HCM 和黄医药(ADR)

Christian Hogg

Okay. All right. Well, 9:00. So thank you, everybody, for attending today the Hutchison China MediTech 2018 Results Presentation. As always, it's a very detailed presentation, but I'm going to just go through the slides and touch on the main points. The disclaimer, as always. So starting off with the financial results. Before I go diving into the actual numbers for the year, I thought I'd stop on this slide for a moment, Slide #3 -- 4 rather. We really have 3 core areas of our focus these days as we strive to build a science-based or science-focused global biopharmaceutical company off of our base in China. The 3 areas we're focused on are: global innovation, China oncology and obviously our existing China business. Global innovation these days is all about bringing our small molecule targeted therapies to development in the global market. We, today, have 5 assets that we are either in development outside of China or about to start development out of China. So more and more, this is us trying to maximize the potential of our assets as we look beyond the China market. The second area is China oncology. This is an area that's just really over the last few years has become very high profile. The unmet medical need in oncology in China is so enormous. And the amount of investment these days that's going into China oncology to try to innovate, to bring better medicines, better therapies to the patients in China is really an area of focus. And so we find ourselves in a really sort of wonderful first-mover-type position in China oncology, at least with regards to innovation. And we'll talk a little bit about Elunate and the launch of fruquintinib in China as a sort of a case study of what we're doing there. So China oncology, 8 assets in development at the moment and moving rapidly. And then our existing China business. This has served 2 purposes over the years. Number one is to generate cash. And number two is to give us expertise in how to commercialize product in the extremely complicated Chinese pharmaceutical market. So in those three areas, when we talk about our financial results in these three sort of lumps. You can see the 2018 results here that we presented or published today. Group revenues of $214 million, unconsolidated revenues from our joint ventures, over $490 million. Investment on the Innovation Platform, this is the net loss from the Innovation Platform, around $102 million. Commercial Platform delivered $41.4 million net profit after tax attributable to Chi-Med last year, which was up about 10% versus the year before. And total group net loss of $74 million, so everything was pretty much in line with guidance. The group revenues were a bit higher than guidance. Reason for that being the sort of phased-in rollout of the Two-Invoice policy in China. In 2018, it came in pretty hard. It will continue to roll out. And we'll see the full effect of the Two-Invoice policy probably over the balance of '19. But basically, results as expected, I think. Innovation side. You can see that the revenues from our partners were higher in 2018. We reported revenues from Eli Lilly of almost $27 million. That's an approval milestone on colorectal cancer, various service fees as well as in the last 5 weeks of 2018, product sales on fruquintinib. So this isn't sales to market, this is sales to Lilly. So we manufacture fruquintinib in China and we sell it to Lilly at cost, basically fully loaded cost, then they mark it up and sell it out. So this $3.3 million of product sales to Lilly is actually our sales at cost to Lilly, then they mark it up. And a little bit of royalty in there as well. So that's 5 weeks because we launched on November 15 -- November 25. R&D expenses of $142 million non-GAAP: the development of 8 drug candidates, 5 of them globally obviously; the establishment of our small molecule manufacturing facilities in Suzhou that got GMP certification during the year; and an expansion of our clinical regulatory team in the U.S. We've now got a team in New Jersey that's running all of our global development on our 5 assets outside of China. So it's pretty, pretty big steps we've taken during 2018. On the commercial side, you see net income up 10% to $41.4 million. Very strong performance on our cardiovascular business, prescription drug business, up 11% to $233 million. Now that's nonconsolidated JV sales. The market share on our cardiovascular prescription drug business in 2018 was 17% national share, up from 15.4% in 2017. So you've got a business that's doing very well there, growing share in a very competitive environment. And then you've got Seroquel and Concor. You see the service fees that we owned from both of those third-party products. We're up 61% to $21.2 million in service fees. So just really good execution by our commercial team. And that continues. The China Two-Invoice System has been implemented gradually through the year. You see the sales dropping as a result of us not being able to consolidate the sales of Seroquel during 2018 whereas we were in 2017, so moving from a system of being able to book third-party sales to actually just earning fee-for-service. But no impact on our net income of that Two-Invoice policy. The Two-Invoice policy has had some impact on sort of distribution and logistics structure in our SHPL joint venture. We had to consolidate from 2 layers of distributors down to 1. So that caused some challenges, but it's gone pretty well, that execution. So in summary, I won't go through all