Morning, ladies and gentlemen. Thank you for joining Hua Medicine's 2019 Annual Results Investor Presentation. On the call today are Dr. Li Chen, Founder, Chief Executive Officer, Chief Scientific Officer, and Executive Director, and Mr. George Lin, J.D., Chief Financial Officer and Executive Director. Dr. Li Chen will give an overview of the company's highlights, including clinical trials and recognitions. He will also share updates regarding Hua Medicine's R&D pipeline. Mr. George Lin, J.D., will go through the company's financials and analysis. They will both be available to answer your questions during the Q&A session that follows. I will remind you that this call today may contain forward-looking statements. For details, please refer to the disclaimer on slide two of today's presentation. With that, I will now turn the call over to Dr. Chen. Dr. Chen, please go ahead.
Thank you. Good morning. Thank you for taking the time to attend this Hua Medicine 2019 annual result call. I hope you all stay safe and healthy. I'd like to start the presentation on slide number four of our PowerPoint presentation, restate our mission at Hua Medicine, and our goal is to achieve the medical care and then to treat diabetes. The mission is to stop the diabetes. We will achieve this objective by establishing our leading candidate, dorzagliatin, as a cornerstone therapy for diabetes treatment. Through dorzagliatin, we aim to restore glucose homeostasis in type 2 diabetes patients. We plan to launch dorzagliatin in China first, then globally as a monotherapy and in combination with the other diabetes drugs. With the heterogenic nature of type 2 diabetes worldwide, we have been engaging the artificial intelligence technology to develop personalized treatment protocols and advance the diabetes care.
We are continuing leveraging Hua Medicine excellent internal teams and a strong partner network to continue advance our current pipeline. We will partner with either China-based or international pharmaceutical companies to make dorzagliatin available to the patients in both China and the regions outside China. In slide number five, we can see that 2019, we have made many breakthroughs. We have achieved the primary efficacy endpoint in our pivotal phase III trial that treated drug-naive type 2 diabetes patients in China in 24 weeks with a very good efficacy, very low hypoglycemia, and very good safety profile. This further validated the concept of restore homeostasis and stop diabetes. We also completed the enrollment of our metformin combination trial with dorzagliatin, both trials are going very well. I'll give you an update later on the current status. We also completed our HMM0110 trial.
This is the trial we conducted in the severe kidney disease patients, and then showing there is no pharmacological PK interaction, which indicates dorzagliatin can be used in the type 2 diabetes patients with moderate, severe, end stage of chronic kidney disease. This is a very important indication. As many of you know, in the coronavirus situation, a lot of patients have the kidney function impaired, and then hypoglycemia of this impaired kidney function can do a very harm damage. Our drug, in this case, will be able to treat diabetes patients with severe kidney dysfunction. We also completed HMM0111. This is a trial investigating the PK/PD interactions between dorzagliatin and sitagliptin. We're very glad to see there is very limited and no PK interactions between the two drugs, indicating they can use together.
Also, we have shown a very good synergistic effect of glucose reduction and an improved beta cell functions when combined dorzagliatin with sitagliptin, one of the best sellers in oral antidiabetic medicine. At the same time, we worked over several other milestones. We were granted a formulation patent for dorzagliatin and also filed six additional patent applications covering fixed dose combinations of dorzagliatin and other oral anti-diabetes drugs, extending and strengthening our IP portfolio. We initiated formal collaborations with Dr. Franz Matschinsky, the godfather of glucokinase at the University of Pennsylvania, to further study the glucokinase activator and the glucose homeostasis. He was just recently awarded the Rolf Luft Award, which recognizes breakthrough discovery that glucokinase plays a central role in glucose homeostasis.
This is the key scientific hypothesis at Hua Medicine and that Dr. Matschinsky has dedicated his whole life and over the last 50 years to work in this field and define the physiological functions of glucose homeostasis play the role that in the diabetes. This is also very important milestone for Hua Medicine, where we collaboratively identify the opportunities to developing glucokinase activator as a potential treatment for diabetes. We also showed our result of a non-biased machine learning algorithm-based artificial intelligence technology used for type 2 diabetes patient sub-classification, which offers an opportunity for us to further developing this personalized medicine approach in diabetes treatment. In December, we announced our global operation headquarter and R&D center will be established in Shanghai Zhangjiang Science City and close where Hua Medicine was founded. During this year, we have fully validated our commercial manufacturing process that supports China launch of our drug.
