Earnings Call Transcript - HCM Q2 2022

Dr. Marek Kania, Managing Director and Chief Medical Officer

Dr. Marek Kania, our Managing Director and Chief Medical Officer of HUTCHMED International. Dr. Karen Atkin, Chief Operating Officer and Mr. Hong Chen, our Chief Commercial Officer of China. With that I will hand over to Dr. Su.

Weiguo Su, CEO

Thanks, Mark. Hello everyone. As you all know the biotech industry is going through some significant changes. HUTCHMED is trying to stay focused on our goals and objectives. During the first half of 2022, HUTCHMED China Commercial continued to grow and deliver strong results, particularly fulfilling considering the impact from the COVID disruptions. ELUNATE continues to gain in prescription share for third-line CRC. The lead of Staviga continues to widen. SULANDA was included in the NRDL this year with a 52% price reduction. Yet sales grew 69%, aided by much improved patient access. ORPATHYS also delivered strong sequential growth compared to the second half of 2021. On the pipeline, while we were disappointed by the surufatinib of U.S. FDA CRL and now MMA withdrawn. Our deep and broad pipeline continues to progress. Our first multinational MRCT for fruquintinib global registration will read out shortly in August. If positive, NDA filings will begin towards the end of the year, starting from the U.S., followed by EU and Japan. For savolitinib, multiple registration studies including global MRCT SAMETA for PRCC and SAFFRON for non-small cell lung cancer are enrolling. The SAVANNAH study, data to be disclosed at WCLC shortly, is also continuing to enroll with potential for filings for accelerated approval. Registration studies for our second wave of products, amdizalisib, sovleplenib, and tazemetostat are all enrolling. NDA submissions in China are expected during 2023 and 2024. Finally, managing changes and challenges. HUTCHMED has gone through many difficult stretches in our history. The management team is very experienced in dealing with challenges, such as the Surufatinib setback over the COVID disruption in China, or the overall unfavorable capital market right now. HUTCHMED has a solid cash balance and a cash-generative commercial operation in China. We are confident we will be able to emerge from these challenges stronger. Next, I'll ask Mr. Hong Chen, Chief Commercial Officer, China to give an update on first half China oncology commercial performance. Chen?

Hong Chen, Chief Commercial Officer, China

Thank you, Weiguo. Hello everyone. HUTCHMED already had three in-house innovative products approved and marketed in China, and 2022 is also the second year for HUTCHMED to commercialize ELUNATE and SULANDA through its own commercialization platform. From this slide, we can see after a successful NRDL renewal with only a 5% price decrease, ELUNATE continued to grow strongly in the first half of this year. The first six months in-market sales were more than US$50 million with 26% growth versus last year. By the end of May, the cumulative in-market sales of ELUNATE already achieved more than RMB1 billion. ELUNATE has benefited more than 50,000 CRC patients, and it has continued to expand its leading position in third-line CRC patient share to 43% during the latest post-launch survey. Next slide please. For SULANDA, NRDL inclusion allows much wider patient access. We can see that despite a 52% price cut, the value of sales still increased by 69% to US$13.6 million in the first half of this year, which was already over the whole year's sales of 2021. The growth was up to 280% in terms of new patient numbers created by SULANDA. Next slide please. This is the first year anniversary for savolitinib since it was approved in June last year. The first half of this year, in-market sales increased by 46% to US$23.3 million versus the second half of last year. As the first-in-class selective MET inhibitor in China, savolitinib is now recommended for the treatment of non-small cell lung cancer with exon 14 skipping in five treatment guidelines. MET diagnostic testing is already recommended as the new standard of care for patients with late-stage non-small cell lung cancer. Our commercial partner, AstraZeneca is now proactively working on the preparation for the coming NRDL negotiation at the end of this year. Next slide please. This slide is a high-level summary of HUTCHMED's commercial capabilities. With the team size increasing to more than 800 staff, more and more hospitals and healthcare professionals can be covered as well. More than 500 new hospitals were covered in the first half of this year, especially in Tier 2 and Tier 3 cities. Many highly effective promotional events were executed in the first half, especially through online and digital communication to mitigate the COVID challenges. For example, we held more than 3,800 ELUNATE events with more than 100% growth versus the first half of last year. We covered more than 43,000 healthcare professionals through SULANDA events with also more than 180% growth. Overall, despite the COVID challenges, we continue to make good progress in commercializing our three market products in China in the first half of this year. I'm very confident that this momentum will continue to grow from strength to strength as our commercial team continues to build over the balance of this year. Thanks. Okay. Weiguo and Marek, please.