of the details on this chart. But you can see the red boxes on Page 8 are our global studies. And you see a lot of sort of proof-of-concept studies. We obviously have the SAVANNAH study, savolitinib and Tagrisso that could be registration intent on the global innovation side. On the blue side, on the China oncology, you see just a lot of programs moving forward with a lot in registration, which I'll go into in detail. And as far as marketed is concerned, you see fruquintinib, Elunate and the various products that we're already selling in the market at the moment. So this chart shows the trend across the way as we push our portfolio through to more market launches. So on the global innovation side, just briefly, we're focused on trying to deliver step-change innovation, looking at first-in-class assets, like Syk potentially, like c-MET, all about kinase selectivity. This is something that, if you've been following Chi-Med for years, you'll know that, that's been our focus is looking to design drug candidates that are clean, that are able to be combined with other therapies to hit the disease, hit cancer from multiple angles. And then building a broad range of assets in our portfolio, now getting more into second-generation immunotherapy targets, looking at combinations and expanding into large molecules as well as small molecules. The team now is large and proven. We have, on the innovation side, over 420 scientists and staff in Shanghai, Suzhou and now in New Jersey. And on the commercial side, we have the best part of 5,000 people in our commercial operations and manufacturing operations in China. So it's a big organization. High level, each of the drug candidates, savolitinib. Savolitinib now has been dosed in over 900 patients around the world in many different solid tumor settings. We actually are approaching at the end of March presentations at AACR, American Association of Cancer Research, on savolitinib in savolitinib monotherapy in MET exon 14 skipping patients as well as savolitinib plus Tagrisso in EGFR TKI refractory patients. Those big oral presentations will happen on March 29. And I think what we'll see there is a lot more information than has been published to date on savolitinib. So we're looking forward to those presentations. Fruquintinib. You can see the colorectal cancer launch and the ASCO presentation there. Obviously, we had a disappointment in lung cancer with the Phase III FALUCA study. We'll be -- we've completed our analysis of that, and we'll be submitting that for presentation some time this year as well. So we are of the view that fruquintinib in lung cancer is a very effective drug. Unfortunately, the design of the Phase III and the changing landscape in lung cancer led to a disappointment there. But we have a big study on gastric cancer that's enrolling at the moment. We'll hit an interim analysis on that shortly. Surufatinib. Over 700 patients dosed primarily in neuroendocrine tumor patients. We have interim analyses, late-stage interim analyses on 2 Phase III studies on surufatinib this year. So we are hopeful that we will see positive outcomes there. And then the Syk inhibitor and the PI3K-delta, both of them are well into development in Australia and China. And the INDs have been cleared in the U.S. And we're about to start development of the Syk inhibitor and the PI3K-delta both in the U.S. and Europe imminently. So the pipeline, again I won't go through it in detail, but this is for more detailed analysis later. But you can see we have well over a dozen studies on those 5 key drug candidates all moving in parallel. Savolitinib, obviously we're hoping that the lung cancer studies, SAVANNAH and the exon 14 study in China will be registration studies. Fruquintinib will now move, hopefully by the end of this year, into a registration study outside of China in addition to the launch in China. Surufatinib, we're hoping that -- well, we're in a Phase II at the moment outside of China in neuroendocrine tumors and biliary tract cancer. And we expect that to expand into a registration study later this year. And then 523 and 689, the Syk inhibitor and PI3K-delta, we will be moving them into global, as I said, shortly. So overall, on the global side, it's aiming about focusing on savolitinib and Tagrisso, getting that combination to a point where we can get it approved and launched. I think that would be an enormous step for Chi-Med to take. Build out our U.S. and European development organization, we expect to be about 30 people by the end of this year. Accelerate the development of the 4 unpartnered global assets: fruquintinib, surufatinib, Syk and PI3K-delta. And then aim to move one novel drug candidate into global development per year. So that's our plan on the global side. It's ambitious. It's a lot more than we've done in the past. We have historically been more focused on China. We're now increasingly focused on the U.S. And we're tooling up to do this, so getting more and more organizational resources to be able to push our assets globally. So looking at China oncology. You've got a large portion of the world's cancer patients in China, I've often said 30%, around 24% on average. Some cancer indications, it's 50%. Gastric cancer is close to 50%. So it varies. But it's an enormous unmet medical need when you consider only 20% of the world's people live in China. So it's overdevelopment in oncology. Major investment coming in. We're a first mover. The launch of Elunate is going well. I'll go into that in a bit more