HUTCHMED (China) Limited

and thank you for standing by. Welcome to HodgeMed 2023 Full-Year Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I'd now like to pass the call over to your first speaker today, Mr. Mark Lee, Senior Vice President, Corporate Management and Communications of Hachmed. Thank you. Please go ahead.

Thank you, Desmond. Welcome, everybody. Good morning, good afternoon, good evening. Just a brief message as usual. The performance results and operations of Hachmed are historic in nature, and past performance is no guarantee of the future. We've got forward-looking statements, which means Within the meaning of the safe harbor provisions of the US SEC, this presentation is for investors only, and information on pharmaceuticals are not intended as advertising or medical advice. This presentation contains statistical and other third-party data which we have not independently verified, so we can't guarantee on their accuracy. Nothing in this presentation constitutes an offer to the sale of shares. No representation warranty is implied on this information, and anything in this presentation should be read in conjunction with Archimedes' results for the year ended December 31st, 2023. So with that, I'd like to hand over to Dr. Weiguo Su, our CEO and Chief Scientific Officer. Weiguo.

Okay, thank you very much, Mark. Good evening, good morning. Welcome again to HUDGMAT 2023 annual results presentation. 2023 was an exceptional year for HUDGMAT. We focused on frequenting of global registration and launch with our partner Takeda while continuing to execute on our strategy towards profitability. This is a year where we made significant progress. The pipeline progressed significantly, now more significant than the US approval for Quintinib for advanced CRC, a historic milestone for HatchMed. Financially, we ended 2023 with a very strong cash position, thanks to the Takeda partnership and also strong growth from our China commercial operations. Next slide, slide number four. Let me quickly introduce the agenda today. So Johnny Chan, our CFO, will go through the financial results for the full year 2023, followed by commercial update. Mr. Chan Hong is not available today, and Johnny will cover for him. And next will be Dr. Wu, who will be giving a manufacturing update, particularly on our new facility and also our global supply strategy. Followed by Michael Hsieh, who will be giving an update on our late stage pipeline and a wrap up. I'll wrap it up and followed by Q&A. And for the Q&A, the full team will be available. Now, for details of all the updates, let me invite our CFO, Johnny, for financial results. Johnny.

Thank you, Dr. Hsu.

And can we turn to page six? So, yep, page six, please. I think the screen is not moving. Yep. Next page.

Okay, so we have a strong cash position at the end of last year with over $880 million cash contributed by $400 million of upfront payment from Takeda. So for which we have recognized $280 million with the remaining $120 million to be recognized over the course of the next three years. Can we move to the next page, please?

Page seven. The screen is not moving, so.

Okay, so our operating performance. Yes, our operating performance, we have, regarding the top line, we have doubled the total revenue from last year to over $830 million. So oncology consolidated revenue was around $530 million, which met the high end of our guidance. As to the bottom line, we made a sizable profit of over $100 million contributed by restructuring of our US commercial operation, prioritizing R&D investments, and tightly controlling operating expenses. Moving on to the next page, our 2024 oncology guidance Page 8. So our 2024 oncology guidance is $300 million to $400 million, driven by 30% to 50% growth targets for marketed product revenue. This guidance is in line with our 2023 product revenue growth of 39%. Move on to the next page, page 9. A quick update on the sales of our food sector in U.S., Takeda achieved 15 million in-market sales in the last seven weeks of 23 after FDA approval. So we are now waiting for approval from EU and Japan, targeted sometime later this year. As shown in the bar chart below, besides the U.S. Day, it's a significant... Yeah, we are on page nine, correct. So as shown in the bar chart below, besides the U.S. Day, it's a significant unmet medical need in EU and Japan for CLC patients. Okay, so we move on to the commercial on page, the next page, page 11. So China commercial environment, just to give you all a quick update, a number of new policies have been issued recently to support greater access to innovative medicines. So, for example, accelerating the review process for breakthrough-destinated drugs and simplifying the NRDL renewal process. On the right-hand side of the chart, you can see we have scaled up our commercial presence, deepening hospital penetration, also expanding pharmacy coverage. Turn to the next page. Page 12. For L&A performance, we have continued to grow our business and achieved over 100 million in-market sales in 2023. On the right-hand side, as you can see, we have further expanded our market share over Stavaga. Moving on to Solenda, next page, page 13. We were able to maintain strong growth for this product. achieving 43% growth versus last year. On the right-hand side of the chart, actually, we should be on page 13. On the right-hand side of page 13, as you can see, we are widening our lead over Sutton and Affinitore in terms of market shares. Moving on to Oparthas, page 14. This is a product commercialized by AstraZeneca and was admitted to NRDL in March 23. They have overall achieved 19% growth despite a 38% price reduction after NRDL inclusion. So looking forward, based on strong clinical results from the confirmatory study, we may have a potential label expansion to first line later this year, which could drive stronger sales growth. I will now pass on to Dr. Wu to give you an update on our manufacturing operation.