Weiguo Su, CEO

Thanks, Hong Chen. Moving on to the pipeline progress. Our clinical development pipeline continued to grow. Our anti-CD47 antibody HMPL-A83 has entered into Phase 1 study. Our first in-licensed product, tazemetostat, initiated the bridging study for China registration. Next. This slide lists 13 ongoing registration studies both in China and globally, with estimated timelines for potential NDA filings. Generally speaking, the COVID outbreak in the first half has had some impact on enrollment, and we are anticipating some delays for most studies in China. Next slide. Again, the seven registration studies for savolitinib are all enrolling. Next slide. This is to highlight the interim SAVANNAH data to be presented at the WCLC. The most important information among other things is the biomarker definition. The data is from 193 patients, all progressed on TAGRISSO with MET activation, both high and moderately high. In this study, 34% of patients were identified with high MET activation, namely IHC-3 plus greater than 90% of the tumor cells, or MET gene copy number greater than 10. An additional 28% with moderate MET activation IHC-3 plus less than 90% or GCN between five and 10 copies. You can see there is a clear difference in efficacy for these two subgroups of patients, including overall response rate, duration of response, and progression-free survival (PFS). These data support and inform the global SAFFRON registration study, which is now underway. Next slide. Additionally, targeting net driver genetic alterations, such as mutations, exon 14 skipping or amplification, another area of strong interest is to target the immunosuppressive role of HGF MET signaling pathway. Last year, we published the CALYPSO study in which MET-driven PRCC patients appeared to derive robust clinical benefit from the treatment of savolitinib durvalumab combination. Currently, the global registration MRCT is ongoing for the SAMETA study. We and our partner, AstraZeneca, are now preparing to explore the same combination in MET-driven non-small cell lung cancer. The sub-study is expected to start enrollment later this year. Next slide. Moving on to fruquintinib and surufatinib for clinical development outside China, let me ask my colleague, Dr. Marek Kania, Managing Director and CMO of HMI, to give you an update.

Marek Kania, Managing Director and Chief Medical Officer

Thank you, Weiguo. Hello, everyone. I will give you a quick update on our latest developments globally. As you can see on this slide, HUTCHMED continues to focus on colorectal cancer, really housing patients with a high burden and high unmet medical needs, to find solutions, and therefore fruquintinib is our main focus. As you can see, it is the second most common cancer type, and for second line standard therapy, patients are running quickly out of options. Only two approved options are in the third line, which is used in less than 20% of total patients. This highlights a strong need and strong rationale for fruquintinib being developed in this setting. Next slide please. As you've seen a few times in the past, the last six months we've focused strongly on driving our FRESCO-2, which is the second pivotal study and multinational MRCT to the finish line. We are actually narrowing our predictions here. We will be in a position to announce top-line results in August, hence presenting at an upcoming medical conference for your results very soon. Just as a reminder, FRESCO-2 was discussed with all major regulatory agencies before finalizing protocol and starting the trial. Therefore, if FRESCO-2 is positive, it will support efforts both in the U.S. for NDA, Europe for MAA, and Japan's PMDA discussions. Japan has strong participation in the study. With this global effort, it will put us in a strong position from a regulatory point of view to start our mission. As a reminder, the U.S. FDA granted fast track designation. Therefore, it will afford us rolling submission starting in late this year if positive. Again, we'll be talking more about FRESCO-2 very soon. Next slide please. Surufatinib, for a quick update, we have discussed earlier in April/May about NDA complete response in the U.S. I'm not going to highlight more of this today. We now announce the withdrawal of our MAA in Europe. Main reasons are summarized in this slide, which highlight similar concerns and limitations and objections from the European regulatory perspective, in addition to the limitations in conducting inspections, both TCP and GMP. Our discussions and decision to withdraw are focused on fast-tracking efforts with both regulatory influences to bring us back to the next phase of development, conducting MRCT. For Japan, we are conducting a bridging study, which would be called a pivotal study in Japanese regulatory terms. We are in part two, below the approaching PMDA for discussions at the conclusion of that study. Next slide, please. Weiguo, I think you will be covering this slide. Back to you.

