Earnings Call Transcript
HUTCHMED (China) Ltd (HCM)
Earnings Call Transcript - HCM Q2 2021
Operator, Operator
Ladies and gentlemen, welcome to this conference. I will now hand over to Christian Hogg, CEO of HUTCHMED. Sir, please go ahead.
Christian Hogg, CEO
Thank you very much, Greg. Welcome everybody to the First Half Results Presentation for HUTCHMED for H1 2021. I'm joined on this call by my colleagues Dr. Wei-Guo Su our Chief Scientific Officer; Dr. Marek Kania, our Managing Director for HUTCHMED International our Chief Medical Officer in the United States; Johnny Cheng, our Chief Financial Officer; and Mark Lee, our Senior Vice President Corporate Finance and Development. So I'm looking forward to taking you through the presentation today. So if you could move to the next slide please, slide number three. The agenda today, what I'm going to do is I'll take you through this presentation hopefully in about 35 minutes. It will be relatively rapid fire, updating on everything. And then, we'll open up for maybe half an hour of Q&A, at which point I'll involve the broader team in answering some of your questions. So the agenda today, we have, first of all, overview and highlights of what's happened in the first half, some focus on our regulatory achievements and our commercial operation progress, some key pipeline updates, a brief summary of the upcoming events over the balance of the year and into 2022 and then, a brief look at the financial picture for the company. Slide four, please. So now on to slide five. This is a slide that gives a high level sort of summary of what we're trying to do as a company. HUTCHMED is very focused on trying to build a global science-focused biopharmaceutical company. We are a very proud China-based company, but our vision and our ambition is very much global. You can see the four kind of key areas that we're working in. The first in blue there is drug discovery and manufacturing. We base all of our drug discovery and manufacturing operations in China at this time, with world-class people and world-class facilities that are able to create novel drug innovation for the global market and then supply that novel drug innovation to the global market. So our base in China of discovery and manufacturing, I think, is very central to our global strategy. The second line there you see in red is the clinical development and regulatory operations that we've built out. We've always been well positioned in China. But over the last three to four years now, we've built out a very strong team in the United States that's able to cover Europe and Japan and manage clinical development of our assets and regulatory operations of our assets in these ex-China markets. So that's a critical aspect to our ability to bring our innovation to the global market is to be able to effectively develop those programs and interact with the regulatory authorities in each of those international markets. In the green line there you see we prioritized building out our own in-house commercial operations in key markets. Really the two key markets for HUTCHMED are China and the United States. These markets represent about half of the global pharmaceutical market. And we want to determine our own success in those markets in terms of commercialization. So we're building our commercial teams very rapidly in both of those markets. And outside of China and the United States you can see in line number four there, we'll build partnerships to bring our products to those what we would classify as non-core markets today. So that's our vision, our ambition, our platform, really globally facing with very strong foundations in our core markets. Slide six, please. Next slide please. Thank you. So the pipeline, as it sits today, is increasingly broad. The first three products on slide six you can see surufatinib, fruquintinib, savolitinib all of which now are approved in China and are being commercialized. Coming quickly behind them are kind of mid-stage programs 689 and 523 in hematological malignancies. We're very excited on 689 to bring it into registration studies this year already, in follicular lymphoma and marginal zone lymphoma and 523 is not far behind. Behind those mid-stage or entering into late-stage assets, we have seven programs that are in earlier stage development. So our FGFR inhibitor the IDH1/2 Dual inhibitor in development inside China and outside of China. Our ERK inhibitor has just started development in China this year. And recently, actually within the last week we got clearance for our IND on our third-generation BTK inhibitor which we'll start development hopefully in the United States later this year and in China also. And then coming behind that, two programs where we target to submit INDs later this year, the CSF-1R, selected CSF-1R small molecule and our first large molecule, our CD47 antibody that we intend to use in combinations with many of our other assets. So, it's a broad portfolio. It's moving quite quickly. And it's really one of the broader portfolios in oncology for most Chinese biotechs. And certainly, probably the biggest advantage that we have is the third column from the right, which details the rights, who owns the rights of these assets. And as you can see, HUTCHMED owns the worldwide rights to almost everything aside from savolitinib, where AstraZeneca has the commercial rights worldwide. Moving on to the next slide, slide 7, the first half highlights. On the regulatory commercial side, our revenues in Oncology/Immunology increased by 161% to US$42.9 million, which is promising, considering this was the initial six-month period that our commercial team had been operational, marketing SULANDA and ELUNATE. ORPATHYS, as everyone knows, was recently approved and launched in China just three weeks after that approval. ELUNATE sales saw an increase of 186% in market sales, reaching a little over US$40 million. SULANDA is now approved for extrapancreatic and pancreatic NET, making it the first therapy available in China for any type of neuroendocrine tumor. Additionally, the acceptance of our NDA in the US and MAA in Europe were significant milestones achieved by our strong international team managing these programs. Regarding our pipeline, we are working on savolitinib and are preparing to initiate five new global and China registration studies this year. We just announced the start of our gastric cancer Phase II study today and, pending positive results from the first part, this could become a registration study, although that is yet to be determined. We will be moving forward with five registration studies throughout this year to capitalize on the initial approval for savolitinib. We have shared impressive PD-1 combination data for surufatinib and fruquintinib at ASCO this year, and we will be entering into registration studies for combinations with both of these assets later this year. The hematological malignancy portfolio is currently transitioning, with 689 now in late-stage development in China for two indications. And that early-stage pipeline is moving really rapidly and getting us all quite excited about the potential of those assets, not just on their own, but also in combination with our existing programs. So, this pipeline approach we have