Welcome everybody to the 2016 Hutchison China Meditech Full Year Result Presentation. We've got quite a extensive presentation here, I'm going to try and cover it in about 35 minutes and then open it up or Q&A after that. This presentation is very, very detailed. The reason for that is we are now entering into a point with many of our drug candidates that we have to start looking at the competitive environment, what competitors are out there, what's in the clinic, what do we feel are points of differentiation. So, we're going to all the detail, I will not cover with that depth in this presentation, it would take too long. But it will layout all the details so that analysts can look at that in due course and come to your own conclusions. Overall, we’ve had a great year in 2016 on a high level. We continued against our strategy, the two pronged strategy, of cash generative China business that is generating significant resource to help fund our increasing investment on the innovation side. So the China business, China Pharmaceutical Business, in 2016 had a fantastic year. I'll take you through the numbers later. But net profit after tax was over $70 million. Now, we had a big one-time gain in there from the land-up in Shanghai, a $40 million gain. But core underlying profit growth on our China business was up 19% last year, apples-to-apples, excluding the one-time gain from the property. So, the business doing very well in China, and represents a big platform for us upon which to launch our oncology drugs one they do get growth in China. On the innovation platform, we've now got eight clinical drug candidates in 30 clinical studies around the world. We just published -- we've just announced that…

It’s Max Herrmann from Stifel, just a quick question on your Lily program. And what in terms of then taking up the option, what are the -- it look like fairly obvious option take up. But I wonder you’re your thoughts are around…

I think that I can't speak for Lily. But fruquintinib is clearly a tremendous drug candidate with global potential. I'd say the only reason that Lily might not exercise their options, there is probably two reasons. Number one is that they have a potential conflict with Ramcirumab, which is the VEGFR monoclonal antibody. So they're going to have to get comfortable with how does Fruquintinib and Ramricumab, how do those two drugs fit together in a portfolio. And it's not that simple. There is a lot of overlap from those two therapies, Ramcirumab and Fruquintinib. So that they probably need some time to think through. The second reason they may not exercise it is because they have a second widow, option exercise window that comes 12 months from now. It will cost them more. But they will also have the Phase III non-small cell lung cancer data in hand before they have to make that decision. So, they have a two months window that starts from March 18th through to, I believe the middle of May. Based on the colorectal data they can decide whether they want to execute it during that time or they can wait for 12 months later, pay a little bit more, 50% more. But exercise it based on having the CRC data and the lung cancer data in hand. So, it's difficult for me to tell. But either way, we are progressing at full speed outside of China. We've got the IND approved in the U.S., and intend to go into bridging study in Caucasian patients in the U.S. in the next few months starting.

[45.52] Christian [indiscernible] from Stifel. Just on an update on Savolitimab, you talked previously around breakthrough therapy option there. But obviously you plan to kick off the Phase III this year anyway. But what's the update on the breakthrough and what are some of the issues around that in terms of the diagnostic around it?

So on papillary renal cell carcinoma, we have to address really one additional question before we can really consider breakthrough therapy designation in papillary renal cell carcinoma. And that question, and it's a valid question from the FDA is, well it's clear that in c-Met driven patients, Savolitinib does really well. Is that because of the drug or is that because c-Met is a positive prognostic for patients with papillary renal cell carcinoma? It's a fair question to ask. Now c-Met has been proven to be a negative prognostic in pretty much every solid tumor type that has been studied in. But nobody has ever looked at it in papillary renal cell carcinoma. So, what we have to do, and we're working on it. There is activity underway that will hopefully resolve this matter by the end of the year to be able to show that actually in papillary renal cell carcinoma if you are MET-driven you will progress faster, you will reach your overall survival endpoint faster. And so, I would say once we have the answer to that question, breakthrough therapy designation in MET-driven papillary renal cell carcinoma, becomes if the answer is affirmative, becomes something that we would be going after pretty aggressively. On second line non-small cell lung cancer, combination with Tagrisso, I think breakthrough therapy designation is ultimately be driven by the Phase IIb data and the strength of that data. But it's certainly an area where it's very fertile breakthrough therapy designation area.

And then just on fruquintinib. Just interested in the combo paclitaxel thing, in terms of the benefit in terms of the exposure to paclitaxel, what's going on there? And is it that something unique in that particular combination of setting or is it something you see across when you do combinations with other…

We haven't -- we don’t have the answer to that yet. All we know is that when you combine fruquintinib and paclitaxel together, average drug exposures of paclitaxel increased significantly. I mean that is, it's a good thing. Well, it’s a good thing so long as there's no ensuing toxicity, because paclitaxel is pretty toxic agent. But this is something that's just come from our Phase Ib study that we've just published. We're now looking into it in more detail to try and understand exactly why that is -- and we don’t have the answer to that yet.