Weiguo Su, CEO

Thanks, Marek. Now let's move on to our second wave of compounds in late-stage development. All in the hem-onc space, HUTCHMED has six assets in clinical development with several more programs in discovery. We believe this is a highly valuable heme-onc pipeline covering pretty much the entire heme-onc spectrum. Amdizalisib and Sovleplenib both have breakthrough therapy designations in China. Next slide. Amdizalisib, our differentiated PI3K Delta inhibitor with a good safety profile, has continued to enroll in two registration Phase 2 studies, the third-line plus follicular and the second-line or above marginal zone lymphoma. Data for other subtypes of lymphoma, including MCL and PTCL, are still maturing and will be evaluated for possible additional registration studies. Outside China, in light of the April FDA ODAC on PI3K Delta class compounds, we are expanding patient enrollment in several subtypes to demonstrate or confirm differentiation with priority in post-BTKi MCL and PTCL. Let me remind you that our intention when amdizalisib was discovered was to improve upon the existing PI3K Delta inhibitors' safety profile, which is now the center of the question. The data we published at ASH last year showed not only promising efficacy data but also a much more favorable safety profile, which obviously needs to be further confirmed in a larger patient population and also in the U.S. patient population. Additionally, we are considering combinations such as the EZH2 inhibitor tazemetostat. Next slide. Regarding savolitinib, the second inhibitor in China, the Phase 3 registration study in ITP is enrolling very well with little impact from COVID, suggesting a strong unmet medical need in this patient population. Another indication where we have breakthrough therapy designation. We hope to complete enrollment of this Phase 3 study by the end of the year. Behind ITP, two INDs have been cleared in China, one for autoimmune hemolytic anemia and another for COVID-19 to explore its anti-inflammatory activity to reduce the death rate in severe to critical patient populations. Outside China, the dose expansion in lymphoma indications continues to enroll with priority in Hodgkins and post-BTK CLL. In addition, based on encouraging proof of concept data from the China ITP study and the strong unmet medical needs in this space, we are preparing to submit an IND to explore the potential. Next slide. Our in-licensed EZH2 inhibitor tazemetostat, which is approved in the U.S. for follicular and epithelial sarcoma indications as a monotherapy. At the 2022 ASCO, we will present Safety Run-in Data in combination with R2 in a second-line follicular lymphoma. The efficacy and safety were very encouraging. Together with our partner Epizyme, the global Phase 3 study, SYMPHONY-01, has been initiated in second-line follicular comparing R2 plus taz versus R2. China will be part of the global MRCT to support registration. In parallel, we just kicked off the bridging study in China to support initial registration of tazemetostat as a monotherapy. Taz has been approved in Hainan province in China through a special registration pathway based on the U.S. approval. Multiple combination proof-of-concept studies are also being planned. So this wraps up our updates on the last-stage assets. Next, I'll pass on to Johnny Cheng, CFO, to give us an update on the financials. Johnny?