of building a portfolio of targeted therapies that can be combined with each other is really starting to play out now. On the organizational progress, the international R&D organization and US commercial team continue to build out, preparing for surufatinib launch, hopefully next year, early next year. But it's not just surufatinib. We've got fruquintinib following in 2023 and also 689, we believe has great potential for a rapid pathway to approval in the US, so we're building that team for a number of assets. The China commercial team is scaling rapidly up to now 540 people. By the end of this year, it'll be over 600 people. We're building a flagship manufacturing facility. It's going to increase our small molecule capability by over fivefold and also establish our large molecule CMC platform. And finally, on the cash side, we're currently sitting on cash and resources of about US$1.2 billion as a result of our Hong Kong listing recently and also the divestment of our over-the-counter drug business. Next slide please, number 8. Number 9, thank you. So, regarding regulatory achievements, I won't repeat myself, but you can see here that we received two approvals for SULANDA, one in early 2021 and another recently in June. ORPATHYS was approved in June, and we submitted the NDA in the US and the MAA submission in Europe, all happening in the first half of this year. So, there's been a lot of activity. Next slide please, slide 10. Here's a brief update on the commercial side. On the left side of slide 10, you can see that our oncology team has rapidly expanded over the last 18 months. Eighteen months ago, we had 70 people in our oncology commercial team, and now that number has increased to 540. It's a young organization that is growing quickly, managed by high-quality individuals with extensive experience in large commercial operations across China. We are now covering over 2,500 oncology hospitals and clinics and more than 29,000 oncology physicians, creating a robust commercial capability. This effort is supported by two of our affiliates that have a strong commercial infrastructure in China as well. HUTCHMED has always been proficient in commercial operations in China, and with oncology as our focus, we are truly coming into our own. On the right side of the slide, you can see our scale-up plans. We will ramp up even faster than what’s illustrated in the bar chart, provided the business warrants it. There are no limits on how quickly we can grow; if the business is expanding, we will build out our team accordingly. However, we have high expectations for productivity. As indicated in the last bullet point, we are aiming for approximately US$ 400,000 in productivity per year per sales representative by 2023. We are not just expanding without purpose; there are clear productivity targets in place. Next slide please, slide 11. Fruquintinib has had a fantastic first half. We took over last October. The red bars indicate HUTCHMED's involvement. In 2020, Elunate sales were $33 million. After we took over in the last quarter, we achieved about $10.2 million in sales. Last year's growth was modest until our takeover. However, this year we’ve seen almost a tripling of the business, with 186% growth from $14 million in the first half last year to $40.1 million in market sales this year, consolidating $29.8 million, approximately 75% of the sales as previously indicated. The sales team is performing well, having conducted over 5,000 educational or scientific events in the colorectal cancer field in the first half of the year. This represents a significant patient population, with 83,000 new patients in the third line, and we estimate treating about 9,000 patients in the first half, translating to about 20% to 23% penetration. There is still considerable potential for growth. While the space is competitive, we believe we are well-equipped to compete. Slide 12 please. You can see the reason for that growth is driven by increasing our hospital pharmacy listings to now 400 in China. That's over double from when we took over from Eli Lilly last October 1. The commercial team has tripled or quadrupled in size, covering over twice as many oncology hospitals and a much broader geographical footprint as well. So, looking forward, Elunate does have some pretty important potential. There's a lot of colorectal cancer patients in China over 500,000. Third-line patient population is increasing quickly. We're very excited about the PD-1 combo data that's starting to get emerged. And we're running a lot of investigator-initiated studies to explore expanding fruquintinib or Elunate into other patient populations. And finally, our Phase 3 in second-line gastric cancer, it's still ongoing, should complete enrollment around the end of this year. So, there's a lot of opportunities for Elunate still. Next slide please, page 13. Here's a brief update on SULANDA. It's still early, as we have only been commercializing SULANDA in China for a little over 5.5 months. In the first half, we achieved approximately $8 million in sales and treated about 2,000 patients. We carried out launch activities at local, regional, and national levels, engaging over 12,000 healthcare professionals. While it's still in the early stages, we remain quite optimistic about SULANDA. It's important to note that SULANDA is currently priced around RMB 17,000 per month and is paid entirely out of pocket, as we are not yet on the NRDL. We are considering NRDL negotiations later this year, and depending on how those discussions progress, we will decide whether to reduce our price to get onto the NRDL or continue our early access and patient access programs into next year. We will see how this develops throughout the year. Overall, I believe it’s a promising start for SULANDA, and we expect to see this momentum grow as our team strengthens. Next slide please, Slide 14. So ORPATHYS is the first selective MET inhibitor approved in China. It's been a terrific month or two. We received approval in late June, which was very important because that allows us to get into negotiations and eligibility for the 2022 NRDL for ORPATHYS. So we're hopeful that if we can negotiate a fair situation with the regulatory authorities that ORPATHYS can be included next year in January. 