial. And in the U.S., we are submitting R/R MCL NDA in the second half year, and this is important for our globalization. And also, we are doing a combo with ICP-248, the BCL-2 inhibitor in the first-line CLL and this year we will have data readout to support our Phase III initiation. Tafasitamab, we are submitted the NDA -- the BLA this year -- actually in May this year. And for the approval in Mainland China, which is also very important. This is our second commercial drug and will be launched in the market. And our novel [ BCL2 ] ICP-248 and we are finished with dose expansions, and we are doing multiple dose expansions. And we hope to read out different indications NHL, AML and also we are tracking the U.S. trial. So ICP-B05 is for T-cell lymphoma, and we will get more patient in, and we will get solid PoC data this year. This is a global, we are the only one being that we are global first. And for CD20 antibody, we are going to define our dose for SSD and therefore pursuing the registrational trial once that is done. Autoimmune disease, Orelabrutinib, we just mentioned completing the SLE patient enrollment and hope to get interim results this year for the Phase IIb study. And also for ICP, we finished patient enrollment this year and hope to finish the [indiscernible] study next year. And ICP-332, and we are initiating the Phase III study for atopic dermatitis and also we are initiating the second indication vitiligo in China and also we are doing U.S. study. And 448, we finished the Phase I PoC, and we are doing Phase II and this is [indiscernible]. This is 129 patients study. It's 3 groups, placebo versus 6 and 9 milligram QD 488. And enrollment was really fast beyond our plan, and we should finish the patient enrollment in May or in July, and then should get the 3-month study result by end of this year. And we just mentioned, we are going to get a big PoC results with the combo EGFR. And 723 we're trying to finish the registrational trial, submit the NDA and also submit the NDA this year. And I stop here and Xin will go through our financial update.

Thank you, Jasmine. Hello, everyone. I'm Xin Fu, CFO of InnoCare. Now I have the privilege to share with you the financial achievement of the coming 2023. Our relentless dedication to innovation and operational excellence has yield solid performance. We have achieved 18.1% increase in total revenue amounting to RMB 739 million. This revenue growth is anchoring the strength of our leading product Orela, which has shown a robust sales performance and remains a cornerstone of our portfolio. We will continue to invest in building the commercial capability, expanding possible coverage, adding new indications, pushing forward early-line treatment. So with those drivers, we are confident our revenue growth of Orela will continue to accelerate in the following years. Regarding the loss of the year, we have successfully reduced our net loss by 27.8% for RMB 645 million for the year of 2023. These achievements reflect our focus on increasing sales revenue, improving gross margin, enhancing operational efficiency and reducing total for the unrealized front change loss during the year. Our commitment to innovation is unwavering attested by an increase in 17.5% in R&D expenses. This investment is in line with what we have achieved in the clinical studies across multiple pipelines and also strategic investments in early-stage candidates for the long-term value of the company. Besides the RMB expenses, we also see that decline for the spending of the sales expenses and also of G&A expenses, which demonstrates our effort to optimize the spending level. Last but not least, our cash balance stands robustly at around RMB 8.2 billion. This is showing the financial health and provides long-term cash runway and enable us to accelerate clinical study and also stretching the investment to expand in competitive pipeline. So in summary, in 2023, we achieved rapid revenue growth, significantly narrowed down the net loss and with improvement of operational efficiency. The strong liquidity position provides sufficient visibility to ensure we stay at the forefront of innovation. So actually we closed for the year of the significant achievement, our unwavering focus on innovation and the strategy to a future position us to accelerate growth and also continued success. We are deeply grateful for our shareholder support as we strive to deliver breakthrough therapies and enhance value. So this is the last page of our today's presentation. Now I hand over back to Ziyi for the Q&A section. Thank you.

