HUTCHMED (China) Limited (HCM) Q2 2023 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to HUTCHMED 2023 Half Year Financial Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Mr. Mark Lee, Senior Vice President, Corporate Finance and Development of HUTCHMED. Please go ahead, sir.

Thank you, Amber. Thank you, everybody, 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 that 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.

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

Thank you, Dr. Su. And may I turn to Page 5, please. Yes. Okay, a quick review of our balance sheet. Two points I would like to highlight here. One is that we have a strong cash position of over $850 million, mainly contributed by the $400 upfront payment from Takeda. Secondly, we have completed the construction of our Shanghai Factory, of which we have utilized the banking facilities supported by the local authorities. This results a loan balance of about $14 million at favorable interest rate of around 3.5%, which is much lower than our deposits rate from the cash debt that we have on hand. Moving on to Page 6 to review our financial performance. Our consolidated revenue up by 164% from around $200 million to over $530 million, mainly contributed by the recognitions of the upfront income from Takeda, around $260 million. Our oncology product sales maintained strong growth of 35% at constant exchange rate. The improvement of our other venture business have also contributed to the overall revenue growth. So 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. In addition to the recognitions of upfront income for the Takeda deal, reduction of R&D expenditure resulting from the portfolio prioritization and restructuring of our U.S. operation as well as higher interest income from our strong cash balance have contributed to the improvement on the bottom line. Moving on to Page 7. Our oncology product sales, as mentioned earlier, has maintained a high growth of 35% to $80 million. So overall, our oncology business in total has achieved around $360 million of revenue, 3x higher than last year. So we are on track to meet our guidance set at the beginning of the year, that is around $450 million to $550 million revenue for the full year. I will now turn -- pass to our Chief Commercial Officer, Chen Hong, to share with you the details of our commercial business performance.

Thank you, Johnny. Good morning, good evening, everyone. I'm happy to update you HUTCHMED commercial performance in the first half of 2023. As a global science focused by pharma company, HUTCHMED fully integrated R&D and commercialization platform. HUTCHMED build up its oncology commercial platform since 2018 and continuously improved the 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 benefit new drug access to patients, including the implementation of new channel pharmacies and the simplification of NRDL renewal process, et cetera. Next slide, please. 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, is still keeping strong growth in the first half of this year. We estimate that there were about 17,000 new patients were treated with ELUNATE in China in the first half with 21% growth. According to IQVIA tracking study report, ELUNATE surpassed regorafenib in terms of patient share since the end of 2021, and that led to grow to about 47% patient share at the end of June 2023. This resulted in USD 56.3 million in market sales up to 12% growth, which is about 20% at CER growth versus the first half of last year. Next slide, please. 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, increasing patient access to SULANDA and its long duration of treatment, the total in-market sales in the first half of 2023 accelerates growing by 66% to around USD 22.6 million, with 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. Next slide, please. ORPATHYS is the first-in-class selective MET inhibitor to be approved in China and marketed by our partner AstraZeneca in 2021. Following negotiations with China and HSA in January this year, ORPATHYS has been included in the update on NRDL since March 1 with a 38% discount. The delayed implementation of NRDL plus the price reduction led to the flat sales in the first half of this year, with about minus 5% growth in U.S. dollars and 2% growth at CER. However, we can see the volume sales grew very strong in Q2 up to 84% comparing to the second quarter of last year. So in summary, of our 3 market products are now included in NRDL, which is in line with our commitment to improve patient access. Despite some initial challenges in the first quarter due to the impact of COVID-19, the in-market sales of HUTCHMED 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.

Zhenping will cover manufacturing update. Zhenping?

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

All right. So yes, I'll cover for Zhenping. Basically, as you know, we've been building our new factory in Shanghai. At the moment, construction is complete. We are going through equipment and validation and also applied for a compliance license, and we should be able to initiate clinical supply manufacturing later this year. And at the same time, we will be initiating 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 be more energy efficient. Next up is Mike to update the pipeline. Mike?

