NovaBridge Biosciences (NBP) Earnings Call Transcript & Summary

Good morning and good evening. Thank you for standing by. This is Tianyi Zhang, IR Director of I-Mab Biopharma. Thank you for joining the conference call, cohosted by I-Mab Biopharma and Jumpcan Pharmaceutical. Earlier today, I-Mab and Jumpcan jointly announced that the 2 companies have established a commercial partnership on the only clinical stage pure protein-based long-acting growth hormone, eftansomatropin alfa, which is also known as TJ101. Today's conference, we will have the management team from both I-Mab and Jumpcan to give you more insights of the commercial partnership. Joining me today on the call from I-Mab's senior management team includes Dr. Jingwu Zang, Founder and Chairman of I-Mab; Mr. John Long, Chief Financial Officer of I-Mab; Mr. Jielun Zhu, Chief Strategy Officer of I-Mab; Dr. Weiming Tang, Chief Business Officer of I-Mab; and Mr. Yifei Zhu, Chief Commercial Officer of I-Mab. We also have management team from Jumpcan Pharmaceutical. They are Dr. Jun Liu, General Manager of Jumpcan Pharmaceuticals; and Mr. Wei Cao, Board Secretary of Jumpcan Pharmaceuticals. Today's conference call will be divided into 2 parts: First, the management team will give an in-depth overview of the commercial partnership. Then it will be followed by a Q&A session. Now I'd like to turn the call to Dr. Jingwu Zang, Founder and Chairman of I-Mab, to share with you more details about this commercial partnership. Dr. Zang, please?

Yes. Thank you, Tianyi. Thank you all for joining the call today. At this call, we're very excited and are pleased to tell you about our partnership with Jumpcan Pharmaceutical Group for commercialization of TJ101, our differentiated long-acting growth hormone. Now this marks another important milestone for I-Mab as we will move towards an innovative biopharma. As shown on the Slide #4, I-Mab has grown from a start-up company back in 2016 to an innovative clinical stage biotech company in a very short period of time. Our pipeline today has 20 assets, innovative assets, including 10 clinical stage assets that are mostly in late-stage clinical development. I want to highlight that 3 or 4 late-stage assets such as felzartamab, TJ202, and our long-acting growth hormone, TJ101, and lemzoparlimab, CD47 antibody, are rapidly progressing towards BLA. So our pipeline is not only innovative, but also getting closer to the commercialization stage. Last year, we have made a strategic decision to embark on a new journey to become an innovative biopharma. To achieve this goal, we are in the process of building our manufacturing facility and commercialization capability. In this regard, we have made remarkable progress at both fronts. As shown on Slide #5, for manufacturing capability, we will get our GMP facility ready by 2022 for pilot production. And by end of 2023 or early 2024, for commercial production. Now what about product commercialization? With our first BLA to be submitted for felzartamab, our CD38 monoclonal antibody for multiple myeloma, we are in the process of building our own commercialization capability and establishing commercial partnership network. For example, we just signed a commercial partnership agreement with Sinopharm, a top pharmaceutical distributor in China. Also, as we communicated before, I-Mab will be focusing on hematologic oncology therapeutic area because our unique position and strength with felzartamab antibody and lemzoparlimab, CD47 antibody, another key asset to be partnered, which is another topic by its own right. Therefore, for TJ101, our differentiated long-acting growth hormone and a pediatric product that has a huge and growing market in China, it makes all the business sense to partner with a pediatric-focused commercial company. So I-Mab can then focus on building our own commercial leadership in the hematology-oncology area. So we have been working hard to identify an ideal commercial partner for TJ101. Today, I'm very pleased to say that we have reached agreement with the best commercial partner for TJ101. Now I would like to ask Jielun, our Chief Strategy Officer, to tell you about our commercial partner, Jumpcan Pharmaceutical Group, and the details surrounding the deal itself. Jielun?

