Good morning and evening to our global investors. Thank you for joining CStone's call today regarding the newly announced collaboration with Pfizer. This is Ziyi Chen, China healthcare analyst at Goldman Sachs. Before we kick off the session, I would like to highlight that this call is strictly for clients of Goldman Sachs only, and this conversation is not intended for the media and is off the record. Participants will be removed from the call if they cannot be properly identified. This call is not for the purpose of sharing or receiving non-public information. Today, we are honored to have CStone's management team online to share their thoughts on the collaboration with Pfizer, the new transaction, and also answer investors' questions.
Joining the call include Dr. Frank Jiang, Chairman and CEO, Ms. Shirley Zhao, Greater China General Manager, Head of Commercial Operations, Dr. Jianxin Yang, Chief Medical Officer, Dr. Bing Yuan, Chief Strategy and Business Officer, and Mr. Ethan Zhao, Chief of Staff, Head of Capital Market and IR. The management will give us a briefing on the transaction details, and then we'll enter in the Q&A session. To raise questions, you can type in your question in English or Chinese through the question box on the webcast, or if you prefer sending questions via email, my email is ziyi.chen@gs.com, ziyi.chen@gs.com. Without further ado, I'm now going to turn the call to Dr. Frank Jiang for briefing. Jiang, please.
Okay. Well, thank you, Ziyi, for your kind introduction, and also wanted to thank all the investor analysts who are essentially a hot call who coming to hear us, and also this is right before the holiday season. Let me start by saying this is a strategic collaboration between CStone and Pfizer. We have the slide, and if we were going down to the slide number three. Just very briefly to recap who we are, CStone is aim to become globally recognized as a leading Chinese biopharm, and the company has a four-year history and is Hong Kong listed. We believe that four cornerstones are very critical. The management team with industry leading experience, rich pipeline, very well-balanced, focusing on oncology, especially immuno-oncology and precision medicine.
Our business model starting from integrated biopharm with the clear focus on clinical development, fast ramping up of our manufacturing capabilities, and now transitioning to the commercial stage. On the right side is the three tranches of fundraising. Moving on to slide number four, this is really a very exciting time for CStone. As you can see, rapid growth toward commercialization. We're expecting five-plus NDA approval out of four products by next year. We have robust positive readout for three pivotal trials that already recently laid out, that including our PD-L1 in first-line non-small cell lung cancer, pralsetinib in second line non-small cell lung cancer, and avapritinib in the exon 18 patients. Well, these obviously materially de-risks CStone's late stage assets.
Here our four bubbles are essentially four assets, IDH1 inhibitor, KIT PDGFRA inhibitor, avapritinib, pralsetinib, as well as sugemalimab, which is our PD-L1 antibody. Below that, those are where the NDA region will be, and I will not read out. Very excitingly, these four products out of five more NDA expected next year. This is really even for a big company, large company as I used to work for Sanofi. This is a very exciting and overwhelmingly needed in the resource to support four products on the market in terms of launch. Let me direct you to slide number five, which is a transaction overview, and quickly going over to slide number six.
For those who cannot read it clearly, this is actually a shade of umbrella, which is actually somehow describe the nature of this transaction, which is this umbrella kind of a deal, and many of the things inter-react together. This is obviously a strategic and a multidimensional collaboration with Pfizer, a leading multinational company that you are very familiar with. The equity investment is $200 million and Pfizer to invest $200 million in CStone for the use of research and development at approximately HKD 13.37 per share. Pfizer to own 9.9% of CStone's enlarged capital post transaction. That is the financial piece. Some of the details including number one, China commercialization of sugemalimab, our PD-L1. Pfizer to in-license our PD-L1 from a potential best-in-class PD-L1 antibody in mainland China.
In addition to the equity investment premium, CStone is entitled to receive up to $280 million in milestone payment and a tiered mid to high teens royalty. These are the financial numbers on the far left. Coming to the second component, which is co-development of Pfizer's assets. CStone and Pfizer together select a post-approval concept oncology assets for co-development, for which CStone will lead the clinical development and Pfizer will lead the commercialization in Greater China. CStone to receive lower double-digit royalty for Pfizer's assets. There is a third component of this umbrella deal, which is a joint in-licensing of global innovative products. CStone and Pfizer to jointly in-license other oncology therapies for Greater China market. This is different from the second column, which is essentially Pfizer's pipeline. Now it is outside Pfizer pipeline.
