HUTCHMED (China) Limited (HCM) Q4 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, welcome to the Chi-Med 2019 Full-Year Financial Results. My name is Maxine, and I will be coordinating your call today. [Operator Instructions].I will now hand over to your host, Mr. Christian Hogg to begin. Christian, please go ahead, when you're ready.

Thank you, Maxine. Welcome everybody to the Chi-Med 2019 results presentation. It's an hour-long session today. I'm going to try and complete the presentation in maybe 35, 40 minutes and then leave 20, 25 minutes at the end for Q&A.So if we go to Page number 3 of the presentation, you can see we've made a lot of progress in 2019, towards our aim of building a global science-focused biopharmaceutical company from our established base in China. On the global innovation side, our team is now over 500 people scientific team on the ground in China. We've built and continue to build a global development infrastructure.Our team in New Jersey, in Florham Park, New Jersey, has been built up over the last 18 months and is now really ready to go to start our global Phase III programs on Fruquintinib and Surufatinib. And obviously, as I have just said, we have multiple Phase III initiating, so that that team in the U.S. is now in place to support that -- those launches of those pivotal studies, global study.In China, the market continues to reform the expansion of the medical insurance scheme and the National Reimbursement Drug List continues at a great speed in China. And we're very well-positioned to take advantage of that and to capitalize on the broadening of availability of oncology drugs in China.Our first three NDAs are locked in at least Elunate obviously is approved and launched in 2017, Surufatinib, the NDA was submitted late last year, and we're very hopeful that savolitinib first NDA will be submitted in the next few months. So bringing our first three drugs to market in China, our first three drug candidates to market in China has been a great achievement and I think will set us apart for the next few years.On the commercial side, we've always had a deep commercial presence in China, through our joint ventures and various legacy businesses. But on the oncology side, we really are moving rapidly to build-up our oncology commercial team now to launch Surufatinib late this year. We're targeting 350 people on the ground by the middle of the year. We're already well over 140 people in the team on the ground in China today. And I'm talking about oncology, commercial team on the ground in China today and getting -- and the entire senior management team is in place in building out the organization. So very exciting time for our commercial group in China.Moving on to Page number 4, you can see as I always show the breadth of our organization, and the depth, I think on the management team, the most notable new joiner is Dr. James He, our Chief Medical Officer, in China. James joined the company three weeks ago. Formerly, he was the Country Medical Director for GSK in China, and the GM for R&D for GSK in China. So James comes with a wealth of experience over the last 15 years in China and is going to help us really accelerate and broaden our clinical programs in China.So the integrated innovation organization, as I've said, over 500 people and I will make note of the progress has been made by our U.S. team in New Jersey in getting established over the last really 18 months to two years. It's really been a fantastic rate of progress that we've seen in the American organization. And that just opens up a whole new dynamic for Chi-Med as a company with our global vision, and our ability now to execute against that global vision.Moving to Page number 5, you can see that 2019 was the year in which we put a lot of building blocks in place. Savolitinib made a lot of progress in 2019, and is set to happen in our view a very important year this year, the Tagrisso combination in non-small cell lung cancer will readout an interim mid-year, and multiple global registration studies have the potential to be started and I'll go through that in more detail later.The second point there, our first NDA submission in China for Savolitinib and the presentation of the data supporting that MET Exon 14 skipping indication will all play out over the next few months.Surufatinib for neuroendocrine tumors, the first NDA submission was late last year. The pancreatic neuroendocrine tumor positive Phase III readout in January, January 20 of this year is the second indication in which we've had to stop a Phase III early because we had already met the primary endpoints of the study. So the NDA last year went in, in October and for extra pancreatic-NET and the pancreatic-NET, NDA will go in hopefully in the first half of this year.And the U.S., Europe and Japan global registration study discussion for Surufatinib, we are and again thanks to the team that is sitting in New Jersey, managing our global regulatory operation. We're now very engaged with the regulatory authorities in U.S., Europe and Japan around the plan for Surufatinib and we expect that to be laid out very clearly over the coming couple of months.Elunate in colorectal cancer Fruquintinib, we have now completed our end of Phase II meeting with the USFDA on colorectal cancer. We expect to start a global Phase III on Fruquintinib, the FRESCO2 study sometime around the middle of the year and we're very much looking forward to that. And maximizing China access, the NRDL inclusion January 1 of this year has had a big impact and I'll talk more about that later.On the organization, as I mentioned, the oncology team in China, commercial team in China is expanding rapidly. Our other programs that are making progress, the lymphoma programs HMPL-523 and 689 making progress in China and in the United States, the PD-1 combos, our VGFR combinations with a number of PD-1 antibodies are making good progress, and our ninth clinical drug candidate HMPL-306, our IDH 1/2 dual inhibitor will kick-off clinical development in China in the next few months. So, a lot going on.From a financial standpoint, on a high level, revenues this year were little bit over $200 million; our net loss was around a little bit over $100 million. The cash that we have on hand at the moment roughly over $400 million, if you take into account unutilized banking facilities. So the follow-on offer that we did in January of this year helped us to beef up our balance sheet ahead of an important year. And the cash flow guidance, the negative cash flow guidance we have for this year is around $140 million to $160 million. So the cash, the cash runway we have at the moment certainly is sufficient for two, two-and-a-half years or so.Moving on to Page 6, the pipeline chart I think I'll just highlight the programs that are in the process of transitioning. So under the registration intent column you can see obviously the three NDAs that are all either have been submitted or about to be submitted, Savolitinib in MET Exon 14 deletion non-small cell lung cancer, and then the two Surufatinib neuroendocrine tumor NDAs. Extra pancreatic submitted in October, pancreatic in the next couple of months.So hopefully, six months from now, we will have all those three arrows. The NDAs submitted and be planning on launching Surufatinib late this year, and then in extra-pancreatic-NET, and in pancreatic-NET, and Savolitinib at Exon 14 deletion will be launches likely in 2021, hopefully in the first half.In proof-of-concept, you can see there are six programs that are now moving towards registration; the Savolitinib MET Exon 14 deletion non-small cell lung cancer global activities are under discussion and planning with AstraZeneca. We have intention to also move into later development on -- in Papillary renal cell carcinoma, which I'll talk about a bit more