Thank you. Thank you very much, Dr. Zang. Hello, everyone. I'm very happy to discuss with you and present to you our partnership deal with Jumpcan Pharmaceutical in China. If you turn to Page 7, let me first give you a quick overview, or for some of you, a quick review eftansomatropin alfa, our highly differentiated long-acting growth hormone. First of all, as many of you know, eftansomatropin alfa, or our code name is TJ101, is currently in a very advanced stage of clinical development towards the end of Phase III registrational trial in China for the PGHD or pediatric growth hormone deficiency indication. We had started patient enrollment in late 2020, and we are on track to complete patient enrollment in early 2022 or early next year. Our planning is to be able to file BLA or NDA for this product in 2023 and, hopefully, in the earlier part of that year. Okay. So this is the clinical development stage of the product. Let me also give you 3 important points of differentiation for this product. First of all, eftansomatropin alfa is the only clinical stage for 100% protein-based growth hormone in trial. This product uses the natural long-acting growth hormone protein and a proven hyFc life technology to extend the half-life. Unlike the traditional PEG base or chemical linker-based technology, we think on a long-term usage basis, the hyFc fusion protein technology provides for potential better safety and an easier usage compared to other potential competing products. So that's the first differentiation. Secondly, in the middle of -- on the bottom half of that page, you can see that this product has proven to have excellent and consistent efficacy and safety. On the chart, you can see -- this is taken from the Phase II clinical trial done by our partner, Genexine, in terms of the efficacy -- in terms of the 6 months growth velocity, you can see that on the 3 doses of eftansomatropin alfa versus the control group, the daily Genotropin, all 3 active doses actually enjoy numerical advantage over the comparator. Although they are not statistically significant, it gives you the sense that this is a very, very -- it has demonstrated very consistent efficacy. And we expect to be able to repeat -- replicate this kind of efficacy in our Phase III trial. Lastly, on that page, we think the weekly administration versus the current daily administration, which is the main stake in the Chinese market is a very big advantage in terms of patient compliance and the usage -- the convenience of use. And on the next page, I will talk a bit more about the market evolution. But it is very clear to us and the majority of the participants and observers, in this market, that the Chinese growth hormone market is going to have a very rapid evolution transitioning away from daily short-acting growth hormone to longer-acting or long-acting weekly or bi-weekly injections. And in addition, we are also planning and now with our partner, Jumpcan, we're also planning to develop new formulation, for example, the auto-injector formulation so that this product -- the clinical benefit of this product can be maximized. Okay. Next page, as I was talk -- I was referring to on the last page, this is a very quick snapshot of what we expect to be the market dynamics from the next -- from now to 2030, which is roughly the 10-year mark. We took this chart or these numbers from Frost & Sullivan, a well-reputable market research firm, so they looked at the market last year, 2020. The total market size was about RMB 5.2 billion. And out of that, 89% was taken by short-acting growth hormone or the daily injection versions. Only 11%, which is about RMB 0.6 billion was the longer-acting -- long-acting version. And that was basically one product by GeneScience, it's called Jintrolong. If you move more forward 10 years in 2030, Frost & Sullivan is expecting the market to grow only on the 20% annual gross basis, CAGR basis, to about to add -- if you do the math, it's about RMB 45 billion total market size. That is a humongous growth rate on its own, 20% CAGR, very big growth. And that growth is driven basically by increases in the diagnosis rate and treatment rate. For all the talk about the Chinese growth hormone market, it is still -- the PGHD indication is still under-treated and under-diagnosed. Only about 5.7% of the patients who should have been taken this product or should have been treated and diagnosed are actually treated. And the number of patients who are actually consistently on treatment is even fewer. So the market is going through explosive growth as we speak. But more importantly, the second point, if you look at the long-acting portion of the market, the projection is to -- for that portion of the market to grow from RMB 0.6 billion to RMB 22.5 billion, okay? That is a CAGR of 22% -- 42.6%. That's a wobbling -- that's a whopping explosive growth. And that is based on the assumption that many of the patients who are currently on the cumbersome daily injection version will be migrated to the longer-acting version, more convenient, safer, and perhaps even more cost effective if you compare the total cost. So it is important to bear in mind that this market is going to be a multibillion U.S. dollar market and our product, as a very differentiated product, will be -- we think will be able to take a meaningful share of that growth market. Last point on this page, on the bottom, you can see that this is a market with a very stable -- we expect to have a very stable competitive dynamic. We're not looking at many, many competitors. Right now, the market is dominated by one product, Jintrolong, which is only approved version -- long-acting version of the growth hormone. But this product uses the traditional PEG chemical linker technology, which we talked about. There may be some long term use safety concerns with this kind of technology. Besides us, there are 2 more competing products currently in similar phase of development, one by [indiscernible] they are all -- most of them are in Phase III. So we think by year 2024, '25, there will be 3 to 4 products in the Chinese growth hormone market -- long-acting growth hormone market. But the market itself is big enough and growing fast enough to be able to give everyone a fighting chance. And certainly, given our profile and the differentiation, we think we have a very, very real chance of taking a very, very substantial share of the profit market. Page 9, I would -- at this point, I would like to turn to Mr. Cao Wei, who is a member of the senior management and also the Board Secretary of Jumpcan. He will be able to give you some background of Jumpcan and also their leadership credentials in the Chinese pediatric market. Mr. Cao?

