Earnings Call Transcript - HCM Q2 2023

Operator, Operator

Good day, and thank you for standing by. Welcome to HUTCHMED 2023 Half Year Financial Results Presentation. Please be advised that today's conference is being recorded.

Mark Lee, Senior Vice President, Corporate Finance and Development

Thank you, everyone, and welcome. At this time, I will remind you that the statements we have are forward-looking in nature, and the results and operations of the HUTCHMED Group are historical in past performance. There's no guarantee of future results, and this presentation is intended for investors only and should be read in conjunction with the announcement we just made regarding the results for the 6 months ended June 30, 2023, and our various other filings in annual reports. Now I'll hand you over to Dr. Wei-Guo Su, our Chief Executive Officer and Chief Science Officer.

Wei-Guo Su, CEO and Chief Science Officer

Thank you, Mark. Good evening, good morning, everyone. Welcome to HUTCHMED First Half 2023 Results Conference Call. During the first half of 2023, we focused on executing our strategy for long-term growth and also reaching our profitability by 2025 goal, including China commercial growth and spending control. We also delivered on our key objectives with our pipeline, highlighted by fruquintinib U.S. NDA and EU MAA submissions, and the advancement of multiple programs into pivotal registration studies, including savolitinib for second-line gastric cancer and HMPL-453, our selective FGFR1, 2, and 3 inhibitor in second-line cholangiocarcinoma. Fruquintinib U.S. NDA was granted priority review designation with a PDUFA date of November 30, 2023. That means the potential approval before the end of 2023. We are working closely with our partner, Takeda, to prepare for the U.S. launch. China commercial for the three approved oncology products continued to grow in spite of the pandemic outbreak at the beginning of the year. Today, I’m joined by the HUTCHMED senior management team. Johnny Cheng will lead off with a financial update. Johnny, over to you.

Johnny Cheng, Chief Financial Officer

Thank you, Dr. Su. A quick review of our balance sheet. We have a strong cash position of over $850 million, mainly contributed by the $400 million upfront payment from Takeda. We have completed the construction of our Shanghai Factory, utilizing the banking facilities supported by the local authorities. This results in a loan balance of about $14 million at a favorable interest rate of around 3.5%, which is much lower than our deposit rate from the cash that we have on hand. Moving on to review our financial performance, our consolidated revenue is up by 164% from around $200 million to over $530 million, mainly contributed by the recognition of the upfront income from Takeda, around $260 million. Our oncology product sales maintained strong growth of 35% at constant exchange rates. The improvement in our other venture business has also contributed to overall revenue growth. On the bottom line, net income to HUTCHMED has improved significantly from a net loss of $163 million to a net profit of over $168 million. This has resulted from the recognition of upfront income for the Takeda deal, reduction of R&D expenditure resulting from portfolio prioritization and restructuring of our U.S. operation, as well as higher interest income from our strong cash balance. Moving on, our oncology product sales have maintained a high growth of 35% to $80 million. Overall, our oncology business achieved around $360 million of revenue, 3 times higher than last year. We are on track to meet our guidance set at the beginning of the year, which is around $450 million to $550 million revenue for the full year. I will now pass to our Chief Commercial Officer, Chen Hong, to share the details of our commercial business performance.