Thank you, Wei-Guo. Slide 13, please. Yet our clinical programs that continue to grow and mature and cover a broad background of hematology-oncology product. And this slide lays a 15-plus ongoing registration trial for 7 leading products globally, including life cycle indication of market products and late-stage assets with the anticipated NDA filing time in the next few years. Fruquintinib, savolitinib and Surufatinib already on the market in China and 2 are in global partnership with Takeda and AZ. And HUTCHMED is leading the development of multiple life cycle indication for this product in China, which I alluded to. Our next wave late-stage compound in registration trial, also in the hematology space, and 2 compounds received breakthrough therapy designation in China, Sovleplenib in immune thrombocytopenia, ITP and amdizalisib, our PI3K delta inhibitor in third-line follicular lymphoma. And the EZH2 inhibitor tazemetostat is the first in-licensed product from Ipsen, and we are doing a bridging study and registration in China. And notably, new to the list is HMPL-453 listing at the bottom here is our FGFR inhibitor and also entered the registration trial in intrahepatic cholangiocarcinoma and leading our third wave product into the registration trial. Next slide, Slide 14. And Fruquintinib global regulatory filing has been going very well and which is supported by the results of Fresco-2 and recently published in Lancet and also the data from Fresco, the China registration trial. So NDA for fruquintinib, Dr. Su already mentioned granted a priority review by the U.S. FDA and PDUFA date is November 30. And MAA validation has started by EMA in June. And also, we worked our partner, Takeda, as doing the Japan filing later this year. Next slide. And the fruquintinib partnership with Takeda has been progressing very well. And Johnny already mentioned, we have received an upfront payment of $400 million. And also the joint team established and started the collaboration already. And our NDA filing, the MAA and Japan and India as well on target. Also on the commercial front, Takeda is initiating launch readiness in advance for the PDUFA date. So -- and also regulatory and life cycle indication part and join the Takeda-HUTCHMED team already in the discussion and also with our external advisers to be held to discuss the LCM strategy. And HUTCHMED is ongoing clinical program in China may also help inform our clinical development decisions. Slide 16. And fruquintinib NDA for the second-line gastric cancer is already accepted in China. And this is based on the FRUTIGA second-line gastric cancer trial met one of the dual new primary endpoint of PFS, which is the [indiscernible] and clinically meaningful. And the other primary endpoint of OS was not a satisfactory significant specified as status quo plan. So we completed our sNDA filing and the NDA has been accepted by MMPA in April. We hope to extend the patients serving gastric cancer with this high unmet need. Slide 17. On the fruquintinib life cycle indication development, we are also very pleased to receive the breakthrough therapy designation in China for the combination with sintilimab, the PD-1 from Innovent in July for the treatment of advanced endometrial cancer with the proficient mismatch repair subtype. And E&C incident and mortality are projected to grow in China and the patient who progressed on first-line therapy remains with a high unmet medical need. And we have completed the single-arm registration Phase II study and if the favor of results from this trial could lead to the regulatory approval in this treatment setting. Next slide, Slide 18. Sovleplenib is the highly differentiated oral Syk inhibitor with breakthrough therapy designation in ITP in China. We are particularly encouraged that our Phase I/II result demonstrate the robust overall response rate of 80% and the durable response rate of 40% in relapsed or primary patients. These high response rates are on par with the current widely used second-line treatment for ITP such as TPO-RA. And the same response rate has been shown in patients with previously treated with TPO or not and much higher than that the existing Syk inhibitor Tavalisse in this setting. So we believe Sovleplenib has the best-in-class potential in the ITP setting. And the result Phase I study was already published in the Lancet hematology in April this year, and we have completed enrollment of ITP Phase III registration trial ESLIM-01 and expect the top line results in [indiscernible]. So if positive, we prepared to NDA filing in China later this year. Next slide. Slide 19. Amdizalisib, our differentiated PI3K delta inhibitor is currently going on with 2 single-arm Phase II registration studies in China, in the third-line follicular lymphoma and second-line marginal zone lymphoma. The updated Phase I data were presented at International Congress on malignant lymphoma in June this year, demonstrate a compound is not only promising efficacy with higher response rate, 4-month PFS rate and durations of response rate in lymphoma and MZL, but also favorably safety profile when compared with the same class of compounds. As highlighted with the low incidence of AE of interest as well as a low discontinuous rate on the treatment. So this, of course, needs to be further confirmed in a larger patient population. I'm very pleased we have completed enrollment for this pivotal trial in follicular lymphoma earlier this year and with the clinical readout and the potential NDA filing later this year. Next slide. There are 7 registration trial for our MET inhibitor savolitinib and all currently enrolling. And 3 are led by our partner, AstraZeneca, globally and 4 led by HUTCHMED in China in multiple cancers with MET operations, including non-small cell lung cancer and papillary renal cell carcinoma. In addition, we have entered the registration phase in gastric cancer with MET amplification up the top trial results presented earlier at ACR this year. Next slide. Our innovative early-stage pipeline continues to grow, and here are only a few examples. And I mentioned earlier HMPL-453, the FGFR inhibitor, has entered registration trial in the cholangiocarcinoma after discussion and in agreement with the CDE. And the clinical proof-of-concept study were presented at ASCO this year and the clinical POC data for HMPL-306, our IDH1 and 2 dual inhibitor, also presented at EHA this year. The randomized Phase II dose has been determined and will consult with the CD on the registration path forward. We also initiated a combination of a trial of tazemetostat and also PI3K delta inhibitor amdizalisib in molecular hematology indications. Also note mentioning is the newest addition to our early-stage pipeline, including a differentiated SHP2 inhibitor HMPL-415. Next slide. I'm very proud our R&D team remained focused and executed very well for the first half of the year. On the regulatory activity, we submitted regulatory filings for fruquintinib and all on target with our partner. And also the Japan third-line CRC is also in preparation. We have submitted a supplemental NDA filing for, as I mentioned earlier, for the gastric cancer indication for fruquintinib and mNDA already accepted our application. And we received breakthrough designation for fruquintinib plus sintilimab in the second-line endometrial cancer. Also want to mention here and following the dialogue with the PMDA regarding the surufatinib. We have decided now to file a Japanese NDA for neuroendocrine tumor on the basis of clinical trial data available. And we also anticipate data readout potential NDA filing in China for Sovleplenib second-line plus ITP and Amdizalisib for third-line follicular lymphoma based on the pivotal trials. And also savolitinib first-line non-small cell lung cancer patient with MET Exon 14 mutation. First-line data will be presented in September at WCLC. And also, we anticipate the endometrial cancer readout. On the development side, HUTCHMED and our partner, AZ will continue to complete the enrollment of multiple registration trial for savolitinib in non-small cell indications. And we also will complete enrollment for fruquintinib plus sintilimab in the renal cell carcinoma. And the heme product will complete the enrollment for Amdizalisib in the second-line MZL and tazemetostat bridging study for third-line follicular lymphoma. We presented clinical readout for savolitinib in second-line gastric cancer in meta-amplified patients at AZR and initiate the registration trial for savo in the meta-amplified gastric cancer. And also, we have completed enrollment of Sovleplenib Phase II part of the second-line warm autoimmune hemolytic anemia indication and will decide for the Phase III after data readout. So to recap our R&D progress, HUTCHMED has a deep and broad portfolio and multiple near-term development catalysts in 2023 and '24. So our R&D team will remain sharply focused on the execution of our late-stage product development. So with that, I'll wrap up my part of the presentation, I will turn the podium to Dr. Wei-Guo Su, our CEO and CFO. Wei-Guo?