later. Then, Fruquintinib in colorectal cancer, Surufatinib and net those are both programs that we're moving into Phase III ourselves or into the final registration stage ourselves. And then the last two HMPL-523 and 689, we've been working hard for a longtime building a data set in both of those assets and while this is a very competitive area, we hope that that data will allow us to decide on our registration strategy through the balance of this year.Going further back into the dose finding we've progressed the Surufatinib Tuoyi PD-1 combo into proof-of-concept already, we're hoping that the Fruquintinib pivot PD-1 combination will also move into proof-of-concept shortly, and our FGFR inhibitive FGFR 1, 2 and 3 small molecule will be moving into proof-of-concept Phase II study in mesothelioma this year as well. So a lot of progress on our pipeline.If we move on to Savolitinib on Page 8, on a high-level we are thinking about most of our later-stage drug candidates in a similar manner. The first thing for us is to get the monotherapy approved. So as you can see here on Savolitinib, the strategy to lead to rapid monotherapy approval is a dual strategy global as well as China. And you see here Papillary renal cell carcinoma is the global, probably the furthest along global approach to get the monotherapy Savolitinib approved in PRCC, and then, obviously in China, the MET Exon 14 deletion with our first NDA about to be being submitted. So ultimately, it's about getting Savolitinib monotherapy approved as quickly and efficiently as we can.Behind that, we have the development of combination opportunities with other TKIs or immunotherapies and you can see obviously, we've been very active in this area. The most advanced obviously is the Tagrisso combination, and as I've said, I'll talk more about that later in this presentation. But we've got a very big year ahead of us, for the Tagrisso combination and I think the hard work of AstraZeneca and Chi-Med organizations over the last three or four years sets us up to do very well on that Tagrisso combination this year. So we look forward to the progress that will be made this year or could be made this year.The PD-1 combo, the intrinsic combination, we continue to look at that closely in Papillary renal cell carcinoma, a broader patient population, not just MET positive patient and also starting to consider it in potentially other indications as well.Exploratory development is shown on -- in a bit more detail on Page 9 where you can see each of the clinical programs we have. On this chart as with all of the charts throughout this deck, the red bars are global ex-China studies and the blue bars are China studies. So you can see here for Savolitinib on Page 9, a very broad program that I've just mentioned in lung cancer and in kidney cancer but also a solid range of investigator initiated studies in multiple other solid tumor settings, so in clear-cell renal cell carcinoma, in gastric cancer, prostate cancer, and colorectal cancer. So, we are investigating and exploring Savolitinib in all of these indications, particularly those indications with biomarker selected patients who are MET positive.I won't repeat everything, I've said on Savolitinib but yes, you can add them up and you've got 10 clinical studies moving in parallel there.Moving on to Page 10 to look at lung cancer, this is a chart that we share very regularly. Really, the two updates on this chart are the continued progress on Tagrisso now in 2019, almost $3.2 billion in sales. And obviously as patients progress on Tagrisso, 30% of those plus potentially are going to need a MET inhibitors. So that's where we see a very large value creation opportunity for Savolitinib and Tagrisso in combo.Page 11, the MET Exon 14 deletion non-small cell lung cancer program in China, the NDA submission as I said, probably in the next couple of months, we will present, if you look at the chart on the bottom left, the red, the red dot will be the data that we present at a Scientific Conference, middle of the year. So that'll be the first time that we really present the data in full of Savolitinib and Exon 14 deletion non-small cell lung cancer and that should follow the NDA submission, which should come a couple of months earlier, maybe in -- maybe April type timeframe.Moving on to Page 12. This is a chart we've shown in the past, so I won't dwell on it. But this is data from the TATTON study showing pattern B and pattern D. These were two arms that helped us decide on the Tagrisso Savolitinib combination dose. We chose Savolitinib 300 milligram, Tagrisso 80 milligram QD, so both of them daily doses, efficacy was not compromised with a slightly lower Savolitinib dose and safety and tolerability was better. So that's why we chose to go with the 300 milligram Savolitinib dose.You can see on Page 13, the waterfall plots and just really effective combination treatment in both T790M negative patients which is orange chart as well as patients that have failed on Tagrisso, that's the pink chart so with the response rate of about 30%. Those patients with T790M positive and had not had access to Tagrisso or third generation EGFR TKI you see a response rate of 67%, so very strong efficacy.Moving on to Page 14, the SAVANNAH study which many of you're aware of a global study in 14 countries around the world it has been rolling quite rapidly now. It kicked-off about a year-ago. These kinds of studies take time to get set up. But now we're enrolling very rapidly and towards our interim analysis middle of the year and our hope is obviously, with that data from that interim analysis will be able to then potentially go or AstraZeneca will potentially go and engage with regulatory discussions about how to accelerate this program. So very optimistic about non-small cell lung cancer, particularly the combination with Tagrisso.So moving on to Page 15, papillary renal cell carcinoma. We haven't shown this chart for a while. When we go back to December 2018, we took a pretty big hit, when the SAVOIR study was terminated early. As we've announced in our announcement today, the basis for terminating the SAVOIR study was molecular epidemiology data as well as the sort of changing landscape of our NRCC treatment with regards to immunotherapy. But from this chart on Page 15, you can see the importance of MET-driven papillary renal cell carcinoma patients, it's about 8% of all RCC, and today that genuinely are very few treatment options for those patients.So if you go to Page 16, you can see the Phase II data that we presented two or three years ago and that was the Phase II data that led to us starting the SAVOIR Phase III study. We saw in MET-driven patients around 18% response rate and MET negative patients obviously zero percent response rate to a MET inhibitor and good PFS somewhere in the region of six, six months for MET positive patients and obviously very rapid progression for those patients that were MET negative and being treated with a MET inhibitor. So that was the reason we started SAVOIR. SAVOIR was terminated at the end of 2018 after around 60 patients were enrolled in the study. During 2019 the data from those 60 patients mature, and in late 2019, that data was unblinded and AstraZeneca and Chi-Med were able to understand how those 60 patients performed.Remember the SAVOIR study was a one-to-one randomization of savolitinib against Sutent, Surufatinib in MET-driven papillary renal cell carcinoma patients. So, we have that data. We plan to present it in full in a scientific conference later this year. And as we say in our results announcement, AstraZeneca and Chi-Med are currently preparing and in dialogue around restarting the SAVOIR study. And that would not be restarting of the SAVOIR study; it would be restarting a study, essentially of a very similar design to SAVOIR and