Johnny Cheng, CFO

Thank you, Weiguo Su. Moving on to the next page, please. As of June, the company maintains a strong balance sheet. We have cash and short-term investments of over $800 million and utilized banking facilities of over $170 million. In addition, we have another $58 million cash in our joint venture with Shanghai fund. Overall, our target is to extend the cash run rate to three years. Moving on to the next page. The strong performance of our commercial teams resulted in group revenue up by 28% to over $200 million, of which our oncology business revenue increased by more than double compared to last year to over $90 million. So we continue to increase our investment in R&D to over $180 million in China as well as in the U.S. and Europe. The popularity of our equity investees increased by 17% to over $33 million. Moving on to the next page please. Our non-core assets continue to do well. As you can all see, they have contributed more than $0.5 billion net income to the group. We continue to explore ways to unlock the value of these assets to provide additional cash resources to support our R&D investment. Moving on to the next page. As you all heard from Hong Chen earlier, due to our strong commercial performance, we will maintain our guidance for the market that is $160 million to $290 million for our oncology and immunology business. I will now pass on to Weiguo.

Weiguo Su, CEO

Okay. Thanks, Johnny. To recap, while the macro environment continues to change, HUTCHMED strives to stay focused on all commercial operations and pipeline progression. We expect that strong momentum in China commercial to continue in the second half. On the pipeline in China, we continue to expand the lifecycle indications behind our three approved products: Fruquintinib, Surufatinib, and savolitinib. At the same time, we are moving on to a second wave of drug candidates, amdizalisib, sovleplenib, and tazemetostat towards registration. Outside China, while surufatinib has been a disappointment, we believe it is a unique case and will not have a significant impact on the rest of the pipeline. We do have a deep pipeline and a robust registration strategy starting from fruquintinib, for which a multinational MRCT will read out surely in August, and NDA filings, if positive, in the U.S., EU, and Japan starting from the end of the year. Amdizalisib and sovleplenib are both generating PLC data, and we will engage with the FDA in the next six to twelve months to discuss and define the registration pathway. Finally, I would like to point out that even though we have a solid cash balance, we are prepared to manage through potentially long-lasting unfavorable equity market conditions. We are reviewing our clinical programs and operations carefully to ensure that we spend cash prudently. We will also look to grow our China business further to generate more income. Lastly, we plan to bolster our efforts in licensing and collaboration activities. Our current environment is challenged, but we are confident that we will be able to leverage our well-experienced management team and emerge from this difficult period even stronger. This is not the first time that we have managed through difficult market conditions. This wraps up our presentation. The management team will be happy to answer any questions.

Operator, Operator

Ladies and gentlemen, we will now start our question and answer session. The first one comes from Kelly Shi from Jeffries. Please go ahead.

Kelly Shi, Analyst

Congrats on the progress and thank you for taking my questions. Regarding the regulatory pathway for fruquintinib in the U.S. based on a global Phase 3 of FRESCO trial, a U.S. Phase 1 trial, and a FRESCO China trial, which should provide a comprehensive clinical information. But again, an experience with the surufatinib, do you see any potential issues regarding the applicability to the U.S. patient population, and also the current U.S. medical practice, and potential data package to support U.S. approval in CRC? And while there's a topic of discussion from the previous U.S. FDA meetings? Thank you. Also, I have a follow-up.

Weiguo Su, CEO

Okay. Thanks, Kelly. Well, obviously, the strategy for fruquintinib registration in the U.S. and elsewhere will be centered on the FRESCO-2 study, which is an MRCT and in a representative patient population. I think in China, the original FRESCO study and all other early-stage clinical studies will serve as support. So we don't expect any issues, and we certainly had previous discussions with the agency before we kicked off the FRESCO-2. So, now we are feeling quite confident that this MRCT covers most issues, completely different from the surufatinib case. Marek, do you want to add anything?

