HCM 和黄医药(ADR)

Christian Hogg

Thank you everybody for coming today to our Interim Results Presentation for Hodgson China Meditech. We got a slightly different format today than we have in the past, there is a bit more brief summary focusing on some of the key things that are going on at the moment. As you will see in the presentation, the appendices are extensive, so much of the much of the detail – a lot of detail is in the back. But let’s start, first of all, on the latest update, including the financial updates as well as the key progress on the pipeline. So overall, probably the biggest thing that the market and investors and we, as a company, are focused on at the moment is our first NDA on fruquintinib. I'll give you a full update on that. It's going to plan. It is a -- as I said before, it's a very long and arduous process that the Company has spent another last 12 months working on, but we're getting very close. And I will update you on that in a more details. On fruquintinib also, at the back end of this year, probably November late November, we’ll see the top line results on the third line non-small cell lung cancer Phase III, so that’s the second indication for fruquintinib will report in November. So we’re obviously quite optimistic about that but we’ll talk about in a moment. On savolitinib where you see the word breakthrough, there is a lot going on. AstraZeneca is moving rapidly now in planning for the combinations with Tagrisso and savolitinib. I can give an update on that later. We have a fairly big piece of news that I think is probably the most important thing to update people on savolitinib. In the last couple of months, we’ve been running MET exon 14 skipping Phase II study in China on savolitinib monotheraphy. It’d been a Phase II study that we’ve just been moving along nicely, expecting to see how it how it went and then eventually move it into Phase III. But the efficacy and the response that we’ve seen in patients has been so sparkling that we went engaged with the Chinese FDA, which is now renamed as the CNDA, the Chinese National Drug Administration. And we had a meeting with the with the CDE, which is the Center for Drug Evaluation, just about a month ago and shared with them the data from this Phase II study that we’re working on. We’ve got agreement now from them based on that Phase II data that if we are able to continue to see the level of efficacy that we've already seen in Phase II study that is almost 40% of the way and enrolled in it. But in that Phase II study that will be sufficient for submission for approval in China. So it's a big step for us and it may well be the fastest way to get savolitinib to approval. So we’re working very hard on that we've got 17 clinical sites open in China. We’re about to open another 17, so it will mid-30s sites by Q4 of this year. And I think that we could be done with this next year sometime and that would be really the fastest way to get savolitinib approved in China. We’ll talk more about that later. So in total, we’ve got currently on the registration studies, we’ve got seven that are currently enrolling as Phase III or as I’ve just said on this exon 14 Phase II registration study enrolling. And we have another four that are in planning. And then finally, as you all know, we have 20 or so proof-of-concept studies that are running on our eight drug candidates. So an awful lot going on and I can update you on some of that. The discovery engine continues to throw out or to produce high-quality assets. I have actually Weigou is not here today, but he is on the phone in Shanghai. So if we need him during this presentation, I will call him in. But the discovery engine is doing extremely well. And the commercial platform for the first half of year had a great first half of the year. So we’ll take you through that as well. So the financial results big investment relative to previous years on the pipeline, almost $70 million was put into our pipeline in the first half. You can see on this chart, the revenues were down. The revenues were down because of the two invoice policy in China, that's not representative of the volume. The business was up a lot but we’re not able now under the two invoice policy to consolidate the sales of some of our third-party products, such as Seroquel, for example. So while we book the profit we don't report the sales any longer. So there's a decline there but it’s more of a cosmetic decline than a real decline. You can see on the commercial platform, the net profit after tax or the net income on the commercial platform after taxes was up 19% in the first half of this year from $22.7 million in the first half of last year to almost $27 million this year. So it’s in robust form and I’ll share that with you later. So the two platforms, the innovation platform, you can see slightly less milestones in the first half of this year than last year. We had a milestone from Lilly and a milestone from AstraZeneca last year in the first half. We didn't receive milestones this year. On the approval of fruquintinib, which will hopefully happen in the second half of this year, we’ll receive a large milestone. So by the end of the year, we’ll at least catch up with where we were last year in terms of income coming into our R&D platform. And on the commercial side, you can see as I’ve just said the net income up 19%. From a cash standpoint, we’re in good shape, following the follow-on offer last year in October. Currently, around $417 million in cash and available resources, you can see $322 million of that is cash and the balance is unutilized banking facilities. So we’re in a good position from a financial standpoint. JV is still holding, our joint ventures holding around $60 million in cash. Our guidance for the year, we've increased our expected spend on the R&D side. As I said on the previous slide, we’ve burned $67 million in the first half of the year on our pipeline. So at that rate, we expect the full year to be somewhere in the region of $130 million to $140 million. The previous guidance was $110 million to $120 million. So we’ve increased it by around $20 million on the investment in our R&D side. That comes in two areas that increase. The market in China is very competitive at the moment for talent. There’s a lot of investment into China biotech, mainly driven by the huge unmet medical need in China, but also the success of companies