Finally, we recruit a former U.S. FDA officer, Dr. Fuxing Tang, as a Chief Scientific Officer this February. On slide six, we are proud to share with you the picture of our top science data from the phase III study presented at annual Chinese Diabetes Society conferences held in the last November, which was hosted by our leading principal investigator, Dr. Dalong Zhu, the Chairman of the Chinese Diabetes Society, and other leaders, leading PIs, and partners, including Dr. Yang Wenying, the former Chairwoman of Chinese Diabetes Society, and who is leading our metformin add-on combination trials. In the slide number seven, I just want to give you an update on what's going on this COVID-19 situation. Before doing that, I think I'd like to give you the update on our phase III study design. As you all remember, we're conducting two phase III studies.
One is the monotherapy for the drug-naive patients, and that's the HMM0301. We have completed, despite of this COVID-19, the 52-week observation in the clinic, and then the clinical operation part is finally finished in March 2nd, 2020. And in also, due to a very good preparation work and engagement by our investigators and our partners, the combination trial, HMM0302, a 24-week study, also completed in February 16. In this case, we can see that with this very important milestone we have achieved in our two pivotal clinical studies, we will advance to the next step in the clinical center, where our team will conduct the quality evaluation and inspections on the clinical data, the performance, and the compliance. This is going to be taking some time as we're moving along as the coronavirus control situation, we will continue to managing the trial according to the national guidelines.
Hua Medicine internally has enforced additional pharmacovigilance and quality control and ensure our data quality stay high, and also our result shows the sound scientific and high quality. Other activities, just report to you, due to the virus outbreak, Hua Medicine has communicated with our employees and maintain a very good, healthy condition and control. By February 3rd, Hua Medicine employees have returned to work remotely. By March 2nd, our employees began returning to our office in Shanghai. The current situation is good, and we are all stay healthy, the operation is moving smoothly. With the outbreak of this COVID-19 globally and the controlling situation uncertainty, we anticipate that there's delays when we go into the hospital, where we have the controls by the COVID combat team, controlled by the regulatory that access to the hospitals, files and data in our clinical study.
That may have a potential delay related to the data cleaning, database lock, eventually the top-line results and the filing. But we will do our best in this situation and keep you posted as we're moving along. In the slide number eight, we basically just remind you that our monotherapy trial has been completed, this year we'll report this phase III 52-week result to you. Also the 24-week study of this combination study and a 15-week result on this 24-week study, we'll communicate with you as we're coming along. The additional combination study of dorzagliatin with empagliflozin, a phase I trial now currently ongoing in the U.S., we're expecting give you an update on that in this year.
Also, here we have initiated dorzagliatin combination studies with the other potential indications, we have in the process of prepare and finalizing the dossiers with the complete assessments and for the NDA submission preparation. At this time, we are expanding and preparing our market entry, and then payer adaptation, and then partner development to engage or launch our product in 2021. We are also engaging international partners, which were helping us to leverage the capabilities, and then to bring the drug in China and ex China. Let's give you a refresh on what we have been doing on the dorzagliatin. I think I like to go to the slide number 11, which want to reinforce our understanding, the diabetes is a terrible disease and is a huge unmet medical need.
Not only with 500 million people with diabetes now globally, a quarter is in China, we spend over $80 billion to treat those diabetes. The diabetes complications, the kidney disease, the heart disease, the stroke, and all those cause additional financial and economical burden to our community. So far, no drug, no approved drug used in the current treatment can stop the progression of the disease, from the early stage toward late stage, and then generate a complication. And then, t he most important thing for this area in the last decade is lack of investment because of this CVOT study, where it was imposed in late 1990s. Now the good news is realizing it's such bad disease and has such big impact and economic burden. And then, U.S. FDA recently has waived the post-marketing CVOT study.
That, I think, is a good news for the type 2 diabetes patients, for the medical community, and for a company like Hua Medicine, that allows us to advance the medicine faster to the patients. Now, the reason the current medicine cannot stop the type 2 diabetes advancing to the complication is the current drug cannot repair the lost glucose sensitivity, it cannot repair the impaired glucose homeostasis. This requires a new therapy, glucokinase activator is just doing that. Over the last 10 years study at Hua Medicine, together with global leaders such as Franz Matschinsky, we have firmly established that dorzagliatin works in the way of repairing the glucose sensor, also being able to restore the glucose homeostasis that makes a very strong potential to stop type 2 diabetes.