detail later. And we have a deep pipeline there. It's a major commercial opportunity. And as I talk about how well we're doing on Elunate and fruquintinib in China, I think you'll start to understand how big the opportunity is in China. I won't go through all of this in detail. But there's one theme on these charts, the arrows are all pointing in the upward direction. The market is growing rapidly. The coverage, the insurance coverage is growing quickly on Page 18. The investment of venture capital and private equity money into the market in China is growing rapidly. So this unmet medical need in China is drawing a lot of attention and a lot of financial support and investment. And regulatory reform is really attracting that. You see on the last box here on the bottom right on Page 18, improved access. You're seeing, on the National Drug Reimbursement List, a lot of new novel drugs are being added to it. 32 world-class oncology drugs have been added to the National Drug Reimbursement List in China in the last 2 years, making access to these kinds of therapies available to the majority of patients in China really for the first time. So that's what's going on and that's what's driving interest in this industry. You see, on Page 19, cancer incidence, 4.2 million patients. You can see the -- on the bottom left here, you can see now drugs like Tagrisso in its second year, over $150 million in sales. This is the first time you've seen innovative targeted therapies come into the market in China and reach those levels of sales so quickly because it's now being reimbursed, it's being pushed very hard. AstraZeneca is making a lot of effort to make it accessible. And you can see on the right-hand side of this chart some examples of Herceptin, Avastin. When you bring the prices down to go on the National Drug Reimbursement List, you see very high levels of increase in access and penetration and sales basically for those products. So that's what's going on in the industry. The eight assets we have in development in 20-plus clinical studies are all moving along rapidly. We hope on savolitinib to get to our exon 14 registration study complete enrollment this year. Fruquintinib, we've got gastric cancer coming behind colorectal cancer. Surufatinib, the 2 neuroendocrine tumor Phase IIIs, hopefully by the end of this year, we'll be done with those. And on the Syk inhibitor and PI3K-delta, we -- well, certainly on the Syk inhibitor, we hope to be in registration intent studies by late this year. So we've been working on that Syk inhibitor for a long time. And we start to get to a point where we know what we want to do with it. So overall, for the next 2 to 3 years, it's about focusing on establishing Elunate as the best-in-class small molecule VEGFR inhibitor in China. And I think we've got -- in our view, we've got the best, we've got the best asset here. So as patients get more and more access to it, as physicians and clinicians are able to prescribe and see the benefits of Elunate, we feel that we will stand apart from everything else that's in the market with regards to small molecule VEGFR inhibitors. Obviously, we're also looking to maximize penetration through working with Lilly, expanding into lifecycle indications on the PD-1 collaborations. Second point, launch our unpartnered assets. So surufatinib in China, we're really looking forward to launching surufatinib in China ourselves. We've partnered fruquintinib with Lilly. We've partnered savolitinib with AstraZeneca. But surufatinib, we'll launch it ourselves. And we are well established to do that. We already are building our oncology commercial organization. It's about 30 people right now. They're involved in working on late development with our clinical regulatory team. As soon as surufatinib is approved, that team of people will focus on commercialization. Savolitinib MET exon 14 potential NDA, early 2020, and then the progression of the broader pipeline. So highlights for 2018 briefly. Fruquintinib, the launch and the deal we did with Lilly, I'll talk about that more later. Savolitinib, we've essentially started 2 registration intent studies in lung cancer. And we presented recently the data of savolitinib plus Imfinzi in papillary renal cell carcinoma. The hematological malignancy programs have moved along well and are now expanding globally. The immunotherapy combination deals that we've done, we've done 4 deals with companies in China as well as our collaboration with AstraZeneca on Imfinzi. That's all moving along. And our global clinical development program is progressing because of the investment we're making in the U.S. team. So those are the highlights for the year. I'll go into each of them in a bit more detail. So fruquintinib, many firsts for China biotech. This is -- many of you have seen this chart before, but it was a long process of bringing fruquintinib from discovery all the way through to launch. It's the first time it had ever happened in China in history in this field. So we take great pride in this. But along the way, we were the first company to present, have a big oral presentation at ASCO for a big Phase III. We were the first company to present a China Phase III in the Journal of the American Medical Association, priority review and all the way through to approval. The launch of fruquintinib was a huge show. Working with Eli Lilly, they put a lot of effort into it. We had a traveling theater that went across China singing and dancing and along with all the top key opinion leaders in