Dr. Wu. Thank you, Johnny. Let's go to slide number 16. As you will hear throughout today's presentation, what we have been trying to do is to One, increase the number of products in the market, different indications. And two, try to expand into other markets. So our manufacturing strategy is try to support this goal for the company. So in the last year, 2023, we've been focusing on expanding our capacity for both China and the global market. The first thing we would like to update you is our Shanghai facility, and we have completed facility construction and the qualification. So now we are in a very good position to leverage this brand new facility, which will give us five times more capacity. And we intend to have clinical supply made here this year. And also, we're doing work to enable us to commercial supplies from this facility to be ready in 2025. Another area we've been focused on is to established a global supply chain. As you know, we have our first product launched in the U.S. And so we have done well in this regard. We have our API CMO in China qualified for the U.S. market. For the drug product, we actually have two sides qualified. Our Suzhou side is our own facility, which we passed the pre-approved instruction by the FDA, so it's qualified. We also qualified a site in Switzerland, a CMO, that will supply a drug to the U.S. market. As we gain approval for the EU and Japan, this supply chain will also be ready for making supplies for those markets. And last, I want to mention that in this new Shanghai facility, have you stored a solar panel so we could reduce our electricity usage and also reduce the emission. And that's always a part of our ongoing efforts. Thank you. And I would like to introduce Dr. Hsi, who is going to tell you about our pipeline. Mike.