Sure. Thank you for a very comprehensive introduction and pretty much you already covered a lot of the detailed data of the assets. Just to remind investors, [Operator Instructions]. And I'm probably going to start with 2 questions. One is really on the commercial and the other one is on the pipeline. On the commercial front, last year, definitely, the market has been seeing a lot of uncertainties, including the second half year. There was [indiscernible] activities in China market. So getting to this year, how should we think about a more normalized to less disrupted commercial environment? And how should we think about the growth of the Orela. Particularly if we're looking at the BTK class in China, I would say, in 2022 and 2023, it was more getting into a relatively steady growth but not at an early stage of introduction of the products. So are we talking about, let's say, teens growth down the road? Or we are expecting some of the new indications are going to potentially drive the sales to another level? And of course, to back that, how should we think about your commercial team buildup? Because I still remember last year, Jasmine mentioned that you was planning to expand the team more aggressively but because of third quarter disruption, you start to revisit the strategy and rethink about how we should be injecting the resources and building the team. So what about now? What is your updated view on how you're going to build the commercial team for that? And in terms of pipeline, I think TYK2 inhibitor has been very interesting. You got a 2, and this is going to be targeting a broader indication in immunology. So because given InnoCare has been -- have a very strong cash runway, are you actively looking for any partnerships for earlier global development? Or you're going to run it by your own before getting to pivotal study stages. So 2 questions from me.

Sure. Thank you, Ziyi. Let me give a try to answer your series of questions and just remind me if I miss anyone. So for commercial, you are absolutely right. Last year, there are quite a bit of the challenge and in every aspect. And then we changed our plan in the middle of it and the market. I think last year, although the total you would say, the total revenue is not -- we hoped a bigger number but our profit actually was very nice last year. And that shrink our really significantly our loss and provided quite a bit of actually commercial profit to the company to happen the research. And so last year, we did -- although the revenue is not as high, but the profit actually roughly what we wanted at the beginning. And the team of -- commercial team now is about 300 -- total 350 people. And then why we changed the leadership this year? We are positioning ourselves for the new indication MZL. Actually it's a pretty sizable indication. And so we are the only CDK inhibitor approved for that indication and works really well. And also we get NRDL coverage this year actually picking the same price. We are pretty happy about that. And so with MZL getting into NRDL and with our -- after your effort on the CLL and MZL and this year we've been much more confident and moving forward. And also with tafasitamab set to launch about a year and with autoimmune disease indications will be launched perhaps about 2 years. And we think we need a team more for the -- more specifically for autoimmune disease, for the different cancers, our solid tumor also will be proved -- will be launched in about a year or 2 years. So we do anticipate really bright future in the next 2 to 3 years with multiple drug launch. For this year 2024, we are still largely relying on Orelabrutinib. And we are confident with the team switch and with our [ multiple ] MZL and also the NRDL cover the indication and with the approval of first-line CLL, we are confident to move forward. And this is the first quarter, we just had a team switch. And we need a little bit more time to say how much we're going to accomplish for this year. But we do feel confident we'll have greater growth in 2024 from 2023 since we observed the 18.5% of growth from 2022 to 2023. So that's a commitment for now. Definitely more time with the new management team, we will have a better sense on that. And we also will see whether we need to increase more resources on that. And we still give a couple of months of observation before we make that decision. If there is a need, we will have no hesitation to increase resource on the commercial. And so this is first question. And what's the second question on the commercial facility?

No, it's more on the TYK2 license. Are you actually looking for partnerships?