CStone and Pfizer to determine the responsibilities on an asset-by-asset basis, while retaining an option for CStone to participate in co-promotions. Not just the R&D, but also the commercial part. That is the overview of the transaction, which including the cash, the licensing of PD-L1 milestone and royalty, and also co-development of the Pfizer's assets, as well as co-development beyond Pfizer's assets. Slide number seven essentially have a quick snapshot on the why this is making sense collaboration on the complementary strengths of those two companies. Pfizer, you all know, is a global pharmaceutical leader with a big name, basically. Extensive commercialization network in China and the leading oncology franchise with the robust pipeline of drug candidates. Now looking at CStone. We are an emerging leader in the biopharmaceutical industry in China, and sugemalimab, a commercial-ready, potential best-in-class PD-L1 asset for large indications.
We demonstrate the superior clinical capabilities with a strong execution. Route to the synergy, and obviously Pfizer to invest in CStone is a long-term collaboration solidified through the equity investment. I think it is also true that with their extensive infrastructure, it will bring faster and broader commercialization of the PD-L1 in China. Furtherly, it is a competitive platform for an in-licensing deals to allow rapid expansion of pipelines. This is a complementary between two parties. Let me move on to slide number eight quickly to go over some of compelling financial benefits and the strategic rationale. One is the significant financial benefit boosted CStone's ability to fund the development of sugemalimab, and certainly frees resource to focus on broader strategic development objectives. We will have many other important trials and activities.
Secondly, to maximize really potential of the sugemalimab in China, whereas also retaining the ex-China rights, so essentially to max the PD-L1's value. Those boost the addressable market of the sugemalimab by harnessing the Pfizer's industry-leading commercialization capability in China, and CStone to retain all the development and commercialization rights of the sugemalimab outside of China. It is also an innovative collaboration model where there is a framework for CStone and Pfizer to collaborate on co-development and joint in-licensing in ways that leverage each other's strength. Additional resource of innovation secured for pipeline development for both companies. This is really a kind of innovation that we are looking at. This obviously helped tremendously to advance CStone into a fully integrated biopharma.
To further build up our well-established clinical development engine and rapidly ramping up our manufacturing capability, this transaction will help us to enhance the CStone's capability to execute what we call Pipeline 2.0 with a dual sourcing of innovation, focusing on first-in-class and best-in-class assets with global eye. CStone's capability to build a full-fledged commercial organization with near term ambition to reach critical mass, which we will talk about later. I think most importantly with this collaboration is really we think that this will be very important for the patient community, a patient to obtain faster and broader access to this highly differentiated PD-L1 treatment and future first-in-class or best-in-class treatment. CStone to become also through this partnership, a key player in addressing China's critical public health needs. That is the transaction overview.
Let me quickly go on to the slide number nine, which is the heading for key collaboration highlights. What does that mean? If we were to go on to slide number 10. China commercialization of the sugemalimab, as you know PD-L1 is a strategic repositioning. The large oncology indication in China, we have disclosed this before in the stage III, stage IV lung cancer, gastric cancer, esophageal cancer, NK/T lymphoma, so on and so forth. Let us be clear that there is a significant unmet medical needs in China, with 4.3 million new cases in China each year. Whereas we are essentially the second-largest technologic cancer country, U.S. is only half of those incidences. But when we look at the five-year survival, we are half of those in the U.S. The mortality in China continues to go up, whereas U.S., going down. So there is a significant unmet medical need.
We need new medicine, we need advanced cutting-edge platform to help us to develop the new medicine. Slide number 11 shows Pfizer really is the ideal partner for maximizing the commercial success of the sugemalimab in China. As you can see, what we believe the four very critical factors to win this market, including a proven leading commercial capability in China, broad and deep coverage in local market, an established commercial leadership, relationship with the hospitals and the rich experience in NRDL negotiation. At the right side was essentially quantity to show that why Pfizer is the leading oncology franchise in China, essentially greater than 1,000 field force in China. These are all oncology and have a coverage of 2,600 hospital and 300 cities with business operation.