Thank you, Dr. Wu. And slide 18, please. Our clinical program continues to grow and mature and cover a vast spectrum of hematology and oncology products. And here are the slides showing the 15-plus ongoing registration for the seven leading products globally. And just a highlight of key milestones, and in addition for Quintinib approval in the U.S. last year and the EU filing and Japan NDA submission, We also make a tremendous advancement in the life cycle indication. Fuquina NDA for second-line gastric cancer accepted for review in China, and also the pivotal phase two for second-line endometrial cancer and the phase three renal cancer, in combination with centilimab, also completed recruitment. And we expect NDA filing early for 2024 for EMC and top-line results for the RCC in the end of 2024. And also for savalidinib and exon 14 non-smart cell lung cancer confirmatory trial phase three already achieved a positive result. And we accept the NDF filing early 2024, and including the new label expansion in the first line setting. And also our partner AstraZeneca also had a pivotal global phase two trial, Samana completed recruitment. And also the potential US filing around the end of the 2024. And also, we are very pleased that Solvoplanib, our novel sick inhibitor, and for the primary immunosignable cytopenia, the Eastland-1 trial also achieved positive phase 3 and the NDA acceptance and granted priority review in China. So we also achieved a positive phase 2 readout for Solvoplanib in another autoimmune indication. warm autoimmune hemolytic anemia, and a phase three will start in Q1 this year. And the other product, the bridging study for Tasmatastat, our in-license product from Ipsen, will have the readout and potential filing later this year. And also, multiple life cycle indication launched product and the late-stage assay in registration trial expected to read out and file NDAs for 2025 and 26 in the timeframe, so paving the way for accelerated growth. in 2025 and beyond. And I also want to provide an update for another hematology product and the Zilacib, our PI3K inhibitor. And in view of the changing regulatory environment, we are currently evaluating the clinical development plan and the regulatory path before deciding regulatory strategy for indication. Let's move to slide 19. And also, I want to highlight the Fukunaga, China second-line gastric cancer trial. And this has been, let's go to slide 19, please. I don't see the advancement. So gastric cancer is advancing globally, and newly diagnosed cases are over a million, and China is really accounting for 44% of global new cases. And treatment options are very limited in the second-line gastric setting, representing an urgent medical need. So the FUTIGA trial was designed to treat the fuquitinib in combination with tocataxel in this second-line gastric cancer. So we recruited about 700 patients, and we're hoping to expand the new indications. So slide 20 highlights some of the top-line results for FUTIGA. And the trial results were selected for our ASCO plenary presentation. Slide 20, please. Fluquinity plus plaque tassel almost doubled progression-free survival, and from 2.7 months to 5.6 months has a ratio of 0.56 with a p-value less than 0.0001. And the Koblen-Meier curve shows an early separation in favor of fluquinity plus platelet tassel group, and also maintained over the duration of the study. statistically significant, but also clinically very meaningful. And next slide, slide 21. And for overall survival, the other dual primary endpoint, we see for quinidine plus plaque detoxyl prolonged the OS from 8.4 to 9.6 months, absolutely improvement of 1.2 months. However, the OS did not reach a statistical significance, and so we observed there's an imbalance between the two treatment group, with 20% more patients in the placebo group receiving subsequent therapy compared to the quittinid group. So the OS result could be confounded by these subsequent therapies. Next slide, slide 22. Further analysis were conducted to examine the OS in patient receive and did not receive subsequent antitumor therapy. And the result here support the OS benefit in addition to quinidib to palicotasil. The OS was improved regardless of whether the patient received subsequent antitumor therapy or not. Although the patient without the subsequent therapy, we do see a statistically improvement of OS. This is a pre-planned analysis. Moving on to the next slide, slide 23. So the 23 is to present a promising second-line treatment offering gastric cancer. So the slide 23 show to put the FUTICA data into perspective with another approved therapy second-line treatment option in China with Robinsirumab plus Paclitaxel. This is a cross-trial comparison showing the RIMBO-Asia study, which is a large study of over 400 patients. So you can see the fuquinidate clearly show a more robust improvement of the overall response rate and the PFS. and also a numerically better OS improvement. Slide 24. Okay, so I also mentioned about the other Fuquina lifecycle indication development. We received a breakthrough designation in China for a combination of a Centella map. Slide 24. Yeah, so in the endometrial cancer, the EMC incidence and mortality are really projected to grow in China, and the patients who are progressing on first-line therapy remain in very high medical need. So we have completed the single-arm food CICA registration phase two trial study, and the regulatory filing expended early 2024. Slide 25, please. Increased mortality rate in RCC in China also outpaced the other development nation, and the second-line treatment options remain very limited. So we have completed second-line RCC for Zika registration trial, and this is a Phase III trial versus Excedinib or Everolimus in second-line setting. So we completed enrollment last year. And hopefully, the favorable results from this trial could potentially lead to regulatory filing late 2024. Next slide, slide 26. The Phase II trial for quinidine plus centilimab POC study in RCC was published in the ASCO 2023. The results are highly encouraging with ORR about 60%. and the median profile PFS almost 16 months. So, the POC results highly favorable compared with other IO plus VEGAS therapy in RCC, and we anticipate the top line result later this year for PHYSICA-2 phase three trial and the subsequent NDF filing in 2025. Next slide, slide 27. And our second wave molecule are advancing rapidly in the late stage development. And Solvoplanet, which is a highly differentiated oral sick inhibitor with a breakthrough destination in the immune thrombocytopenia in China. And the current treatment target either Treg or B-cell pathway for producing autoantibody or stimulate the megakaryocyte to produce more platelets. SICK offers a dual mechanism by targeting both B cells to inhibit autoantibody production and also prevent the macrophage to destroy the platelet form. So we have completed the China phase 3, Islam 1, in the second line plus IDP patients. It met a primary and a secondary endpoint. NDA accepted by NPA this last month and the priority review for breakthrough destination So we also cleared the US IND for our phase 1B and 2 trial in the startup stage and for global development. Next slide. Slide 28. So 28 is IQVIA report on the China ITP treatment landscape. And we believe SolvoPlanet not only can compete in the, you know, currently treated IDP patients, about a quarter million patients, and also they can potentially help the patients who lost follow-up primarily due to no other effective treatment. Slide 29, please. We are particularly encouraged by our Phase I-II trial to demonstrate a robust overall response rate of 80% overall response and the durable response rate of 40% in relapsed refractory ITP patients. The high response rate on PARV is the current widely used second-line treatment option, which is TPO-RA. Despite in our trial, the SolvoPlanet trials had even more heavily pre-treated patients, and with 75% of patients who also feel the prior TPRA treatment. And compared with the other approved product, Tabalisi, which is a sick inhibitor, and you can see only the 18% durable response and 40% overall response. Clearly, Solve-A-Planet has the best in class potential in the IDP indication. Next slide, slide 30. And we also achieved a positive phase two. Next slide. Yeah, the ITP phase three EZLIN already completed and we submitted NDA is under priority review. Hopefully we can see the approval later this year. Okay, next slide, slide 31. And similarly like the ITP and SovoPlanet also currently in development in another autoimmune medication. warm autoimmune hemolytic anemia is served the same mechanism by preventing the red blood cell engulfed by the macrophages and also prevent autoantibody production from B cells. So this unique dual mechanism can also be a potential treatment option for the ITP patients, for the AIHA patients. And so, the POC has already got achieved, and we are starting the phase three shortly. Okay, slide 32. And also, I want to mention the other product. There are seven registration trials for the MAD inhibitor, savalidinib, and currently enrolling. They are led by our partner AstraZeneca globally for three trials, and the HodgeMed leading the other four indications, including newly initiated phase III gastric cancer in the satellite setting. Next slide. Slide 33. And, you know, we have presented our first-line MEDIC714 data in non-small cell lung cancer with MEDIC714 skipping mutation. It showed a deep and durable response for a 60 percent overall response rate. And the update data will be presented as our presentation next month at the ELCC in Prague. Next slide. Slide 34, please. And also updating you about the progress of salvalidinib global development. And the Global Pivotal Savannah trial has completed enrollment. And despite some of the new data readout, like Mariposa, TL05, and RN31, We believe savalidinib plus tagrizol represent its oral-only chemo-free option for biomarker-selected MEG-positive patients in EGS viral mutation who progressed on tagrizol. And the anticipated U.S. NDF filing around late this year by our partner AstraZeneca will be a huge catalyst for HodgeMed after frequenting a U.S. approval in the RCC So we're bringing our second in-house developed novel medicine closer to global approval. Okay, so just to recap our R&D progress, and we have a deep and broad portfolio in oncology, hematology, and also recent advancement in autoimmune disease. So I'm very proud our R&D team and the global partners remain focused and executed very well for the past year and a multiple near-term global development catalyst. for 2024 and to 2025. So I will turn the stage to Dr. Weiguo Su, our CEO and CSO. Weiguo.