Thank you, Mike. Yes, just next slide, Slide 23. A reminder of our near-term goal of turning profitable by 2025. Obviously, we are focused on growing our China business, China commercial, at the same time, managing the control -- managing and controlling the spending. Together, hopefully, will allow us to achieve our goal of breakeven or being profitable by 2025. And next slide, Slide #24. Now to just sum it up, we had a very strong first half of 2023. We will continue to focus on our near-term goal, and we are confident that we will be able to deliver on these goals because we have a broad pipeline, and we are working on multiple -- on very extensive and robust life cycle indications for our first wave of compounds, namely fruquintinib, savolitinib and Surufatinib, both in China and outside China. At the same time, we are also working to file and register basically these compounds outside China for global patients. Secondly, we are working to file for approval in China, our second wave of 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. At the same time, we expect our third wave of compounds to enter into pivotal registration studies in China in the next 6 to 9 months, led by HMPL-453, our selective FGFR 1, 2 and 3 inhibitor. I mean all these will present opportunities for NDA submissions in '25 through '27 and will position us for long-term growth. Overall, I'm quite happy that we had a very strong first half 2023. And we are quite excited about our long-term prospects given this extensive pipeline. So this will conclude the presentation, and we'll be happy to take any questions.

[Operator Instructions] Our first question comes from the line of Kelly Shi from Jefferies. We are not getting 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.

Can you hear me?

Yes.

Great. So 2 from us. First, could you help frame the scope of the top line 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.