Here are listing some of their most important oncology products, covering essentially five therapeutic areas, including breast cancer, lung cancer, renal cancer, gastric cancer, GI cancer, and hematology. Very comprehensively covered in China. Moving on to slide number 12, which is essentially the second component of our interaction and deals, which is the co-development of Pfizer's asset, fully leveraging synergy strengths of CStone and Pfizer. By leveraging CStone's clinical development capability and Pfizer's commercialization capabilities, both party will together bring innovative oncology therapy to patient community in China. If you were to look at collaboration framework that CStone to lead the clinical development activities and then Pfizer to lead the commercial. Certainly the near-term timeline clearly define where these assets will come from and the post POC assets only in the scope. These essentially have a pretty certainty that this is going to be successful.
Lower double-digit royalty of Pfizer's assets gained by CStone. If you were to look at the strengths of respective company, CStone with a proven execution excellence in clinical development, deep knowledge of regulatory pathway and oncology market in China. Whereas Pfizer, expansive commercialization infrastructure in China and exceptional multinational brand and the rich pipeline of the oncology assets. So a very good combination between two parties relative to further develop the Pfizer's assets. Moving on to slide number 13, which is the third component, which is a joint in-licensing global oncology assets between two parties. This is a way to maximizing in-licensing competitiveness for highly sought for, highly sought after opportunities. An innovative collaboration model between a China biotech and a multinational. Target highly sought after late stage or commercial stage assets. These are very well-defined.
For CStone, we mentioned before is proven track record in in-licensing late stage global first-in-class asset in China market, and we've been working very successfully with [Ayvakit], Blueprint. As you know, these are all post proof of concept asset. Many of those have already been in the U.S. market. Whereas Pfizer exceptional brand value in China commercial capability really is a very good mix, and advantage of joint licensing model would be complementary strengths and the portfolios synergy to maximize the financial return, and potential for CStone to participate in commercialization in the case of the joint in-licensing and flexibility maintained to in-license and commercialize separately. Relative to the partnership of collaboration highlight, here slide number 14 is a quick summary.
Number one is a significant financial benefit for $200 million equity investment at approximately HKD 13.37 per share, up to $280 million milestone payment and additional tiered royalties. Secondly, maximize the commercial potential of our sugemalimab, a potentially best-in-class PD-L1 antibody in China. Further solidify clinical development leadership in China with additional avenues for cash flow generation arrangement. Vote of confidence by multinational company in a leading China biotech company and allow patients faster access to highly differentiated PD-L1. Coming to the last part, which is really implication for the CStone post-transaction. CStone, as we have mentioned, is a very focused oncology biotech, four years getting from the establishment, and this strategy would enhance our ability to resource and resource to pursue our winning portfolio strategy.
As you know that on the one hand we have immuno-oncology with the combo strategy, and we're the only one has a PD-1/PD-L1, and the CTLA-4 as a backbone. Also recently we have a Numab and we have a bunch of the assets surrounding it to make this combo strategy a reality. On the right part is the leader in the precision medicine. These are all coming from our partners in the U.S., and these including the asset I've already mentioned, so I'm not going to read them again. Finally, that this will enhance our capability to fuel the sustainable growth on our, what we call Pipeline 2.0, and this is a sort of dual sourcing, which we'll elaborate a little bit on next page.
With the area we have already very much focused on first-in-class, first wave or best-in-class bispecific antibodies, cancer vaccines, tumor microenvironment to maximize the PD-1 or PD-L1 efficacy, and the novel pathway inhibitors. This will help us not only from the late stage, but also from the early stage perspective development to our pipeline. Speaking of the early stage pipeline, if you were to look at slide number 17, it's certainly better equipped to execute the Pipeline 2.0 with dual sourcing of the innovation focusing on the first-in-class or best-in-class asset with potentially global rights. This is how we have been doing in the internal research. We use these, what we call hub-and-spoke, and we have already delivered 40 INDs with 12 assets since companies are forming. Lots of the work, lots of the new bullets coming from our own shop.