16 days after approval, we shipped our first product and have since prescribed 40 patients on day one, which is no mean feat given that the price of ORPATHYS is quite high at around US$ 5,300 per month. So it's a great program. We're relying on AstraZeneca to commercialize ORPATHYS in China. As you can see from the right-hand side of this slide, they're very big in China, number one MNC, in China and ORPATHYS fits really well into their lung cancer franchise. So we're very optimistic. Obviously, the first sale triggered a $25 million milestone. So that's very helpful as well. Next slide please, Slide 15. ORPATHYS has extensive publications across many tumor types with really high-quality data in each of them, whether it's kidney cancer, lung cancer or gastric cancer. And as I said earlier, we have five studies now on the right-hand side of this chart that registration studies that should be kicking off over the second half of the year with the gastric cancer study having started just in the last couple of days, actually today – yesterday it was. So this is not a drug that has a limited treatment history. It's been studied in many, many patient settings and we're quite optimistic as to its potential in the market. We'll talk more about that. On the next slide 16. This is the building block slide that shows all the MET-driven patients across many solid tumor settings. You can see in the brown box in China, MET Exon 14 deletion non-small cell lung cancer about 13,000 new patients a year. This is just a fraction of the broad MET-driven patient population. And so this chart I think does a very high-level job of identifying what are the patient populations of most interest. You can see in the red boxes, these are patient populations that we are initiating registration studies in. The pink boxes, most likely these are patient populations that might benefit from ORPATHYS, if their physicians are prescribing off-label. But obviously, that's up to the physician to determine if the patient is appropriate for this therapy. So really a big patient population for ORPATHYS in China and outside. Next slide please, Slide 17. Okay. Finally on the commercial side, just some update on the US commercial organization. It continues to build out in preparation for the launch of suru next year and fruquintinib the year after. We've really built out the senior management team ready to set the strategy for launch. And it's not just on the sales side. It's all the other ancillary functions that are now in place regulatory affairs, medical affairs, quality and safety, you can see there down in the second – on the bottom side of this chart. So our US commercial organization and clinical regulatory team are really making great progress. Now close to 100 people on the ground in the United States and a satellite organization in Europe as well. Next slide, please. So clinical development update, Page 19, a brief update on surufatinib. Just to reiterate its unique mechanism of action the VEGFR FGFR1 CSF-1R inhibition, so that's what makes surufatinib unique. Next slide, please. Great data on Slide 20, that was presented at ASCO for the surufatinib/toripalimab combo is neck and gastric. These are strong data that are leading us to make decisions as to registration studies, particularly in neck. But there are multiple other indications where we are studying at the moment in Phase II and we'll publish more data on that later in the year. Next slide, please. I'm going to have to go quite quickly here because we're running short of time. So I won't go through this slide in detail but China very active on the PD-1 combos and IIT studies. And then globally, the team working very hard on the European and the US NDAs and also the PD-1 combos with tislelizumab, the BeiGene PD-1 in a number of indications. Next slide please. Fruquintinib mechanism of action highly selective VEGFR inhibitor potent against VEGFR-1, VEGFR-2 and VEGFR-3 and designed really to be used in combinations, because of that unique safety profile, its ability to be combined with chemo other targeted therapies or immunotherapies is really in our view, difficult to beat. Next slide please, slide 23. The FRESCO-2 study is probably our biggest global Phase III that we are running at the moment, the U.S. team and European team and also through partners in Japan managing this very big global Phase III. The regulatory interaction we've had in Europe, the U.S. and Japan, gives us a high degree of confidence. If this FRESCO-2 study is successful, it should support a good label of third line and above metastatic colorectal cancer. So a very important global study for us, over 680 patients should be completing enrollment in those 14 countries and 150 sites by the end of this year. Slide 24 please, next slide. The data we shared at ASCO for fruquintinib and the PD-1s in colorectal cancer is very encouraging. And we are now moving forward to consider next steps for this encouraging combination in colorectal cancer. Also looking at, some of the other indications, endometrial cancer being one where we've seen terrific synergy between, fruquintinib and the PD-1 antibodies. So we'll be moving forward into registration in that area. Next slide please, slide 25. Again, I'll touch on this very briefly. China it's the FRUTIGA study completing enrollment late this year, continuing work on the PD-1 combos and a lot of exploratory studies ongoing on fruquintinib in China. And then, globally, completing the FRESCO Phase II enrollment and expanding the PD-1 combo again with, tislelizumab and BeiGene for fruquintinib. Next slide please. So savolitinib, I won't go into a lot of detail here other than to say, we've treated over 1200 patients with savolitinib over the last 10 years. That's a lot of patients. We're now first-in-class selective c-MET inhibitor in China. And as I've said before, we are expanding into multiple global registration studies. Next slide, please, slide 27. The key focus will be the savolitinib and TAGRISSO combination. The TATTON study had its final results published at the World Conference on Lung Cancer earlier this year, which is outstanding data that is well-recognized within the Oncology Lung Cancer Community. The SAVANNAH study will conclude soon, allowing us to outline our Phase III design for the savolitinib and TAGRISSO global Phase III study in the upcoming month or two. We will concentrate on the dosage regimen, the target patient group, and the diagnostic tools, particularly regarding the biomarker strategy. I believe we are in a strong position with AstraZeneca to finalize what will be the best design for this global Phase III study. Next slide, page 28 please. I am personally very excited about, the MET-driven papillary renal cell carcinoma data we presented at ASCO, 57% response rate. The current standard of care is sunitinib and that has about a 7% response rate in these patients. So this is really a step-change efficacy improvement for patients with MET-driven papillary renal cell carcinoma. In our CALYPSO study, you can see there, a median overall survival for these difficult patients of 27.4 months. That's relative to just over a year, for patients today with sunitinib. So it's a big step. And we'll start a global Phase III in MET-driven PRCC very shortly hopefully, in the next month or two. Next slide please, page 29. Savo development summary, I won't go through this in detail, but the approval of Exon 14 the start of two big Phase IIIs with the TAGRISSO combination in China, the SACHI Study, the SANOVO Study, the gastric study that just started this week. And then globally, a global MET positive PRCC Phase III, the SAMETA Study. And then the Phase III that comes off of SAVANNAH which is the big registration, global registration study, hoping we can start that later this year. Next slide please, slide 30. 