This is now our goal, in maintaining glucose homeostasis in a healthy range. And then, a chieving the glucose homeostasis, in this case, we'll be able to stop diabetes b y lowering blood glucose level alone, it will not be able to do that. And then, many of the medicines and medical practice have shown that the current medicine focused on blood glucose lowering will not be able to stop the progressive nature of the diabetes. That's the slide in number 13, where it's showing that, with the current in the left side, you can see, with the monotherapy used, none of them can stop the diabetes progression. The HbA1c keeps up going as you're taking the drug.
On the right side, it explains that when your body lose the first phase insulin secretion, they cause all the problems in the beta cell stress, and then leading to the progressive degeneration nature of beta cell dysfunction and eventually leads to the diabetes. In the diabetic conditions, the disease is getting worse because of the further stress, and then the beta cell function deteriorating over time, and then cause this loss of the control of the disease.
Now, in slide 14, basically, further showing is a recent study that current therapy, including metformin, liraglutide, the leading GLP-1 compound, glargine is the leading insulin compound, alone or through the combination, would not be able to stop the progression of the beta cell dysfunction. And then, the ability to control the blood glucose with those therapies or the combination of the therapies will not be able to repair the beta cell function at the end.
This is saying why we need to fix the sensor and then restore the glucose homeostasis that's shown in slide 15. Many of you have seen this many times. Our body is fully automated to control blood glucose. Glucose controls the blood glucose through the glucokinase, acting as the sensor, showing the functions in the left side of the globe. Then those managing the hormones, insulin, glucagon, and the GLP-1, in response to glucose, and allow our body to store the glucose in our liver, muscle, or fat. The glucose storage and production function on the right-hand side of the globe, showing that glucokinase also plays an important role in storing the glucose and producing glucose in the liver. This all working together, forming the glucose homeostasis. And then glucokinase here is playing the central role in managing the whole process.
In this way, you can see in slide number 16, in the therapeutic area, that's why it's easy to understand why the current medicine, which is targeted only on the regional operation organs in the blood glucose control. And then their functions in those organs is eventually managed by insulin, GLP-1, and the glucagon, which was finally controlled by the glucose and managed by the dorzagliatin. In this case, dorzagliatin serves the cornerstone therapy to treat diabetes in combination with existing therapy, have a very solid scientific foundation. In slide 17, we use the analogy for the automated control of the temperature in the building, the thermostat is the key in the whole automation. Then the other coolers, vents, and heaters are in the operation, is managed by the thermostat. And then in our body, our automation of the blood glucose control is managed by the glucostat.
The glucokinase is the key element in the glucostat, and then that controls the whole automated system of glucose homeostasis. Then, you can usually understand if the sensor breaks down, and then the automation control is lost, and then you'll get either elevated temperature or very low temperature. Similarly, in our body, in a diabetic situation, the blood glucose fluctuates after you take a meal, and then it goes down to hypoglycemia when you are hungry. That fluctuation in a diabetic function led to the complication, has a lot of things to do with the dysfunction of the glucokinase, and then the glucostat. The good news is that, 50 years ago, Franz Matschinsky started looking into this.
Then roughly about 20 years ago, Dr. Matschinsky, together with Roche colleagues, discovered the first glucokinase activator, and then showing that the glucokinase activator is able to manage the blood glucose and then has the potential to become a diabetes therapy. Owing to his work in this establishing the key function of the glucokinase, and in the glucose homeostasis, and proposing the discovery of glucokinase activator, and then he has got this Rolf Luft Award. Then we have been very lucky in working with Dr. Matschinsky over the years to advance our dorzagliatin. Then now we can see many of the pre-clinical and the clinical data showing dorzagliatin is working in the way of repair the glucose sensor, improve the beta cell function. That is in the slide number 19, where on the left up corner, which is the data comes from the [Sprague-Dawley] rat pancreas.
We can show dorzagliatin improved the beta cell mass and then improved the beta cell function after treatment. And then, in the top right and then bottom left are the studies conducting in the diabetes patients, showing dorzagliatin can improve the glucose sensitivity, mirrored by the left shift of the C-peptide secretion curve, and also mirrored by the early insulinogenic index. In the bottom right, the panel showing that the diabetes patients after treatment for three months, their glucose disposition index gets very good improved. This index showing the ability of our body to control the glucose homeostasis. This effect also lasted in a week without drug treatment. In week 13, the disposition index maintains, showing the glucose homeostasis control continue working very well.