We have a fully integrated research team composed of cancer biology, pharmacology, DMPK, and bioinformatics, and all functional leaders have over 10 years of experience in the drug discovery and IND filing. CStone initiate project, identify the target, and lead the process from the lead identification to IND. This is what we have been doing. Certainly that we leverage the ecosystem, leverage the leading technology platform from CRO or biotech partners for lead discovery and optimization. Our upcoming Pipeline 2.0, I'll just give some examples with including multispecifics and different targets, which we have not disclosed those. It is also very important that we're not alone. We cannot as one organization to conquer the cancer, we need to partner with the very best with a fitting strategy. This is where we think that the second route of partnership is very important.
We have proven track record of licensing in the global first-in-class/best-in-class asset, active partnership discussions participating in to come fruition in the near future, the Numab example, and working with multiple universities and so on and so forth. As we mentioned before, these are collaboration projects that CStone lead are in the area of ADC, novel fusion proteins, cancer vaccines, to just name a few. In the research, that certainly will help tremendously in terms of moving forward with newly freed money and to do a lot more collaboration projects and directed by CStone scientists. Slide number 18 is on our clinical development and further solidify our clinical development leadership in China. In our early stages, you know that we have one asset transition into late stage and five combo studies and two continue identify mono RP2D doses.
In the late stage, the asset name is already on the slide, so I'm not going to read it. In the late stage, we have two potential best-in-class IO assets. These are PD-L1 and PD-1. We have six different indication toward registration. For precision medicine, we have three first-in-class, first wave to China, and we have seven potential indication with the three assets, which we also lined out here for you to read. Finally, new post POC assets under Pfizer's co-development, and we haven't disclosed any of the names, just the asset one , asset two , and so on and so forth.
Moving on slide number 19, this is to say we do have a state-of-the-art manufacturing facility to secure supply of sugemalimab and other CStone assets, and we're very pleased to tell you that things are moving very well, and we're hoping that the antibody manufacturing will be roof sealing by the end of this year. The whole facility will be put in use by the end of next year. Last but not least is our commercial. We have a clear commercial strategy toward building a full-fledged commercial organization with a near-term ambition to reach the critical mass. Strategically out-licensing sugemalimab in mainland China is actually helping us to focus on what we can do even better with our three precision medicine and quickly ramping up our capabilities.
We also have focused on launch precision medicine, Boao EAP precision medicine pilot program in Hainan has been very successful. We have put out the announcement yesterday. The commercial organization with core competencies and teams ready by 2020 year end. Here are in the next three to five years, we'll reach the critical mass and we really wanted to make sure that we have the capability entirely to commercialize by our own capabilities in the next three to five years. This is forming what we call a sales platform effect. Finally, beyond in the stage three, we also hope that to achieve a global vision one day. I know this is a quick rundown on the highlights of the transaction and giving some context to who we are and how this is going to help our company to move towards the next level.
I will be happy to take any questions that you may have.
Thank you, Jiang. Thank you very much for the thorough introduction of the deal. We are looking forward to more milestones happening to CStone. Now we are going to open the floor for question- and- answers. Just a reminder that if any of the investors or sales analysts are in the call that would like to raise a question, you can type in your question via the webcast, or you can send in questions via email to me, ziyi.chen@gs.com. I am going to read out the questions for you. Before we are reading out investors' questions, I got actually two questions for management team: First of all, I would like to have management reminding us that what is going to be the key regulatory and the commercial milestone for the PD-L1 ahead over the next 6-12 months horizon.
Particularly the timeline for the late stage IV lung cancer indications, when it is going to be the NDA and when we are expecting the drugs getting approved, and also about the stage III lung cancer. All those major indications, I think people are, in market in general, very interested on the progress of the key assets. Second question is we are trying to have a better understanding of why we are picking Pfizer as our partner. If we are looking into the space, there are different multinationals probably also need a PD-1/PD-L1. There are a lot of domestic players in the space are looking for good assets for combos or to strengthen their pipeline too. I think, among all those potential partners, why we picked Pfizer and particularly on the co-development candidates. I think this is very interesting to CStone.