like Chi-Med and some others. And so a lot of financial investment is coming into China, and that's leading to many biotech companies starting up. And in fact with the new rule changes in the stock exchange Hong Kong for listing of biotech companies without a track record of profitability there’s just a lot of action. And as a result we chose, at the beginning of this year, to implement a share option scheme for the middle management of our innovation platform that was a pretty far-reaching employee share option scheme. That will impact our P&L this year by about $7 million. So of that $20 million increase on the R&D side, part of it is securing that really important base of talent for the long term using share based initiatives. The other reason it’s going up is just as costs are going up. When you’ve got more interest in China biotech, you’ve got more activity. You’re running clinical studies. You’ve got a finite amount of clinical centers in China that you can really access. And now there are many, many companies trying to access those sites, so costs are generally going up a little bit. But we remain in a pretty good position to be competitive. So looking at our 11 registration studies, the seven that we have ongoing and the four that we’ve got planed here on this chart, you can see the red lines are the registration studies that are actually enrolling today and the pink lines are those that are being planned and should startup over the next six to nine months. The planning of a other large global registration study takes time. You don't just flip a switch. It can take six to nine months to plan it. So you can see on savolitinib really for registration studies the papillary renal cell carcinoma customer studies, you're all aware of. the two Tagrisso combination studies that AstraZeneca is working on at the moment; and then the MET exon 14 deletion single arm Phase II study that we've now been given guidance from the CNDA that north of 50% response rate in about 50 patients should be sufficient for a submission as shown on this chart. On fruquintinib, obviously, the colorectal cancer, the tick, the third line colorectal cancer that hopefully we’ll see approval in the relatively near term. The Phase III in lung cancer that will readout in the next four months or so; and then the second line gastric cancer Phase III is enrolling as planned. So we will reach an interim analysis on that Phase III sometime in the middle of next year. At which point, there is a proof-of-concept milestone payment from Eli Lilly, subject to us delivering the desired outcome, so gastric cancer for fruquintinib should reach that point next year. Fruquintinib, the two pancreatic and non-pancreatic neuroendocrine tumors Phase IIIs are moving quite well now. They will both hit interim analyses middle of next year, middle to -- the first one will be second quarter, the second one will be third quarter next year. So we will get a sense of those at that point. Biliary tract cancer for fruquintinib, this is the Phase II that we've been enrolling. We're pretty encouraged by what we’re seeing in that Phase II in biliary tract cancer. So that will move into a Phase III somewhere around the middle of next year -- early next year. And then the epitinib, the brain penetration EGFR inhibitor, I'll give you a bit of an update on that. That is continuing to move towards starting the Phase III. It’s very complex designing that protocol for brain mets but we’re making good progress, regulatory interaction, as well as with our PI. So fruquintinib, you can see what’s happened over the last 12 months since we submitted the NDA. This charts a lot of detail. I won’t go through it in that too much detail. You can basically see that you have multiple activities involved in getting an NDA approved in China. They cover the qualification and the analytical work on the on the critical supply and then the finished product. Looking at the clinical data, the stats, doing all the technical review of the study itself and then CFDI in there purple down there, the only inspections of the clinical sites, preclinical and clinical sites. What we’ve just completed is the second of purple box down at the bottom there, which is the full GMP inspection all our formulation facility, as well as our API manufacturers so that’s done; the PAI sample analytical work, which is the result of all the GMP inspections we produced fruquintinib, it was then sent for analysis to ensure that it was on spec that's complete as well. So we are basically here now on the final step of taking the whole dossier of inspection work that’s been conducted by the CFDI, the inspectors and it's about to go on to for final review. And ultimately, our work is done in the context of managing the process. So now it’s just comes down to how long it takes for that review to take place. Obviously, we’re hopefully that will lead to an approval in the next few months and launch within this year, because upon approval, we will then have to produce the drug from zero and that will take a couple of months and then it will launch. So that's where we are right now. Fruquintinib, a lot of checkmarks, a lot of ticks have been achieved and we are I think hopefully in the final stretch. So that approval on colorectal cancer is really the first step for fruquintinib. You've got now a lot of other things happening, the non-small cell lung cancer Phase III. You’ve seen the Phase III data before, very high quality Phase II data in terms of PFS. We’re very -- we're looking forward to the Phase III data that should publish in maybe November of this year. The gastric cancer Phase III moving quickly. And as I said earlier, there’ll be an interim in probably middle of ’19 on that to give some comfort as to the quality of that Phase III. And as I said earlier, there will be a milestone. So if we hit our targets as far as proof-of-concept readout, it's about $10 million milestone. And then most importantly is global expansion, what are we doing with regards to taking fruquintinib outside of China. This is a wonderful plot for axitinib plus pembrolizumab, the VEEGFR inhibitor in combination with PD1, and you’re seeing terrific efficacy of these combinations, the VGFR inhibitors and the immunotherapy. And we’ll talk more about that later, because that’s an area we’re going to now start getting into hopefully in quite a lot of detail. So fruquintinib, we