All this evidence was basically showing that dorzagliatin, as a 4th-G eneration of glucokinase activator, is able to performing fixing the glucose sensor, that is the glucokinase function, and improve the beta cell function in the diabetes patients. Obviously, our studies in our current phase III trial, the data we have been published in last November, firmly showing that the concept of fix the sensor and treat diabetes with underlying cause is really working in the large phase III trial. And then, the 24-week top line showing that this is the first drug candidate now be able to treat underlying cause of type 2 diabetes and now achieving the primary endpoint efficacy in the 24-week study. The HbA1c reduction is very profound, at 1.07%. Very good statistic significance compared with the placebo group. Very good patient response rate.
Those response rate means the patient, after taking the drug, not only just dropped the blood glucose, but also getting their blood glucose into the healthy range, that is HbA1c below 7%. In addition, those patients have no hypoglycemia, and that's where the glucose homeostasis is working, is functioning. I think this is very exciting, not only from the fundamental basic science translating to the clinical space and animal models validating dorzagliatin is able to repair the glucose sensor and restore the homeostasis. Now we have a solid validation in the larger pivotal trials in the real world saying that the drug works very well and helps avoid a lot of potential side effects from the other drugs. For example, the discomfort and the GI side effects. Now in this study, we have less than 1% incidence of hypoglycemia and no severe hypoglycemia.
This also further supports our theory and our mechanism of action with dorzagliatin. Now, as I mentioned, this is HMM0301, has a 24-week placebo-controlled, double blinded study, plus a 28-week open-label safety outcome. The whole file has completed by March 2nd, 2020. And then now we're getting to the data cleaning and quality control management inspections and get our data ready to tell you later on this year. The other very important study is also showing here that this is a study in the patients in the U.S. who have taken the diabetes medicine. Now, when we co-administer dorzagliatin and sitagliptin together, you can see that it's a very good reduction of their blood glucose when combined together. This is a synergistic effect. This effect is not only showing in the blood glucose reduction, but also in increasing the beta cell function by the C-peptide secretion.
Additionally, as our previous work has indicated, that dorzagliatin is also able to regulate GLP-1 secretion in animal studies, in healthy volunteers, and also, I think it is happening in the type 2 diabetes patients when we treat them with dorzagliatin. The combination of dorzagliatin with sitagliptin or DPP-4 class may offer us an opportunity to come up with an oral GLP-1. It's not through injection, but it's through our body to produce GLP-1. That is also very important aspect and Hua Medicine now is moving forward on developing that. Now I'm at slide 22. Here, again, is talking about the opportunity of taking dorzagliatin into the different patient populations. In China, diabetes kidney disease consists of about 22% of the type 2 diabetes patients.
Those patients have very limited anti-diabetic drugs to use because many of the oral anti-diabetics, including metformin and DPP-4 and sulfonylurea as such, they require dose adjustment because those drugs get cleared by the kidney, and if the kidney function gets changed, then the drug cannot be directly used. Otherwise, they will cause hypoglycemia, and this is very dangerous. This is also happening now in the coronavirus patients. In this patient population, I think having oral therapy such as dorzagliatin, which actually now showing that in the late stage, end-stage renal impaired patients, there's no pharmacokinetic changes. Which means that our drug can be used in those diabetes patients with moderate, severe, and end-stage chronic kidney disease. This is a very important indication, further showing that dorzagliatin is safe and also has the advantage to be a cornerstone therapy to address the whole entire type 2 diabetes area.
Of course, we'll continue to explore the patient population, and then using Hua algorithm, advancing this into a machine learning process. The purpose of this is allow us to better understand the complexity of the type 2 diabetes and then make them into the sub-classification, and then we can provide more accurate or personalized treatment in the type 2 diabetes patients, either with dorzagliatin as a monotherapy or dorzagliatin in combination with existing therapeutic drugs. That allow us to further advance our medicine's portfolio by developing dorzagliatin in combination with metformin SGLT-2, and then all six different classes of anti-diabetic drugs. This is showing on slide 24 that we can treat metformin-tolerated or AGI-tolerated patients in China, which are the first line. Then we can treat the diabetes patients with a cardiovascular risk in combination with SGLT-2 inhibitors.
In the DPP-4 area, the combination of dorzagliatin is not only be able to use for the type 2 diabetes treatment, we also consider there's a potential of treat neurodegenerative diseases with the endogenous GLP-1 production managed and then promoted by dorzagliatin and then adding the DPP-4. The new indications are here, not only now in the diabetes area and also getting to the neurodegeneration and potentially in the type 1 diabetes and in the NASH population. Those are the activities ongoing either in the pre-clinical or the clinical settings. We are very excited and we're going to be very busy in 2020 to advance those programs and bring the cure and opportunities to treat the diabetes. Now in slide 25, we basically want to re-emphasize how dorzagliatin is become the cornerstone therapy.