Marek Kania, Managing Director and Chief Medical Officer

Yes, Weiguo. Thank you. I would just add my voice of confidence. As you said well, FRESCO has nothing to do with surufatinib, which was just unique. We have had numerous formal discussions with the U.S. FDA in the FRESCO-2 meetings, and we were very transparent, and the idea was very collaborative in designing this FRESCO-2 study, which is our main pivotal study. FRESCO-2 will be considered in totality of the package as well. So we are very confident if FRESCO-2 is positive, that will be based on three continental regulatory discussions. As we already reported before, we also have scientific advice from the EMA, who provided comments on the FRESCO-2 design. So Europe FRESCO-2 will be the primary pivotal study. At the same time, we have had the same discussion with PMDA. So we remain very confident in our strategy here.

Kelly Shi, Analyst

Great to hear. Thank you very much. I also have a follow-up regarding the PI3 kinase inhibitor. How should we think about the market opportunity in the lymphoma indications in the China market, given CD19 CAR Ts and anti-CD20 bispecific antibodies have entered the market, with a few more entering the market as well? How does this competitive landscape look in China versus in the U.S. for those lymphoma indications? Thanks.

Weiguo Su, CEO

Yes. So obviously, it all comes down to safety and tolerability, if proven, how safe and efficacious. We believe that PI3K Delta should have a very strong competitive edge because it can be used before or after these biologic treatments, and also because it's oral administration. As you know, these are relatively indolent diseases, and patients will have to stay on treatment for a very long time. So safety and tolerability are extremely important. Some of the bispecifics have shown some strong data, but these are all single-arm studies and still need to be confirmed. CAR-T can work for some patients but not for all, and even those patients that benefit ultimately progress or have a recurrence. Overall, we believe the indolent lymphoma patient population will need to rotate to new therapies repeatedly. Therefore, a good, efficacious, and safe tolerable PI3K Delta inhibitor should have its place for these patients. Thanks. Move to the next. Operator?

Operator, Operator

Hello. Paul Choi from Goldman Sachs. Your microphone is open.

Paul Choi, Analyst

Thank you. Good evening, and thank you for taking our questions. Just a couple of quick financial ones to start and then one pipeline question. First, was there any inventory built at the end with regard to some of the newer products that were included on the NRDL? With respect to the guidance being maintained, can you maybe speak to how you view the current macro environment and what would sort of be the pushes and pulls that might drive your full-year results to the lower end versus the higher end? Then I had a pipeline question to follow up.

Johnny Cheng, CFO

Yes, Paul. Regarding the inventory, we believe that at the moment it's at a normal inventory level. If anything, during the lockdowns from April, May, and into June, there was some level of depletion of inventories. Therefore, we think it's at a normal level now. We are quite confident that in the second half, the momentum will continue. With regards to the push and pull, I think we are a bit concerned about COVID-19, wondering whether we could have another outbreak somewhere else, and that can be quite disruptive. So that remains a bit uncertain, as nobody can predict the situation. We have gone through it once, and our team is putting in place multiple measures, including online doctor visits, online conferences, and inventory and distribution management. We believe we are now better positioned to deal with any potential COVID outbreak in China. Nevertheless, it can still be an issue, depending on the scale, obviously. We remain cautiously optimistic that we will be able to deliver within the guidance, and hopefully we can perform better towards the higher end. So the only headwind would have to be the uncertainty of COVID.

Paul Choi, Analyst

Okay. Thank you for that. As a follow-up, my pipeline question is, I know you'll have the FRESCO-2 results imminently here in August. Is there a plan to present the data more in detail at a medical meeting here in the second half of 2022? Or will we have to wait until 2023? Thank you for taking our questions.

Weiguo Su, CEO

Yes. Marek, if you want to take that.

Marek Kania, Managing Director and Chief Medical Officer

Yes, I can take it. So Paul, obviously, our principle is the disclosure of important data, both at the announcement level expeditiously but also, at the full date set as quickly as possible at a major conference. I'm not in a position to confirm which conference, but our aim is always to present at a major conference as soon as possible, pending acceptance and confirmation. We'll have a separate announcement when we have the exact location and timing for that, but it will definitely be this year.