often just go through this quickly. But on a high level, we should all remember, the VEGFR is probably the largest single sub-category of targeted therapies. It's an $18 billion market globally. You can see all of these approved VEGFR inhibitors, either antibodies or small molecules around the world. The biggest being of Avastin, bevacizumab from Roche, but there are many. There are some even now that are getting approved in various indications in China, like Hengrui, Apatinib is now in its third year post launch, and is doing about well over $200 million in sales. So VEGFR space is a very active space. But we believe fruquintinib, in terms of sale activity is the most selective VEGFR inhibitor in existence. And that is very important in the context of combinations. So here is what I talked about a little bit before about the use of VEGFR inhibitors in combination with immunotherapy. And you can see here Axitinib in first line clear cell renal cell carcinoma. You’re seeing Axitinib delivering an ORR of 34%, so good efficacy in those first line clear cell renal cell carcinoma patients. You see pembrolizumab the PD-1 also delivers around mid-30s response rate in this first line clear cell renal cell carcinoma patients. So both monotherapies are really providing benefits to patients. But when you put them together, you get the third chart, which is 73% objective response rate, 8% complete response and breakthrough therapy designation from the USFDA. So what you're seeing here is VEGFR is all about cutting off the blood flow to the tumor. As I shared in the last chart, a small tumor will secrete VEGF; VEGF will bind to VEGFR; will call small capillaries to build-up around the tumor feeding that tumor, and that’s how it grows very rapidly; so as a platform therapy, VEGFR inhibitors, a very important pretty much for all solid tumors. And you can see on that prior chart, you've got VEGFR inhibitors approved in over 30 cancer solid tumor indications and some hematological malignancies indications as well. So clearly -- and this is one of the things that came out of ASCO was fantastic data that I got everyone is excited. So where we sit with fruquintinib on this chart, it shows that relative to the main small molecule VEGFR inhibitors that are out there, axitinib is on that chart, Sutent, sulfatinib, lenvatinib from Eisai. Fruquintinib is just the most selective, just sitting VEGFR 1, 2 and 3. And that selectively in our view is -- that selectivity will allow for more tolerable combinations with PD-1 inhibitors. So we’re working on this. Sulfatinib also has an angle with respect to PD1 combinations and that it inhibits CSF-1R and limits tumor associated macrophages production, which is a shroud to the cancer cell that stops the T-cells coming in and killing it. So sulfatinib has, from a scientific point, a great opportunity to be combined with PD1s as well, so that’s we're working on. So that's fruquintinib, hopefully about to get approved, the lung cancer Phase III about to be reported top line, as well as in our view, great opportunity now to expand into combinations with immunotherapy agents around the world. We’ve established our own clinical regulatory organization now in the U.S. It's small but it's getting going. We’ve hired our -- appointed our first Chief Medical Officer in the U.S., 25 year veteran of Eli Lilly. And we’re getting ready to take action and bring some of our assets into the clinic into later stage developments in the U.S. And fruquintinib will be one of the first along with sulfatinib. So a quick update on savolitinib. You can see here background MET is apparent in many different solid tumor settings and savolitinib is thousand-fold more potent against c-MET as it is any other kinase, so again a very selective compound. The biggest area -- this is chart many of you’ve seen already. The biggest area of opportunity for us is in non-small cell lung cancer first line MET exon 14 skipping and c-MET gene amplified patients second line in combination with Tagrisso and third line in combination with Tagrisso. And you see as those -- as you go further along the treatment paradigm you seeing more and more MET driven resistance in non-small cell lung cancer. So the next chart shows some of the efficacy that we’re seeing. You’re seeing some of it before but this is probably the one that we should focus on is first line non-small cell lung cancer, the MET exon 14 skipping patient. And you can see savolitinib monotheraphy in the lung here, on the bottom of Page 17, you can see 9 centimeter diameter tumor in the lung here. 336 days on savolitinib and you see 70%-odd shrinkage of that tumor. You see that same patient before treatment with savolitinib with a big tumor that's developed on the head, 112 days completely shut down. So that is startling efficacy. And what we’ve seen with savolitinib in these MET exon 14 patients is really very encouraging. And obviously, the regulatory authorities in China also feel the same way and we’re moving as fast as we can now on this to bring it approval to in China and submission for approval. And obviously the pictures you've seen before in second line in combination with Tagrisso, really startling efficacy. And even in the third line setting, post Tagrisso, which is probably the area that AstraZeneca is most interested in, just because of the success of Tagrisso and the board scale adoption of Tagrisso in both first-line now as well as second line. c-MET is a major, is probably the major resistance pathway to Tagrisso. And you can see on the chart -- on the far right of this chart, really meaningful efficacy in those post-Tagrisso failure patients. So I won’t go through this in a lot of detail, but it just shows --I think the chart, the boxes to watch are the ones on the far right. These are all color-coordinated with the previous slides. And you can see that the post Tagrisso the pink that now is probably Astra's most high priority for starting-up a global study. In combination with Tagrisso, post-Tagrisso failure, you always got to shutdown EGFR so you’re going to have to continue to use Tagrisso. But adding savolitinib on top of that, my hope is that that study, that global study which initially until such time as we've had regulatory discussions, that will start out as a Phase 2 but subject to positive regulatory discussions that could end-up then being a registration study in