China to really make a splash of this. Because this is something that, I think, China has got a lot of pride out of, to be able to create a world-class innovation in China for the market in China. It was fantastic and did very well. So how are we doing on Elunate? So we've got 55,000 to 60,000 third-line non-small cell lung cancer patients. This is Page 26 of the presentation. That's our target patient population. You see the pricing is around RMB 22,000 per cycle per month. But we have a patient access program that requires patients to pay for 3 months and then essentially get fruquintinib for free. So the total cost under the patient access program, which is means-tested for patients, is about $9,900 to be on fruquintinib. Now most companies do patient access programs during the period of time while you're waiting to get on the national reimbursement catalog and while you're waiting for the drug to be reimbursed. So we were in that process. The reimbursement list will have an update later in this year. And Lilly and Chi-Med are working closely together to try to get on that. But it's a negotiation. It's all about negotiating with the pricing authorities to find a middle ground on how to price and how to reimburse. So as I said earlier, the first 5 weeks, the revenues were $3.3 million. That's just our sales to Lilly. And the royalty in the first 5 weeks was about $300,000. That's about $2 million of external sales, given the royalty is about 15%. As of the end of January, so 9 weeks into the launch, we had well over 1,000 patients on fruquintinib. So at that point in time, 1,000 patients were being treated with fruquintinib, 1,000-plus actually, which is very early, can't get too carried away with these kinds of numbers. But in the context of thinking about all of the patients through development that have been on fruquintinib through all our clinical programs in its entire development history, we had -- we have treated through clinical trials about 1,500, 1,600 patients. Now in the first 9 weeks of launch, you've got over 1,000 patients that are paying to be on the drug. So still very early and you can't draw too many conclusions from that. But both Lilly and Chi-Med are quite happy with that status. And it's a good start. I think that overall, when you launch a drug in China, you are gradually going province-to-province. You're gradually getting distribution into the key hospitals. The first thing you do actually as you go and you get distribution in the retail pharmacies around the hospitals is getting on the hospital -- in the hospital pharmacies can take time. So that whole process is doing very well. And we're covering already the top sort of almost 400 oncology hospitals in China. And as a result, in 8 or 9 weeks, you see over 1,000 patients are already being treated with this key drug. So the key for us is the more patients that are being treated with fruquintinib, in our view, the better it's going to get because it's a superior drug. It's a clean drug. Its safety profile is better than, in our view, better than anything else that's out there. And as a result, the more usage you get of this product, the better it's going to get. So that's where it stands as of right now, early but very encouraging on sort of a month-to-month growth trajectory basis. And as I said at the end of January, so after just 8 or 9 weeks, you've already got well over 1,000 patients on the drug. The Lilly amendment. I won't go into a lot of detail here. But we are really happy with this amendment. It took a long time to negotiate this deal with Lilly. Lilly were hesitant to hand over these kind of controls to us. But we pushed very hard and we were able to come to an agreement on it. So we have full freedom to operate in China. Yes, we have to pay for clinical development in China. But taking over control, taking over decision-making around which indications to go into with fruquintinib, which drug to partner with on fruquintinib, it's really important. And we're looking forward to moving into a lot of lifecycle indications on fruquintinib. Materially higher milestones and royalties, it's all laid out. Our top-tier royalty goes up to 29% from previously 20% and also possible promotion rights in 30% to 40% of China. This is triggered by a commercial event that's nothing to do with fruquintinib. It could happen 2021, 2022. It's triggered by the launch of another drug from Lilly called Cyramza, which we saw as potentially a competitor to fruquintinib. So we negotiated to say, "Look, we actually need to take over a portion of the market in China to ensure that fruquintinib, there's no conflict of interest essentially." So fruquintinib gets full attention by us, our performance in that particular -- in that 30% to 40% of China, if we do well there, we would expect Lilly to be doing the same level of performance in its markets even if it's got an additional therapy in there that might be considered competitive. So I think this -- the potential to take over that 30% to 40% of China just gives us flexibility and ensures that fruquintinib gets of fair shake. But this is not going to happen in the next two years-plus. Until such time, over the next couple of years, Lilly is 100% focused on fruquintinib. They're paying for everything in there, in my view at this stage, doing a very good job. So that's enough on fruquintinib. Moving on to savolitinib on Page 28. You've all seen this chart many times before. The prevalence of MET-driven disease in various stages of non-small cell