likely to be called SAVOIR2. But there'll be more updates on that later in the year.Page 17 talks about the Savolitinib/Imfinzi combination. This data was again presented at ASCO GU early this year. You can see that the Savolitinib/Imfinzi combination in the middle on the far right of the chart shows you the objective response rate data and the median overall survival of 12.3 months for the Savolitinib/Imfinzi combination. That's across all PRCC, so MET positive as well as MET negative. It’s early data, it's encouraging obviously, in our view and in the view of the investigators, it warrants further development. So we are in discussions with the investigators and our AstraZeneca is in discussions with investigators with regards to potential expansion of that CALYPSO study.On the next page, Page number 19, I think it is 18, you see the response data of the combination of Savolitinib and Durvalumab or Imfinzi. And you can see while it starts to get to be pretty small numbers as far as patients are concerned, you're seeing the MET positive patients. The combination dose delivering a 40% response rate, that obviously compares to as we saw in the Phase II of the monotherapy around an 18% response rate. Now MET positivity isn't necessarily the exact same. So in this case, MET positivity was IHC 3 plus, whereas for the Phase II study, it covered various other genetic aberrations of MET. But encouraging, and certainly was continuing development. So on PRCC this year, hopefully we're seeing the restart on monotherapy in MET positive patients for Savo and then continued parallel development of the combination in perhaps a broader patient population.So moving on to Surufatinib, Page 20, you can see obviously Surufatinib is wholly-owned by Chi-Med worldwide, a very similar strategy to Savolitinib in the what we're looking to do is get the single agent Savolitinib approved both in China and outside of China as rapidly as possible. Obviously, China with the NDA now under review in extra pancreatic-NET and a positive Phase III in pancreatic-NET, we're well on our way to that, meeting that objective. The global NET registration, as you can see in the middle, is the subject of deep discussions with the regulatory authorities at the moment. And that clarity from those discussions I think will come in the next couple of months, certainly in the United States and Europe and Japan shortly thereafter.Biliary tract cancer very difficult, patient population and solid tumor indication but Surufatinib is currently in development in a Phase IIb/III study. We should have an interim analysis on biliary tract cancer later this year, and that will drive our decision on whether to continue into the Phase III.We continue to work to solidify combination opportunities with immunotherapies. So for Surufatinib, we're working both inside China and outside China to work the combinations with the PD-1. The first data from that will be presented, I believe at AACR for Surufatinib and Tuoyi, that will be the Phase I dose escalation data, and we're excited to present that.Moving on to Page 21, each trial we are running in more detail. The neuroendocrine tumor, the two positive Phase III reached obviously the end of registration studies. The red -- the red bar there Surufatinib and NET about to start, the last stage of development outside of China. And then the PD-1 combos as you can see in block number four there with Tuoyi and Tyvyt. Tuoyi is Junshi's PD-1 approved in China and Tyvyt is the PD-1 antibody from Innovent that's also approved in China. So Surufatinib development is ongoing. We're working also widely and the team are working closely with a number of investigators to expand investigator-lead studies in a number of other solid tumor settings.One other things that's quite exciting about the Surufatinib Tuoyi combination that can be seen as the second last bar on the chart there on Page 21 is that's now in proof-of-concept. So we've now started Phase II development of that combination. And we're expanding that Phase II development into multiple solid tumor setting. So we will be able to get data from a lot of patients in a lot of solid tumor settings with that combination so quite excited.Moving on to Page 22, this is a chart we've shown around Surufatinib and NET in the past. There's always been a caveat in the past of pancreatic NET was not covered. Well now you can see on the far right-hand side Surufatinib has successfully made it through Phase III studies in all solid tumor NET patient populations across all tumor origin sites, whether that's GI tract, pancreas, lung or other both functional, non-functional NET across the board. And this we believe is the first time that any oral therapy or any therapy of any, any type for that matter has successfully done this. So you can see there's a lot of untreated patient populations there on Page 22. Obviously, there are a lot of approved therapies both globally, and in China, but mostly in subsets of NET. And Surufatinib, we believe is the first therapy that that is effective across all NET neuroendocrine tumor, advanced neuroendocrine tumor patient population.Page 23, you can see getting ready for the launch as I've mentioned 140 people already onboard with the sales team and very active this year in preparation, it's fantastic for our company, for Chi-Med to be building out an oncology team of 350 people in readiness for the launch of this fantastic drug or the potential launch of this fantastic drug. So it's a great focus for the company this year and hopefully by the end of the year, we can really launch it with a big bang.Page 24, the neuroendocrine tumor patient population in China, probably around 300,000 people that's a conservative estimate. It could be higher, it could be somewhere in the 400,000 range. The diagnosis of neuroendocrine tumors in China is less sophisticated than it is in the West where there's been seen a very big increase in incidence over the last 40 years of NET in the West. The reason for that increase in incidence is because of better diagnosis. So our job, Chi-Med's job in China will be to use our commercial organization to really educate the clinical community on how to identify NET and how to treat NET. And really try to access this big patient population of patients that live with this disease for many years. So it's a disease that is treated over many years in a large group of people and that's why we think commercially this is an attractive opportunity for us as well.Page 25 shows the efficacy of Surufatinib against the Everolimus in extra-pancreatic NET, it's really apples-to-oranges comparison because the Chinese patients, the SANET study was all in Chinese patients, generally as can be seen in charts in the Appendices are sicker patients, they're mostly Grade 2 advanced NET patients, whereas the RADIANT study they were mostly Grade 1 less sick patients and you can see that from the placebo on the RADIANT study being longer. So Surufatinib really outstanding efficacy in a really large patient population.Moving on to Fruquintinib, similar type strategy on Page 27 get the monotherapy approved first, obviously, we're doing that -- we've done that in China in colorectal cancer now we're moving and the team in the United States is moving really rapidly to get that global colorectal cancer registration study started, not just the United States but Europe and Japan as well. And then solidifying the combo opportunities with the PD-1, so you've got the Tuoyi, sorry the Tyvyt Fruquintinib combo, the genolimzumab T1 combo with Fruquintinib, and a number of other opportunities, second-line gastric cancer is a very big opportunity for us, combining paclitaxel and Fruquintinib together in China, a patient population that is potentially four or five times the size of the colorectal cancer opportunity. So