the future. So that will hopefully start up late this year. The second orange area is in the second line post Iressa and Tarceva that Phase II study -- that global study based on the back of the 60%-odd response we saw in TATTON B is likely to start up slightly later than the Tagrisso combo post Tagrisso study. So that will start up probably early next year. And then TPP 10, the red one, well this one now is enrolling its registration studies. So as I've just mentioned, on axon 14 skipping patients. And then it's not just lung cancer it’s kidney cancer as well. These charts you've seen -- a lot of you have seen this before, but this chart I want to reemphasize how important this is. The chart in the bottom left here. You can see that MET gene amplified patients in gastric cancer have less than two year overall survival, median overall survival versus MET negative patients have a median overall survival of 10 years. So MET in gastric cancer is just a terrible thing and it's consistent throughout many solid tumor types. So we have molecular epidemiology study in kidney cancer over 200 patient molecular epidemiology study that will readout interims will be soon, and we’ll probably have the full data set by the end of this year. And I'm hopeful that we will be able to see that kind of a chart, showing that MET is also a big negative in kidney cancer. And as I've said in the past, if we can show that in the molecular epidemiology study, combine it with our Phase II data that shows clear benefit to patients with MET positive, then potentially we can bring that all together and go reengage with the USFDA around breakthrough therapy designation. Very briefly on some of the other key assets, sulfatinib is now moving into global development. The first thing obviously though is the China Phase IIIs, the two big China Phase IIIs, the SANET-p and SANET-ep studies in neuroendochrine tumors. As we've said here, the interim analysis on both of those studies will be in 2019. So we will reach a point -- and we are hopeful that if we’ve been able to enroll sufficient patients and if data is anywhere near what we saw in Phase II in terms of PFS, medium PFS, there is a chance that we can find ourselves in the situation where the interim analysis could lead to a stopping of the study and submitting for approval if the data is strong enough. So we're hopeful for that but we’ll have to see how enrollment continues. The biliary tract cancer, BTC, which is an extremely difficult type of cancer with a very short overall median overall survival of today maybe four, or five months overall survival. So BTC, we’ve got the Phase II. We've been enrolling it. We’re encouraged by the data. And we’re going into Phase III on BTC. So we will start that up as it says here, probably early next year in a Phase III in China. And then the U.S. development, we've already expended now from our Phase I study into Phase II exploratory study in pancreatic neuroendocrine tumor patients and biliary tract cancer in the U.S. So that study is already kicked off, we just announced that last week. So epitinib, this is something we’ve been talking about for quite some, we’re about to go into the Phase III. But it is a complex patient population, patients with brain metastases. And so we have spent an enormous amount of effort, engaged with the regulators in China, as well as our principal investigators to design the protocol. And one thing we are certain of is that epitinib gets into the brain and provides great benefit to patients. As we’ve seen in the Phase 1B study that we presented at World Conference on Lung Cancer. But one of the big challenges that we have is the design of the protocol around brain mets, because what we're doing is we're going to be -- we’re going to have to prove a superior results in intracranial response and median PFS on the intracranial side, but you have a very big range of brain metastasis and stage of brain metastasis. So these two examples of this idea, the two CT scans. On the top, you see a patient that has brain metastasis. This is sort of stars in the sky type brain metastasis, that’s small that’s present in a big way they are less than 10 millimeters in diameter. They are not measurable under RECIST and generally they’re asymptomatic. So in general, it takes a long time for these for that type of brain metastasis to progress. On the other hand, you have on the bottom of this chart you have a patient with a measurable lesion that may be symptomatic, and is more than 10 millimeters in diameter and probably more aggressive and moving. So how we enroll patients into our study to establish superiority and brain met is very important that we design that study to get the right patients in at the right point and we stratify those patients carefully along the treatment arm as well as the control on. So it’s this understanding of this patient population that we've been working very hard on, and the design of the Phase III, to give ourselves the greatest chance of success. There are the complexities as well that make it challenging. The EGFR premium landscape in China has been changing fairly rapidly over the last year or so. So we're close now, I would say, to having it all locked down and being clear on the design of this Phase III. The last thing you want to do is run into a Phase III quickly with a protocol and the design that is, for whatever reason, going to yield a suboptimal result. So I think we’re very close and we’re getting there. On the Syk inhibitor, things are looking exciting as well. The dose escalation is complete, we needed a quite big dose escalations; Australia plus China is about 60 patients. You can see here; we've enrolled 13 dose cohorts; we started very low; Syk has a long history of toxicities with fostamatinib, et cetera. So we were very careful starting; starting at a low dose; making our way out; but we've got a wealth now of data in those 60 patient; and we’re planning to present that data at ASH in November, it's actually December I think, early December this year. Meanwhile, our dose expansion study has started in both China and Australia and you can see the scale of it is large. It's a 192 patient dose expansion study. So it's a Phase Ib but we're enrolling a lot of patients into this expansion study. These are indolent non-Hodgkin's lymphoma patients. And more and more were identifying the sub-types of hematological