Right, right, right. The TYK2, actually we've got -- we are very happy we got dermatitis data. And it is the most important that we are all scientists, it really fit our hypothesis. And besides the biggest commercial potential. So we are moving to the Phase III and quickly. As you know, for a small molecule, you do have some certain GLP animal study to support the human study. So we should have that out in the third quarter, and we are putting together the protocol for the Phase III, and we will do that. And we anticipate a fast enrollment. We already have a calculation how many people are needed -- how many patients are needed for Phase III. And also we still have a time line on that, but we want to disclose in a way [indiscernible]. Maybe by once we started Phase III, we will have a better idea. And also we are starting the second indication in China, vitiligo, and its [indiscernible] is also with a lot of big market with unmet medical need. And from our high purposes, it showed the work for that indication as well, but we do need a Phase II study to confirm that. So in global, we submitted IND and we are getting approval any time. So our plan is we will first do the healthy volunteer, make sure the PK is the same in China versus Caucasian patients, people and then after that. And we still want to do AD for the global. And we might also we are considering another novel indication for the global study. So in terms of whether we develop by ourselves or by partner, we think of autoimmune disease in the global market. It will be good to have a partner. And we are open to other license and also we are open to co-development and et cetera. So depends on -- surely depends on how good is the CRA. So yes, we are planning. We're in the middle of activity, we're doing all of those, and I hope we will get some news to disclose sometime this year.

Got it. We saw some questions coming from online. Next question coming from Jack Lin from Morgan Stanley. Jack, you can ask for questions.

I have a few questions regarding the autoimmune pipeline, specifically the 332 and the new IL-17. So for the 332, I'm glad to see the very robust efficacy data and also fairly clean safety profile. I'm curious to hear kind of what your thoughts are in terms of what we're seeing strong response as well as potentially earlier response time. So I'm wondering what your thoughts are as far as how much contributed from the JAK1 portion, how much contributed from the TYK2? And also as far as the safety data, I'm curious about how long is a follow-up on that? And are you concerned as far as any infection-related adverse events related to JAK1. So that's the 332. And just on the IL-17, just really quick. I'm curious in terms of how you see this pipeline positioning as you're seeing domestically like there's a lot of other players playing either 17 or other biologic targets in the autoimmune space. So I know we've shown some kind of MOA differentiations on the -- our own IL-17, but in the broader picture, like how do we see us positioned against others. So just these 2 questions.

Yes. Jack, thank you for the question. For 332 and so your question is about the safety. So we have a 1-month study. We also had 1-month safety observation. Of course, that's for Phase II. For the Phase III, we will have 400, 500 people and also the study will be longer and 16 weeks. And also we will have a year of safety observation. And meanwhile, we are opening a second indication that will provide another around 500 to 700 people. So by registration, we should have over 1,000 patient number for the long term. So we should have a better assessment by then. But in terms of mechanism, as I mentioned, if you go back to the slide of number the mechanism of -- so this is why we are doing AD for TYK2 inhibitor. TYK2 is much potent than JAK1. And then -- so in there, you'll see both JAK 1 and TYK2 play a role in the AD, in the disease progression of AD. And if we block both pathways, we should get better response. In terms of how much from JAK1, how much from TYK2. We know the compound is fortyfold more potent TYK2 than JAK1. So we think [indiscernible] TYK2 much stronger. We also calculate [indiscernible] on the JAK1 versus [indiscernible]. And based on their [indiscernible] et cetera, we see our hedging is much lighter JAK1 than [indiscernible]. Our team does have the detailed calculation of all the detailed numbers that we believe both contribute to the AD efficacy and perhaps TYK2 and contribute more. That's our current understanding. And so for IL-17 and so currently -- and so it is really called you are right, the people pursuing in the cytokine treatment and with a small molecule become like [indiscernible]. For IL-17, so far, there is only one compound -- actually 2 compound. The first one may not work, it's very weak. And the second compound is from Dice. Both compound are from Dice. And they are licensed to Eli Lilly. And so that's reference compound, and we feel we do have advantage in that. And like all our compounds from InnoCare, we're carefully looking into all the different pharmacological parameters, efficacy, safety parameters. We generally choose the best from internal innovation. And so we do see 923 comparing to the front runner in the clinic. It has all the advantage in terms of potency, in terms of taking both homodimer and heterodimer as well as avoid drug-drug interaction. So maybe they target multiple people to do that, but still the best compound win in the market.