Thank you, Jielun. As Dr. Jun and Dr. Jielun previously discussed, so the growth hormone market in China, particularly in the long-acting growth hormone market, we expect to maintain a record growth. Eftansomatropin alfa is the only pure protein products in the later stage clinical development. Clinical results show strong efficacy while long-term safety has been validated with no PEG or chemical linkers, leading to potentially safer and long-term usage. Through our strategic collaboration agreement with I-Mab, we look forward to eftansomatropin alfa becoming one of Jumpcan's core commercial products and our most important source of revenue growth in the future. Jumpcan is the leader in pediatric medicines in China. It is a top 100 pharmaceutic company in China. Jumpcan's revenue in 2020 was RMB 6.2 billion, while 2021 Q1 to Q3 revenue reached RMB 5.4 billion, of which the pediatric segment accounts for over 60% of total revenue. Jumpcan has solid existing pediatric medicine sales and a marketing team with over 300 and 500 medical representatives and retail specialists, covering over 23,000 hospitals ranging from first tier, second tier and third tier cities, in 30 provinces and cities across the country. The specific breakdown leads to over 1,700 Tier 3 hospitals, over 3,700 Tier 2 hospitals, and over 18,000 Tier 1 hospitals and community clinics. Our hospital coverage includes 220 children's hospitals. In terms of product sales, Jumpcan's main products, which includes Pudilan Anti-inflammatory Oral Liquid, Child Chiqiao Qingre Granules and Rabeprazole Sodium Enteric Capsules as market leaders. From the data of third-party market research, Jumpcan's Pudilan ranked first in market share in 2020 to treat pharynx and throat swelling caused by excessive heat and toxin accumulation. Meanwhile, Child Chiqiao Qingre Granules market first -- ranked first in market share for pediatric products in public hospitals in 2020. While Rabeprazole Sodium Enteric Capsules used in anti-ulcer therapy ranked first in China's National Public Hospital market share in 2020. These products are a validation of Jumpcan's robust product pipeline and [ terminal ] sales capabilities. The company is confident that with Jumpcan's strong sales network and extensive pipeline in the pediatric fields, eftansomatropin alfa is approved for commercial use, the commercialization process will launch quickly, providing a better treatment option for millions of children in China.