689 just PI3K delta, we include this, because it really has now moved into late stage. It's unique in its isoform selectivity its potency on a whole blood level. And it's really unique in improved pharmacokinetic profile. So this is really in our view unique therapy in this PI3K delta space that should be able to differentiate itself, versus everything that's there today. Next slide please. So this is just the Phase I dose escalation data, it's about 56 patients. We've published as stated before. What's important though is since this data was published at ASH last year, we've enrolled well over 100 patients at the recommended Phase II dose. We also in the US and Europe have now almost reached our recommended Phase II dose and just about ready to move into expansion outside of China. So things are moving very quickly on 689. And we intend to publish more data hopefully at ASH later this year. And that should be a meaningful data set that we present at ASH later this year. Next slide please. On page 32, I've already mentioned that in China for 689, we've moved into registration studies in Q2 of this year for follicular lymphoma and marginal zone lymphoma. These studies have the potential for NDA submissions late next year or early 2023, which we hope will be our next major novel drug NDA submission in China. We're exploring several combinations, as these B-cell signaling pathway targets are all interconnected. We now have an excellent portfolio that includes the third-generation BTK, the PI3K delta, the Syk inhibitor, and several other assets that can create synergy. Outside of China, Marek and his team will engage with the FDA later this year to compile all the data from China and our international dose escalation efforts. We plan to discuss moving this asset to market outside of China as swiftly as possible. We are very excited about this. Next slide please, slide 33. The next wave of innovation includes our Syk inhibitor, which is advancing into Phase III trials for ITP, and we are making significant progress with indolent non-Hodgkin's lymphoma outside of China. We've found that patients who are refractory to BTK inhibitors tend to respond well to Syk inhibitors. Our IDH inhibitor is progressing rapidly, and the third generation BTK inhibitor 760 recently received IND clearance, allowing it to enter clinical trials later this year. The ERK inhibitor is also progressing well, and we are continuing to enroll patients in trials for the FGFR inhibitor 453 in intrahepatic cholangiocarcinoma. Additionally, we have submitted INDs to explore combinations of this FGFR inhibitor in specific areas, indicating that there is a lot happening on the early development front. Next slide please, slide 34 to 35. I won't go through all of the upcoming events on page 35, but you can see the most important ones highlighted in red. For surufatinib, we have the NDA submission and the European launch scheduled for next year, along with the US launch. The FRESCO-2 readout for fruquintinib is expected next year, but enrollment will be completed late this year. There’s significant activity with savo this year, including data from CALYPSO and the start of global Phase IIIs in papillary renal cell carcinoma and the combo with TAGRISSO. As we look at the pipeline, the regulatory dialogue on 689 is likely the most critical for us. Next slide, page 36 is the China upcoming events. Many of them have happened already with the suru launch, the savo launch, but still a lot going on. So on surufatinib, the neuroendocrine carcinoma and gastric PD-1 combos that data was published as I mentioned. Now we're starting to look at okay how can we start registration studies in these areas or some of these areas. The same can be said for fruquintinib. The enrollment of FRUTIGA completing late this year, and then savo three registration studies kicking off this year, gastric and SACHI and SANOVA. And then 689, starting these registration studies in China. 523 also hoping to start Phase III late this year as well. So a lot happening. Next slide please, slide 37. I'll move past slide 37 briefly to summarize. We are starting 10 Phase III studies and introducing three new drugs. Now, if you turn to page 39, you'll see that by the end of June, our consolidated balance sheet showed $950 million in cash. This figure does not account for the over-allotment from the Hong Kong IPO, the $25 million milestone related to ORPATHYS, or the approximately $150 million we expect to receive soon from divesting our OTC business. This brings our cash and resources to about $1.2 billion. The first half of the year was significant for equity financing. We aimed to attract some key strategic investors, including Baring Private Equity Asia, the Canadian Pension Plan Investment Board, General Atlantic, and Carlyle during the Hong Kong IPO. These investors play a crucial role in supporting our company's initiatives. Next slide please. Slide 40, I'm on slide 39. If you can move to slide 40, Mark? I don't know, why it's not..
Mark Lee, SVP Corporate Finance and Development
It's already on 40 for me.
Christian Hogg, CEO
Okay. Well, I'll just – it's not in front of me, so I'll just sort of speak from memory. So slide 40 just talks about our guidance for the year US$110 million to US$130 million guidance oncology revenues. Obviously, that comes from fruquintinib surufatinib and savo. We've got the first sale milestone in there of $25 million on savo as well. Yeah, I think we're on track for that guidance this year, and expect to deliver. Next slide please, slide 41. I also can't see slide 41, so I'll have to go from memory as well. There you go, I've got it now. So you can see, yeah, R&D expenses increasing oncology revenues increasing. So it's just a reflection of our strategy of bringing our oncology assets to market, building out profitability from those oncology assets and helping funnel that profit into broader R&D investment against our broad pipeline. So you can see – we've talked a lot about sales, so I won't talk any more about that. But on the R&D expenses side, you can see around $123 million of R&D investment in the first half of this year, around 50-50 China versus outside China. And so the investment in our US, Europe R&D activities is really increasing. It's tripled in the last year. And that's because we're now developing six assets actually now with the BTK developing seven assets outside of China. So the net loss attributable to HUTCHMED around $102 million that still is contained because we have our other ventures that in the first half of this year we're able to generate around, $43 million in equity and earnings from our equity investees, or other ventures business. So we've always been able to increase our R&D spend and offset it by the profits of our commercial businesses. Next slide please. Slide 42, I think this is the final slide. It's stuck again, I think, Mark. But anyway, the final slide just looks about the ambitions of the company lays out the kind of numbers, we expect to be delivering. We expect by 2025 to have nine therapies launched in China. We've already got three launched. We expect five to be launched outside of China, and we expect another six therapies to be in registration studies by 2025 outside of China, and nine inside of China. So that, if we're able to deliver these kinds of numbers, HUTCHMED will be a very big company by 2025. And I'm fully of the view that we will be able to deliver these kinds of numbers. So I took a bit longer than expected, but let's open it up for questions. And Greg, if you could direct the questions, and I will either answer them or involve my team or the team to answer.