that's a big area for us.If you move on to Page 28, you can see all the details of the programs we have on Fruquintinib. Obviously most of the people on this line will know that we're partnered with Eli Lilly on Fruquintinib in China but outside of China, Chi-Med retained all rights to Fruquintinib and that’s why global development of Fruquintinib is very important for us because we own 100% of those rights outside of China.Okay, going to Page 29, talking about the performance of Elunate, during 2019, you can see the sales there was $17.6 million about RMB120 million in its first year. Total cycle, both out-of-pocket paid or patient access were about 14,500 cycles of Fruquintinib were used by patients in 2019. It's a start and during that year, Fruquintinib was priced high. And it was more expensive than Stivarga, the main competitor in colorectal cancer and very much more expensive than off-label use of local VGFR inhibitors. So, we had headwinds with regards to the price of Fruquintinib.Despite that, we booked revenue of about $10.8 million which came from the manufacturing costs that we charge Eli Lilly, as well as the royalties that we earn the 15% or 20% royalty at this level of sales.So the most important thing as we went through this year was working with Eli Lilly to get on the National Reimbursement List and that can be shown on the next page, Page 30 where you can see that in November of last year we were able to get onto the National Reimbursement List. We took a 63% price reduction on Elunate and you can see the chart on the bottom right-hand side shows the sort of the pre-NRDL price versus post-NRDL price and you can see Elunate went from almost $3,300 a cycle per month to a price of about $1,200, $1,180 per cycle post-NRDL, so a 63% reduction.The circled numbers show for the 317 million people on the National Medical Insurance Scheme for urban employees and residents, those patients, the out-of-pocket cost now for Elunate are between $350 and $600 per month. So you've gone from out-of-pocket price of $3,300 to approximately 25% of the population of China having access to Fruquintinib for between $350 and $600 a month, which is an enormous improvement in accessibility.So as you can see from this chart on the bottom left, at the high price pre-NRDL in 2019, Elunate reported around 5% market share, about 5% penetration, about 3,000 of the 55,000 patients in China, these are new patients in China were given or got access to Elunate.Now on the reimbursement list that that penetration is going to increase dramatically and we report here unaudited results for January/February, for the first two months of the year, since we went on the reimbursement list, Elunate has recorded $6.6 million in sales. So that's a material change versus a year-ago when you consider all of 2019, it was $17.6 million. So it's still too early to say obviously the coronavirus in China has affected January/February results somewhat although in this case not by that much.I won't go through 31 and 32. These are the efficacy and safety advantages of Fruquintinib.Moving on to Page 34 is a chart that lays out the sort of structure that we plan to put in place with our oncology commercial team in China. We intend to cover 1,300 hospitals in China, that that is going to cover 95% of the sales of oncology products in China and for a coverage of that scale, we intend by the end of this year to have about or by the mid to end of this year for the launch of Fruquintinib to have a team of about 350 people in place. That will grow as you can see on the chart here, over the next three or four years, up to by the end of 2023 we will be targeting to have a team of about 900 people on the oncology side. But that team will be doing multiple things, they'll be obviously marketing, Surufatinib, and potentially marketing Fruquintinib in parts of China per the agreement that we signed with Lilly a year ago. But also our other assets as they start coming through, so and more indications on our initial asset, so an exciting time as we build out our team.Page 35 just the next wave of innovation, the Syk inhibitor, the PI3Kδ, the FGFR inhibitor, all just moving along. HMPL-306 is our IDH 1/2 dual inhibitor, is not on this chart but it will be hopefully by the time we report our mid-year results. So everything moving along there.Page 36 since we're running short of time, I won't talk a lot about it. This is a chart many people have seen in the past 523 and 689, Syk inhibitor, PI3Kδ. I think the chart on the bottom right is the important one I'm sorry the box on the bottom right is the important one showing the Phase I, Ib data now on the Syk inhibitor is around 200 patients we dose on PI3Kδ. We are now through dose escalation and into expansion, that data will really help us inform our registration study decisions this year.Page 37, a brief explanation of the IDH 1/2 inhibitor and the opportunity there. There are some very important patient populations which have high levels of IDH 1/2 mutations. There are obviously drugs, IDH 1 inhibitors and IDH 2 inhibitors approved globally or in the United States. But IDH 1/2 dual inhibitors, we feel that HMPL-306 really brings a unique angle in that it addresses resistance to IDH 1 inhibitors and resistance to IDH 2 inhibitors. So that's our sort of point of differentiation and that I think will be explained more to you all as time goes by.The next page, page number 38, what's next from discovery organization? Weiguo and the team have been working long and hard on a number of large molecule and small molecule programs coming through. We're very excited about KRAS and ERK and we have a number of things that we're working on that will play out in the coming years. And we expect potentially one novel drug candidate a year coming into the clinic from our team.Page 40, the financial results, I won't go through in lot of detail, I'm sure you can all cover that. On the commercial platform, I think page 41 shows it quite well. Continued growth in revenues, but in terms of net income to Chi-Med 13% growth on a constant exchange rate basis to over $47 million, $47.4 million for the year-end 2019. You can see on that chart on Page 41, 85% of our profit comes from our prescription drug business, 15% comes from the consumer health business, the non-core consumer health business.Next page, Page 42 is the cash position and guidance which I touched on earlier. So, I won’t reiterate it's around $400 million in cash resources and a burn of about $140 million to $160 million this year.Page Number 44 is the upcoming events, there are many of them. They're laid out in great detail in our announcement; I won't go through them in detail here. The ones with the stars on them are the important ones. So data on the PD-1 combo, the NDA for Savo and Surufatinib and the potential launch of Surufatinib this year in China and then progress on Tagrisso and Savo in lung cancer, and Savo monotherapy in PRCC.So last chart that I'll talk from then I'll open it up to Q&A. Page 45, the target, we've covered these pretty much through this presentation Surufatinib it's about launching it, building the team. Savo it's about getting the NDA submitted, getting through the interim analysis on Tagrisso combo and moving forward on papillary renal cell carcinoma. Elunate it's all about expanding access and establishing ourselves as the best-in-class VGFR TKI in China. U.S., European clinical regulatory organization, yes, as I said, it's a great team, well established and really primed and ready to go. And then on the M&A side, we have some interest in entering into the large molecule space. And we also as we said many times before have interest in divesting some of our non-core commercial businesses such as OTC for example. So, that's where I'll leave it, leaving us 15 minutes now for Q&A. Maxine?