malignancies that the Syk inhibitor is going to be able to provide benefit for. The Syk inhibitor is moving very rapidly now, and it's all very encouraging. The U.S. R&D has been cleared. If you will recall, we had a hold as we were doing a three months tox study on the M1 metabolite of 523. That three months tox study was done; was fine; was resubmitted; and USFDA has cleared 523 now for developments in the U.S., so that's another area we’ll start working on. So on a very high level; I've talked savolitinib’ I've talked fruquintinib; we've talked sulfatinib; we've talked epitinib. Theliatinib, we continue to work on esophageal cancer in EGFR over-expression patients; that Phase II is happening. The Syk inhibitor we've discussed; 689 our PI3K delta; it's in dose escalation now; and we are seriously encouraged by what we're seeing 689; it's still very early, obviously; but it's a highly encouraging status update I can give you on 689; and as we go through this dose escalation, we’ll be able to provide more information on that. The EGFR inhibitor, as I say deep in the announcement, in the Australia study, the Phase I study, we've encountered some problems on toxicities. These are FGFR target related toxicities, toxicities that have been seen for many other FGFR inhibitors around the world. So we're working on that. We finally enough have not seen those same FGFR target related toxicities emerging in China. The Chinese patients are not as -- actually when it comes to drug exposure; Chinese patient is counter to every other drug candidate that we have; but in FGFR Chinese patients were able to take higher doses without the same levels of toxicities than Australian patients. You would imagine Australian patients would be larger than Chinese patients, and would probably be able to take a greater dose; and that is the case in seven out of our eight drug candidates; but in the FGFR inhibitor, Chinese patients are a more tolerant of this compound; So we continue to explore it, recognizing very much the FGFR target related toxicities we've seen in Australia and very strict monitoring in China in that Phase I, to ensure that patient safety is paramount; but we’re working on it and we’ll see; it’s clearly a very active drug in FGFR apparent patient populations; we’ve seen a lot of activity in those types of patients, but we’ll continue to work on that. So that’s the pipelining on a high level. As a Company over 4,000 subjects have been treated with our drug candidates over 400 in the first six months of this year, and that’s another reason for the broadening of our investment in this area. The news flow over the next couple of months, over the next six to nine months; you’ve got savolitinib; you’ve got the two Tagrisso/savolitinib combination studies I’ve mentioned; you’ve got the molecular epidemiology data. I think at the end of this year, you’ve got fruquintinib, hopefully the NDA approval and the launch in China; you’ve got the top lines on Peluca, the third line non-small cell lung cancer study; the start of epitinib in brain MET; the start of sulfatinib in biliary tract customer; you’ve got the publication of the 60 patient dose escalation study on 523 at ASH; and probably the Phase I dose escalation early next year for the PI3K delta will also come. So there's a lot of data and start of major studies that is that is coming. Very briefly on the commercial platform; we continue to do very well; these charts better visualize the progress we've made in the last 13 or so years. On the commercial platform, looking at total sales of our JVs as well as our subsidiaries; you can see that we’ve seen compound annual growth of 27% over that last 13 years. And in terms of profit, compound annual growth of 37%; so this has been a very, very good run; and the reason for that is just the general growth of the Chinese pharmaceutical industry that we continue to believe will continue will grow. The first half of this year; in terms of sales, was up 10%; in terms of profit -- as I’ve said earlier, our net income was up 19%, when you look at the JVs and the subsidiaries all together; this is obviously not the number that we consolidate, but this is a measure, a non GAAP measure of the total scale and size of our business. On some of the third-party products the most high-profile one, Seroquel and Concor, we’ve seen continued great results; even though, unfortunately, we can no longer consolidate the sales of Seroquel, the business continues to grow rapidly; you can see that in the first half, sales of Seroquel were up 36% in China under our commercial organization; that lead to a service fee from AstraZeneca of $9.6 million, up from $5.5 million last year; so you can see its substantial, it’s material and it’s moving in the right direction. Concor with Merck Serono, total sales are in the first half were up 25% on Concor, the beta blocker from Merck Serono; and the fee structure slightly different there, but you can see our service fees of $2.2 million, up 100% from last year. So it's working well, the third-party operations that we have; AstraZeneca sold Seroquel to a Chinese, company called Luye Pharmaceuticals in June of this year. So what AstraZeneca sold was the top right. So now we work with Luye as their exclusive commercial agent in China. And Luye is responsible to uphold all of the contractual obligations that AstraZeneca contractually obligated to us before. For us to continue to commercialize Seroquel in China, we have to hit targets. The target for this year is 22% sales growth, and for the first half we did 36%. So we are optimistic that if we continue to do what we do on Seroquel in China, we’ll continue to hold those commercial rights. But we now have a new partner to deal with this, slightly different than in the past. So we'll see how it plays out. So that's the commercial side, very strong at all levels. I'll leave it there -- I'll stop it there, we've got 15 minutes. We can open it up for questions at this time; but overall, I think Chi-Med is in great health; the pipeline is moving very rapidly; you’re never going to get absolutely everything right in the biotech industry, it's a risky industry; but savolitinib is moving well; fruquintinib is moving well; sulfatinib is moving well; the Syk inhibit is moving very well; and our secondary assets are all playing out as well. So it's encouraging basically. So open it up for question.