Most importantly, I think it restore the glucose homeostasis and optimize time in range, and reduce the glucose fluctuation and preventing the diabetes complication. This obviously is coming from the protection of the beta cell function, and be able to achieve very solid HbA1c reduction and without hypoglycemia and a GI side effect. I think those are the very important attributes of the dorzagliatin that can be used as a cornerstone function. And then, the second important thing is that how we expanding our indications in the diabetes kidney disease and potentially in the cardiovascular disease and also neurodegeneration. Those opportunities has already showing through our initial pre-clinical and clinical study, and we'll be able to advance those through our portfolios and the pipelines which is showing on slide 26. And then, that basically has already been explained, and all those is on track to move forward to deliver the results.
Just remind you again that in the next 12 months, we going to continue update with you on the two pivotal phase III trials and two combination trials with the DPP-4 and SGLT-2 inhibitors and the trials related to extend our patient population with monotherapy and metformin combination. With that, I think I'll turn over the floor to George Lin, our Executive VP and CFO, to give you a update on the financial review.
Great. Thanks, Dr. Chen. I will go through the financial summary very quickly. As you can see on this page 29, for the 2019 fiscal year, we spent CNY 337.7 million and ended with a cash position of CNY 1.1 billion, so very strong balance sheet. Of the amount of cash spent, approximately CNY 342 million was used in operations. Of this amount of cash, CNY 238 million was used for R&D activities. On the next slide, we show you the accrued amount of R&D expenses, which includes non-cash expenses incurred in 2019. Due principally to the increase in activity for phase III spending in 2019 over 2018, our resulting accrued expenses increased from CNY 269 million in 2018 to CNY 321.9 million in 2019. Our administrative expenses also increased in 2019 from CNY 100 million in 2018 to CNY 146.6 million.
These administrative expenses were related to the establishment and growth of the finance and corporate development team and commercial strategy and marketing team, along with a consulting engagement regarding the commercial strategy. On the final slide in the financial summary, we can provide you other income and gains as well as total year loss in 2019. Other income increased to CNY 29.6 million in 2019, due principally to an increase of CNY 13.1 million in government grants from Chinese government entities, then an increase of CNY 6.1 million in bank interest income. Other gains was only CNY 6.3 million in 2019 compared to CNY 63.8 million in 2018 due to the smaller appreciation of the U.S. dollar against the renminbi in 2019. Finally, our total loss before tax was CNY 425 million in 2019, which is a lot less than the corresponding loss in 2018.
If you recall, there was a non-cash accounting charge we took due to a loss in fair value of convertible preferred shares incurred before our IPO in September 2018. That charge is no longer as of the IPO. So as a result, that's the main difference. Our adjusted net loss for 2019 was CNY 350.9 million in 2019. I know people will probably ask what 2020 budget looks like. Currently, we're budgeting to spend approximately CNY 700 million. As we recall, as of the end of December 31, 2019, we had CNY 1.1 billion. We are still in a very strong cash position. To sum it off, the last two slides, I'll go through this quickly. This slide 33, you've seen many times, but to reemphasize, we've got global rights to our dorzagliatin.
We've met our primary efficacy endpoint that we announced for our phase III monotherapy in November last year. This is a first-in-class drug, and it's a first novel concept, which is very strange for a disease where the first drug, insulin, was discovered less than 100 years ago. It's a novel concept in actually being the only one to treat the underlying cause of type 2 diabetes. From our perspective, this is the key point, is that there's a lot of drugs that treat the symptoms, that lower blood sugar. Why do we care about a first-in-class? Why do we care about a novel concept? Because the point of this drug is actually to stop diabetes, to stop the progressive degeneration of diabetes. This is a very serious thing. If you think about it, Dr. Chen mentioned it.
Two weeks ago, the United States removed the CVOT requirement that would cost probably $500 million and up post-marketing in the U.S. Four years, 10,000 patient trial. They removed that requirement because they believe that that requirement has actually stopped innovation, and it truly has. In addition to that, it's not that meaningful. All the CVOT that came out showed positive results, which you would expect with any drugs that lower blood sugar. You also have to think, Dr. Franz Matschinsky just won the Rolf Luft Award, which is awarded by the Nobel Committee at the Karolinska Institute, and he's going to make a presentation in May. Why was it after 50 years he just received this? That's because the synchronization of his wonderful hypothesis to treat the underlying has now been matched with actually a viable and safe glucokinase like ours.