[Operator Instructions].We have a question from Alec Stranahan from BAML. Alex, your line is now open. Please go ahead.

It's Justin on for Alex. Thanks for taking my question. Just a couple on Savolitinib, what kind of data can we expect from SAVANNAH in the next coming months, and then what will the next steps be for the program after the trial leaves out and then a quick follow-up on that is, what do you see as the ideal combination partner in your mind for Savo? Thanks.

Okay. SAVANNAH it’s an interim analysis on the first 50 patients of that 200 patients SAVANNAH study, we will not be publishing that data. That data -- that interim analysis is really mainly to guide our regulatory dialogue. So what will happen after that interim analysis is obviously subject to it being positive is I'm sure, we will engage with the regulatory authorities and determine what's the most accelerated pathway to approval for the combination.So those are the sort of the next steps coming out of the interim analysis. I think that that regulatory dialogue and potentially the starting up of further studies on the combination will really give you over the back half of the year an understanding of the state of play on the Savolitinib Tagrisso combo, which I hope is a positive state of play, I'm quite optimistic of that.On the combination, I'm not really clear what you mean, what's the best combination obviously; the Tagrisso combo is the main focus area. We have studied Iressa Savolitinib combination in T790M negative patients. And we're recorded terrific efficacy in that patient population as well. But I think AstraZeneca's obviously prime objective is to broaden the Tagrisso franchise and Savolitinib is really a perfect bedfellows with Tagrisso to help broaden our franchise. Hopefully that answers your question.