Hi, Susie Jana from Edison. You mentioned fruquintinib is possibly the most innovative oncology drug to come into China for a long time. Can you talk us through the NDA submission process? Is that going to be a bit easier because of the innovation, or possibly a little bit harder?

So the whole process of submitting the NDA in China on fruquintibib is something that's being planned for some time now. We've been interacting really closely with the FDA in China, in Shanghai. Shanghai is the first poll of call, so it’s the Shanghai FDA that we submit the NDA to. Then they review it, and they send it up to Beijing for final approvals. And so, we've been cooperating very closely with the Shanghai FDA for best part of 12 months in readiness for this positive outcome. The entire NDA -- and also been working very closely with Eli Lilly, because they have a pretty big stake in the success and the expedited submission of the NDA and approval et cetera. So everything is ready, basically; the manufacturing; the CMC side of the NDA; all the pre-clinical sides of the NDA, everything is ready. It's now a matter of taking the clinical study report and putting it into the NDA and submitting it. Now, that is not a trivial matter, clinical study reports, when you've been running a study in 28 centers around China, each of those centers needs to validate, and chop they call it in China, put the hospital's chop on the report and then you bring them all together and put them in. So we expect to go through that process, it's going to take us probably two or three months. We've been working hard on prepping for that. And so there's nobody sitting around waiting. We're being proactive. But it's a very, very highly high quality study that's being conducted, using quintiles, global CRO, to run this study in China. And we don't believe that the FRESCO study will have loose ends that will lead to slowness in submission of the NDA. So, its number one priority for us as a Company, all hands are on deck, moving this program forward towards the NDA and probably July-August, I expect.

Hi, Daniel Wilkinson at Edison. Just also on your preclinical immuno-effect platform. Are they known mechanism of action, or you're going for now the novel targets, and which way you're doing it as kind of disease focused or more kind of pathway focus on this?

So, both is the answer to that. We have four or five targets we’re going after in preclinical in oncology, mostly small molecule. But not all only small molecules we’re looking beyond. And I think it's pretty obvious, there are clear IO target that would do well in combination with our wave 1 and wave 2 innovations. So, we need to take those boxes, but we are also looking at some quite innovative stuffs and novel targets that should -- more of the high risk, high return type opportunities.

Hi, Martin Hall from Hardman. Christian, you mentioned some competing products, I'm just thinking about the commercial prospects here. In the competing products that are approved for your first two products, is there much evidence that they’ve being used in earlier stages in the tertiary level that they are actually approved for?

So, the best example of a competitive product that’s in the market, it's very detailed exponential that you couldn’t can see it from how far back you are. But is Apatinib, the drug from Hengrui. It’s a VEGFR inhibitor. So, it’s a same kind of mechanism as fruiquintinib. Iits first generation, so it hits a bunch of other things. So that toxicities, they’ve got to be careful on the toxicities. But it's approved in third line gastric cancer. Now, the reason it's done so well so quickly is because it's not just being prescribed in third line gastric cancer, it's being prescribed heavily off-label; so, in third line colorectal cancer, third line non small cell lung cancer, where VEGFR inhibitors can provide clinical benefit to patients. And today, because it’s the only approved VEGFR inhibitor of its type in China at that sort of price level, they’re pushing it everywhere. And that’s why it’s $140 million in its second and third year. In gastric cancer, the view is about half of the sales is in its approved indication, maybe $60 million $70 million is in gastric. So, now your question is about what about coming forward into the bigger patient populations. The problem, at least our view of the problem with Apatinib, is there are certain limitations as to its combined ability. It inhibits a family of proteins called steep, so drug, drug interaction is a bit of initiative of Apatinib, at least in our preclinical analysis of it. So, it's going to be very difficult for it. It certainly wouldn’t be used off label earlier. And they're going to have to put it into earlier clinical trials, and show a benefit to patients for physicians to broadly prescribe it in earlier line treatments. You don’t get that off label, you won’t get off label usage in combination with paclitaxel in second line colorectal cancer it's too risky. So, you get broad off-label usage in the third line, but very limited use outside of that. So for us the way we see it now on for fruquintinib, which is a very clean drug. And you can see in combination with paclitaxel, the additional toxicity, is negligible relative to paclitaxel alone. Now, we go really hard in second line gastric cancer to bring it to patient populations 250,000 patients, relative to third line which is 50,000-60,000. You multiply three or four fold or five-fold the amount of patients that you can expose your drug to. So, that's really how pharmaceutical companies do it is get the approval in the later stage of patients, because generally those trials are shorter. Because those are very sick patients who have shorter survival time left. And so, you go in there, you provide benefit, you get the drug approved, and then you bring it into the much bigger patient population, so that all of our drug candidates are designed to do that. The cell activity is a key for that.