Operator

[Operator Instructions]

Unidentified Analyst

Thank you. [Cindy] from Bloomberg Intelligence, I have two questions. First on, while we’re waiting for the approval, can you just give us an update on your launch preparations and the reimbursement negotiations. And my second question is on savolitinib. In you press release you mentioned we’ll see some preliminary data for Phase II in c-MET amplified gastric cancer. And can you just specify when -- at which meeting we’ll see the data? Also, is that a Chinese study? If so, will you able to use the data to engage with USFDA for breakthrough therapy discussions? Thank you.

Christian Hogg

So for fruquintinib, obviously, Eli Lilly is our commercial partner in China. So we do everything in terms of the development, in terms of the manufacturing. But in terms of actually commercializing fruquintinib, it will be Eli Lilly that commercializes it. Now Eli Lilly is very well prepared. They've built a team of medical reps that are now waiting, ready to go. They've appointed several, I would say, very experienced industry veterans on the commercial side to be responsible for the launch of fruquintinib. So yes, I'd say they are ready. They are involving us in all of this commercial planning as much as they can, obviously. But yes, subject to approval, I think we’ll be very ready to launch fruquintinib. On the pricing and on the negotiation of the pricing, this is something that comes later. It will be launched initially as an out-of-pocket drug. So patients will pay out-of-pocket but very soon after launch, we will start to engage with the regulatory authorities around reimbursement and how to broaden the availability of this product to patient populations in China, so that's on fruquintinib. On savolitinib, you asked about got gastric cancer. We've presented some very preliminary data from our gastric cancer Phase II studies, one in Korea and one in China. And that data has been very encouraging. And we continue in c-MET gene amplify gastric cancer patients to be very encouraged by the data that we see. So much so that we are working closely with AstraZeneca to talk about what's the next step for gastric cancer on savolitinib. In my opinion, there is an exciting next step for gastric cancer and savolitinib in those c-MET gene amplified patients. As far as when is the data, the Phase II data going to be presented, it’s a little bit out of my hands, because the main study is an investigator led studying Korea, at Samsung Medical Center. It’s a huge study that covers not just c-MET but many other molecular or genetic mutations in gastric cancer. So when that study is published is a bit out of my control. But I can say the data is starting to look very interesting, and if that’s the case, I would imagine -- you could imagine that it could be a scientific conference in 2019 sometime, maybe in ASCO or before that.

Mike Mitchell

Thank you. Mike Mitchell from Panmure Gordon. The investments in the -- from the U.S expansion is I think very strong. Could you tell us a little bit more about what you’d be expected to establish in terms of the U.S operations, international operations? And also just that given your comments on the inflationary pressure in China does that percentage will give you optionality in the future?

Christian Hogg

I think the optionality is good. As a company, we’ve always been focused globally. So why grow -- and the team created this portfolio of clinical drug candidates with global potential in mind, not just China. So it's absolutely essential that we build out our capability globally, or particular in United States and Europe, to bring our assets through developing ourselves. Historically we’ve relied on partners, AstraZeneca being the one example. But I think, going forward, as a company with bigger, with stronger; we have more resource; we have more capabilities; our assets are further along. A de-risk. It’s now time for us to take on that work ourselves. And so building this clinical regulatory team in New Jersey has been a big strategy for the Company. And we’ve been able to appoint some really good people, actually there is one thing in the back here, Enrico Magnanelli formerly from Gilead, who has joined as our Head of International who's going to be helping our clinical regulatory team in the U.S. get established and look for opportunities to bring our assets outside of China. So yes, it’s an important step for the company but it's one that is long overdue.

