New York Healthcare Conference. My name is Kelly Shi, one of the biotech analysts here covering SMID cap. Please join me and welcome Mr. Mark Lee, head of Corporate and External Affairs of HUTCHMED, for this fireside chat session. Welcome, Mark.
Thank you.
Maybe we can begin with some high-level overviews of HUTCHMED before going into the details about your commercial products, pipeline, and extensive pipeline programs. Where are HUTCHMED's current key focus and priorities, and what should investors be focused on in near term?
Sure, Kelly. Okay, just, just, starting off with a very high-level overview, HUTCHMED's been around for close to 25 years now. We've done it all the hard way, starting from discovery, discovering our own compounds. We still have a very vibrant discovery team, and taking those compounds through clinical development and onto commercialization. So I joined the company about 15 years ago. Back then, I think we had just put in our first two INDs for small molecules, and we had about 200 people. Now, we've got about 2,000 people. About 900 of them are commercial people in China.
Along with our partners, selling three and a bit commercial compounds that have been researched, developed, and manufactured, and now marketed by us and our partners, AstraZeneca and Eli Lilly.
Great.
So... Mm-hmm. Yeah.
Sorry, go ahead.
No. So, in addition to that, we've got a very, you know, a very broad pipeline coming from that research team. Those 150 to 200 R&D people that I had mentioned before are now closer to about 900. And, in addition, we're partnered with Takeda outside of China for one of our lead compounds. As well as what I mentioned earlier, AstraZeneca, for another one of our compounds.
Okay, terrific. Could you give us an overview of your commercial pipeline in China and how they are tracking to the 2024 consolidated revenue guidance of $300 million-$400 million so far?
Yeah. Yeah. So, as I mentioned, we've got three compounds marketed in China. One is a VEGF inhibitor called fruquintinib, that or brand name is ELUNATE, and that has been on the market for almost six years, very robust. We... Since we took over commercial operations three or four years ago, we-- Well, at that point, we, within a couple of quarters, we doubled sales. That's now doing about $100+ million in sales as of last year. That's continuing to grow in the mid- to high teens. Meanwhile, we've got two more compounds, surufatinib, for neuroendocrine tumors. That's still growing in the 30%-40% area, and ORPATHYS is the partnered compound where we have partnered with AstraZeneca, also growing in that range, having also been launched a little more recently.
I should say, though, with, with ORPATHYS, with AstraZeneca, that initial indication is not, is not the big one. It's the first one, but And that is for, MET mutation, non-small cell lung cancer, which is only about less than 5% of new non-small cell lung cancer patients. But the big opportunity for that drug is in combination with AstraZeneca's TAGRISSO, which we all know is a $6 billion+ market opportunity or sales opportunity right now. And, and in combination, we are working with AstraZeneca, both in China and outside in China, to bring that to-- that, bring that indication to market, in the next sort of 18-24 months.
Terrific. Many investors are also interested in learning about China's oncology environment. What does it look like lately from a commercial perspective, and what tailwinds can benefit HUTCHMED? And also, what dynamics do you think investors may not be aware of?
I think, I mean, the dynamics that most, most people, looking at China are aware of, the, the most obvious thing is the size, right? Number of patients, size. Everybody knows you take that and multiply by its very large population number, it's very big. But then the potential downside with China is getting out into the market. It's such a big country, getting not just into the Tier One kind of cities where, you know, traditionally the multinationals have been hitting, but getting into Tier Twos and Tier Threes, as well as maintaining a decent price. There is, and I, you know, I had meetings with investors this morning, and they're all concerned that in the periphery, it sounds like maybe net price might be an issue.
I think on those last two points I just mentioned, we're – we are in a good position, at least. As I mentioned before, we have about 900 salespeople. We, through establishment of another business we had, we've had for 15 years, have always been very good at getting deep into the depths of the country, the Tier 3 cities, really hitting those physicians and informing them on the benefits of the drug. So we've been doing a great job there. And as I mentioned before, even though we're partnered with Eli Lilly, we took over sales and marketing 3 years ago, and we've just done a fantastic job. Our team's done it, it's not me.
The team has done a fantastic job of increasing sales in the thirties, forties percent growth. Now that we're in year 6, it's obviously a little bit lower on this current indication. The other thing is pricing. I think a lot of people outside China have had feelings or heard that pricing in China can get very aggressive, and there's a lot of discounts applied all the time. I'd say that's not true, at least not in our view, and not where we sit. We've got a drug that has been on the market for many years. We've been through two renegotiations on pricing for that drug. You generally renegotiate every 2 or 3 years, and we've seen almost flat, no change in pricing.