What kind of strategy behind that when we are looking at those potential co-development candidates, any color that management team can share with investors about what are the potential strategies for the co-development? Thank you.
Yeah. Well, thanks, Ziyi. Let me try to answer your first part of the question. So what are the upcoming regulatory or development milestones? As you know, we have committed to the regulatory pathway on the non-small cell lung cancer first line stage IV lung cancer. As you know, we publicly announced the data on August the 6th, and this is one of the trials that we are actively preparing for the NDA submission, so to speak. I think we should be able to complete this before the year end, hopefully to say long before the year end to submit NDA. So this is one of the regulatory milestones, and I think this will bring us into one of the first few first line non-small lung cancer PD-1/PD-L1 battlefield. This is very critical.
If you were to look at our data, I think it is equally impressive, and the hazard ratio was only 0.5x, meaning that this is, and also for both pathology, squamous and non-squamous. Along that line, we also have a stage III lung cancer, which is well undergoing, and we are hoping that to perhaps announce the data by first quarter next year, if not this year, and this is the guidance we have given. That trial was also very interesting because not only we have a part of what has been proven to be very successful in the PACIFIC, which is a concurrent patient population. But in China, the practice is largely, it is not just partially, it is largely different with the sequential population. So we made a conscious and innovative trial design whereby we actually have very carefully sorted out those population.
When the study is becoming successful, I think it is going to be addressing a huge number of the medical needs in China. Following that, there will be gastric cancer, esophageal cancer, and also one of the things that has been much discussed is the ENKT lymphoma. ENKT lymphoma is also doing very well, and not only in China, but also we had R&D opening in the U.S. Currently, we are ramping up the patient recruitment in the U.S., and this is going to be a global play for the NK/T. So those five indications are basically stage IV, stage III lung cancer and gastric cancer, esophageal cancer, and extranodal NK/T-cell lymphoma. So to answer your question, these are the ones that we committed to complete.
The second question really is, I think it is in general, and people would ask, and it is very interesting that when we were in our previous roadshow, one of the frequent questions is asking is, "Frank, what do you do with your PD-L1? Do you sell yourself, or do you have a partner? If you were to have partner, would that be local? Would that be international?" I think we have gone through all that. We have done a very broad consideration and thinking of all aspects inclusive. Here we think Pfizer obviously as a worldwide leader in the industry, it has one of the most extensive commercialization infrastructure in China that will maximize the commercial potential for both sugemalimab as well as other assets that identified for our co-development and joint in-licensing.
Secondly, I think Pfizer has the industry-leading R&D platforms, and that can also yield an array of candidates for development by CStone. It is not just commercial, but also I think there is more integration between two companies relative to R&D team. There is a third component, which is CStone can offer Pfizer as a global quality clinical development engine with a track record of innovative development strategy and trial design, as well as exceptional execution speed. I think Pfizer can harness CStone's clinical development engine to accelerate China commercialization for their pipeline products or joint in the in-license assets. What I see is truly a complementary, and obviously having Pfizer as a partner is a great vote of confidence.
Great. Thank you. I think here is one interesting question coming from investors is: What is your plan for the rest of the world rights, ex-China rights for the PD-L1 sugemalimab? Any global clinical trials are running on that we should be expect, if we can give more color on the timeline? That will be best.
Yeah. So for the ex-China, right? Obviously, this partnership is focused on Greater China market and address the acute public health needs here. But we also have a couple of trials running in ex-China territories. For example, sugemalimab and regorafenib which is from our partner of the Bayer, sorry, Bayer in the liver cancer and gastric cancer in Australia. We have also received R&D approval for our extranodal NK/T-cell lymphoma in U.S. I think the U.S. or ex-China right remain to be CStone's, and that also is very interesting, particularly, I think it is very important. I think when we publish our first line non-small cell lung cancer on August 6th, we really received quite a bit inquiries. One of the top lung cancer specialists said two things changed his, I guess, perception or whatever.