We have another question from Paul Choi from Goldman Sachs. Paul, your line is now open. Please go ahead.

Thank you and good evening, everyone. I have a follow-up question with regard to SAVANNAH, Christian if I could, with on the interim with the first 50 patients, could you maybe just speak to what would be the level of maturity of data that you would have by that interims and specifically about a roughly how much follow-up would you have for that -- for those first 50 patients and would you just be in a position to discuss or would you have PFS data that you think, you could approach regulators with at that point?

Well, so the primary endpoint of the study is ORR. And what will have on that 50 patient data, or at least what is planned to have is 50 patients treated with the 300 milligram, 80 milligram combination. And I believe around two-thirds of them through two tumor assessments, the other third being through one tumor assessment. So obviously in the past, we've seen the efficacy of the combination come on very quickly. So the expectation would be that with maybe two-thirds of the patients with two tumor assessments, and one-third with one tumor assessment, you would get a very good idea of the objective response rate for those -- for the combination.And remember also this, this comes on the back of the TATTON data which will be it in multiple treatment arms, different types of patient with different molecular profile. That TATTON data number is up to a total of around 200 patients, I think 190 patients. So we have a very large data set now for the Savolitinib/Tagrisso combo and I think the Savo, sorry the SAVANNAH interim analysis will just sort of be the kind of bringing together all of that information.

Okay, thank you for that. And then with regard to the SAVOIR2 trial that you referenced here earlier, could you -- I know you'll have a data presentation later this year, but could you maybe just speak to what you're seeing or learnings that you've seen from the first 60 patients that I guess has reinvigorated enthusiasm for monotherapy development here?

It's difficult for me to go into detail, Paul because obviously this is subject to scientific conference presentations. But what SAVOIR2 -- what SAVOIR provided, as I say around 60 patients, one-to-one randomization of Savolitinib against Sunitinib. What we didn't have ever was a prospective view on what Sunitinib would do in MET positive patients. We had the Phase II data; we had a lot of single arm data on Savolitinib in MET positive PRCC patients. So we have a good sense or we had a good sense even before SAVOIR on what Savolitinib does in these patients. But we have no idea what Sunitinib did as the control in these patients. And we made our best guess when the SAVOIR study was designed. So what we will have coming out of SAVOIR on those first 60 patients is a much -- is a very good understanding what Sunitinib does in those MET-positive PRCC patients. And that's the big difference.So, I think that, we'll obviously have to wait until the scientific -- until this sort of conference where we present all of this data. But I think if you read between the lines and look at our announcement, which is announcement that was carefully crafted by both Chi-Med and AstraZeneca together, you can see that we're obviously quite encouraged by what we've seen on SAVOIR and we are now working closely to consider the next steps and to restart the program basically.

Okay, thank you for that. And if I could maybe just squeeze in a quick commercial one. With regards to the 25 clinical sites that you used for Savolitinib ahead of your commercial sales force expansion later this year. Are those centers in the clinical trial the primary treatment centers for NET or do you need to go into a second tier of medical centers and hospitals to expand your reach with regard to treating NET tumors? Thank you.

Yes, thanks Paul. So obviously the SANET-ep and p studies were done in sites that had probably the most -- the most high volume neuroendocrine tumor sites in China. But we see neuroendocrine tumors and the availability of patients for us to go after and to go and try and help as being far, far greater than the sites that were just in our Phase III studies, these 25 plus sites.As I say in the presentation, our commercial team is being set up to cover 1,300, the 1,300 key oncology, the clinics and hospitals across China. That's where we think 95% of the business will be located; there will be obviously diminishing returns. But based on the way we plan to cover these institutions, we think a team of 350 makes a lot of sense to cover that and we'll take out 95% of the -- we will gain access to 95% of the patients that are literally neuroendocrine tumors in China, so I don't know whether that answers your question, but it's -- that's our approach.

It does. Thank you.

Thanks.

We have another question from Rajan Sharma from Deutsche Bank. Rajan, your line is now open.

Thanks for taking my question. I just wanted to [indiscernible] actually kinase inhibitors, they look slightly exposed kind of potential favorable tolerability profile relative to competitors. So just wondering if you've done any combination work with this asset or whether it's the potential feature in the future? Thanks.

Rajan, thanks, maybe I'll ask Dr. Weiguo Su, our Chief Scientific Officer to answer that question.

Sure. Well, the brief answer is yes. Up until now it's pretty much single agent. So we do have a plan now going forward to initiate several combination exploratory studies, it could be later this year.

Okay, thanks. And then just secondly on so you kind of highlighted M&A as a potential for the innovation platform and the preference say would be on kind of single assets. So would you be looking at kind of building that platform capabilities?

So on the M&A side, what we're interested in is expanding our large molecule footprint. Weiguo and the team have been working for the last four or five years on a number of novel targets for large molecule innovation. And we've now got some things; we want to start putting into the clinic. So we're looking rather than just outsourcing production of these assets to third-parties, we're looking to potentially acquire a platform to do that. But also when we do that, we're looking for a platform that that already has some approved products, because when you're building out a commercial, you look at Chi-Med's commercial capability and sort of history in China we're very deep and we know what we're doing when it comes to commercialization. And so, now we're building out the oncology team, would be -- it certainly would be synergistic to be able to acquire some assets that we could channel through that that commercial team as well.So the large molecule M&A side for us is sort of it's a two, two pillar strategy. One is to get the manufacturing through the footprint. The second is potentially get all those for new products. But new products are expensive in China. They're not growing on trees. So we'll take our time and we'll look at this carefully.