Operator, Operator
We are going to start the Q&A session. We have the first question from Alec Stranahan from Bank of America. Please go ahead.
Alec Stranahan, Analyst
Hey, guys. Thanks so much for taking our questions. First one from me. You recently got the IND clearance for your BTK and your ERC program is starting Phase I. So, I guess, given these are increasingly crowded areas of development, could you help frame the thought process that went into these programs in terms of what you think it could take to be best-in-class, and whether you think monotherapy will be enough, or will your focus really be more on the combos? And then secondly, on the catalyst road map that you presented, it looks like quite a few PD-1 combo data should be expected later this year. So, do you have any more granularity on timing or venue for that data? Thanks.
Christian Hogg, CEO
Thanks, Alec. Maybe I'll ask Wei-Guo to talk about the sort of the differentiation in the mono combo question with regards to BTK and ERC. And then maybe Marek, could pitch in around, how he's thinking about developing for example the BTK inhibitor in a relatively busy field. So go ahead Wei-Guo.
Wei-Guo Su, Chief Scientific Officer
Thank you for the question. Firstly, this is a third-generation BTK aimed at targeting BTK-resistant mutations alongside the wild type. It is distinctly different from the first-generation ibrutinib and second-generation options. This generation is relatively new, and there are currently few molecules of this kind in clinical settings. It is designed to address resistance, particularly C481S mutations. As a pipeline-driven company, we are heavily investing in B-cell signaling. In addition to BTK, we have PI3K-delta and Syk, and we are also advancing our CD47 antibody and CD20-based bispecifics. This BTK inhibitor will be an important part of our valuable portfolio aimed at covering a wide range of hematologic malignancies. For example, we have already generated in-house data combining this BTK inhibitor with our PI3K-delta in DLBCL and other areas. We have high expectations for this compound, both as a standalone treatment and in conjunction with our existing portfolio. As mentioned by Christian, it has just cleared the IND in the US, and we will soon begin the dose escalation. The timeline in China is quite similar.
Christian Hogg, CEO
Thanks Wei-Guo. Maybe Marek, could you talk about the…
Marek Kania, Managing Director
Yes. So just to add, Alec, thank you for your question. Building on what Wei-Guo said, based on the strong differentiation factors, based on preclinical data, obviously, we have very ambitious plans to exploratory scientific data driving our future plans. We're taking broad match to really translate into clinic what Wei-Guo said based on our hypothesis. And it's really meeting with high interest from global thought leaders, engaging in this program two of our Co-PIs are world-renowned class. And so we are taking, obviously, first approach establishing safe dose in escalation phase and trial will have multiple cohorts of specific setting as Wei-Guo highlighted a number of post BTK-resistant subsets in multiple subsets of lymphoma. And as Wei-Guo said, we are also in parallel going to think about combining and creating signals from our own assets, which mechanistically and scientifically make sense you know PI3K-delta is one of them, but we are looking at many other possibilities as well. So we are very excited. Despite of the cloudiness of the space, there's still significant unmet need and the fact that top-notch scientists are very interested to explore it is one of the factors proving that. So, obviously, it will be driven by data. So stay tuned.
Christian Hogg, CEO
Thank you, Marek. I'll address the first part of your question regarding the MAP kinase pathway and our approach to combining assets. Our goal for the MAP kinase pathway is to create a diverse range of treatments similar to what we've achieved with the B-cell signaling pathway. This means developing a collection of tools to target the MAP kinase pathway in various combinations and sequences. The ERK inhibitor is our initial offering, and we have several other innovative therapies that Wei-Guo and the team are developing to enhance this portfolio. What excites us most about the ERK inhibitor is that it is just the beginning of a broader strategy to explore and innovate in this pathway. Regarding your question about the anticipated data in the second half of the year and early next year, particularly concerning the PD-1 combination data, we have only released a limited amount so far. However, we have a wealth of additional data across many indications that are advancing. Some of these indications hold great potential, while others may be less impactful. As we gather more data and refine our registration strategies, we will determine the appropriate scientific venues to share our findings. Therefore, you can expect a consistent flow of PD-1 combination data over the next six to nine months.
Alec Stranahan, Analyst
Great. Thanks a lot in terms of that progress.
Christian Hogg, CEO
Thank you, Alec.
Operator, Operator
Thank you. Next question from Louise Chen from Cantor. Please go ahead.
Louise Chen, Analyst
Hi. Congratulations on your progress this quarter, and thank you for answering my questions. First, how do you plan to distinguish yourselves in the US market as you launch your business there, particularly in comparison to other oncology and biotech companies in the States? Secondly, what is the global peak sales potential for savolitinib in non-small cell lung cancer, kidney cancer, and other significant indications? Lastly, what are your views on the new draft guidance for oncology drug development in China? Do you see this as a positive or negative factor, and why? Thank you.