One is that he clearly understand that PD-L1 can do very well in the lung cancer, especially in the first line. Secondly, he saw that the data even better than PD-1. Also when you look at safety profile, that seems to be very favorable. I think having a global right and offers tremendous other opportunity for partnership.
Got it. Here is another question, could you please introduce one or two assets potentially co-developed by CStone or Pfizer that you think are worth highlighting? I think investors will still be quite interested in what kind of asset you are going to be targeting.
So let me briefly introduce how the mechanism works between those two parties. Within a certain month, partner will provide CStone with a list of potential additional assets to start with. Partner will submit at least one additional asset by providing a selection package within not a long period of time of the definitive agreement. We and the partner may submit more or use assets acquired through the joint in-licensing process. I think there is obviously a clear defined time frame that when we do this. You know that I have been in the multinational company for many years. One of the things that we usually develop the cancers that are more prevalent in the U.S. Partly because of research, you probably do not want to develop 25 types of cancer at the same time.
You want to go after those that are most prevalent in your country or in your region. Now with us, as you probably know that we have this advantage of doing a very quick POC, proof of concept. Essentially with a limited number of patients, you can do quite a few cancer types. That is exactly what we did with our PD-L1. As you know that we opened up 12 different arms on the PD-L1 in relative to its POC. We never knew that PD-L1 would do so well, it is an understatement. It is excellent in the ENKT lymphoma. If you look at the competitors PD-1/PD-L1, they are looking at about 6%-7% of the complete response rate, whereas we are at over 30%. That is not even a comparison.
Similarly, when we did esophageal cancer, which is squamous, we always worried about the side effects, bleeding and so on and so forth. It is almost on the contrary, it was very well tolerated and with a response rate over 60%. Most recently in the non-small cell lung cancer. That is another living witness that this is just a very differentiated and with the best in class potential PD-L1.
Got it. Here is another interesting question. From Pfizer's perspective, why is Pfizer trying to license in CStone's PD-L1 given they already have the avelumab which is also a PD-L1 collaborating with German Merck KGaA. Is that because they do not have China rights or because they think in China probably CStone's PD-L1 is going to work better? What is the rationale behind that when they already have one, they got another one from CStone?
Yeah. The fact that our partner does have another PD-L1 in the market outside China, but still choose to in-license sugemalimab in China demonstrates the partner's vote of confidence for CStone and for the drug. I think they also had a very thorough due diligence in the way that when they are coming to look for the assets, and especially I think at the time of the lung cancer data coming out and they truly believe this is a very differentiated PD-L1. I am not sure about their global PD-L1 right relative to China or performance in general.
Got it. Since now Pfizer is going to really working on commercializing the PD-L1 for CStone in China. Is there any change to CStone existing plan of commercial team build-up, like team size staffing, the coverage model, or is there any existing assets in the pipeline could potentially be commercialized by Pfizer? Other than PD-L1, CStone are still going to build your own team extensively to cover major hospitals.
Yeah. No, I think if anything this is. Before a company, when I presented, I highlighted the fact that even for Sanofi, if you were to have four products to be launched in a year, it is going to be resource crunching. We made a very conscious decision. We look into all the potential route to maximize the four products in terms of launch and the commercial capabilities. Obviously one way to do it is all do it by ourself, and secondly is to look for a potential partner for one or two or three, whatever. I think this is one of the most frequently asked questions. "Frank, are you looking for a partner for your PD-L1?" Understanding that probably will need an established presence in China, a good access approach and some proof of track record on the negotiation and NRDL.
Whereas we are establishing, we have been very happy with having recruited Shirley Zhao, who used to be the general manager for BMS, actually made the first PD-1 in China. Obviously, when you build up a commercial organization, it takes time, and there is a ramping time. What we are doing is that while we having the PD-L1 out licensed, we continue to ramp up quickly as quick as possible, our internal marketing sales force. We hope that hopefully in the next three to five years or even shorter, we will reach to the critical mass whereby we are going to have a platform effect where we are going to sell everything that from internal.