Paul Choi, Analyst

This year. Okay, thank you very much.

Operator, Operator

We have another question from Mike Mitchell from Panmure Gordon. Please go ahead.

Mike Mitchell, Analyst

Thanks. Good afternoon, everyone. Many thanks for taking my questions. I wondered about the current commercial organization; you're continuing to add significantly to the oncology team. I think you mention you have over 800 people now, but the number of oncology physicians covered is starting to flatten off somewhat. So just wondered how optimal the commercial organization now looks just in terms of structure? I have a question on fruquintinib and the global strategy clearly, the FRESCO-2 data is important in terms of paving the way towards the regulatory process outside of China and more widely for the global strategy for the business. If that doesn't play out as we hope, then I think you're looking at the global savolitinib, SAMETA, and SAFFRON global story, which are still a way out in terms of potential NDA. I just wondered if you could recap TAZVERIK global terms in that context, please? Thanks.

Weiguo Su, CEO

Okay. Thanks, Mike. With regard to the commercial organization, in China, we are now around 800 staff. We believe this is the optimal scale for the current portfolio of products. We do not intend to grow further; instead, we'll focus on driving efficiency and productivity from the current staff. Concerning your second question on fruquintinib global registration, we can anticipate various scenarios, but first things first, we need to wait until the FRESCO-2 data reads out. Personally, like you all, I am anxiously waiting for the FRESCO-2 readout. I believe we have accumulated quite a lot of data from this global MRCT that will serve as pivotal. Marek, do you have anything else to add?

Marek Kania, Managing Director and Chief Medical Officer

You said it well. Given the proximity of the outcome, we are indeed thinking about the positive and negative outcomes, given the wealth of data, including one positive study in addition to several other studies. Our cohorts from the U.S. study across different lines of prior therapies have shown consistent results and clinical benefits demonstrated. Although I cannot speculate here, I will emphasize that the FDA is asking for more precise answers. We had discussions and designed studies for FRESCO-2, which is our pivotal study. If it's positive, it will do the job. Obviously, we will use the totality of data for the most convincing package. This is why most clinical investigators and thought leaders in the field strongly support this study. Additionally, this contributes to how quickly the study accrued, achieving almost record time during COVID limitations within 14 to 15 months. I will stop here.

Mike Mitchell, Analyst

Okay, that's fair. The next question was related to SAVO globally. Could you address that?

Weiguo Su, CEO

Well, obviously, if there's a negative outcome, it will be a major setback, right? Similar to surufatinib and the CLL. Obviously, we remain confident that these are valuable drugs that can help patients, but the setback is essentially a timeline pushback. We're talking about three to four years for the first approval. We'll evaluate very carefully, similar to what we are doing for surufatinib, and we'll apply the same scrutiny to fruquintinib as well. Negative outcomes will certainly change NPVs greatly if the timelines continue to be pushed back. This is a critical area we must be cautious about.

Mike Mitchell, Analyst

Understood. That's all I have. Thank you.

Operator, Operator

The next question comes from Yang Huang from Credit Suisse. Please go ahead.

Yang Huang, Analyst

Yes, this is Yang Huang from Credit Suisse. Thanks for giving me the opportunity to ask questions. The first one I have today, I just want to follow up on FRESCO-2. I know some of our peers have asked about this study, but since this trial started in the second half of 2020, we all know that the FDA certainly changed their position regarding the review of drugs from China in 2021. It would be helpful if we can get some more insight about the communication we had with the FDA before starting the FRESCO-2 study. Have you noted any potential changes in the FDA's view after the 2021 events? Thanks. I have a follow-up on finances too.

Weiguo Su, CEO

Yes. We have already discussed this. Obviously, we had end-of-phase 2 or pre-phase 3 discussions with the U.S. FDA and were aligned on study design for FRESCO-2. If positive, we'll have the opportunity for a pre-NDA discussion as well. Regarding the FDA position, I'll let Marek chime in, as he has been more involved in discussions with the FDA.