There's no. We don't see this specter or potential hard discounts. We had zero discount in the last renegotiation. The renegotiation before that, it was in the mid-single digits difference. So it really is not. If you've got a drug that's truly benefiting patients, it's not a worry for us.
Okay, great to know. And, for fruquintinib, for which you have a partnership with Takeda, it was approved in November 2023, for previously treated metastatic colorectal cancer. Could you talk about how the launch is going so far in the U.S.?
Well, yes. So in the last seven weeks of 2023, with Takeda did $15 million in sales. I'd say the launch is going very well, and I think we picked the right partner. We chose Takeda because when they laid out their commercial plan, it was very comprehensive, and we really saw that they were gonna push it hard, and I think they have done. The first quarter, calendar quarter of this year, it's a little different because if you follow Takeda, their fiscal quarter is at the end of March. But if you... The first calendar quarter of this year, they did $53 million. So that's the first quarter of this drug, first full quarter, and they did $53 million. So we're very happy about that. Obviously, it's still early to tell.
Mm-hmm.
I think consensus estimates for that were in the order of maybe $75 million-$100 million for the year. So $53 million in the first quarter ever is a good start, and I think once we see a second quarter under our belts, just to make sure that it's not sort of a bit of stocking, see a better sense of the trajectory, I think we'll have a better sense. So I'm not really gonna give guidance on that, 'cause at the end of the day, no one really knows.
Mm-hmm.
It's looking very good, and we're very happy.
Okay, regarding the commercial plan, in the rest of the world, outside of U.S., could you give us update on the regulatory progress?
Yeah. So, as you said, November, November eighth was the FDA approval. Even before we signed the deal with Takeda, we had a, we were submitting that NDA. We were near the end of finalizing our European MA. So that was submitted shortly after the FDA one. We just got our. About four weeks ago, we got our the CHMP EMA positive opinion, positive opinion. And so, you know, I think, there's a very, very high probability, as we all know, that the EU should approve it in the next few weeks. And we should, we'd expect Takeda to ramp that up over the next few months.
Obviously, it's Europe, so there's a lot of country-by-country work that needs to be done, but I think the regulatory part is there. In addition, I guess the next big market would be Japan. I think that's a very exciting opportunity between the huge incidents in Japan and a more moderate pricing structure, more similar to the U.S. than to Europe. I think that's a very big opportunity. Beyond those three regulatory regions, there's another 10 to 15 other countries that we've been working with. We're actually doing the manufacturing, so we're going through all these inspections.
We're passing them all, whether it's, you know, Korea or Mexico or, you know, many other countries, as well as utilizing the collaborative projects that the FDA have with other regulatory agencies.
Collectively, what is projected peak sales for CRC outside of China?
So I-
Question?
I never really answer this, but the question, Look, Takeda paid us $400 million upfront last year for this. I think, you know... Just for this, you know, late-stage colorectal cancer indication, it's, you know, should be north, should be closer to $1 billion. Obviously, there's a lot more questions on future developments. We're only-- We're not talking just about ex, ex-China, but even in China, we're continuing. We've got 2 NDAs in China, even, for this drug currently under review, so potentially there could-- If we add up all of those other indications, there could be a lot more.
Terrific. Any question?
Yeah, so considering the price difference between the U.S. and China, any difference on supply chain or even packaging those?
Yeah, there, there's a difference. I mean, for starters, Americans prefer bottles, and Chinese prefer blister packs. Actually, Chinese and Europeans prefer blister packs. So, but the, the API and the drug product manufacturing part, as in, you know, putting together the capsules, that's all the same supply chain for the moment. For you, we do have an alternative site in Europe as well for drug product manufacture, and so that will be utilized with our European rollout, most likely. But in general, it's... You know, I think, I mean, you know, you touch on a good point because the FDA came and audited our manufacturing site.
It was the first manufacturing, first FDA audit ever for that manufacturing site, and we were very, very proud to say that we had, you know, no, no 483s, no, no findings at all. So for a first-time assessment, that's outstanding. Absolutely outstanding.
... Great. Switch to another pipeline asset, savolitinib, which is a MET inhibitor. Could you talk about the development opportunities, especially in lung cancer, along with our partner, AstraZeneca?