Hong Chen, Chief Commercial Officer

Thank you, Johnny. Good morning, good evening, everyone. I'm happy to update you on HUTCHMED's commercial performance in the first half of 2023. As a global science-focused pharma company, HUTCHMED has a fully integrated R&D and commercialization platform. HUTCHMED has built up its oncology commercial platform since 2018 and continuously improved its commercial capabilities and efficiencies. By the end of June 2023, the sales team size was close to 1,000, covering more than 3,000 hospitals and over 33,000 oncology specialists. Meanwhile, the government continued to introduce policies to encourage innovative drug development and improve new drug access to patients. ELUNATE was approved for the treatment of third-line mCRC in 2018. Although 2023 is the fourth year for ELUNATE to be listed in NRDL, it's still keeping strong growth in the first half of this year. We estimate around 17,000 new patients were treated with ELUNATE in China in the first half, which is a 21% growth. According to IQVIA tracking study report, ELUNATE surpassed regorafenib in terms of patient share since the end of 2021, leading to about 47% patient share at the end of June 2023, resulting in USD 56.3 million in market sales, up 12%, which is about 20% at constant exchange rate growth compared to the first half of last year. SULANDA was launched in China in 2021 for the treatment of all advanced NET patients. The in-market sales growth in 2022 was very strong, being the first year in NRDL. As a result of our continuous marketing activities and increasing patient access to SULANDA, the total in-market sales in the first half of 2023 accelerated growing by 66% to around USD 22.6 million, with an estimated 12,000 new patients treated. According to IQVIA tracking study report, in the first quarter, SULANDA had higher patient share than Sutent and Afinitor, which were approved in China much earlier than SULANDA. ORPATHYS is the first-in-class selective MET inhibitor approved in China and marketed by our partner AstraZeneca in 2021. Following negotiations with China FDA in January this year, ORPATHYS has been included in the updated NRDL since March 1 with a 38% discount. The delayed implementation of NRDL plus the price reduction led to flat sales in the first half of this year, with about a 5% decline in U.S. dollars and 2% growth at constant exchange rate. However, we noted the volume sales grew strongly in Q2, up to 84% compared to the second quarter of last year. To summarize, our 3 marketed products are now included in NRDL, which aligns with our commitment to improving patient access. Despite some initial challenges in the first quarter due to the impact of COVID-19, in-market sales of HUTCHMED's 3 novel products continue to grow at 16% to USD 101 million in the first half of this year. That's all for my part. Thank you.

Wei-Guo Su, CEO and Chief Science Officer

Zhenping will cover the manufacturing update. Zhenping?

Mark Lee, Senior Vice President, Corporate Finance and Development

Wei-Guo, perhaps you should go ahead. I think he’s having some technology problems.

Wei-Guo Su, CEO and Chief Science Officer

All right. So yes, I will cover for Zhenping. We’ve been building our new factory in Shanghai. Currently, construction is complete, and we are going through equipment and validation. We've also applied for a compliance license, and we should be able to initiate clinical supply manufacturing later this year. At the same time, we will initiate tech transfer of our commercialized products for this new factory to start commercial manufacturing as well in the future. We also are installing solar panels to become more energy efficient.