In addition, if you think about page 26, our pipeline. Every single one of our pipelines so far has shown positive, which means that the value of our portfolio, which is basically monotherapy and more importantly, combination to treat each one of the diverse range of type 2 diabetics in the world, is actually going positive. It's advancing. The value is increasing. Then we will increase this in two other dimensions. It will increase it geographically by finding a partner, and then we will increase it from a product portfolio by advancing our fixed dose combination. That is why we're very excited about this. The last slide is all the industry-wide recognition that we've received thus far. Actually, it isn't thus far. It's just the last few years. There's a lot more.
As you can see, the awards keep on coming, and we're expecting that with positive results from our pipeline, that we would get a lot more awards as well. With that, we will conclude our prepared remarks and hand it over to the moderator.
Thank you. We will now begin the question- and- answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question comes from David Li from CLSA. Please go ahead.
Hello, can you hear me, George and Dr. Chen?
Very clear.
Hello. Okay, cool. I've got two questions would like to discuss with you. For your clinical trial, things like the HMM0301 and HMM0302, the clinical trial has been completed in the first quarter of this year, especially for the 52-week trial for the HMM0301 that has been finished in March 2nd this year, and for HMM0302, that has been completed also in February this year. I'm wondering why you are going to announce the double-blinding results in the third quarter of this year. Given this, will you also adjust your expectation on the marketing time of your drug? This is the first question. My second question is that I'm just wondering to know that is there any development on your potential cooperation with large pharma companies since the interim result? Is there any development, updated development? This is my first two question. Thank you.
Hi, Li Chen here. Let me handle this first, and then George can add on additional comments. I think we just announced it now that we completed clinical—
Dr. Chen, I can't hear you very clearly.
Oh, sorry. It must be the face mask. Now is better? Hello?
Yes better now.
Okay, good.
Thank you.
We just announced that we have completed these two clinical studies in China, which is conducted in over 110 clinical centers and scattered around the country. This is the one part of the drug development, is complete the patient observation and then taking the drug and then doing the testing in the hospital. We call the last patient out milestone. The last patient out of the clinical center and then out of this study. The study has now been completed.
The most important part is after the last patient out, Hua Medicine team and our partners from Covance, from Tigermed, our quality control team will go into the clinical site to review all the data and review all this practice, do the quality inspection, quality control, and quality audit to ensure the trial is run properly, the data is recorded correctly, and all the data later on, after we freeze, we do the analysis and come out with the top-line data is accurate, scientifically sound, and in high quality. Let us say, after we finish the clinical portion of the study, there is a significant amount of time and work we need to do at the clinical center, to do this quality control and quality assurance and the management.
The reason we anticipate some delay on this is that the outbreak of coronavirus situation in China and many of the clinical centers now is in the situation of handling the patients. However, the amount of site that impact on our own clinical study is less than 10%. That last— that 10% may impact on the timeline because we need to complete all the sites and the quality and the control. We're working with the regulatory and also the hospital management team, closely monitor the COVID-19 situation and plan, we can do the data validation, quality control, as early as we can so that we'll be able to drive the program forward and reach to the next milestone. George, you want to add?
Yeah, I mean, David, does that answer your question? The very positive good news, as you mentioned, is that the two data points, the 52-week for HMM0301 and 24-week, those are complete. Those patient visits were done. We've been very diligent about talking about enrollment numbers throughout the last two years. If you look at that, the wave of patients that kind of were completed as of the end of January was all done.
The issue is for us to have database lock with our CROs, we need to get all 110 sites and have access to that, right? Effectively to sign off. You can imagine there are some sites, some hospitals, that are very much focused on other things than clinical trials. Getting access, getting their time just takes time. The data's waiting there, and our CRO and our quality assurance team just needs to go. That's to your first question.
The discussion with partners, we really can't reveal much more than they continue going. I would say again, flip to page 26. David, you have always indicated to us, you guys have a lot of data coming that's great. Make sure it's data that the pharma partner, potential partner, would be interested. If you look at slide 26, right? We've got lots of very interesting data with time as it goes. They get more and more excited because the combo potential is all possible. HMM0301 to HMM0302 will be coming. And then, if you look at HMM0110, that's very important trial, right? We just showed that our drug works without dose adjustment in renal-impaired type 2 diabetics, which comprises 21.9% of the Chinese type 2 diabetes patients. And then, if you think about it, metformin, sitagliptin, DPP-4, and the top-selling SGLT-2, they can't do this. They can't say what we just said.