Christian Hogg, CEO
Thanks, Louise. I'll address the first few questions and then ask Wei-Guo to discuss the guidance in China. Our approach to differentiating ourselves in the market involves several key factors. First, each of our assets is unique in its own right. Surufatinib is the first therapy of its kind for neuroendocrine tumors, and fruquintinib is expected to stand out due to its safety profile and efficacy. Similarly, 689 has a distinct safety profile compared to other PI3K-delta inhibitors. Each asset has been purposefully designed to be different. In contrast to many US-based biotechs that often have single asset portfolios, HUTCHMED is building a diverse commercial team in the US. We anticipate surufatinib will be our first approval, followed maybe by fruquintinib about 12 to 18 months later and 689 another 12 months after that. Our strategy involves having a robust portfolio of assets, similar to our approach in China with surufatinib, fruquintinib, and savolitinib. This is not a one-product company; we aim to bring multiple assets to the market. This broad range will help us differentiate ourselves and compete effectively in the United States. Regarding peak sales for savolitinib, I believe it has the potential to become a multibillion-dollar global drug if successful alongside TAGRISSO, which could be its largest indication. The additional indications, such as papillary renal cell carcinoma and gastric cancer, are significant as well. However, the primary focus will be the combination with TAGRISSO for patients with EGFR mutation-positive non-small cell lung cancer. We are making efforts to ensure that patients can access the savo/TAGRISSO combination early in treatment and remain on it as long as possible, which is crucial for driving significant growth. Wei-Guo, could you share some thoughts on the guidance in China?
Wei-Guo Su, Chief Scientific Officer
Yes. I think the recently issued sort of guiding principles for oncology drug development in China by CDE, it's really meant to discourage irrational and repeated investment in certain targets. As you know for instance PD-1 in China a total of 80, 90 different PD-1s were put into clinics. And obviously this is the initial 1, 2, 3 may have long clinical value, but it won't get up to beyond 20. All those compounds will have diminished clinical value basically. Also recently now in the news as well, the CD19-based CAR-T there are over 150 programs targeting basically the same technology CD19-based CAR-T. So CDE issued that guideline really to discourage this kind of approach in China because of the diminished clinical value for latecomers. And how we view it, we think it is a major positive for us because these repeated programs take up so much clinical resources and slow down a lot of innovative programs, programs that we do. Everything we do, we have a very clear differentiation strategy behind our programs. And everything is guided by clinical value and by science basically. So by cleaning up some of these very overheated investment in certain targets I think we'll free up space and resources for truly innovative programs, programs like what we are investing in today. So we really think it's a positive for us.
Christian Hogg, CEO
Thanks, Wei-Guo. Marek, do you have anything else to add regarding the differentiation in the US market?
Marek Kania, Managing Director
Yeah, Christian, so I would add to building on what you said about the robustness and size of the portfolio which is very well differentiated and I believe strongly can really act and create value to everyone. Obviously, this cannot happen without an amazing team and a team which is being built with the long-term and a very robust portfolio in mind. So we are building a team of seasoned individuals with multinational large midsized companies with long history of excellent track record and that culture would sustain us across this multiplicity of assets we expect to bring to the market. And the last part obviously we are very ruthless looking at what and how we can create value to first of all patients and then physicians and payers. And if we continue doing this across our portfolio which can compete, I think value can be significant and accretive here.
Louise Chen, Analyst
Thanks, Marek.
Christian Hogg, CEO
Okay. Thanks, Louise.
Operator, Operator
Thanks. Next question from David Ng from Macquarie. Please go ahead.
David Ng, Analyst
Thank you very much. Congratulation Christian for a very impressive first half. It's been many years and the first half of this year really had so many positive news. So I guess for a lot of investors one question is how can second half of this year top it off? Can it be even more exciting than first half? And what will be the key things that we should highlight on in the upcoming four to five months? Do you continue to drive the excitement of the company? And one thing that I would think of is of course along the business development area, anything you can share with us in terms of maybe in the last few months with a stronger balance sheet any new initiatives in the BD team. What will be the focus of the potential products, the bite sizes that you are comfortable with and maybe the challenges that you have encountered so far in the last few months as you ramp up your BD activities? And I have two more questions after this. Thank you.
Christian Hogg, CEO
Thank you, David. It has been a fantastic six months, but the successes we've achieved recently are built on many years of prior effort and the dedication of our team. Looking ahead to the second half of this year, as we mentioned with the upcoming events, there is a lot happening. Our teams are working diligently right now to make clinical progress with these assets. As we continue to advance, you will see the true value of our company in our ability to develop genuinely differentiated assets on a global scale. With our clinical regulatory teams worldwide and our CMC teams all working together, the value of these assets will become evident. I believe what will truly elevate us is our pipeline. On the business development side, we are currently exploring several potential transactions. From a cash perspective, we are now in a position to pursue some of these opportunities, but we are being particularly selective. There are essential criteria that must be met for us to consider in-licensing, for instance. Wei-Guo has developed a well-defined portfolio strategy aimed at building a set of tools to target specific areas. Therefore, we will not partner or license any asset that does not align with our portfolio and the therapeutic areas we are focusing on. This type of pipeline synergy is crucial. Additionally, we have noticed a considerable increase in the prices for in-licensing opportunities in China recently, and we are maintaining a disciplined approach in that regard. We will not pay above market rates and will remain strict in our evaluation. Another important aspect we need to consider is the synergy with our commercial portfolio, as it follows that if there is synergy in the pipeline, there should also be in our commercial efforts. However, we are also examining some oncology assets that may not be directly tied to our portfolio but could be beneficial for our commercial team. Ultimately, it’s all about synergy and value creation. Furthermore, our partnership considerations are not solely focused on China; we aim to create value through global combinations. We are reviewing several opportunities, but we are committed to being disciplined. We will not move forward with any licensing deals that do not align with our company's interests. If the opportunities fit, we will pursue them; if they don’t, we will focus on our own initiatives. We currently have a number of discussions in progress.