Or in some cases that you know that there are some of the mid-sized or even large-sized company in the U.S., they have little or zero presence in China, and having a first-class sales team is going to be definitely a plus for the partnership. I think this is precisely how Shirley is aspired to do. To answer your question, Ziyi, that we are looking forward to building a all capable commercial for CStone.
Sure. Here is another question. I think it is more regarding the PD-L1 filing strategy. I think you mentioned that you are planning to file the sBLA NDA for the PD-L1 on the first-line lung cancer indication later this year. As a lot of other players also filed or even got phase III indication approved, non-squamous and squamous approved, what is the view, CDE's view on your clinical data and also on the trial design that combining the squamous, non-squamous together? Is this more like a approach that really appreciated by the CDE or they actually will have more screening on this very innovative clinical trial design?
Yeah. I will answer that question in two parts. The first part is obviously before you submit NDA today in China. There is a process called a pre-NDA meeting or submission. You have to submit something, so they have to review it and making sure that if what you presented are true, then we are going to approve you. Obviously, that we are going to approve you takes another 10 months because then they go into the nitty-gritty details, making sure what you presented on the surface is indeed consistent with the deeper side of the file. So we have gone through that, and obviously we have gotten the acknowledge of the CDE to move forward with the NDA submission. Again, we will do this before the year-end, and hopefully long before the year-end. So that is first part. The second part is very interesting.
Very recently, we had a lot of interaction with Zhou Caicun, who is the PI of our trial. He said many of the people, I hate to use the word jealous, but many of the people are saying that, "Oh my gosh, you helped CStone to design a trial with two pathology in one shot, and why didn't you help us do the same thing?" It's also not necessarily without any risk before we look at the data. It's innovation whenever you do something different, do something new, that you are running a risk. It's just I guess God is on our side and we were very fortunate. Not only we have a successful study, but it was actually overwhelmingly a success whichever way you look at it.
We'll be very pleased, very pleased when it comes to the world lung meeting, and we'll disclose how the squamous and the non-squamous split on its hazard ratio. Compared to many of the public data, you will immediately spot that there is a difference.
Got it. Regarding the deal itself, there are a few questions. First of all, is there any approval or regulatory approval or preset conditions that need to be addressed to make the deal happen, or it's already a done deal? Particularly when we are looking at the geopolitical uncertainties, will that actually affect the deal? That's the first one. Second, I think also regarding the deal, investors trying to get some sense on the $280 million milestone. Any color on what could potentially be regulatory milestone or what potentially could be commercial milestone roughly breakdown? Thank you.
Okay. All right. Let me start with the geopolitical impact, or whatever, or no. I think we do not expect the current political differences to prevent us from capitalizing on the benefits of this partnership. That's one. We believe it is in the best interest of both countries actually to preserve a space for their business communities to collaborate. This probably is an example. We are also especially hopeful that this will be true for areas like ours where the outcome have the potential to save millions of lives and improve the quality of millions more. We do not foresee any regulatory approval barrier for this strategic deal. Your second question regarding the $280 million milestone, we have not disclosed any detail.
Got it. Here's also, everyone's very interested in on the pricing environment for the PD-L1/PD-1 battle in China. Regarding the pricing now, since Pfizer is taking the commercial rights for PD-L1 in China. Who's going to have the final say on the pricing, on the market access strategy? Is it going to be Pfizer solely or is it actually through negotiation, discussion with CStone? That's the first thing. Second, given the environment for PD-1 pricing, particularly this year, we're going to head into the NRDL negotiation again for some of our competitors' products. How would you suggest the potential pricing for sugemalimab in the market?
Yeah. That's one of the frequently asked question and we obviously had a lot of interaction with Pfizer and one of the reasons, as I mentioned earlier, is because their tremendous presence, histories, and the network access in China, and they used to be the number one until most recently. To answer your questions, we will work with Pfizer to take a comprehensive approach to setting the right price. We are not going to announce price today, but there is a process in place that we will follow with them. Part of why we are working with Pfizer is because their commercial expertise, which we will leverage in all aspects, of course, of bringing the sugemalimab to the market. We believe that they have the capability to maximize the commercial values of the sugemalimab in China with a solid pricing and a NRDL negotiation strategy.