Yeah. So as you said, as I mentioned earlier, savolitinib's on the market in China for exon 14, which is a small market opportunity. With AstraZeneca, the main development plan is SAVANNAH in the US. This is a potential registrational phase II. What we have shown in interim analyses on this trial is durations of response of almost 10 months in this patient population of MET gene amplified post TAGRISSO refractory patients. And really, the key was that was only on just over 100 patients. The work that we've been doing in the past 12-18 months has been just to enroll more patients and, you know, this data should read out once the...
We've finished enrolling, we're just waiting for the data to mature. Think maybe sometime in the middle of the second half, we'll get the results of the broader, data set. So with a broader data set, assuming that this, this, duration of response, PFS efficacy, and of course, safety profile, remains intact with a larger N, then the plan is to submit a, an NDA at the end of the year for AstraZeneca to send-- submit that.
Terrific. And also look at the EGFR space in lung. The data from Janssen's MARIPOSA trial in frontline and also the MARIPOSA-2 in patients progressed after TAGRISSO led us to revisit the treatment paradigm in EGFR mutant market. So with this evolving landscape, how should we look at opportunity for savolitinib?
I mean, I'll give you what KOLs have been saying to us. Firstly, MARIPOSA, which is not technically our market opportunity, it's, 'cause that's too directly competing with TAGRISSO. I think TAGRISSO's real-world PFS has been in the sort of low- to mid-20s months. MARIPOSA has not really... I mean, it's higher numerically, but it's not a massive difference. And TAGRISSO is a bottle of pills that you carry around with you, and you take one a day, versus MARIPOSA, which is a much more messy combination of infusions plus their EGFR inhibitor that most oncologists are not familiar with. So that's from that perspective, again, it's not our compound, but that-
Mm-hmm.
-that seems to be the difference. Likewise, also, AstraZeneca last year at, I think at ASCO or ACR, presented the results of their, FLAURA2 trial-
Yeah, FLAURA.
-which, which combined TAGRISSO with chemo and showed that if you do that, then you get, you know, even better-
Right
... PFS than the MARIPOSA. So what we've been hearing is that the likelihood is TAGRISSO is gonna remain the market leader.
Mm-hmm.
Including not even the TAGRISSO + chemo combination is not likely to be a leader. The quality of life improvement of just being on TAGRISSO has been very important for oncologists. For MARIPOSA-2, which is more relevant to us, the patient population's a little different.
Mm-hmm.
Yes, it is post TAGRISSO, but the MARIPOSA-2 trial was not selective for MET patients, whereas ours was-
Mm-hmm
... is. And MET as a driver of that resistance mechanism is generally expected to be a very poor prognostic for a patient. And so we're very specifically selecting these MET patients, which is about 30% of the post TAGRISSO population, and giving them, saying: "You know, you take your TAGRISSO, and by the way, here's another bottle. Take this as well. And, you know, here's another bottle of pills." Well, you know, and the physician can say, "See you in a month or two." Again, MARIPOSA-2 is, number one, it's not selective for these patients. And so, and if you look at the durations of response, or at least the data I saw, the earlier data I saw is actually slightly lower than ours. But not much. It's a bit of a wash.
But number two, it's so it's not selective. If you're not a MET patient, of course, go for that. Could be your alternative. But also, as we said with MARIPOSA, the regimen's a lot more impactful to your quality of life, going to sit in a chair for all of this, for chemo and the antibody as well.
Okay, so commercially, it could be very positive view for the savolitinib and TAGRISSO as a non-chemo and all-oral regimen.
Yes, exactly. Exactly.
I'm curious actually how big that market opportunity is, in the second line and with MET aberration?
Well, so I was saying the duration response seems to be about almost 10 months. TAGRISSO is in the sort of 2022, so that's the kind of difference in the, in the usage compared to TAGRISSO's current-
Mm-hmm
... current sales and prescriptions. And of course, it's only 30% of the... Well, if it's MET high, maybe 15%-25% of those patients. So if you take those ratios of the post-TAGRISSO MET only... shorter duration. Pricing-wise, you know, I think everyone in the U.S. knows that, you know, the lower, the later in the line, pricing should be a premium to the earlier line drug. So I think that that's relatively proportional. So I think, you know, you can work it out from that.
Terrific. And a pivot to immunology asset, a Syk inhibitor, SYK, and you already disclosed in EHA abstract-
Mm-hmm.
in two immune relevant indications, ITP, immune thrombocytopenia purpura, and warm autoimmune hemolytic anemia, very mostly. And could you actually share with us what are the key findings there?