David Ng, Analyst
Thank you, Christian. I have two more quick questions. First, it's quite interesting that you have done great work in launching fruquintinib and surufatinib. With AstraZeneca helping with savo, what have you learned? As you ramp up sales and penetrate hospital education, AstraZeneca has already done a lot of that work in China over the past few years. Considering these insights from Astra's launch of savo, how would you compare your efforts to Astra's and what can you learn from them to potentially accelerate the ramp-up of fruquintinib and surufatinib beyond your current progress? My second question is straightforward. Will your next three in-house products be developed significantly faster than your first three innovative products that you have already launched? How does your development speed compare with other domestic players regarding the pace of clinical development and the effectiveness of your clinical strategies? Thank you.
Christian Hogg, CEO
Thank you for your question. I'll address the inquiry about Astra and then ask Wei-Guo to discuss the next three assets regarding approvals, with Marek also providing insights focused on both China and international markets. AstraZeneca is an outstanding operator in China, being the largest multinational pharmaceutical company in the region. Their commercial footprint is extensive, and they have excelled over the past decade in building their business, guided by a highly capable team. In oncology, their significant advantage lies in TAGRISSO, which they have successfully launched and effectively managed within the market. This success connects closely with savolitinib and the healthcare professionals who prescribe it, as well as the platform that savolitinib requires to be fully optimized. I have high expectations for AstraZeneca, and I believe there is a lot we can learn from their operations. They do an exceptional job of bridging multinational and local perspectives, leveraging science, discipline, and effective execution to enhance their business operations. Our daily interactions with AstraZeneca have been highly informative, and we anticipate their continued strong performance. In about six months, after observing their commercialization efforts with fruquintinib and savolitinib, I’ll provide more insights. So far, their decision-making has aligned with my views, and I hold AstraZeneca in high regard. I welcome any comments from Wei-Guo and Marek on the next three drugs, both within China and internationally.
Marek Kania, Managing Director
Sure. Wei-Guo maybe you can start and I can build on this.
Wei-Guo Su, Chief Scientific Officer
Yes. Our portfolio is looking promising. Compound 689 is already in registration studies, and 523 will follow soon. Our earlier portfolio, specifically the IDH 1/2 inhibitor, has significant potential to progress quickly due to its unique characteristics and differentiating features. We are already witnessing positive activity in the clinic. Compound 453, our FGFR inhibitor, is also demonstrating interesting results, and we are starting combination therapies for earlier lines, which we believe is the best approach for the FGFR compound. Overall, we have four promising compounds, with 689 likely leading the charge, but each has great potential to reach key milestones in the coming years.
Marek Kania, Managing Director
Yes, from a global expansion perspective, if we consider 2018 as a starting point for our late-phase assets such as surufatinib and fruquintinib, their development is advancing rapidly on a global scale despite the challenges posed by the pandemic. We are being very aggressive even in this late stage. As Wei-Guo mentioned, our new asset, the IDH dual inhibitor, along with our 689, 523, and BTK, are all targeting areas with significant unmet medical needs and have strong potential for accelerated approval. We will diligently monitor their activity and benefits. Additionally, as Christian noted, we are collaborating with the FDA on our 689 PI3K-delta inhibitor in the latter half of this year. This approach will help us expedite our efforts to achieve the best clinical benefits for patients while aiming for swift approvals. Overall, we are committed to executing this strategy as quickly as possible with a focus on creating value.
David Ng, Analyst
Thanks. Thank, Marek. Thank you.
Operator, Operator
Thank you. Next question from Paul Choi from Goldman Sachs. Please go ahead.
Paul Choi, Analyst
Hi. Thank you and good morning, everyone. I have two questions. First, regarding your earlier comments about deciding on the Phase III trial for TAGRISSO plus savolitinib next month, have you and Astra reviewed the latest data from the SAVANNAH trial, given that it’s open label? Can you confirm if there are any differences regarding the 300 mg dose in terms of efficacy or tolerability? My second question is about your upcoming update on 689 at the ASH meeting at year end. Can you clarify our expectations? Are you focusing on initial safety data or are you seeking clear evidence of efficacy differentiation compared to other drugs in the class? Thank you very much.
Christian Hogg, CEO
Thanks, Paul. I'll address the question about the TAGRISSO combination first and then ask Wei-Guo and Marek to provide updates on ASH and 689. Regarding the SAVANNAH study, there hasn't been any new data since the cutoff in July. AstraZeneca expects to have substantial data by late August that will aid in designing the Phase III study. This will include further insights on the 300-milligram BID, 600-milligram QD, and the 300-milligram QD dose cohorts. An important aspect of the upcoming data is the first look at mature progression-free survival, which we haven't had from SAVANNAH yet, and it's crucial. Additionally, the ongoing biomarker analysis is significant as it involves a large patient population, potentially around 170 to 200 individuals. The final biomarker analysis will be combined with the TATTON data to shape the biomarker strategy for Phase III. We anticipate having this information in the next few months, after which Astra will conduct its internal processes to finalize protocols and governance. We're hopeful that the global phase will commence by the end of the year. That's the latest on the TAGRISSO and SAVO combination. Meanwhile, Wei-Guo and the team are swiftly advancing the SACHI and SUNOVO studies, both of which involve combinations with TAGRISSO and SAVO, aiming to initiate Phase III registration studies in China around September to October.