Ming Shi, Pipeline Lead

Thank you, Wei-Guo. Our clinical programs continue to grow and mature, covering a broad range of hematology-oncology products. This slide lays out 15-plus ongoing registration trials for 7 leading products globally, including lifecycle indications of marketed products and late-stage assets with anticipated NDA filing in the next few years. Fruquintinib, savolitinib, and Surufatinib are already on the market in China, and we are leading the development of multiple lifecycle indications for these products in China. Our next wave late-stage compounds in registration trials include two compounds that received breakthrough therapy designation in China, Sovleplenib in immune thrombocytopenia and amdizalisib, our PI3K delta inhibitor in third-line follicular lymphoma. The EZH2 inhibitor tazemetostat is our first in-licensed product from Ipsen, and we are doing a bridging study and registration in China. New to the list is HMPL-453, our FGFR inhibitor, which has entered the registration trial in intrahepatic cholangiocarcinoma, leading our third wave product into the registration trial. Fruquintinib's global regulatory filing is progressing well, supported by the results from Fresco-2, which was published in The Lancet, as well as the data from Fresco, the China registration trial. The NDA for fruquintinib has been granted priority review by the U.S. FDA, with a PDUFA date of November 30, and MAA validation has started by EMA in June. We worked with our partner, Takeda, to initiate the Japan filing later this year. The fruquintinib partnership with Takeda is progressing well. Johnny mentioned we received an upfront payment of $400 million, and the joint team has been established for collaboration. Our NDA filing, MAA, and Japan and India filings are on target. On the commercial front, Takeda is initiating launch readiness in advance of the PDUFA date. The regulatory and lifecycle indication parts are being discussed between HUTCHMED and Takeda's teams, along with external advisors to shape the lifecycle management strategy. HUTCHMED's ongoing clinical program in China may help inform our clinical development decisions. The fruquintinib NDA for second-line gastric cancer has been accepted in China, based on the FRUTIGA Phase II second-line gastric cancer trial, which met one of its dual primary endpoints for progression-free survival. The other primary endpoint of overall survival was not satisfactorily significant according to the predefined plan. We completed our supplemental NDA filing, and the NDA has been accepted by MMPA in April. We hope to expand the patient population for gastric cancer with this high unmet need. On the fruquintinib lifecycle indication development, we are pleased to receive breakthrough therapy designation in China for its combination with sintilimab, the PD-1 from Innovent, in July for the treatment of advanced endometrial cancer with proficient mismatch repair subtype. Endometrial cancer incidence and mortality are projected to increase in China, and the patients progressing on first-line therapy have a high unmet medical need. We've completed our single-arm registration Phase II study, and if the results are favorable, it could lead to regulatory approval in this treatment setting. Sovleplenib is a highly differentiated oral Syk inhibitor with breakthrough therapy designation in ITP in China. Our Phase I/II results have demonstrated a robust overall response rate of 80% and a durable response rate of 40% in relapsed or primary patients. These high response rates are on par with the widely used second-line treatments for ITP such as TPO-RA. The same response rate has been shown in patients previously treated with TPO or not and is much higher than that of the existing Syk inhibitor Tavalisse in this setting. We believe Sovleplenib has best-in-class potential in the ITP setting. The Phase I study results were published in The Lancet Hematology in April this year, and we have completed enrollment of the ITP Phase III registration trial ESLIM-01 and expect topline results soon. If positive, we are prepared for NDA filing in China later this year. Amdizalisib, our differentiated PI3K delta inhibitor, is currently undergoing two single-arm Phase II registration studies in China for third-line follicular lymphoma and second-line marginal zone lymphoma. Updated Phase I data were presented at the International Congress on Malignant Lymphoma in June this year, demonstrating a promising efficacy profile with higher response rates, four-month PFS rates, and duration of response rates in lymphoma and marginal zone lymphoma, along with a favorable safety profile compared to the same class of compounds. The low incidence of adverse events of interest and a low discontinuation rate during treatment are also noteworthy. While this needs to be confirmed in a larger patient population, we have completed enrollment for this pivotal trial in follicular lymphoma earlier this year, with clinical readout and potential NDA filing later this year. There are seven registration trials for our MET inhibitor savolitinib, with all currently enrolling. Three are led by our partner AstraZeneca globally, and four are led by HUTCHMED in China across multiple cancers with MET alterations, including non-small cell lung cancer and papillary renal cell carcinoma. Additionally, we have entered the registration phase in gastric cancer with MET amplification with trial results presented earlier at ASCO this year. Our innovative early-stage pipeline continues to grow, highlighted by HMPL-453, which has entered registration trial in cholangiocarcinoma following discussions and agreement with the CDE. The clinical proof-of-concept study was presented at ASCO this year, and the clinical POC data for HMPL-306, our IDH1 and 2 dual inhibitor, was also presented at EHA this year. The randomized Phase II dose has been determined, and we will consult with the CD on the registration path forward. We also initiated a combination trial of tazemetostat and the PI3K delta inhibitor amdizalisib in molecular hematology indications. The newest addition to our early-stage pipeline includes a differentiated SHP2 inhibitor, HMPL-415. I'm proud our R&D team remained focused and executed very well in the first half of the year. On regulatory activity, we submitted regulatory filings for fruquintinib and are on target with our partner. The Japan third-line CRC filing is also in preparation. Recently, we submitted a supplemental NDA for the gastric cancer indication for fruquintinib, and our NDA application has already been accepted. We've received breakthrough designation for fruquintinib plus sintilimab in second-line endometrial cancer discovery. Following dialogue with the PMDA regarding surufatinib, we have decided to file a Japanese NDA for neuroendocrine tumor based on the available clinical trial data. We anticipate data readouts and potential NDA filings in China for Sovleplenib for second-line ITP, amdizalisib for third-line follicular lymphoma, and savolitinib for first-line non-small cell lung cancer patients with MET Exon 14 mutation. The first-line data will be presented in September at WCLC, along with endometrial cancer readout. On the development side, HUTCHMED and our partner, AZ, will continue to complete the enrollment of multiple registration trials for savolitinib in non-small cell indications. We will also complete enrollment for fruquintinib plus sintilimab in renal cell carcinoma. The heme products will complete enrollment for Amdizalisib in second-line marginal zone lymphoma and tazemetostat bridging study for third-line follicular lymphoma. We are presenting clinical readouts for savolitinib in second-line gastric cancer in meta-amplified patients at AZR and initiating the registration trial for Savo in meta-amplified gastric cancer. We've also completed enrollment of the Phase II part of the Sovleplenib study for second-line warm autoimmune hemolytic anemia and will decide on the Phase III trial after data readout. To recap our R&D progress, HUTCHMED has a deep and broad portfolio and multiple near-term development catalysts in 2023 and '24. Our R&D team will remain sharply focused on the execution of our late-stage product development.