lung cancer. I think the key highlighted points on Chart 28 here is how well Tagrisso is doing. In its third year of sales, it's $1.9 billion in sales. And you can see that from data on this chart as well as on the charts I'll show you in the next pages, MET-driven disease is a major mechanism of resistance to Tagrisso. You've got a very successful drug with Astra. Currently, the estimates are $4 billion or $5 billion in global sales on Tagrisso with MET being the major resistance pathway. So we find ourselves in a very good position there. So a little bit of detail on Met exon 14. We will be presenting preliminary Phase II data in 3 or 4 weeks in Atlanta at AACR. This page, Page 29, shows the competitive landscape in MET exon 14 and the treatment of MET exon 14 skipping non-small cell lung cancer. You can see capmatinib, tepotinib and crizotinib, Xalkori, from Pfizer, they're all in that game. And they've all published in a relatively limited dataset. You can see in box number one that you treat patients early with MET exon 14 skipping in first-line setting, you can get some very high levels of response, sort of the 60%-plus. You get to patients later, second line and above, it starts to look like 30%, 40% response. So this is all the data that's out there at the moment. We will present our dataset in three weeks. And our hope is that we will be quite competitive with all of this. We believe that MET exon 14 will be the first -- the fastest way for savolitinib to get approved. So the Phase II in China, which is registration intent, is hopefully set to be completion of enrollment by the end of this year. And we'll be ready, if that's positive, to be able to submit the NDA early next year. And that would be the first potential NDA for fruquintinib -- for savolitinib. As I said, Page 30, the Tagrisso resistance. So here, you're seeing -- actually, here, you're seeing samples from the AURA3 study, which is the use of Tagrisso in second-line setting. You're seeing that 19% of patients here using plasma are failing due to MET gene amplification. The expected frequency of MET amplification is likely to be higher in tissue samples versus plasma samples. So I think -- we believe this 19% is actually a low-end number, could be higher. And when you treat patients who have failed on the first-generation EGFR inhibitors with savolitinib and Tagrisso in combination, you see these types of sort of 50%, 60% response rate. To this point, we have never published PFS data or mature duration of response data for the combination of savolitinib and Tagrisso in these patient populations. We will publish that data in 3 or 4 weeks at AACR. So we're really looking forward to getting that data out there. And I think that will be a big news for us. And then post Tagrisso, you're seeing 15-odd percent MET amplification, again expected to be higher in tissue samples. And so these are patients that, for example, where Tagrisso is being used in the first-line setting and are not being exposed to first-generation EGFR TKIs. These patients exposed to Tagrisso in the first-line setting, they fail, you've got 15-odd percent here of patients that are MET gene amplified based on plasma analysis. Again, tissue should be higher. And in those patients, we see -- we've presented data that shows around 30% response rate. But we've never published any duration of response or PFS-type information on this. We will in 3 weeks at AACR and actually a bigger dataset as well. So I think this is -- we're excited about AACR at the end of this month. And I think the world will have a better understanding of savolitinib/Tagrisso and also savolitinib in MET exon 14 skipping patients. It's all about the safety actually. When you're talking about combining 2 highly potent therapies together, it's about can patients tolerate them? And so as we've worked through the last year or so, I think actually when I stood here a year ago talking about savolitinib and Tagrisso, we talked about exploring different dose regimens and weight-based dose algorithms to try to ensure that patients could stay on that combination as long as possible. And we've made a lot of progress in that space over the last year. And I think we're now very close to being able to say what we think is the right dosing algorithm for savolitinib and Tagrisso. And that will be the algorithm of the dosing regimen that will be used in the SAVANNAH study, global SAVANNAH study. So this is the SAVANNAH study that we started screening for late last year and patients already being enrolled in it. It's a complex algorithm here. But this chart on Page 35 shows really the 2 areas that we're focused on. The top box on -- the red box on the top is how patients get on to the savolitinib/Tagrisso combination coming through first-generation EGFR TKIs, like Iressa and Tarceva coming through, failing on those, then being put on to Tagrisso under the AURA3 study and then failing on Tagrisso. And when they fail on Tagrisso under AURA3, they then go on to SAVANNAH. These are generally quite sick patients who are quite far along on their disease progression. You've then got another box down at the bottom here that comes out of the FLAURA study, which is using Tagrisso in the first-line setting. And so when patients fail on Tagrisso in the first-line setting, then they go into SAVANNAH. Actually, AstraZeneca set up a separate study called ORCHARD that it's an umbrella study with multiple arms to take patients out of first-line Tagrisso usage because there are many other