Okay, thank you very much, Mike. Let's go to slide number 36. So 2023 was an extraordinary year. We made a lot of progress in 2023, both in R&D, the progress in the pipeline, as well as commercialization in China. We managed a great, robust growth in China commercial. But obviously, we are most proud of fluquentinib approval in the US, our first approval outside China, a big step towards our vision of bringing our innovative medicines to global patients. 2024 and beyond, Obviously, we have a lot to look forward to on our way to profitability, hopefully by 2025. We will focus on near-term and mid-term launches of new products and new indications in China. We are obviously very excited about Solve the Planet for ITP. ITP represents a major mathematical need in China, as Mike pointed out. almost half of the patients, after they try everything, their medical needs remain unmet. And obviously, you know, the second indication, WAIAJ now in registration trial for solvoplanib as well. At the same time, we expect the approval of frequenting in Europe and Japan, as well as the NDA submission potentially in the U.S. for our second drug, cefalitinib, with our partner AstraZeneca. So this is, again, a major progress for cefalitinib. And these regulatory activities will ensure steady flow of new approvals and accelerate our revenue and profit growth in years to come. We are confident about our goal of becoming self-sustaining by 2025 and well positioned for accelerated growth beyond 2025. So next slide, just to wrap up slide number 37. Again, we are really focused on execution of our strategy towards self-sustaining 2025 and look at our product portfolio and new product approvals outside China. For instance, Savalitinib for lung cancer and also Solve the Planet moving outside China for clinical development as well. So we are extremely excited about the near-term and longer-term, for that matter, future for HutchMath. And with that, I would like to thank you for your attention and close the presentation, and we'll be open for Q&A. Thank you. Thank you.

We will now begin the question and answer session. If you'd like to ask question, please press star 11 on your telephone and wait for a name to be announced. If you'd like to cancel request, please press star 11 again.

Please stand by while we compile the Q&A roster.

Our first question comes from Delilah Louise Chen from Kent Hall. Please go ahead.

Hi, congratulations on all the progress, and thank you for taking my questions. The first question I wanted to ask you is what you've learned from the U.S. launch of Frusakla, and how can you apply that to the rest of your global expansion initiatives? Second question I wanted to ask, I know you went over a lot of this in the presentation, but just to distill it down for investors, you do have a very large and productive pipeline. So what are the key readouts and events that you think we should really focus on? Maybe if you could pick two or three. Thank you.