Wei-Guo Su, CEO and Chief Science Officer

Thank you, Mike. Just a reminder of our near-term goal of turning profitable by 2025. We are focused on growing our China commercial business while managing and controlling spending. Together, we hope to achieve our goal of breakeven or profitability by 2025. We had a very strong first half of 2023. We will continue to focus on our near-term goal and are confident that we will deliver on these goals due to our broad pipeline. We are working on extensive and robust lifecycle indications for our first-wave compounds, namely fruquintinib, savolitinib, and Surufatinib, both in China and outside China. Additionally, we aim to obtain approval in China for our second-wave compounds, including Sovleplenib, amdizalisib, and Tazemetostat in the next 6 to 12 months. By 2025, we expect to have at least 6 compounds approved and launched in China, with our third-wave compounds entering pivotal registration studies in the next 6 to 9 months, led by HMPL-453, our selective FGFR 1, 2, and 3 inhibitor. All these efforts will present opportunities for NDA submissions from 2025 through 2027, positioning us for long-term growth. Overall, we're pleased with HUTCHMED's strong first half of 2023 and are excited about our long-term prospects given our extensive pipeline. This concludes the presentation, and we're happy to take any questions.

Operator, Operator

Our first question comes from the line of Kelly Shi from Jefferies. We are not getting a response from Kelly. I'll move on to the next question. Our next question comes from the line of Alec Stranahan from Bank of America.

Alec Stranahan, Analyst

Can you hear me?

Wei-Guo Su, CEO and Chief Science Officer

Yes.

Alec Stranahan, Analyst

Great. So two from us. First, could you help frame the scope of the topline for Sovleplenib and amdizalisib in the second half in terms of number of patients and follow-up on the primary endpoints from those studies? And then I've got a follow-up.

Wei-Guo Su, CEO and Chief Science Officer

Yes. So Sovleplenib in ITP, it is a Phase III randomized placebo-controlled study. We expect topline readout in the second half of this year, actually fairly soon. We will obviously announce that in due course. As for patient sample size, it includes a total of 180-plus patients randomized in a 2:1 fashion between Sovleplenib and placebo arms. The durable overall response rate will be the primary endpoint. Regarding Amdizalisib, there are two pivotal studies ongoing, both single-arm studies with overall response rate as the primary endpoint. We have completed enrollment for third-line follicular lymphoma, which includes around 100 patients, with the readout expected toward the end of this year.

Alec Stranahan, Analyst

Okay. And would the plan be to present those around a scientific meeting? Or whenever the data is available, you'll update the market?