Great. Well, I think there's another follow-up. It's also on the pipeline, coming from e-mail. Could you update us on the BTK and multiple sclerosis? What is the status now? Because recently, Merck KGaA pretty much give up the assets. They didn't move forward with the asset, which just didn't show very strong efficacy. And I think for Sanofi, they are still waiting for the Phase III data coming out in mid of the year or third quarter of the year. So what is the status for ibrutinib? Any recent feedback from FDA?

Yes. So that's a good question. Actually, there are some lasting change since the last time we updated the market. Interestingly, CDK inhibitors, there are 5 total in the global study in the U.S. for continuing RMS and except for Novartis, so all the 4 has partial clinical hold and including our Orelabrutinib for RMS. And then Merck, they finished the Phase III from the study, the patient enrollment outside of the U.S. and in the RMS, and they did not see the efficacy. They failed the Phase III. So I have to say from Phase II data, there is quite weak. If you look at all the Phase II data and [indiscernible] and probably this like 70% or 60%, 70% of the new lesion reduction, while we are getting 90-some percent and Sanofi got 89%, 87%, whatever the percent. So there is the weak in the Phase II. So it's not surprising ADC didn't work for the Phase III in RMS. And now Roche has also has BDK inhibitor. Their reversible BDK inhibitor also had partial clinical hold on RMS. And so the current thing is actually [indiscernible] got some progress. And although the RMS just finished patient enrollment outside of the U.S., the [indiscernible] is only in the U.S. And they are getting the RMS data sometime this year, like you said. And they have TMS, they have, PPMS primary progressive MS, actually get relief from partial clinical hold and they lifted the hold and now they resumed the global enrollment of the patients. The reason is actually for RMS, the FDA reached the standard because the proof of CD20 antibody it proved [indiscernible] and they worked also pretty well for the RMS. However, for the progressive MS, PMS, also RMS eventually become PMS, secondary PMS and no treatment therapy so far. So people think the penetrable like a BTK inhibitor Orela and other BTK inhibitors because of the role in microglial in the brain, so you do need not only systematic B cell reduction of the inflammation, also you need local inflammation reduction of reinflammation from microglia. So that's the reason they get lifted. And we are -- for Orelabrutinib, as I say, we finished the Phase I. We observed excellent results for RMS. And since we aren't performing any study and we have no further data to lift the clinical hold yet. And we are also looking into the possibility for PPMS due to that really unmet medical need. And also outside of the U.S. and such as in China, others, we get approval for Phase III trials in RMS, we're evaluating whether it's worth it to do the trials without being within the U.S. and should we [indiscernible] the hold and then including U.S. for the Phase III study and for RMS. So that's the current status. And then we like to -- we are also doing some efforts, and we like to update you when we will get results. Otherwise, you guys will be really anxious to ask on a weekly basis what's the progress and how is that. And so we would like to know if we get progress in one way or another.

Got it. Great. And also I think this year -- well, last year, you have moving a lot of new assets in the clinical studies and now InnoCare is really managing a pretty large pipeline under clinical development. So how should we think about, #1, in your early-stage discovery, what you are being focusing on. #2, among all those very meaningful progress in the clinical pipeline, how you're going to pick and choose prioritizing the projects because although we believe InnoCare still have a very strong cash flow with RMB 8 billion plus and with a loss of RMB 650 million last year, so it should be supporting your operation for a very, very long time. But still, we are being cautious about in this type of environment when we are spending all those resources, we're going to be focusing on returns. So how should we think about which process is going to be your prioritization -- prioritized projects and which are potentially going to be those good to have assets?