They either need dose adjustment or they're contraindicated, right? And then upcoming data will be SGLT-2. We've already shown DPP-4 is very promising. Knock on wood, that could be very powerful as a competitor to the GLP-1 class as an oral. Potentially because of the drop in price in acarbose, the increase of use of acarbose also makes the combination of dorzagliatin with acarbose very powerful. Why do I mention this in connection with the partners? Because this is all very interesting to the partners, and the data is all pretty much coming for most of these, by the third quarter as we said, right? We said third quarter because we didn't want people to expect it in June because of the access to these various other things. That will coincide also when the information is shared with these partners.
Okay. Got you. Thank you, George. Thanks, Dr. Chen.
Thank you, David.
Thank you. Again, if you have a question, please press star then one. Your next question comes from Yinhong from Goldman Sachs. Please go ahead. Yinhong, your line is now live.
Can you hear me?
Yes.
Yes.
Thank you, Dr. Chen and George. This is [Zi] from Goldman. I got a couple questions. Thanks for all the colors and updates. There's one important thing about because I think definitely the combo data plus metformin is one of the critical data that we should be looking at, and this definitely the most important data for potential global collaboration discussion. Given that in our HMM0301 trial, we actually saw a very strong placebo effect in that trial. That actually makes our placebo-adjusted HbA1c reduction probably weaker than expected. How should we think about the potential, the combo data? Will that placebo effect still be in place? We're going to see that very strong placebo effect again in this trial or it's really hard to tell? That's my first question.
Second, it's more about our clinical development plan, because I still remember that when we released the first half earnings, we were talking about where we're planning to initiate some of the clinical trials, head-to-head comparison versus DPP-4 versus acarbose. We were planning to initiate those studies in second half last year or this year. What are the status of those clinical trials, and are we still going to initiate those trials or we're changing our clinical development plans for that? I think the third question, and also this is one of the questions people are really care about, is commercial potential and pricing strategy in China. Particularly after price cut of FARXIGA from AstraZeneca to get into the 2019 National Reimbursement List, right? They cut the price quite aggressively.
What's your thought on the potential competitive landscape in China, if more and more of those novel patented anti-diabetes, new generation drugs experience significant price cut? Will that really affect your commercial strategy and pricing strategy? Thank you.
Okay, thanks. I think I'll address the first two questions, and then George will give you the talk on the commercial potential. I think the commercial potential is huge and especially now with our drug that adding to all this de-diluting therapy and doing really well. I just want to talk about this placebo effect and many people talking about placebo effect because the placebo, you take the placebo and then your disease and symptoms disappears. In our HMM0301 study, we actually in compliance with Chinese Diabetes Society and Endocrine Society guideline in the clinical study and the clinicians enforce. We call it the five-prong approach for diabetes patient care, which involves dietary control and exercise, self-monitoring, continued education, and the drug. Right? And then, the difference between the treated group and the placebo group, so-called, is only with or without the drug. Now that's the real-world practice in diabetes control.
I think we have seen very significant differences between the placebo group-treated and then the drug-treated, so I think that's a very good sign showing the drug works really well in the future in the market that the patient and physician will like to use this. That's one aspect of the placebo effect that people keep talking . This type of practice is different from the diabetes drug development in the U.S. and western countries. This type of education was not enforced, and the patient was left alone, so that you will not see the benefit of dietary control, exercise, and self-monitoring, which change your behavior and make you a healthy person. That's very important.
The second thing about the so-called placebo effect is actually in any anti-diabetic drug, if you read the drug label, the first sentence is that under dietary control and exercise, if you cannot control your blood glucose, then you take this drug. That's the standard part of treatment. Actually, the dietary and exercise is a treatment to the diabetes patient. I think that just makes sure that we all understand on the same page. The trial conducted in China is close to the real-world exercise of diabetes control, and this is what we believe is the right thing to do. Our leading physician, Professor Zhu Dalong and Yang Wenying, all believe this is the right thing to do and the right way to conduct the trial. To answer your question on the placebo control issues in the metformin area.
In the metformin trials, in order to make sure that we are not having a difference in patients who are taking the generic metformin or branded metformin, which we use in the clinical study, and then those differences we have seen in the previous clinical studies. And then, to prevent that, we have enforced a very good practice and control and then let patients adapt to the branded metformin and then reach a stable state and then get into the placebo run-in trial practice. In this way, we believe the trial design was appropriate, and then the operation control has been done very well. We basically don't believe that we will have the risk to the placebo control risk in terms of trial quality. Okay.