Yes. So Sovleplenib in ITP, it is a Phase III randomized placebo-controlled study. And in terms of the top line readout, we expect second half of this year actually should be fairly soon. And we'll obviously announce in due course. Specifically with regard to patient sample size, it is a total of 180-plus patients, randomized 2:1 in Sovleplenib and placebo arms. The durable overall response rate will be the primary endpoint. So that is about ITP for Sovleplenib. Amdizalisib, there are 2 -- actually, there are 2 pivotal studies ongoing both our single-arm studies with overall response rate as a primary endpoint. So follicular, third-line follicular we completed enrollment, which is around 100 patients and the readout should be towards the end of this year.

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

Yes, of course. Yes.

Okay. 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, maybe help us understand whether that would be in China or if you would shift manufacturing to other sites to help support the launch?

Okay. Thanks, Alec. Yes, we've been working with Takeda just to support them on the launch readiness. Obviously, they are driving the activities. Maybe I'll ask Karen to provide some more details on the preparation from Takeda side. In terms of manufacturing, we qualified 2 sites for drug product supply. One is obviously our HUTCHMED factory or plant in Suzhou, China. The other is in [indiscernible] Switzerland. So obviously, we are going through pre-approval inspections and so forth. So likely, the Suzhou plant will be the initial supplier. And ultimately, the 2 sites will be supplying global markets. Karen, can you talk a little bit about launch readiness at high level?

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

Yes. Thank you, Karen.

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

First, I was just wondering how the relationship with Takeda might potentially be capitalizing other aspects of business developments. Obviously, the focus right now is fruquintinib, but then I think there is a wide and deep pipeline within HUTCHMED. So does that provide a basis for more expansive discussions with Takeda? Or do you envisage potentially the deal sort of generating further interest in the pipeline from other third parties?

I mean, obviously, Takeda is a very strong potential partner. We are working with them at the moment on fruquintinib. They are great partner to work with. And yes, obviously, we always constantly in talk about potential opportunities for collaborations. And so I wouldn't -- I think it's all project-based. We -- yes, we have a very broad and deep pipeline, but it's all about pipeline fit or synergy, if you will. So we just are very happy at the moment, working with them on fruquintinib. And will definitely explore other opportunities when they -- when our compounds progress through clinical development when the time is right.

Got it. Perhaps I can just follow up with another question just in terms of third-party relationships. Just with AZ, I think we saw earlier in the year some press speculation on potentially how AZ might evolve its China operations in the future. I'm just wondering how you think about that in terms of how any changes in terms of spin-offs or other restructuring of AZ China operations, where or not anything happens. How that might change your relationship and particularly in terms of development of Savolitinib? How are the structures sort of set up in order to be flexed basically?

Changes are constant almost for every company. But specifically for AstraZeneca China, we don't think there is any basis. It's just -- we believe it's just a rumor. So at the moment, nothing is -- nothing changing in our relationship with AstraZeneca. It's all playing out according to our original contract.

Fantastic. And perhaps I can just finish with just 1 final quick one, just on COVID. In terms of the commentary around the sort of impact on Q1, just wondering if there's -- you've been saying anything further in Q2 or even with the current quarter just in terms of COVID. I kind of take my focus away from COVID impact in recent months that, that would be very helpful.

Yes. Generally speaking, the COVID impact was early part of first quarter, January, in particular. So it was a bit soft in the first quarter. Second quarter, things now seem to return to normal. We are seeing the trend of things picking up. So we don't expect any major issues from the second quarter and on. So yes, pretty much back to normal.

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

This is Wayne on for Louise. Congrats on the progress. We have 2. The first question is on the Sovleplenib. In the press release, you mentioned you might profit into the Phase I in ITP in the U.S. depending on the outcome of the China Phase III data. So what do you need to see here in order to move into the U.S. study? And how is it differentiated from the other mechanism of actions, such as FCRN? Then the second question is, can you discuss your strategy for further build out in the hematology space moving forward, given you already have 6 investigational drug candidates targeting the hematological malignancies in clinical development?