Wei-Guo Su, CEO and Chief Science Officer

Yes, of course.

Alec Stranahan, Analyst

And one last question, if I may, just on the commercial readiness activities for fruquintinib. Could you help us paint a picture of what Takeda is doing currently to prepare for the launch in the U.S.? And from your side, on manufacturing, could you help us understand whether that would be in China or if you would shift manufacturing to other sites to help support the launch?

Wei-Guo Su, CEO and Chief Science Officer

Thanks, Alec. Yes, we've been collaborating with Takeda to help them prepare for their launch. They are leading these efforts. I’ll ask Karen to share more about Takeda's preparations. Regarding manufacturing, we have qualified two sites for drug product supply: our HUTCHMED factory in Suzhou, China, and another in Switzerland. We are currently undergoing pre-approval inspections, so the Suzhou plant will be the first supplier, while both locations will serve global markets.

Karen Atkin, Commercial Lead

Yes, we're working closely with Takeda. They plan to assume a positive outcome of the FDA review and be ready to go as soon as we have that positive outcome. They've already hired the medical team and the marketing team and are doing detailed planning from sales and the commercial perspective as well. Thus, they are taking this very seriously as it is an important product for them, and I'm confident they will be prepared to launch as soon as we know the FDA outcome. Back to you, Wei-Guo.

Wei-Guo Su, CEO and Chief Science Officer

Thank you, Karen.

Operator, Operator

Our next question comes from the line of Mike Mitchell from Panmure Gordon.

Michael Mitchell, Analyst

First, I was wondering how the relationship with Takeda might potentially capitalize other aspects of business development. The focus is currently on fruquintinib, but there is a wide and deep pipeline within HUTCHMED. Does that provide a basis for more expansive discussions with Takeda, or do you envisage the deal generating further interest in the pipeline from third parties?

Wei-Guo Su, CEO and Chief Science Officer

Takeda is a strong potential partner, and we are currently working with them on fruquintinib. They are a great partner to work with, and we are constantly discussing other potential collaboration opportunities. However, these discussions are project-based, focusing on pipeline fit or synergy. For the moment, we are very happy working with them on fruquintinib and will certainly explore other opportunities as our compounds progress through clinical development.

Michael Mitchell, Analyst

Got it. If I could just follow up with another question regarding third-party relationships with AstraZeneca. Earlier in the year, we saw speculation on how AZ might evolve its China operations in the future. I'm wondering how you think about that in terms of any changes in their structure, such as spin-offs or restructurings of AZ China operations, and whether that might affect your relationship, particularly in the development of Savolitinib?

Wei-Guo Su, CEO and Chief Science Officer

Changes are constant for every company. However, for AstraZeneca China, we believe this is just a rumor. At the moment, there is nothing changing in our relationship with AstraZeneca. All operations are proceeding according to our original contract.

Michael Mitchell, Analyst

Fantastic. One more quick question about COVID. Regarding the commentary around the impact on Q1, have you seen anything further in Q2 or with the current quarter regarding COVID? I’ve taken my focus away from COVID impacts over recent months, which would be helpful.

Wei-Guo Su, CEO and Chief Science Officer

Generally speaking, COVID impact was limited to the early part of the first quarter, particularly in January. It was a bit soft in the first quarter, but in the second quarter, things returned to normal. We are seeing trends of activity picking up, so we don't expect any major issues from the second quarter onwards.

Operator, Operator

Our next question comes from the line of Louise Chen from Cantor Fitzgerald.

Unknown Analyst, Analyst

This is Wayne on for Louise. Congrats on the progress. We have two questions. The first question is regarding Sovleplenib. In the press release, you mentioned you might proceed to Phase I in ITP in the U.S. depending on the outcome of the China Phase III data. What do you need to see to move into the U.S. study? And how is it differentiated from other mechanisms of action, such as FCRN?