Marek Kania, Managing Director and Chief Medical Officer

Yes. Thank you, Weiguo. Yes, just to clarify, I sense some confusion here. The overall challenges faced by surufatinib attendees and other sponsors are related to agency concern regarding applications for NDA made with one country's Phase 3 trial. That is their core concern regarding one country, and China is a broader issue. The case for FRESCO-2 is entirely different. Fruquintinib's case is unique. As Weiguo said, we've had pre-NDA and pre-end-of-phase 1 meetings, and we are preparing for a type C meeting very soon, plus the top-line results. So far, the agency has been consistent. An important fact is that we are running a global study, a global study conducted across 14 countries with 150 sites, and the U.S. is participating significantly. It cannot be more than a multinational study rather than a regional one. It is exactly what the agency expects. Other studies supporting this will also play important roles in the submission package. Therefore, I urge caution in overanalyzing these concerns regarding Fruquintinib as they are not applicable moving forward. Thank you.

Yang Huang, Analyst

Thank you. My second question is about finances. We noticed that in the first half, our total revenue grew by approximately 30%. However, cost revenue only grew by 10%, which is much lower than our total revenue growth. Do you think this trend will continue, or what caused this slower growth in the cost of revenue in the first half of this year?

Weiguo Su, CEO

Okay, thanks for the question. I'll ask Johnny to provide the answer.

Johnny Cheng, CFO

Okay. Thank you, Weiguo. I believe it’s related to the product composition. Comparing with the last period, we did not have savolitinib in the first half, which we now recognize for the in-market sales of Savolitinib; we actually recognize 30% of the royalty. This has improved our gross profit margin. Meanwhile, we have invested in our sales force. This is part of what is captured in our cost of sales. The product mix indeed makes a difference to the analysis that you just referred to. But going forward, we hope to continue targeting strong performance in ELUNATE and surufatinib. I believe that the proportion of savolitinib sales will increase over time. I hope that answers your question?

Yang Huang, Analyst

Okay, that's very helpful. Thanks.

Operator, Operator

Next question comes from Louise Chen from Cantor. Please go ahead.

Unidentified Analyst, Analyst

Hi, this is unidentified for Louise, and thank you for taking our questions. Our question is on fruquintinib. The EMA indicates that these studies were representative of patients and medical practice in the EU. Why do you think this wouldn't be potentially complicated in Japan? Just to clarify, while you still pursue a global path forward for fruquintinib in light of the U.S. and EU need for local trials? Thank you.

Johnny Cheng, CFO

Well, I think it's understandable that this argument aligns closely with the situation in regard to the U.S. CLL, which is the representative patient population. I think Japan is quite different. First off, they are Asians, right? Secondly, it's on a different registration path. They requested us to conduct a bridging study, and this study is ongoing. Of course, we will continue to discuss with PMDA in Japan. Clearly, different patient populations are evident between Asia and Caucasians. In Japan, they are Asians as well, but they also follow a different registration path. Anything else to add, Marek?

Marek Kania, Managing Director and Chief Medical Officer

No, I would only add to highlight that we consider fruquintinib as a unique case. Japan will have distinct considerations as well. We cannot recall any instances of two Phase 3 studies originating from China with the intent to submit for NDA in Japan, despite their high unmet medical needs. With regard to the bridging study, Phase 1 will engage upon completion of this study, which we expect in 2023. We'll discuss the path forward in pre-NDA discussions. We will see. As you know, Japan also considers NDA approvals in the U.S. There may be lingering biases in that context. We will build a bridge once we have that data later.

Unidentified Analyst, Analyst

Got it. Thank you.

Operator, Operator

Next question comes from Matthew Yan from CLSA. Please go ahead.