molecular drivers of the disease, not just MET. And so what they're doing is they're creating an umbrella study that can provide patients incentive to provide tissue samples for molecular analysis to determine what is the driver of their disease. And then they have a number of treatment alternatives, one of which is savolitinib. Probably the greatest one is or the most common one would be MET and then treatment of savolitinib. So that's SAVANNAH. We'd hope that this would allow for primary data completion sort of in 2021. But as we go along the way, we have interim analyses along the way. And I'm sure we'll be giving updates on this. But I really believe that this is a great opportunity for savolitinib. Kidney cancer. You've all seen this chart on Page 36 on papillary renal cell carcinoma. You can see MET-positive papillary renal cell carcinoma circled on the top right there. This was the area -- this was the patient population we were going after with savolitinib monotherapy, the Phase III, the SAVOIR study that we stopped or suspended enrollment in December. It came as a bit of a surprise to everybody that we stopped. But the reason for it is shown in the next chart. So on Page 37, what you can see is the combination of MET inhibitors and PD-L1 inhibitors. The question is, is there synergy here? Now on the bottom left-hand side of the chart, you can see that MET and HGF have a very complex interplay with the immune system. There are numerous scientific publications that show that MET and HGF are directly interacting with the immune system. So the concept of bringing a MET inhibitor with a PD-L1 is, is it additive? Or is it synergistic? When you bring those 2 assets together, do you make those immunotherapies more effective? The answer to that in our minds is still to be determined. But the CALYPSO study is very encouraging. And actually some of the data that's been published recently on immunotherapies in papillary renal cell carcinoma also sort of supports that potential for synergy hypothesis. You can see here on the right-hand side the 2 circled numbers. Savolitinib monotherapy in MET-driven papillary renal cell carcinoma: disease control rate, 75%; median progression-free survival, 6.2 months as savolitinib on its own in those MET-driven patients. At the bottom, you can see pembrolizumab, Keytruda, monotherapy in non-clear cell renal cell carcinoma, so the three blocks. And you can see a disease control rate of about 40% and a median PFS of around four months. Savolitinib is a highly effective therapy in MET-driven disease across pretty much all solid tumor types, including papillary renal cell carcinoma. The question is, is combining savolitinib with a PD-L1 antibody going to give you a synergistic efficacy? So we see with the savolitinib-Imfinzi combination, you can see response rates in the sort of the high 20s, low 30s. And you see that all the rest of the data there is basically immature. So the CALYPSO data that was presented a month or 2 ago or a month ago at ASCO GU is encouraging to us, but it's very premature. And it's going to take time for that data to mature. Our hope is that there is a synergistic effect of the MET inhibitor and the PD-L1. And if that's the case, that has potential not just in papillary renal cell carcinoma but across many solid tumor types. So encouraging, but early is the point. But I hope now you can understand why we said, "Okay, let's stop the savolitinib monotherapy." Because in our mind, the potential for the combination with the PD-L1 is great. But we need to watch that Phase II study data mature more before we decide what we're going to do with it. In hematological malignancies, on the Syk inhibitor, we're moving rapidly. We have an expansion study in Australia and China now. It's almost 200-patient dose expansions. So as I said earlier, our plan is to initiate China registration studies on the Syk inhibitor by the end of this year in potentially several indolent non-Hodgkin's lymphoma subtypes. And then finally, the chart that we've been showing on PD-1 VEGFR inhibitor combinations in clear cell renal cell carcinoma. You see the axitinib/pembrolizumab data that's recently been published. There's definitely a lot of synergy with VEGFR inhibitor and the PD-1s. So that's why we partnered up with 4 PD-1 players in China. The two local companies, Innovent and Junshi, that both have just received approval on their PD-1 antibodies in China. And so now we're working on expanding development of fruquintinib and surufatinib in combination with those PD-1s. So we're quite excited about this. So that's the highlights on the innovation side. On the commercial business, it's a big platform. Many of you have seen these charts. In 2018, we sold almost 5 billion doses of medicine in China through our Commercial Platform. It's a big operation, 2,400 medical reps and market-leading products. You can see the commercial success that we've seen in the last few years has been terrific. On Page 42, you can see the sales in 2018 were $664 million of our subsidiaries and our unconsolidated JVs. On the profit side, the $41.4 million we made in 2018, it's been a long and regimented progression towards increasing profitability on that business. And you can see total net income from our operations in China over the last -- since 2005 is almost $600 million. So we've generated a lot of cash from these commercial businesses is to help fund our long-term investment in innovation. Page 43 is the commercial organization as it's laid out. You