Okay. Thank you very much, Mr. Cao for the very detailed intro -- very detailed description. I would like to move on to Page 10 and 11. These 2 pages give you the details of this partnership and the key terms. First of all, on Page 10, I would like to make 3 quick points before we get into the nitty-gritty details. I want to say that this is a deal with 3 firsts, okay? So the first, first is that this is the biggest or the biggest domestic China BD deal as far as we can see. The total, not only in terms of the upfront payment, but also in terms of the total consideration. Upfront payment is $35 million and the total consideration is $315 million. Both of those numbers are, we think, are history making and bigger than the next #2 or #3 deals as we can gather data for. So a very big deal and a very important deal. The second point is, the second first is, that this also is a very interesting model of cooperation between 2 types of companies or players in the Chinese biotech market. Companies like us, I-Mab, a very fast-growing biotech market -- biotech player transitioning to be a biopharmaceutical player in china partnering with Jumpcan which is a traditional Chinese medicine and also pediatric focused player in China, we are actually pooling different resources to maximize the commercial benefit of this product. We are maximizing I-Mab's leadership in innovation and the clinical differentiation of eftansomatropin alfa as product, plus Jumpcan's leadership in the pediatric market in China, their existing sales network, their long-standing experience in this market. This is a very, very rare and shining example of using both sides' advantages and strength to get this product to market as quickly as possible and get this product to as many patients as possible. The last point, important point, is also that this is also one of the biggest partnership deal in the pediatric space globally. Pediatrics is, to some extent, a niche market. But it's important for many patients, especially patients in China, to be able to recognize, to have good products to get to patients. So we hope that this deal highlights the importance of a market like pediatrics, especially in China. Now let me give you more details on the economic terms of this partnership. As I mentioned, the total consideration is $315 million or RMB 2.24 billion (sic) [ RMB 2.016 billion ] in total consideration. Out of the $315 million, USD 35 million is the upfront payment payable upon signing the contract and shortly after. And the rest, $280 million, is the total milestone payments payable upon achieving development, registration and sales milestones. More importantly, we will also be able to share profits of this product in the Chinese market with our partner Jumpcan on a 50-50 basis, under which we are entitled to receive tiered low to -- low double-digit royalties on the net annual sales of this product. So it's -- even on economic terms, this is a true partnership while we're sharing the upside from this product in addition to the milestone payments and upfront payment. Lastly, in terms of how we work together with Jumpcan, I think we have more details on the following page, on Page 11, if you look at the right-hand side of this page. This lays out the details of the specific areas where we will be working with Jumpcan on this product, going forward. First of all, in terms of clinical development, I-Mab will continue to lead the ongoing registrational trial for PGHD and complete the registration process as the MAH holder. And the two companies will share the CMC costs. The second area where we've been working together very closely is to secure BLA approval and the commercial drug supply. Again, I-Mab will be the MAH holder -- MAH of this product, eftansomatropin. And I-Mab will supply the product at an agreed-upon cost to Jumpcan. On that basis, I-Mab will also be able to recognize and record revenue on an ex-factory basis from this product. And again, also shared profit and the royalty in addition to that. So it's important to keep in mind that this product is not leaving our pipeline. It is still very much an integral part of I-Mab's pipeline. And also, it will be -- investors will be able to see the impact of this product economics like in financially in our financial statements going forward. Lastly, in terms of the commercialization and the future indications or future clinical developments, Jumpcan as our commercial partner, exclusive commercial partner in China, will be leading the -- all the activities relating to commercializing eftansomatropin alfa in China including frontline sales, market access, pricing and et cetera. Jumpcan will also be leading the effort to develop additional indications beyond PGHD. For example, ISS-induced idiopathic trisector and, AGHD, adult growth hormone deficiency, and et cetera, to expand the indication space for this product and to maximize the commercial value. We will be -- I-Mab will be providing the necessary clinical and other support in their efforts, okay? So I hope you can see that this is a very organic close working relationship going forward. And the two parties will also establish a Joint Governance Committee who will be meeting regularly to guide the next stage of the development for this product. We look forward to working very closely with our friends at Jumpcan and making this product widely accessible to our patients in China. Thank you very much for listening to our call. I think this marks the end of our prepared comments. I now open up the floor to any questions from investors and analysts. Thank you.

Thank you, Dr. Zang, Jielun and Mr. Cao for the very comprehensive overview. So now we will start the Q&A session. So if you have questions, please use the raise your hand function in Zoom, and we will unmute you and take your questions in orders. Okay, the first question comes from Jill Wu at CMBI.

This is Jill from CMBI. Congratulations for this successful deal, very impressive. And may I ask how does Jumpcan look at the positioning of eftansomatropin alfa within its pipeline? Will this long-acting growth hormone become Jumpcan's most important product? And how can we understand the competitive landscape for growth hormones in China?

Okay. So thanks for your questions. So for the first one, so in terms of the position of eftansomatropin alfa, I think, with the internal pipeline. So Jumpcan will work closely with I-Mab to complete the product launch as soon as possible. Eftansomatropin alfa will be regarded as Jumpcan's primary product in the next 10 years. We plan to allocate the largest portion of our human resources, academic resources and market resources to accelerate its commercialization. And second, as for the market competition of growth hormone in China, we know today, so the growth hormone market is highly concentrated. We anticipate that high-quality products with a strong sales team, we'll be able to obtain a relatively big market share. In terms of growth hormone types, there are several short-acting growth hormone and only 1 marketed long-acting growth hormone product. The short-acting was required daily injection, which often hampers patient compliance and adversely affect clinical outcomes. Therefore, there is a trend to use long-acting growth hormones to replace short-acting growth hormones. For long-acting growth hormone products, there is room for eftansomatropin alfa to compete on the market. Eftan is the only recombinant human growth hormone in its proprietary fusion protein format, a pure protein-based marker with hyFc fusion technology. Its advantage lies in its long-term safety as compared to other chemically-modified recombinant human growth hormone drugs. We anticipate a multibillion-dollar market for growth hormones in the future. By combining Jumpcan's abundant marketing resources with the product advantage of eftansomatropin alfa, we believe that we can secure a good position in the market. Thanks.

Thank you, Mr. Cao. The second question comes from Phil Zhao at Daiwa.