Christian Glennie

Hi, I am Christian Glennie with Stifel. Just I guess a follow up on that point, on potential of getting fruquintinib into global markets. And so what do you think in terms of the potential combination studies you’re thinking of in terms of what modalities there or mechanism being particularly attractive? And therefore, when you think about those combinations and those companies that ultimately have those other products, so it would be in combination how you look to structure, it’s straight forward that would supply the product and you’ll investigate a combo and then see where that gets you, or something maybe a bit more for more?

Christian Hogg

What I'm going to do is I'll answer the part about how we structure it and then I will hand it over to Weiguo who is on the phone for him to answer what areas are we interested in, what combination opportunities are we interested in. So to start with the structure that we will look at for collaboration is -- well, it’s easier if you’re going to combined it with something that we've already got. So fruquintinib in combination with savolitinib would be for us a no-brainer. And there are probably two or three other combination opportunities with our own assets that would be quite interesting. But as we've said in this presentation, probably the biggest area is looking at, and I'll let Weiguo talk about that. How we would do it is we would find the right partner and probably in a relatively non-exclusive manner provide product. The partner provide product. We work on the safety run-ins to ensure that these products are combinable. We may do small exploratory expansions to see that does the combination provide benefit in the patient populations that we’re looking for. And then maybe you go into a more exclusive collaboration, once you’ve designed and defined your registration strategy and you start investing in registration. These collaborations could be for just China or they could be global collaborations, and I would imagine there would be many of those types of collaborations. These are very common in the industry. These days, I think particularly as company start looking for innovative combinations of their assets with other assets, you've got to be fairly flexible and you’ve got to make sure that both parties have the same objective. So maybe I'll hand it over to Weiguo Su to address which combination areas are we interested in.

Weiguo Su

So good morning, Weiguo here calling in from Hong Kong. So with regard to -- I mean specifically for PD1 combinations, as you know VEGFR is obviously very important over 30 tumor types haven't being approved in indications haven’t been approved for these type of therapies. So specifically for PD-1 combination, a lot of promising data already produced and published in over the last two to three years. So what we are thinking, I think, it will be will it treat China and outside China differently, simply because the competitive situation. So inside China, I think, it's wide-open. We probably will go and there is chance for well established indications such as kidney cancer and liver cancer for that matter. So we may go for a bit more mature indications with better proof-of-concept, but still a window of opportunity to get in there and really move fast towards registration. So we take that route while the opportunity still exists. Outside China, as I already alluded to, kidney cancer is a bit late and even liver cancer given Roche got breakthrough therapy designation just two weeks ago with otezo plus bev combination. And data from other combinations, pembro plus lenvatinib, for instance, also looking pretty strong. So it's a bit -- and we feel it's a bit late there. We might explore other indications, perhaps maybe in GI, for instance, gastric, colorectal area where everyone is at the same start -- pretty much at start line. And PD1s or PDL1s, therapies have not really succeeding on large scale for that matter. Another area would be also of course angiogenesis, plays a very important role as the GYN; these are indications, breast cancer, ovarian cancer, even cervical cancer as well. So this is an area immunotherapies have not done very well, but angiogenesis is extremely important. So perhaps the combination will lead to some breakthroughs there as well. So in all, we’ll probably take a balanced approach. In China, we would love to identify a few indications perhaps with more proof-of-concept data with a bit more mature, but there is still an opportunity in China for rapid registration. But outside China, we’ll take some more risk and explore areas where PD1 monotherapies or PDL1 monotherapies have not done very well. While we also understand that angiogenesis is very, very important and this probably include GI, GYN, and maybe also GU, aside from kidney I think that bladder cancer, urothelial cancer. I think all of this -- perhaps worth exploring. So outside China, we’ll be more exploring but inside China, we would take on some of the more mature indications and try to move rapidly towards registration.

Christian Glennie

And then just one follow-up, if I can, on Savolitinib and particularly on the MET exon 14 skipping, a sense for the percentage of patients if you know that yet in terms -- of these patients that have that phenomenon. And then what potential read across -- is this something you shared with Astra and what potential read across that have in terms of their plans for development?