Okay. Thanks for the question, Wayne. I think specifically for the U.S. strategy for Sovleplenib for autoimmune diseases, I think the ITP in China would be a major catalyst if the Phase III top line results recapitulates our Phase I/II data. I think it would represent a very strong opportunity for global market, we believe, would expedite the process to initiate our Phase I -- U.S. Phase I for autoimmune disease. We do have an active IND in the U.S. and -- but we do need to quickly confirm the recommended Phase II dose for U.S. patient population or for global patient population for that matter. So we believe it is a very -- it is a highly differentiated oral Syk inhibitor. And the data we presented or published now for Sovleplenib of Phase I/II clearly demonstrated superior efficacy and much improved safety comparing to fostamatinib, which is the only Syk inhibitor approved. So we would -- we believe there would be a clear opportunity for Sovleplenib in autoimmune diseases space. And we definitely would invest to follow the China studies. In China, we are already evaluating the landscape and if the ITP is positive readout of Phase III in China, we would follow with addition of life cycle indications for Sovleplenib. And the U.S. will catch up once the dose is confirmed. With regard to hematology, we are evaluating this space. I think the space has changed a lot now with the bispecifics and CAR-T ADC as well. So we are evaluating the potential opportunities for the Syk inhibitors. But clearly, it is now much more crowded comparing to 2 or 3 years ago.

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

My first question is on savolitinib with regard to the SAVANNAH trial. Can you remind us if there will be an interim update for that study and when that might come? Or are you going to run that study just to completion ahead of a potential filing for an accelerated approval? And then I have a couple of follow-ups.

We don't think we have interim analysis built into the current Phase II registration study -- SAVANNAH study. So it would be just -- it's a relatively small study. So it'll be just a straight enrollment into completion and then report out.

Okay. Got it. My second question is on -- to follow up on the earlier question was regarding the Takeda collection and commercialization in the U.S. Can you remind us if your 2023 oncology guidance is inclusive of any sales post an approval here in the U.S. or should we assume that the first sale would likely come in, in 2024?

There's no royalties built into our guideline for 2023, specifically for fruquintinib U.S. sales. The priority review status and PDUFA data before end of the year, all just played out, we did not build into our guidance.

And my last one is on just regarding collaboration and life cycle development with Takeda for fruquintinib. When do you think you might be in a position to -- with your partner to talk about the development path in markets outside of China for that? And can you remind us of how the cost sharing is going to work there for future clinical development?

Yes. So first on the cost, obviously, will be 100% covered by Takeda. With regard to specific indications to pursue, we've been in discussion with Takeda team. There are obviously a few that we are interested in or Takeda is interesting as well. So we continue to evaluate the opportunities and also leveraging many proof-of-concept studies coming -- reading out in China as well. So overall, the 2 joint teams have been working together and evaluating different opportunities, we just need to finalize the plan. Maybe Mike, you can chime in on this.

Yes. We have been in active discussions with the Takeda team. I think from a medical perspective, right, we really focus on quite a few indications, right? I think both we have shared the China, both HUTCHMED study and also IT results. I think both teams are very engaged, and we're also consulting with external KOLs, right, medical experts. Really hope we can shape up some indications for future development. So I think both teams have to continue to work on that.

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

Congratulations on the results. I got 3 questions. First is regarding positive SAFFRON study. I know that is expected to complete recruitment by end of this year. So do you have any plan for any readout for this trial and also the follow-up NDA filing supported by SAFFRON. And my second question is regarding the other ventures. I noticed that it grew very strong in the first half. So can you share more color on this? And my third question is, I think it's quite a concern for a lot of investors over the weekend is that the central commission of the -- for the disciplined inspection in China, have some talk on the anticorruption campaign of the health care industry in China. So I wonder if there was any impact on your commercialization activities regarding this? That's my question.

So your first question on the ongoing -- obviously, there's an ongoing trial and not only just enrollment, but also PFS follow-up and so forth. So we don't really anticipate any interim report of the results of any ongoing trials. So I don't have -- for this one as well, I don't anticipate any reports or publications anytime soon until PFS is mature. Your last question about commercial anticorruption. So both HUTCHMED is always highly compliant with global quality -- global standards of compliance. So we don't expect any major impact on our commercial operations. What was your specific for your second question?

The other venture grew by over 50% in the first half.

Sorry, just related to the logistic distribution business, Dr. Su.

Okay. Maybe, Johnny, you can provide some more details on this.

Yes. Basically, I think the key contributor for the other ventures growth in the first half is related to the growth of our logistics distribution business. So our commercial team there have continued to receive good interactions with the new customers. So we have been able to do this logistics distribution work really well in Shanghai region. So that's contributed to the growth. It's relatively low-margin business. So I think it is -- the key importance is our oncology product sales growth that has reported 35% growth in the first half.