Yes, that's a good question. Let me answer your second question. It's easier. So for our assets in the clinic, we do have a very differentiated priority. And Orelabrutinib is our cornerstone commercial product. We are putting quite a bit of a resource in China and global for the studies. And also tafasitamab, yes, we are launching pretty soon. In fact to that, we really think the asset bringing a really big return, we think, is for hematology is BCL-2 inhibitor since that excellent safety profile and is potential for broad indication either alone or by combo like AML globally huge unmet medical need. And if our asset is better than Venetoclax, and we do get the AML potentially global presence. And so we will -- that will be one of our total priority. In addition, the autoimmune disease Orelabrutinib, we put a lot of effort ITP, and that will be our first indication going through the autoimmune disease. If we build a commercial team, that will be based on that approval of time. And also SLE, this is a huge indication. Globally we are the first and only BTK inhibitor showing excellent efficacy in multiple parameters of SLE. So we are really excited about it. So that's where we're going to put a higher priority. That will be big indication to pursue in our autoimmune disease and also help a lot of people for SLE, the small molecule to provide advantage of using its [indiscernible] safer. And here, this is our TYK2 inhibitor 332. Already demonstrated excellent efficacy and the primary shifting in the large indication like AD and we are considering multiple large indications. So that will be our -- in terms of importance for our commercial, Orela, will be 248, will be 332, and 488. And we do have great confidence those are maybe best-in-class compound on the target with a number of first-in-class of indications and large indications. For China, definitely, we are going to develop all those indications. But for global, like you say autoimmune disease is very expensive. We do a lot of Phase III. It does cost a lot of money. So for autoimmune disease, we have a strategy that we'd like to either out-licensing the compound or some of the common -- or actually prefer from co-development partner so to give us a potential for the global income revenue. So those were for autoimmune disease. For oncology, we've tied together Orela and 208. And these 2 together can cover really well for the liquid cancer or the hemato-oncology field. And then we will see either we can co-develop them or maybe if we do a [ BDDO] we really need a really good deal for us licensing them and that's our current thought. We are developing them ourselves meanwhile. If we get better data, more data, and definitely we can get a better return even by out-licensing. So Ziyi did I answer your question? And for the near term of our asset priority?

Yes. That's clear.

So for the preclinical, and we have a very powerful discovery side, internal discovery. We focus a lot on autoimmune disease. Like you see IL-17 is just the [indiscernible] show you above the water. We still have a lot of other mechanism [indiscernible] small molecule with cytokines and et cetera. And also, we have antibody approaches for autoimmune diseases. So that will still continuously systematically cover different MOI, covering different large indications. Our inspiration next few years, we can have 15 large indications covered by our autoimmune disease. So we are developing more assets. And for the solid tumor, we think we have opportunistically a few opportunities such as our first-in-class SHP2 and it's excellent molecule with a very safety profile. It's unbelievable safe and [indiscernible]. You may wonder whether it's a SHP2 inhibitor. So it's very good. And then if the combo with EGFR or third-generation EGFR [indiscernible] and they were going to get opening a huge field that will put a lot of resource. Meanwhile, we were waiting for the PoC. Once we reached PoC and if it works, that will be huge for solid tumor and not to just support lung cancer and also for others and other combos. And meanwhile, we're developing platform in our hand. We like to build assets that can be really used for what I said use [indiscernible] tumor, you really put on the TFS, OS by years, not by a couple of months. So we're seeing that that's worth our effort. So we try to get a different MLA combo with targeted therapy immunotherapy in the same drug or with a combo and to get prolonged effect for the solid tumor. That's our -- actually, we are doing a lot for research on that.

Got it. That's really good to know. You have explained it very clearly about your early-stage discovery efforts. I think we don't see any more questions. I guess you pretty much cover all the major stuff, including very detailed data in the presentation already and also your answers to our questions. So I think to close the call, any wrap-up comments from you, Jasmine.

Yes, it is late. It is already beyond 1 hour. Thank you so much Ziyi for moderating this session, and thank you all for attending our presentation today. And also thank you for your support. Look forward to see you all face to face. Thank you.

Thank you. Thank you, everyone, for joining today's call. We're going to wrap up call here. Have a good day. Thank you. Bye.