So, okay, just to make it easy, one's ITP, and the other one-
is wAIHA. We say-
We just say AIHA for anemia.
Yeah
... for the immune anemia indication. The most prominent right now is the ITP indication, of course, because that's the NDA that's currently under review in China. And that's exciting. The data showed this was a controlled trial of our Syk inhibitors, of sovleplenib versus placebo, and it showed a durable response on our drug of 48%, 48+% versus placebo of 0%. So it's... And the bar charts don't look right because it looks like it's missing a bar, but it's not. It's just, it was zero. That's fantastic. I mean, I think the only other Syk inhibitor approved anywhere in the world is fostamatinib from Rigel here in the U.S., and that had a durable response rate of 18%.
And the current treatments for ITP around the world, I mean, the best one is, is getting similar response rates to us, are the TPOs. So of course, TPOs are the vast majority of the market today. It's durable response are about the same as what we've shown in phase III, but it's a subcutaneous injection every week, and you know, there are all sorts of other issues with that. Whereas again, we've got another small molecule pill that has shown very good efficacy, durable efficacy, and a very good safety profile.
I think, in addition to those, to us, Rigel and the TPOs, there are, there have been, if you've been following the development of other drugs, I think there's, Sanofi has a, a BTK, and, argenx had a, had a drug, but all of those results from, so far in clinical trials have been in the 20%-30% durable response rate. So we're very optimistic on the competitiveness of this drug in ITP, and hence we're, you know, we're looking forward to launching it at the end of the year in China, assuming, it gets regulatory approval. In wAIHA, you know, wAIHA's interesting 'cause it's a relatively small indication, but the only treatment available for it right now is steroids.
Of course, that's, you can't have steroids for any chronic disease all the time-
Right
... for any disease all the time. So again, the data is exciting. It's a phase II, so we'll, you know, we're, we've just moved into phase III, so more data to come, but we're very excited that this is one of those indications where, you know, there really isn't anything else to compete with.
Very interesting. So what is the market opportunity across ITP and wAIHA in China? And also, do you have a plan to explore the outside of China opportunity?
Yeah. So in China, for ITP. I mean, look, the global market for thrombocytopenia is about $3 billion. That includes other indications other than primary ITP, but, and that's mostly the TPOs today. In China, it's focusing just on ITP. You've got probably a prevalence of about 250,000+ . Maybe about a fifth of them are a fifth of that for new patients every year. There's a lot of patients. I mean, this is not oncology, right? So, you know, patients come and go. That, with that 50% response, you know, 48%-50% response, durable response rate, they go, they flip between the various treatments, and I think there's a lot for us to address there, just in China, just for that.
Outside of China, we've kicked off a phase I-B in the U.S. Of course, we need to get the initial safety data in place, get a, which we're very confident with because it's, you know, we've have so much patient data, not just in ITP, but also in oncology, even in the U.S.-
Mm-hmm
... already. So I think we should be able to get that done over the course of this year. And then hopefully, when we present that data to the FDA, we'll flip that straight into... Our intention is to flip that straight into a pivotal trial. So, you know, hopefully get that into that development global development pathway, in the next 12 months.
Looking forward. Lastly, would you like to highlight the major milestones and the key data events for the next 12 months?
I mean, for the next 12 months, I think everyone is clearly watching the sales of FRUZAQLA with Takeda and the launches of FRUZAQLA by Takeda. I think the launch is going very well. And those numbers, because we've only had a quarter, of course, people are gonna be watching this for the next couple of quarters, at least, to really get a sense of the trajectory. In terms of the near-term sort of regulatory stuff, we've got the biggest one, I guess, is the gastric cancer, which you saw at ASCO.
You saw the data at ASCO. It was ASCO Plenary back in February, and more data, more subgroup data was pre-presented at ASCO. This is a market opportunity that is potentially twice the size of our current market opportunity in China. So if that gets approved in the next six months, then that'll give fruquintinib a massive boost in sales growth in China later this year. And then, and plus in China would be the launch of the Syk inhibitor, and then maybe in the sort of twelve months from now, if SAVANNAH reads out well, we hope AstraZeneca will be launching global, launching in the US, that combination with TAGRISSO.
Okay, terrific. Thanks for a great discussion.
Thanks, Kelly.
Thanks again for everyone for attending.