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

So just 3 quick questions. I think 1 or 2 are kind of follow-up to a previous question. So the first one is kind of back to the Sovleplenib in terms of the Phase III readout. I was wondering how should the investors and analysts like us frame the top line results compared to the result that we've been seeing for the Phase I and II considering there is a bit different patient enrollment in terms of new line of previous treatments. That's the first one. Second question is in terms of the commercial strategy for Sovleplenib and also amdizalisib considering the indication that they will be launching is a bit different from kind of the existing product -- obviously looking to establish new teams or using existing teams? Or will we be looking for partnerships to -- for their commercialization? And I think one final one is just on the kind of the commercial dynamic for SULANDA domestic. I see that the slides that are mentioned, there's 12,000 new patients that was treated in the first half of this year. So it's a significant increase from last year. While it looks like on the market share side, the majority of market share gain actually went to others compared to the pipeline slides at the full year results. I remember I was just checking, it looks like for SULANDA, it went from 16% to 17%, while other went from, I think, 18% to 23%. Just wondering what's the competitive dynamic in this space right now. And what inhibits will be any challenge to continue growing the shares in this market.

Okay. Thanks for the questions. So Sovleplenib Phase III readout, I think you've already seen Phase I/II results, 80% overall response rate and 40% durable overall response rate. I mean these are obviously very strong results. But very small sample size as well. So I think what would make Sovleplenib stand out is it's oral convenient dosing and fast onset of activity, 80% is very robust activity for these patients -- in heavily pretreated patients. And it's open on the very small study. So here, we -- the Phase III is randomized placebo-controlled if these data can be capitulated, it would be a very strong data, not only comparing to compound in the same class, but also comparing to any treatment available for ITP patients. These are obviously refractory -- highly refractory patients. So I think we need to look at the level of efficacy, but at the same time, our safety profile as well. We already pointed out early on that we have very low risk of thrombosis basically with blood clotting formation with typically seeing with TPO or TPO-RA therapies. It's -- it represents very severe potential side effects. So Syk inhibitor of Sovleplenib, so far we've seen very -- we have not seen any cases of thrombosis to date and would represent a very low risk there. So strong efficacy coupled with a good safety profile, low risk of thrombosis and also fast onset of efficacy that would differentiate Sovleplenib from the current -- currently available therapies and would make it a very competitive product in this category -- or in this patient population. Commercially -- commercial strategy, it is an autoimmune disease. However, these patients typically in hematology space, a lot of physicians are in hematology -- hematologic malignancies like lymphoma, leukemia, as we talk to. So even if the ITP is not a hematologic malignancy, but a lot of doctors or even in a hospital, they are treated by hematologic-malignancy physicians. So we definitely will have a dedicated team for this indication, but a lot of doctors or physicians will be in the same hematology space, if you will. For SULANDA, I think you see a lot of big -- we are growing the patient numbers. And you have to understand the neuroendocrine tumors and also the treatments available. This is a very highly fragmented disease with different -- they can originate from different tissues or different organs. And also, the hallmark for this disease is that you typically don't see very high response rates. What happens is that patients experience -- many of them -- majority of them experience stable disease. So they can control the disease. They sometimes see some tumor shrinkage or tumor regression, but not to the point of response. Oftentimes, they rotate on -- they rotate on to some other treatments and they come back to the same treatment to SULANDA, for instance. So there's definitely some rotation going on. So by far, what we are -- patients treated so far with SULANDA by far majority are neuroendocrine tumor patients.

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

This is Clara on for Kelly. Congrats on the progress. So -- just a question on fruquintinib. So at ASCO we showed subgroup analysis of fruquintinib, including overall survival in patients across different lines. So could you maybe talk about the time line and development plan to support the earlier line approval and do you plan to run digital studies?

Yes, I'll ask Mike to comment on this. Mike? Fruquintinib, earlier lines of CRP.

Right. So life cycle management indication discussion, as I mentioned earlier, we've been actively in discussion with Takeda on the LCM plan, right? So certainly, earlier line of indication is also what we are considering. And so at this point, with further evaluating data, as mentioned, we certainly have some China data show earlier line fruquintinib can be combined with chemo-immunotherapy demonstrate signs of clinical activity and safety. So certainly, moving to earlier lines of possibility, but we'll still continue to discuss and evaluate this Takeda.

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

Mark, do you have any comments or to sum it up?

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

No. no, not for me.

Okay. Thank you, everybody, for joining. And if should you have any questions, please feel free to contact us. Happy to answer your questions or organize a meeting if there's anything that's not clear in anything we've spoken about today. Thank you all.

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