Right, just on fruquinitib, you're seeing increased taxol, PK. So, is -- that’s not through the set pathway. I mean you're obviously having some effect to the metabolism of the drug. So, does that also preclude you from being use without the data in the second line setting?

I think without data you just can't be pushing to be used in any setting. I think, as I said to your colleague, we've just really learned this about the increased taxol exposure. And what you see in the charts as you see the safety profile of fruquintinib and paclitaxel, both of their full doses. And you see the paclitaxel drug exposure is 30% half. And the safety, based on that combination, is okay. It's fine. So the idea for us would be that if we are able to ascertain, that combination is truly delivering that 30% increase in drug exposure. Can you dial down the amount of paclitaxel that you're exposing patients to, and still get the same drug exposure, as is necessary? If you can dial it down, the safety profile should improve significantly, because most of the safety -- or in fact, all of the safety data that we've shown, all the AEs grade three and above, are paclitaxel driven AEs. So, there is still work to be done on that. We don't have all the answers to this. But it's encouraging for us, because even at those high levels of drug exposure on paclitaxel and fruquintinib, patients are; A, they’re seeing good response; and B, it's tolerable.

[59.05] Bruce Anderson, [indiscernible]. On 523, you’re moving ahead on hematological cancer. And can you say what you're doing on RA?

On rheumatoid arthritis, we submitted our U.S. IND last year; and based on the Phase I data that we've also presented on 523 at the end of the year. The FDA came back to us and we’ve said this in our recent announcements. The FDA came back to us and said 523 is an interesting drug candidate, it's metabolize, so once it’s consumed it’s metabolized. Now, there is a single metabolite that represents 30% of all of the metabolites on 523, or a high proportion of the metabolites with 523. And when you get a situation like that, the FDA wants you to do regulatory toxicity work on the metabolite; not just on the drug, which is what we did but also on the metabolite, to show that that metabolite is not going to cause any trouble. Now, it didn't cause any trouble in the Phase 1 healthy volunteer study in Australia. So, we don’t believe it should cause any problems. But we're in the process of completing that animal toxicity testing on that metabolite. And that's why on immunology, we have to wait until that's done. Because in immunology, when we talk about rheumatoid arthritis, these are healthy people other than their arthritis. And there can be no room, whatsoever, for any answered questions when it comes to toxicity. So, we're working on that. Hopefully, that'll get done pretty soon, and we can progress that. Meanwhile, we’re moving as rapidly as we can on the hematological cancer side where the toxicity is obviously always important for all patients. But in late stage hematological cancer patients, they have a higher tolerance for toxicity just because they've got a bigger problem.

And in terms of short-term catalysts, will they even trigger milestone payments in the coming year?

Yes, the submission of the NDA will trigger a milestone; the start of the Phase III in papillary will trigger a milestone; the start of the Phase III in non-small cell lung cancer, the second line Tagrisso combination will trigger a milestone; our collaborations, because they're progressing on multiple fronts, trigger a lot of milestones.

Just last question, given your success with Seroquel, are you going to expand -- is there an opportunity to expand the third-party drug activity in China? Is that something you would choose to do or not to?

Yes, I think I said this at the last meeting in August. We will, if it makes sense. There is a lot of Chinese companies these days paying very big money for these kinds of assets. And so we're not going to get into a bidding war for anything. The best use of our resources is against our pipeline, and moving that quickly. But if there are sensible assets that we can get our hands on for reasonable prices then we can consider that. But actually probably the biggest thing versus that we're tooling up to get ready to launch is sulfatinib and epatinib into the China market. Now, that may be in two or three years, but you start working towards that now to get ready to do it. Okay, any other questions on there? Okay, good. If no more questions, I'll call it a day. One hour, that worked pretty well. So, thanks very much for coming everybody, and look forward to delivering some more results for you. Thanks.