Wei-Guo Su, CEO and Chief Science Officer

For the U.S. strategy regarding Sovleplenib for autoimmune diseases, the ITP results in China could be a significant catalyst if the Phase III topline results align with our Phase I/II data. This would represent a strong opportunity for the global market and likely expedite the process for initiating our U.S. Phase I for autoimmune disease. We already have an active IND in the U.S. but need to confirm the recommended Phase II dose for the U.S. and global patient population quickly. Sovleplenib is a highly differentiated oral Syk inhibitor. The data we've presented or published shows superior efficacy and much improved safety compared to fostamatinib, which is the only approved Syk inhibitor. Thus, we believe there’s a clear opportunity for Sovleplenib in the autoimmune disease space. We'll ensure investments for follow-up studies in China, and if the ITP proves positive in Phase III, we will add lifecycle indications for Sovleplenib. The U.S. will catch up once the dose is confirmed. Regarding hematology, we are evaluating this space. The landscape has significantly changed, now with bispecifics and CAR-T therapies. We continue to evaluate potential opportunities for Syk inhibitors, but it is now more competitive than it was just 2 or 3 years ago.

Operator, Operator

Our next question will come from the line of Paul Choi from Goldman Sachs.

Kyuwon Choi, Analyst

My first question is about savolitinib regarding the SAVANNAH trial. Can you remind us if there will be an interim update for that study and when that might happen? Or will you run that study just to completion before a potential filing for accelerated approval?

Wei-Guo Su, CEO and Chief Science Officer

We don't have an interim analysis built into the current Phase II registration study, the SAVANNAH study. It will be just a straight enrollment until completion, and then we'll report out.

Kyuwon Choi, Analyst

Got it. My second question is a follow-up on the earlier question regarding Takeda's collaboration and commercialization in the U.S. Could you remind us if your 2023 oncology guidance includes any sales post-approval here in the U.S., or should we assume that the first sales will likely come in 2024?

Wei-Guo Su, CEO and Chief Science Officer

No royalties are built into our guidance for 2023 regarding fruquintinib U.S. sales. The priority review status and PDUFA date before the end of the year have been factored, but we did not include this in our overall guidance.

Kyuwon Choi, Analyst

And my last one is on collaboration and lifecycle development with Takeda for fruquintinib. When do you think you might be in a position to discuss the development path for markets outside of China with your partner? And how will cost-sharing be structured for future clinical development?

Wei-Guo Su, CEO and Chief Science Officer

Regarding cost-sharing, it will be covered 100% by Takeda. On specific indications to pursue, we've been discussing with the Takeda team about some that we find interesting as well, and we're evaluating these opportunities. The two teams are actively working together to assess different options and finalize the plans.

Ming Shi, Pipeline Lead

We have been in active discussions with the Takeda team. From a medical perspective, we are focusing on several indications that consistently show opportunities, and we are receiving input from HUTCHMED studies and IT results. Both teams are engaged, and we are consulting external KOLs to shape some indications for future development.

Operator, Operator

Our next question will come from the line of Matthew Yan from CLSA.

Yonglin Yan, Analyst

Congratulations on the results. I have three questions. First is regarding the positive SAFFRON study. I know that it is expected to complete recruitment by the end of this year. Do you have any plans for any readouts for this trial and also the follow-up NDA filing supported by SAFFRON? My second question is on your other ventures, which grew strongly in the first half. Can you share more color on this? And my third question concerns investors regarding the central commission for discipline inspection in China and discussions on the anti-corruption campaign in the healthcare industry in China. Has this impacted your commercialization activities?

Wei-Guo Su, CEO and Chief Science Officer

Regarding the ongoing trials, we don't anticipate any interim report for the results of any trials. We won't report or publish anything until the progression-free survival is mature. As for anticorruption, HUTCHMED maintains compliance with global standards, so we don't expect to see major impacts on our commercial operations.