Okay, thank you very much, Louise. Maybe I'll do a quick response, and I can ask Mike to chime in. So for Zecla launch, I think Takeda is a great partner, and they prepared well. And we worked together very well through NDA submission, both NDA submission in the US and MAA in Europe, as well as Japan submission. So we worked together extremely well, and we also prepared a launch. extremely well as well. Given, you know, in the U.S., the approval came ahead of our original expectation because it was granted priority review and approved, you know, only, you know, less than six months. But Takeda really prepared well, and we worked together very well as well. So, for instance, you know, we had drug product all mapped out and we were ready to go as soon as we received the approval. The first prescription was written within, you know, a couple of days, basically, and NCCN guideline inclusion within one week. So clearly, you know, Takeda was ready to go, the launch team, and we were waiting for the approval. So I think it kind of demonstrates uh the power of partnership if you will and and um you know going forward in eu and japan we'll we'll be doing the same and and for our second product savalitinib obviously our focus now is on nda submission behind savannah uh obviously we you know we have so much data to to uh to support and submit so we'll be working very closely with astrazeneca on Savalitinib. We believe it's a great drug. With regard to pipeline, we continue to actually prioritize our portfolio and make sure that we invest on the highest value projects. So behind the three approved products, we believe Solve the Planet can be can be a very important product. Not only is it going to be the first immunology product, but it represents a very different, entirely different indication. Talking about chronic disease and a major medical need. Almost half of the patients, they stop trying because nothing works for them. Behind Solve the Planet, you know, we have additional compounds moved into, several compounds actually moved into registration studies, including our IDH1-2 inhibitor for AML and also potentially solid tumors as well. And, you know, more, targeted therapies in the pipeline as well. But, you know, these are really for future registration and launches. So we'll be actually really focused on Solve the Planet in China this year and also global development. We have a meeting scheduled with FDA to discuss the registration path and the plan. really important for Solvoplanet. So I think we believe it is going to be a major product for us. Mike, do you have anything else to add on?

Yeah, I think just to add on to what Dr. Su mentioned, right, Solvoplanet clearly represented a major, you know, novel mechanism for the ITP and other autoimmune disease. It's just we're going to present our phase three data in a upcoming conference and publication. So hopefully that will put a very strong path forward for the development plan. And then also to add on the Vesakula product launch, I think the HodgeMed team and Takeda team actually work very well together. We actually plan the drug supply ahead of the time, we are really hoping we can ready launch in October timeframe just to get it to the patients, right, the prescription. So the product launch preparation went very well, the add-on to the NCCN guideline in a week time. And also I think Takeda is really having a strong Japan presence, right? If we are doing it alone, I don't think we can actually submit it to Japan, you know, that soon. So I think that's really a good collaboration with our global partner, and we hope that Savalitinib is going to repeat, right, for our next molecule to reach the global patients, yeah.

Okay, thank you. Thank you, Mike.

Thank you for the questions. One moment for the next question. Next question comes from the line of Alex from bank of America. Please go ahead.

Uh, Hey guys, thanks for taking our questions. Um, and congrats on the progress in 23, um, three quick ones from me on silver planet. Um, I guess first w what is your go-to-market strategy, um, for civil plan planet? If it's approved, would you be able to handle the launch leveraging your current Salesforce in China or, Would you need maybe a separate commercial arm, given it's a new indication for you? Second question, how big of a contributor do you see this in your current 2024 oncology revenue guidance, or could this be maybe additional to that? And then just lastly, I know you said in your press release that you plan to initiate clinical development outside of China for silver lipoma in 2024. Would the plan be to partner for these studies? And I guess, ultimate commercialization ex-China? Thanks.

Okay. Thanks, Eric, for the question. Solar planet commercial launch, obviously we already started to prepare. We have the infrastructure in place. We obviously need to build a specialty team to support it. So that's the current plan in China. obviously we can leverage our commercial infrastructure in China. We do need a special team to support marketing and also sales as well. So that's the plan and we obviously have time to prepare. With regard to revenue contribution to 2024 in our forecast it's almost it's it's uh it's it's it's nothing basically we expect it to um to be approved towards the end of the year so um uh contribution should come actually 2025 uh 24 um we'll probably just get going by as soon as it's approved but that will be towards really towards the end of the year um Your last question about U.S. development or ex-China development and partnerships. So as I mentioned, we have a meeting scheduled with FDA shortly, and we'll discuss the development, our development plan and seek endorsement from FDA once that's clarified. And, you know, we'll get going very quickly. Partnership discussion, these discussions are ongoing as always. And I think once we publish the data, very soon actually, it could be sometime mid-year this year at a major conference. Also, at the same time, we'll publish proof of concept data for the second indication, the WAIHA, all very strong data. So I think it will attract more potential partners. So the plan is to just wait, just kind of, you know, we already engaged, but we will continue to engage with potential partners. And I expect once we have clarified the development pathway outside China, and also the data is published, will probably intensify the discussion.