Again, they've been here for many, many years, and they are very good people and they have a lot of network, and we believe that this is truly going to be a synergistic part in the discussion.
Sure. Here's another question coming from investor regarding some of the logistics, because we know that WuXi Biologics now are acting as a CMO for the PD-L1 for CStone. Going forward, if Pfizer is taking the commercialization rights, is it going to be WuXi directly supplying the product to Pfizer or is there any roles in terms of logistics that CStone will get involved? Secondly, regarding the funding for the future clinical development for sugemalimab. Whether it's going to be CStone 100% responsible for all the clinical development cost, or it's going to be partly shared with Pfizer to finance the future clinical development for the PD-L1.
Yeah. Okay. The first part was really, actually CStone will be responsible for the manufacturing of sugemalimab for the territory, and for all the clinical and commercial supply for the sugemalimab in mainland China. As you know that we will be in full function by the year-end next year. I think this is probably before that or shortly thereafter, the commercialization. There will be probably a little bit bridging. To answer your question, CStone will be responsible for the manufacturing and there is actually a special agreement. Secondly, relative to the—
The clinical development cost.
Oh, yeah. The clinical development cost. Right. CStone and partner agree on the allocation amount of the equity investment to be applied to the clinical development cost for agreed indications and for the first indication of each additional asset. The partnership enables CStone to strategically transform into a fully integrated bio firm by freezing essentially the resource to focus on establishing a robust and highly efficient commercial franchise. Some of the $200 million will be used for clinical development and we also have our own, well, before this $200 million comes in, we have our own money. This money could be potentially released for commercialization, could be for new assets, and could be for many other things. Essentially it's a one plus one equal two.
Got it. I think last one is probably for the joint in-licensing model for global innovative drugs. Pfizer, I think the China franchise is also looking for good assets to really beef up their China pipeline to explore the commercial potential in the second largest market. What can be the strategy behind, let's say there's some really good assets and how Pfizer's going to decide they're going to bring it into China franchise by their own, or they're going to decide to co-license it with CStone's help on that kind of deals. I think it's more about how the decision-making process for the joint in-licensing model. Who's going to be on a driving seat for that?
Yeah, that's a very good question. I just want to make sure if Yuan Bing is still awake. If he is, then I'll ask him to. Yuan Bing has been instrumental in architecting the whole deal and working with the Pfizer team and the consulting team very closely. I feel since Ziyi, you said this is the last question, and I feel obligated that he got to be saying something. Perhaps it's a way to say I don't know, but I don't want to admit that. So I wanted to make sure. Yuan Bing? Okay. You hear us? Sorry. You hear the answer, right?
Yes.
You hear the question, right?
Yeah. I hear the question, yes. The question is about who is in the driver's seat for the joint in-licensing. Actually, both parties can nominate the potential joint licensing assets. As you know that right now the licensing, especially for late stage or even commercial stage assets to China become very competitive, right? The potential partner not just looking for money, but also the partner in China has both development and strong commercial capabilities in addition to the financial strength. So we and Pfizer both agree that if we go out together with the track record, we have been successful in licensing in China and also with their track record and a huge brand name in China, we will be a lot more competitive in such in-licensing. Of course, it's going to be case by case. It can be one party be the driver or the other.
I hope I answered your question.
Got it. Thank you. Thank you, Dr. Yuan. Now I am going to turn the call back to Jiang for wrap up, for closing remarks.
Okay. Well, thank you, Ziyi, and thank you for all our investors taking the call. I think it was really very exciting to have the partnership with big brother Pfizer, and not only as a validation of the PD-L1 and having a better access to the PD-1, to the market, and to patients at much faster rate, but also a way of proving that they like our clinical development capabilities. That is where we are going to continue to build on the pipelines and bring more assets to China. Finally, obviously, a few million cash is always helpful. So we are very happy with the transaction, and we will continue to do the right thing. Thank you for your support and have a great day.
Thank you, Jiang , and thank you CStone management team. Thank you everyone for dialing the call. We are going to wrap up here. Thank you.