can see it's primarily focused on Eastern China, Northeast and South China, which is where all the population is, where we cover over 320 cities and towns. You can see on our third-party products, we've done very well. So it's not just on the products we manufacture and sell ourselves. But taking on third-party products like Seroquel and Concor, you can see we've done very well through the years on these programs and are generating a lot of service fees from those activities. So on the existing business, it's continued organic growth. It's building out synergies on the China oncology operations. Looking at M&A potentially, both in terms of acquisitions or potentially selling off non-core assets and focusing on cash generation. So finally, talking of cash. We sit here today or at the end of last year with around $420 million in cash and available resources, $301 million in cash and short-term investments, another $119 million in unutilized banking facilities and only about $27 million in debt. And if you look at the guidance going forward, we've streamlined our guidance for this year just because we wanted to focus in on what are really the most important metrics for guidance for Chi-Med. And we see those 2 metrics as research and development expenses. We are -- we've just gone through telling you that we are moving aggressively globally with 5 of our core assets. And when you start developing multiple assets outside of China, it does tend to get quite expensive. So we feel it's important to give guidance on research and development expenses, which we feel are going to be somewhere in the region of $160 million to $200 million in 2019. And the impact that, that has on essentially cash burn, this metric we have adjusted non-GAAP group net cash flows excluding financing activities. So this is the pure sort of the cash burn of our operations and our activities, somewhere in the region of $120 million to $150 million, the difference being the cash that we're generating from our Commercial Platform, potentially from some of our multinational partners and offset, to some extent, by our administrative costs, et cetera. But essentially, those are the 2 metrics that we feel are most disruptive for our business at this stage. So I think on the innovation side, this year, we'll see Elunate ramping up quickly. It'll be a gradual start in 2019. But I think it'll ramp up very quickly over the next couple of years. And obviously, we'll see an increased investment as we expand in the U.S. and Europe. And then on the Commercial Platform, I think the growth this year will be -- historically, we've seen growth on our Commercial Platform double-digit growth pretty much every year. I think this year in '19, we'll see it a bit more narrow than that. It'll be in the single digits. Reason for that, and we go into a lot of detail on this in our announcement, around the restructuring of our logistics and distribution platform under SHPL, our prescription drug business in China, where the Two-Invoice policy has required us to go from a system that used to have 200 primary distributors and 1,600 secondary distributors to a single tier of 800 primary distributors. We've had to make that change over the last year. And it took us 16 years to get to that 200 and 1,600 structure. And because of Two-Invoice policy, we had to change it. So I'd say that the restructuring has gone really well. Business is doing well. We're actually very optimistic for the full year on SHPL. But I think that will leave this year to probably single-digit growth as opposed to double-digit growth. And the U.S. dollar is sort of moving in the wrong direction. Our U.S. dollar in the first half of this year was 5% stronger than the RMB versus a year ago. So we're basically -- we're seeing Donald Trump and all of these China trade tensions leading to a slightly weaker RMB, which is where all of our profits are in China. That said, a weaker RMB actually helps us when it comes to investing in the innovation side. So obviously, we are converting U.S. dollars into RMB to fund a lot of investments in development in China. So it's kind of give-and-take basically. As far as news flow and targets for 2019, we've got a year of quite a lot of news flow. You can see the starred boxes are the ones, I think, are most important. I've mentioned them already. The savolitinib/Tagrisso -- this is Page 48. The savolitinib/Tagrisso data at AACR late this month will be very important. The savolitinib monotherapy in exon 14 deletion patients at AACR will also be very important. The next starred item would be surufatinib Phase III interim analysis on extrapancreatic neuroendocrine tumors sometime in the middle of the year. Looking at the top here. Savolitinib and Taxotere or savolitinib in gastric cancer in the VIKTORY study, that data should be getting presented sort of mid-third quarter of this year. That will be very important data. And then the last star there is the surufatinib, the second Phase III interim in pancreatic NET. So there's a lot of news that's coming this year. And it's an important year for Chi-Med. I think we've had a very busy year in 2018, a lot of positives and a few disappointments on FALUCA, for example. But we continue on and we have great momentum. We've got all the resources we need. We've got great assets. And I think our view for the future is very, very positive, very optimistic. So that's it. I'll leave it for some questions now, anybody has any questions. And we have a microphone you have to use. Mike?