Christian Hogg

So everything on savolitinib is working in tandem with AstraZeneca. So we don't do anything independently, this is all joint -- it’s a joint steering committee, we work together on everything we do. So the exon 14 skipping program, while in China. We are running that clinical trial with the sponsor of that clinical trial we’re doing it in collaboration with Astra. As far as the as the proportion of patients that are MET exon 14 skipping, it varies in various different subsets of non-small cell lung cancer. But in general, it’s 1% or 2%. It’s a very small subset. It’s difficult to find them. But when you talk about 1.7 million new non-small cell lung cancer patients a year, 1% or 2% is actually 30,000 patients a year, so it's -- particularly in China where non-small cell lung cancer is such a very large problem. So I think it's a material and relevant patient population. And as far as how we see savolitinib performing in that area, we’re very encouraged. Our PIs are very encouraged. AstraZeneca is very encouraged. And we intend to capitalize on this as quickly as we can. And we’re also -- it's wonderful to see the Chinese regulatory authorities identifying great efficacy. And while there is no breakthrough therapy designation structure in China today, they are essentially saying take that Phase II data and make it big enough, deliver that level of efficacy and we will treat it essentially as breakthrough therapy and approve it based on that. So it's very encouraging from a regulatory standpoint in China and from an efficacy standpoint in the patients that we’re seeing to this point.

Unidentified Analyst

Can I follow-on from what Mike and Christian would be talking about when we look at fruquintinib, there is just obvious opportunity there. Is having Lilly on board an asset or a liability as you look forward?

Christian Hogg

As we look forward -- actually, we retain the rights on fruquintinib outside of China. So Lilly still has an option on the global rights, which expires after the third line non-small cell lung cancer study reads out in November. So probably January their global option will expire. I do not expect them to take that up. They have Cyramza, which is VEGFR2 antibody that worked on pretty hard over the years. And there is a bit of overlap between fruquintinib and Cyramza. I doubt that they will take up fruquintinib. So in terms of are there an assets or not outside of China, subject to them not up-taking of the global option then it's neither here nor there, it's all us. And actually that's where, as Weigou has just said, our interest is in combinations, it really go up and develop fruquintinib ourselves outside. That's why we are building our own clinical regulatory team in the U.S. to start this work and to get this work going. So I think outside of China, there is no impact of Eli-Lilly. Inside the China, looking forward, this is an area that we have deep discussions with Eli-Lilly on around lifecycle indications on fruquintinib. You've got the first indication hopefully close to approval in colorectal cancer. But you can see there are 30 different solid tumor types for which VEGFR inhibitors are approved around the world. In China, it’s a fraction of that, maybe a dozen. So there's a lot of solid tumor indications in China that a high quality VEGFR inhibitor is going to do very well in. And it's in that area that it's difficult for us to be on the same -- have the same objectives as Lilly for us, it move us rapidly as we can in these lifecycle indications to maximize the potential sales and profits and use of this drug in China, whereas Eli-Lilly may have a different philosophy towards it. So in China, I can't really tell, to be honest with you at this stage of the game. I would hope that we would not be held back. And that fruquintinib would be given every opportunity to become as big as it can be. We think fruquintinib can be an enormous therapy in China. Outside of China I am less concerned, because it’s more in our control.

Unidentified Analyst

Just talking about MET monotheraphy exon 14, it’s a single arm study. What’s the Chinese FDA are asking for comparisons?

Christian Hogg

So basically for MET exon 14 patients, actually that study, that Phase II study is chemo refractory MET exon 14, so you cannot, it’s not ethical to knock free those patients with chemo to start with. And so they are chemo refractory MET exon 14 skipping patients. Then post failure on chemo, really there's nothing left for them. So putting them on savolitinib is ethical, and it’s in those patients that you’re seeing that fantastic efficacy. Now ultimately that's not the patient population that we would seek to get approval in. You obviously want to become the first line therapy for MET exon 14. But in this case, this study is around chemo refractory patients. So we do that, we get it approved then we’ll have another study, which will be first line. And that will be how you get it approved in absolute first line.

Unidentified Analyst

And then just looking at epitinib, also savolitinib, fruquintinib outside of China quiet positive. But with epitinib and maybe Tagrisso being positive in brain met. What’s your thoughts kind of outside the China with that…

Christian Hogg

I think epitinib, our primary focus is get epitinib right in China, because EGFR mutation positive non-small cell lung cancer; around 50% plus of non-small cell lung cancer patients in China are EGFR mutation positive. In the west, it’s between 10% and 15%. So it’s a much smaller sub-segment of non-small cell lung cancer is EGFR mutation positive. So China is by far in a way the biggest reservoir of EGFR mutation positive patients. And so our real primary focus on epitinib is for China at the moment. As you say, Tagrisso does have -- it does metabolite that can penetrate the blood-brain barrier and provide benefit to patients, but it's a very expensive drub. So epitinib would probably be something at a much lower level, but we’ll see. I think our focus is squarely on China for the moment and we’ll at global at a later day.

Unidentified Analyst

Okay, thank you.

Christian Hogg

Okay, great. Well, that’s the hour up, and thank you all very much for coming. Thanks very much for the questions. And I think we will call it here, we have probably some of the line, but we’ll call it. Okay, thanks very much for coming.