I think the most important thing is to understand what is the placebo effect and then also what are the impact factors in the real drug versus no drug effect. And then, I think control the patient population using the branded metformin to standardize them and then get into a trial is a very good way to control that operation risk. And then, for the head-to-head study, I think as we're moving along and the new data came out from the clinical study like HMM0111 and in the future, HMM0112, and ongoingly, we are planning to do the related studies and so on. I think the initial thought about just doing a head-to-head comparison versus now, I think the benefit by doing the combination and add-on effect that's showing the beneficial effect.
The program is still ongoing, and then the physicians and the investigators are now working on the protocols and then in other events to have a better design. Hopefully, we'll be able to address the differentiation we like to see, just like we saw that in one of the slides I presented, like monotherapy comparison and then also the benefits with the combination therapy. Those are the type of things we are still ongoing and then with our investigators and then physicians. Yes, we are continuing in those efforts, it is the actions now, the study designs, with more and more data came out, we will be able to have a better design that answers the questions not only by comparing the two therapeutic agents but also leveraging and understanding its synergistic potential in diabetes treatment and in potentially the other disease areas. Does that help you on this?
Yeah. Thank you.
Okay.
I guess—
Yeah, George.
[Zi], just to add to Dr. Chen's answer to the number two, right? One of the key things is, as he mentioned, for example, when we saw the positive results of HMM0111 , there's really no benefit to do a head-to-head with that kind of drug, right? With DPP-4, if it's positive and we, again, show that GLP-1 endogenous is increased, then this becomes a very formidable combination against oral GLP-1, right? That's important for the strategy discussion, for example, because what we've been seeing, as you know, we've been in discussion with all the top pharmas and leading Chinese players. They've been following and watching. But then, as you mentioned, this very dramatic cut in prices, both for SGLT-2 class as well as for acarbose, changes the competitive landscape.
What we've seen is that there's actually increased attention and interest in learning a lot more about how our drug potentially could work with these other drugs, because these other drugs now will become much more available and accessible. We have unverified results, for example, that acarbose, within two to three weeks after this huge price cut, the orders are 5x-10x . It's amazing. A lot of people are going to use it. The key fundamental is none of these drugs, over time, sustainably can achieve glycemic control. All the guidelines, even in the U.S., right, advocate combination. Our unique first-in-class, novel only-in-class globally, focused on improving beta cell, is a perfect MOA, right? Mechanism of action, when combined with the linear PK/PD, as a suitable combination. Right? You almost get like a two for one. In the past, acarbose would be CNY 4,500 per year, let's say.
Right now it's around CNY 1,000 something. That's a lot more reimbursement that could be used for actually novel drugs, which is consistent with the Chinese policy. It's too early to talk about pricing, but we would look more like at why Merck with their KEYTRUDA, right? Why did they not include themselves in the pricing discussions, right? The reason is they have a lot of data, right? Their data is very, very good, and they want to defend their own. From our perspective, we're only in class, right? And then actually, when we launch, by the time we launch, there will be another launch of a new class, which is an oral GLP-1. As you know, Rybelsus in the U.S. is priced exactly the same as injectable liraglutide and injectable semaglutide, right?
From that perspective, you will see an introduction of a new drug in China that will be set, we think, pretty high. Right? Right now, I think liraglutide is around CNY 14,000, although it's not fully reimbursed, CNY 14,000. That's a huge difference if they maintain that sort of discipline. Again, too early to talk about pricing, but we are excited by partners actually looking at our drug as combos potentially with some of these other compounds that may have been cut or may not have been cut, as they sense that this market will change dramatically. It will change dramatically with the guidelines that are now being changed. For example, the push on combinations and then the non-requirement by the only government in the world of CVOT. That's now been removed, so now U.S. is more like every other country. Does that answer your question on the strategy, [Zi]?
Yes. Thank you so much, Dr. Chen and George. Thank you.
Yeah. Again, page 26 is very important for that, right? Every single one of these has been positive and has been showing very good results. We just need to continue advancing. We will spend and adjust our pipeline again to suit what actually gets the best return of money to our investors and to the company. Right? From seeing HMM0111 become positive, we're going to do that combo, and then HMM0112 hopefully will be coming out shortly as well.
Great. Thank you.
Thank you. Again, if you have a question, please press star then one. We'll pause briefly for any last questioners. This concludes our question- and- answer session. I would like to turn the conference back over for any closing remarks.
Thank you, operator. In closing, on behalf of the entire management team, we'd like to thank you again for your participation in today's call. If you have any further inquiries in the future, please feel free to contact us. Thank you.