Johnny Cheng, Chief Financial Officer

The key contributor to the other ventures' growth in the first half related to our logistics distribution business. Our commercial team has continued to receive good interactions with new customers, so we've been able to perform this logistics distribution work effectively, especially in the Shanghai region. This has significantly contributed to the growth, although it's relatively low-margin. The key importance remains on our oncology product sales growth reporting a 35% increase in the first half.

Operator, Operator

Our next question comes from the line of Jack Lin from Morgan Stanley.

Unknown Analyst, Analyst

I have three quick questions. One or two are kind of follow-ups to previous questions. First is back to Sovleplenib regarding the Phase III readout. How should investors and analysts frame the topline results compared to results from earlier phases, considering the different patient enrollment criteria for treatment lines? The second question is about the commercial strategy for Sovleplenib and also Amdizalisib, considering their different launching indications. Will you establish new teams or use existing ones, or seek partnerships for commercialization? Lastly, could you clarify the commercial dynamics for SULANDA domestically? I see you treated 12,000 new patients in the first half of the year, which is a significant increase compared to last year. However, it appears most market share gains went to others compared to the previous slides. What are the competitive dynamics in this space, and what challenges might inhibit continuing to grow shares in this market?

Wei-Guo Su, CEO and Chief Science Officer

Regarding the Sovleplenib Phase III readout, you're aware that we've demonstrated an 80% overall response rate and a 40% durable response rate. These are strong results but based on a small sample size. The key factors that will make Sovleplenib stand out include its oral convenience, rapid onset of activity, and the strong response rates among heavily pretreated patients. The Phase III study is a randomized placebo-controlled trial. If the data replicates what we've shown, this would position Sovleplenib strongly against competitors in its class and potentially any treatments available for ITP. We should also consider the safety profile, as we have not seen cases of thrombosis to date, a common side effect among TPO or TPO-RA therapies, which represents significant severe potential side effects. A favorable safety profile combined with strong efficacy could differentiate Sovleplenib significantly in the ITP category. On the commercial strategy for Sovleplenib and Amdizalisib, while the indication differs, these treatments target hematological diseases. Even though ITP isn't classified as a hematologic malignancy, many physicians treating these patients are hematology specialists, so dedicated teams will be formed for ITP, but many doctors will be within the hematology sphere. As for SULANDA, we are growing the number of patients. The neuroendocrine tumors are a very fragmented area of disease. While patients experience stable disease or some regression, many rotate between treatments, making it complex to track market shares. The majority of treated patients are from neuroendocrine tumor backgrounds, but it’s important to understand that this market involves many underlying factors and shared treatments that impact how we view market dynamics.

Operator, Operator

We will now take our final question from Clara Dong of Jefferies.

Unknown Analyst, Analyst

This is Clara on for Kelly. Congrats on the progress. I have a question about fruquintinib. At ASCO, we showed subgroup analysis of fruquintinib, including overall survival in patients across different lines. Could you talk about the timeline and development plan to support earlier line approval and whether you plan to run additional studies?

Wei-Guo Su, CEO and Chief Science Officer

Mike will comment on this.

Ming Shi, Pipeline Lead

We've been actively discussing with Takeda on the lifecycle management plan. Exploring earlier lines of approval is certainly under consideration as we evaluate the data we have. We have some promising data from China indicating that earlier line fruquintinib, combined with chemo-immunotherapy, demonstrates clinical activity. Therefore, we're considering moving into earlier lines of therapy, but this will be a topic of ongoing discussions with Takeda.

Operator, Operator

Thank you all for your questions. I'll turn the conference back to our speakers for any closing remarks.

Mark Lee, Senior Vice President, Corporate Finance and Development

Thank you, everyone, for joining. Wei-Guo, do you have any comments?

Wei-Guo Su, CEO and Chief Science Officer

No, not for me.

Mark Lee, Senior Vice President, Corporate Finance and Development

Okay. Thank you, everybody, for joining. Should you have any questions, please feel free to reach out. We're happy to answer any queries or organize a meeting if anything remains unclear from today's discussions. Thank you.

Operator, Operator

Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.