Q

Mike Mitchell from Panmure Gordon. The Two-Invoice System, just wondering how the restructuring or if we should think about any further restructuring during 2019. Or was that now completed? And on the QCE bidding process, has that -- how do you think about that mapping on to the Commercial Platform as it stands at present and over the coming years?

Christian Hogg

So the Two-Invoice policy has basically played out. I think you might see a little bit of impact in 2019 but not much. On the 7+4 QCE policy that's come out, it's essentially a policy that's designed to squeeze pricing in the generic drug industry. I actually see that -- it will hit the Hutchison Sinopharm business a little bit in terms of revenues just because we do sell some third-party generic products under this Hutchison Sinopharm JV. But they're very low margin. It won't affect our profitability at all. But I think, in general, that 4+7 QCE policy is going to be really positive for Chi-Med over the next few years because ultimately the whole point of it is to bring price down on generic drugs to open up more headroom for reimbursement of innovative drugs, which will be where we will be bringing our oncology assets. So yes, I think in the short term, you might see these commercial reforms impacting Hutchison Sinopharm sales a little bit, won't impact our profit by much. And in the long term, mid- to long term, it will really help us as a company.

Cinney Zhang

Cinney Zhang from Bloomberg Intelligence. You're pushing to get fruquintinib on the National Drug Reimbursement List. When exactly do you expect that to happen? Also do you expect the final reimbursement price to be significantly lower than your retail price?

Christian Hogg

Thank you, Cinney. I'm hearing that there's going to be an update on the National Drug Reimbursement List sometime in September, October this year. I don't know whether that's certain. But they're trying to get it done this year is what I'm hearing. Whenever you bring a new drug into the National Drug Reimbursement List, it's a negotiation on the price. And that's a negotiation that is set to happen. It hasn't happened yet. So it's difficult for me to really comment on what the price will be. I haven't seen any drug go into the national reimbursement list with a premium. So it will be a discount. But the extent of that discount will have to be determined through negotiations basically.

Susie Jana

Susie Jana, Edison. Could you just talk us through the hirings in the U.S., 30 more people this year, what sort of profile you're looking for? And how rapidly are you going to expand in 2020 and 2021, given the amount of assets going into global development?

Christian Hogg

Thanks, Susie. Yes, the team in the U.S., I mean, it's wonderful to be able to attract high-quality clinical regulatory talent into our U.S. organization. We've recruited in a Chief Medical Officer in the U.S. from Eli Lilly. And he has set about building a fully functional clinical regulatory organization, clinical operations, clinical science, everything. So we are just in a great position having -- I think what's able -- what allows us to really attract high-quality talent is our assets and our appetite to develop those assets in the U.S. and Europe. So I would imagine, as I say on this presentation, by the end of this year, our target is to be up to about 30 people. I would imagine that would grow quite rapidly after that because we'll be running multiple programs in parallel and we'll need the resources to manage that. But particularly, it's not just the U.S., it's Europe as well. Because in a lot of these global studies, you need European sites and you need those European sites to be functioning properly. So you need people on the ground over here as well. I don't know whether that answers your question. But it's a full-fledged building of a big multifunctional organization in this space.

Unidentified Analyst

And just picking up on the -- you mentioned the ASCO GU data, kind of the KEYNOTE-426, you've seen some impressive stuff there. Are you thinking yourself about maybe a PD-1 fruquintinib combination in kidney cancer? Or is it -- are they too far ahead, those kind of your Merck's world?

Christian Hogg

So it's a bit -- clearly, fruquintinib or surufatinib in combination with a PD-1 in kidney cancer is attractive to us. It's very competitive. There are a lot of players that are already in that space. But we're looking at a lot of things. I won't go into details of what we're looking at. But we're looking at a lot of things. And I think there is certainly clear proof of concept in there that both of those assets, surufatinib and fruquintinib, could do well in RCC. But I think you can't just be following what everybody else is doing. You've got to think about it in a slightly different way. And that's what Weiguo and the team are looking into.

Christian Hogg

Any more questions? Okay. Do we have any? Okay. So if that's it, thank you all very much for coming, and appreciate your attendance and look forward to a good year. Thank you.