We have a question from John Newman from Canaccord. John, your line is now open.

Hey, good morning. Thanks for taking my question. Christian, I just wondered if you could walk us through a little bit more of what we should expect this year for Fruquintinib in China. You mentioned on the call that you are on the National Reimbursement List. Just wondered if you could explain to us just the importance of that process and sort of what that does for you in terms of access?

Well, John, I don't know whether they can pull it up on the presentation. But there's some charts in the Appendices that shows the impact of getting on the reimbursement list in China. When Avastin got on the National Reimbursement List in China, three years -- two -- in mid-2017, so two-and-a-half years ago. Avastin was doing about $200 million in sales in 2017, 2019 it did $566 million in sales. So it's pretty much close to triple in terms of sales in China. And that's Avastin having been launched in China, a good decade ago. So it took many years to get to $200 million onto the reimbursement list. They took a 62% price reduction and within two years, they've almost tripled their sales. So getting on the NRDL really matters because it expands access to patients. It makes the drug much more affordable. And you go from, as I've shown you on our charts, 5% penetration on Fruquintinib at a high price to potentially really meaningful penetration. Where it ends up I don't know but you would certainly hope to see 30%, 40% penetration once you get well established.So getting on the NRDL is absolutely critical and only time will tell the impact of it but as I've shown for January/February, the results since we got on to the reimbursement and taking into account you've had a fair amount of disruption in February because of this coronavirus, we've still done very well on Fruquintinib in January/February. So we're reasonably well. So I think relative to last year, so I think that's the impact. I don't know, is that sufficient for you?

Yes, yes. Thank you. And I said one follow-up question on Surufatinib, just wondering if you could just talk a little bit more about the global strategy here for neuroendocrine tumors given that this is a very attractive and large revenue opportunity especially in the United States. You have an oral small molecule, just curious if you could talk to us a bit about, how you're thinking about perhaps some of the design aspects of the registrational study?

So this is the huge question. And our team based out of New Jersey led by our Chief Medical Officer, Marek Kania, in Florham Park is deeply in discussions with regulatory authorities on exactly this question. I'm not going to be able to give you an answer on it here. But I think over the next couple of months, we will have real clarity on what is the registration pathway for Surufatinib outside of China in neuroendocrine tumors.One of the things that we believe is that neuroendocrine tumor patients and the standard of care for those patients in China is not a whole lot different than the standard of care outside of China. So we would hope that those two very important Phase III studies in extra pancreatic and pancreatic NET in China would be data that would be of real important to the regulatory authorities outside of China. So those discussions are underway and we'll see where it takes us over the next couple of months. And we'll report back as soon as we -- as soon as we're very clear on what we need to do to get Surufatinib to patients as quickly as possible.

We have a question from Mike Mitchell from Panmure Gordon. Mike, your line is now open.

Hi, Christian, thanks for taking my questions. Just two on Savolitinib actually. Just thinking about the combination with Iressa, I might have missed the other point of thinking that that was one of the programs expected to transition into registration study level during this year. Is that still the case or is that not? How should I sort of think about the relative progress of that event program at this point? And secondly, on MET Exon 14, skipping, just thinking about the FDA has given Priority Review to manage Capmatinib. How should I think that relative positioning again Savolitinib given the rare -- the rare indication profile for this non-small cell lung cancer? And should I think about more strategically on that particular product?

Got it, Mike, thanks. So just very quickly, Savolitinib/Iressa obviously, great data from the Phase II that we've presented. We have in the past set out -- we're working with AstraZeneca to figure out the registration pathway for Savolitinib Iressa combo.To be honest, how the SAVANNAH study is moving, the speed in which is moving and level of energy around the Tagrisso combination. AstraZeneca is pouring a huge amount of effort and energy and financial resource into that combination at the moment. So the Savolitinib/Iressa combination is there as a potential pullback, but it certainly isn't a priority at the moment, the priority is Savolitinib/Tagrisso which I think everybody in the industry recognizes is a pretty important combination. So Savo/Iressa is there, it's good but I would if I were you thinking about it, I'd see it as a sort of a more of a fallback or an insurance policy in case something goes awry on Savolitinib/Tagrisso combination.On Capmatinib obviously, their submissions in, so they're ahead of this level, Savolitinib for Exon 14 is way ahead of everybody in China, with the NDA about to be submitted hopefully. So but we are behind outside of China and Weiguo and the team and the AstraZeneca team are obviously working to figure out what is the sensible and most sort of aggressive way to consider Exon 14 outside of China, leveraging the big data set we have in China, but also taking into account things like companion diagnostics, which are necessary outside of China and also taking into account Capmatinib submission now, they got BTD and they've made that submission, it'll be a conditional approval. So we're not -- we're not so far behind though. We can't -- we can't get ourselves to submission in this area. But clearly, we're way ahead in China and we're behind outside of China but we would hope to be able to catch up and I think ultimately when the Phase II data, the registration intent study Phase II registration intent study of about 70 patients is presented at a scientific conference this year, everybody will be able to look at sort of the relative efficacy and safety of Surufatinib relative to the other, the other MET inhibitors that are out there.

We have another question from Tony Ren from CLSA. Tony, your line is now open.