Matthew Yan, Analyst

Hi, management. Thanks for taking my question. Congratulations on the results. I got two questions regarding savolitinib and FRUTIGA. I noticed on your presentation material, you mentioned that you filed the NDA based on SAFFRON in 2025. So does this mean that the SAVANNAH data do not support an NDA filing in the near term? My second question is regarding the SAVANNAH readout; how do you see savolitinib differentiating in terms of clinical profile versus peers that have already been approved, like tepotinib and capmatinib?

Weiguo Su, CEO

Okay, thanks, Matthew. Well, the SAFFRON NDA timeline of 2025 is obviously an estimate, as we just started the process. It will depend on the enrollment speed and the PFS follow-up, which can sometimes be longer than expected. The SAVANNAH timeline should provide more clarity, right? We need to align with the U.S. FDA on the potential for savolitinib from the SAVANNAH study to receive accelerated approval. We think that both HUTCHMED and AstraZeneca believe that SAVANNAH can have an approval timeline of at least 12 to 18 months ahead of SAFFRON in the U.S. Now, your second question regarding differentiation with tepotinib and others: these two compounds have not yet been approved in China, and they have been exposed to a limited number of Chinese patients. Just looking at the profile, they are all potent and selective c MET inhibitors; however, they vary significantly in terms of chemical structures. I’d expect to see differences in pharmacokinetics or in compound-based safety profiles. As they have only limited exposure in Chinese patients, it's hard to precisely determine these differences and compare them directly. I can say we believe we are in a competitive edge given our broader program in non-small cell lung cancer, gastric, and PRCC. Therefore, we feel we hold a unique position in terms of the trials being conducted.

Matthew Yan, Analyst

Okay. That's very clear. Thanks, Dr. Su.

Operator, Operator

We have another question from Alec Stranahan from Bank of America. Please go ahead.

Unidentified Analyst, Analyst

Hey, guys, good morning. Thanks for taking my question. This is John for Alec. I have a two-part question. On the FRESCO-2 trial, through your conversations with the U.S. regulatory agency so far, how do you think they will view the data? Are they going to view it through the lens of the current U.S. market landscape, or another perspective? If they do investigate it from the earlier FRESCO Chinese trial’s perspective, do you think they will factor in that this MRCT has a more complex, harder-to-treat population in terms of international landscape metrics? That's my question. Thank you.

Weiguo Su, CEO

Yes, that's a really good question. Yes, let me give a brief overview and Marek can contribute as well. The FRESCO and FRESCO-2 studies are obviously very different, different patient populations, different prior therapies. Both have merits and can support one another. That's my initial read on this. The FRESCO and other Chinese studies will provide a basis to support FRESCO-2 in terms of efficacy in different patient populations, in different settings, or subsets with or without prior VGF or VGFR treatment, Chinese versus Caucasians, etc. I believe both studies will complement each other. Marek, do you wish to add anything?

Marek Kania, Managing Director and Chief Medical Officer

John, this is a good question. However, one statement I want to make is that study comparisons are risky and not definitive, though I know everyone is doing that. The FRESCO-2 study is designed to address uniquely independent questions, built into the trial. It is highly powered, with a 90% power to detect primary endpoints. Should FRESCO-2 return positive results, it could stand alone with or without FRESCO. However, we will always examine the totality of the data. Hence, we haven't seen any significant discrepancies in therapy prior lines. We've conducted several heavily treated cohorts in our U.S. studies, one cohort mirroring FRESCO, and another mirroring FRESCO-2's populations for more heavily treated patients. The clinical benefits shown are consistent. While I don’t want to speculate, the FDA is looking for specific answers. We had those discussions and designed studies for FRESCO-2, as it's our pivotal study. If it's positive, it should be sufficient. Naturally, we'll use the totality of data for the most compelling package. This is why clinical investigators and thought leaders strongly support this research, contributing to the rapid recruitment of this study despite COVID limitations. I will stop here.

Unidentified Analyst, Analyst

Okay. Thank you for the insight.

Operator, Operator

This concludes today's session. Thank you for participating.