Wei-Guo Su, Chief Scientific Officer
The key differentiation of 689 lies in its superior efficacy and safety. We previously shared dose escalation data at the 2020 ASH conference, demonstrating a 48% overall response rate across all dose levels and lymphoma subtypes. Since then, we have expanded our dosage, administering the recommended Phase II dose to over 100 patients and observing further improvements, though we will need to wait for publication to share detailed results. Additionally, the presentation has been accepted for an oral talk at ESMO this year, where the data will be available soon. Regarding the safety profile, 689 shows significant differences from other PI3K-delta inhibitors, especially concerning gastrointestinal and liver toxicity. We believe this drug will be utilized in the patient population for an extended duration, making the safety profile crucial, and we are pleased with the safety and tolerability of 689. The observations from the Chinese patient population are consistent with those from our international program in terms of pharmacokinetics, safety, and efficacy. Marek may want to add further insights.
Marek Kania, Managing Director
Yes. So, I would just only add, I totally agree with Wei-Guo that data is consistent and we believe that we can differentiate based on both safety and efficacy and what we see is very encouraging. And as far as program Christian kind of alluded to entire package. We are looking at both China, the historic data, which is still ongoing and now in the registration Phase II in China. We are expanding also our ongoing international studies. So between three studies, we'll have a very robust package, as it continues to mature. And obviously, every possibility, where we can provide meaningful analysis, we'll be doing that and while we are discussing with regulatory agencies. So, we are extremely encouraged. That's what I can say.
Paul Choi, Analyst
Thank you, very much for taking our questions.
Marek Kania, Managing Director
Thank you, Paul.
Operator, Operator
Thank you. Next question from Mike Mitchell from Panmure Gordon. Please go ahead.
Mike Mitchell, Analyst
Thank you. Thanks, Christian. I've just got one question relating to pipeline strategy which perhaps flips the earlier BD question on its head. I thought the Inmagene collaboration is a particularly interesting relationship to advance a number of your earlier-stage assets. So, I'm just wondering, now that your increased financial resources perhaps allow you to think about supporting more complicated, but potentially more interesting and more valuable programs focused on combinations of molecules, where you might have otherwise looked at monotherapy, so perhaps deprioritizing the monotherapy strategy across the pipeline. Might you take an Inmagene type approach for what would otherwise have been those monotherapy programs, especially if you're seeing inflated prices in in-licensing in China?
Christian Hogg, CEO
Thanks, Mike. Essentially, obtaining monotherapy approval for each of our assets is crucial. This initial step involves identifying the monotherapy indication needed for approval. Once we have successfully mitigated risks associated with an asset through monotherapy approval, we can then explore various combinations. In some instances, such as with savolitinib, combination strategies can be applied quite early on. I do not believe we would ever deprioritize the approval of our monotherapies. The financial foundation we have established with the Hong Kong listing and our available cash resources enables us to pursue a wide range of opportunities with our asset portfolio. Our pipeline, as shown on slides 3 or 4, consists of a comprehensive array of 11, 12, or 13 assets that we will develop extensively. As you noted, we have chosen to focus on immunology as a distinct area for creating innovations. However, while developing these assets, our limitations are not financial; rather, immunology development is inherently different from oncology. We believe that Inmagene can provide focus and the capability to effectively engage key opinion leaders in the global immunology field, potentially accelerating these programs more than we could achieve, given our strong emphasis on oncology. I hope this clarifies your question. We certainly do not intend to deprioritize the development of monotherapies for any of these assets.
Mike Mitchell, Analyst
Got it. No, it’s fantastic. Thanks, Christian.
Operator, Operator
Thank you. And that is all for questions from the telephone. We will take a final question from the web. The question will be read by Mark Lee, SVP, Corporate Finance and Development. Sir, please go, ahead.
Mark Lee, SVP Corporate Finance and Development
Thanks, Greg. We have a question from Sean Wu of Morgan Stanley, and so I'll just read it out. Right now your fruquintinib and PD-1 combos are exploratory. Moving forward, do you intend to tighten the screws and rework collaboration agreements? Are you free to pursue global collaboration of savolitinib with PD-1?
Christian Hogg, CEO
Thank you, Mark, and Sean, for your question. Regarding the fruquintinib and PD-1 combinations, as well as the savolitinib/PD-1 combinations, they are indeed exploratory. However, these are substantial Phase II studies involving multiple cohorts across various indications, with about 20 to 30 patients to assess efficacy and tolerability signals. Currently, Wei-Guo and the team are expediting these into registration studies. Our collaborations are set up so that in the early stages of development, like Phase II and proof-of-concept, they are nonexclusive. Once we enter registration studies, they shift to exclusive arrangements with some form of cost sharing. We are transitioning to this exclusive framework for our collaborations with Innovent and Junshi while discussing the structure of these registration studies, including financial responsibilities. To answer your question, these collaborations do indeed evolve from exploratory, nonexclusive formats to exclusive ones during registration studies. Regarding savolitinib, we are not permitted to combine it with PD-1s outside of China. However, AstraZeneca has Imfinzi, the PD-L1 antibody, and we are actively pursuing the combination of savolitinib and Imfinzi in a global Phase III trial for papillary renal cell carcinoma. The CALYPSO data shows a 57% response rate in MET-positive PRCC patients, and we are witnessing significant synergy between the two assets, suggesting a greater impact than just additive effects. We plan to explore other opportunities to develop savolitinib and Imfinzi together in additional indications, but this will be done in partnership with AstraZeneca, not independently. I hope that answers your question. Greg, do we have any further questions?
Operator, Operator
Yes, we don't have any more questions by phone.
Christian Hogg, CEO
Okay, great. Well, then on behalf of the entire HUTCHMED team Marek, Wei-Guo, Johnny, Mark and myself, thank you all very much for joining our call. And we look forward to engaging with you all in the coming months. But the next six months should be very important six months for HUTCHMED and I think we're all feeling very positive about the future. So thanks very much for listening in.
Wei-Guo Su, Chief Scientific Officer
Thank you very much.
Marek Kania, Managing Director
Thank you very much.