Thank you for answering my question, Christian. So I got two questions. One is about colorectal cancer and the other is about the situation surrounding COVID-19 in China, so in colorectal cancer, we know that Taiho's drug Lonsurf was approved in China in September last year. So just wondering if you guys see any impact from Lonsurf on Elunate. And the second question is about the current COVID-19 outbreak in China. We know that there was a lot of social distancing. There's a lot of business affected in the regulatory process still taking place. Do you expect any delay on any of your regulatory filing?

Okay, thanks, Tony. I'll let Weiguo talk about the regulatory process in a moment. But on PRCC on TAS-102 Lonsurf from Taiho in China. This is a different mechanism of action to the EGFR inhibitors. Obviously, TAS-102 Lonsurf is approved outside of China. It actually is used more often outside of China than regoragenib in third-line colorectal cancer just because regoragenib is a drug that has it's issues with liver toxicity and the blackbox warning.But what we've seen -- what we've seen in our development outside of China is that patients have had exposure to Lonsurf, they do -- it doesn't diminish the efficacy of Fruquintinib. So we don’t see Lonsurf as a major issue either inside China or outside of China for Fruquintinib.On COVID-19, there's been obviously we put a relatively simple update in our results announcement about a paragraph on COVID-19. We don't really have a lot more to say other than that in the -- obviously it was a pretty significant disruption in early February. We've seen in late February, the organization improvising and figuring out how to go. So, we've seen on our commercial business in China's not seen too much impact of COVID-19 on for example, the sales and profits of our commercial business. But maybe Weiguo you could say a couple of words on how COVID-19 may have affected the regulatory process.

Well, I mean you probably reading a news that recently multiple actually, maybe dozens of -- plenty of coronavirus clinical trials got off in China and so you could imagine that the CDE would be quite busy reviewing and approving these trials. However, we’ve been in very close contact with the CDE on our NDA both on Surufatinib and Savolitinib. It is that they’re quite; they're working on our cases, so been quite responsive as well.So I would say, I mean obviously resources within CDE, you could imagine quite limited there. So but I think COVID-19 is -- I think about a big impact, but I hope it's going to be very short lived. I think in more so, our concern would be in hospitals where we have to get all the -- get our CSRs, finalize and signoff and we may have to change the PIs and but the bottom-line, I think there could be some, some risk of delay but it would be really limited.

We have a question from Steve McGarry from HSBC. Steve, your line is now open.

Hi, there. Couple of things. Firstly, just in the R&D pipeline, you are trialing Elunate in combination with Tyvyt and genolimzumab so both PD-1 what is the rationale for doing trials, two trials -- two programs at PD-1 with the go, no-go criteria for taking either one of those into Phase II? And secondly, in terms of the sales force expansion in Chinese given that 900 plus personnel by 2023. And could you just give us some guidance in terms of will that be balanced with the revenues that you expect to generate out of January [ph] and from that point, that it won't just be -- there's going to be 900 regardless. And then finally just in terms of the non-core asset, potential divestments, we have been talking about this for a little while, we'll be moving any closer to that conclusion or not. Thanks.

Thank you, Steve. Great question. So on the R&D pipeline, the geno or genolimzumab and the Tyvyt P1 combo. We feel that this sort of early stage, the more the merrier. We partnered with Innovent, we partnered with Geno here to combine Fruquintinib with that PD-1 they both are ambitious companies that are keen to do a lot with these combinations. So, our view is early development with both assets, really let the science and the clinical data do the decision making, the go, no-go criteria will purely be driven by the data. It'd be very difficult for me without that data or for Weiguo without that data to make any kind of decisions on which is the better combination. So about doing early development with a number of partners and then moving into later development probably with more focus and with planning in on what we're doing late development.On the 900 people plus by 2023, yes, we're obviously not -- this isn't a business that's about building the size of the team. This is a business it's about, about ensuring that we're making good financial decisions and developing our business competently towards ultimately making money. So our hope is that the oncology team of 900 plus people by the end of 2023 will be justified by the assets that we have through NDA approval and launch. We certainly won't be building a team of 900 people, if there's no sort of financially attractive reason to have those people. But I can clearly say that the first 350 this year makes a lot of sense, it will cover 95% of the institutions in China and it will get Surufatinib off to a great start. And I think then we can get into next year and look at it and see how we're doing and does stepping up to the next level makes sense.And that's the approach we took getting to 2,400 medical reps in cardiovascular space. When we first started selling our cardiovascular drug in China, we had less than 100 medical reps and we just literally year-after-year-after-year of the year built up around the business case on the business and now we have a large team and it makes a lot of money. So that's what we will do in oncology as well.As far as the divestiture of non-core assets, we've been working really hard on this. And I don't want to tempt fate. So I won't go into details on this. But needless to say, we've been working very hard on this. And if something's going to happen, it will happen. We can never tell until you've actually signed a deal on these things. But we've been saying, we are keen to offload certain non-core assets to enable us to focus in on our core focus on oncology in China. And we intend to do that. Hopefully that answers your question.

[Operator Instructions].Okay. Since we currently have no further questions, so Christian if you'd like to continue.

Yes, okay, thank you very much. We went over a bit here but thank you everyone for your questions. And please feel free to reach out further if you have additional questions. But thanks very much and look forward to a big year. Bye-bye.

This concludes today's call. Thank you for joining. You may now disconnect your lines.