Great. Thanks, Weiguo. Appreciate the call.

Thank you.

Thank you for the questions. Our next question comes from Delia Pochoi of Goldman Sachs. Please go ahead.

Mr. Pochoy, your line is open. You may unmute locally.

Hi. Congratulations on all the progress, and thank you for taking our questions. My first question is on savolitinib and with regard to the Sanova study, which you expect to, I believe, complete later this year. Just in terms of the incremental opportunity in terms of the frontline population, Can you maybe just expand on how many patients are currently actively treated in China with available med inhibitors and just kind of how you think about the commercial opportunity there for the first-line opportunity? And then I had a follow-up question.

Yeah, so, Paul, at the moment, savalitinib is approved for second-line and above patients. non-small cell lung cancer with exon 14 mutation or skipping mutations. So that's a label. Obviously, given the extent of its efficacy comparing to chemo or IO, as well as now we've already published the first line data, I would not be surprised there could be some you know, some usage into the first line. But all in all, I think it's been, at the moment, mostly second line patients. The population in first line, we think, we believe it should be much bigger. And that, you know, you have to, you know, combine to, better clinical, even better clinical benefit for these patients. So we believe it will translate into a significant opportunity.

Okay, great. Thanks. And then as the follow-up question, maybe turn back to Sulzapletinib for a minute and ITP. As you think about sort of different standards of care in markets and regions outside of China, How are you thinking about potentially coordination on a placebo arm or whether the studies will require an active comparator arm just to harmonize requirements, let's say, between the U.S., Europe, and other geographies? Just maybe some high-level thoughts on whether an active comparator would be required versus a placebo-controlled trial would be great. Thank you.

Yeah. Again, for this specific question, we don't have a lot to offer at the moment. Paul will be in discussion with FDA very shortly. And once we have it clarified, we'll let you know. Actually, we'll announce once we are into clinical development in the U.S.

Okay, great. Thank you. I'll go back in queue.

Yeah, thanks.

Thank you for the questions. Our next question comes from Kelly Xu from Jefferies. Please go ahead.

Hi, this is Clara. Clara, I'm for Kelly. Thanks for taking my question and congrats on the progress. So, we just have a question on ITP. Once a global study will be initiated, how should we think about the cost change on R&D in general? And also for warm autoimmune hemolytic anemia, how large is the market in China? And what do you need to see for this indication to initiate maybe future global development? Thank you.

Okay, thanks. Thank you for the question. Well, ITP, you know, it's at the moment anyways, you can see the market or the treatment has been dominated by TIPO or TIPO-RA. But a lot of patients, there are a lot of other treatment options, but not necessarily approved. Some of those are just off-label usages. So, you know, we believe Solvo Planet represents a novel mechanism of action. Patients, there are a lot of patients that they don't, they probably already tried everything. somewhere between 8 to 10 years of various treatments and then they gave up. If nothing works for them, they just gave up or they just lost to follow up. So it represents a big on that medical need. So I think ITP is a very specific disease. you know, how we can be able to target the patients globally outside China, how big is the study, you know, so we like to understand the same, you know, particularly you say, right, the impact on our R&D spending. So until we have clarity until we align on a development plan with FDA. It's hard to estimate and obviously a lot to do with the study design, the line of prior therapies, for instance, the sample size and so forth. We also, you know, behind the FRESCO and FRESCO2, you know, we would at least share the data with US FDA on FRASCO2. I mean, I'm sorry, on ISLM1 study in China, hope that can serve as part of core registration studies. So whether this can reduce the sample size for this upcoming study outside China or how we think about these, So it all depends on this discussion with FDA and alignment with the FDA. Until then, we think it would be manageable in terms of the cost. Certainly, if we line up a partner, then it will be much less material on a cost. The warm autoimmune hemolytic anemia, which is actually a very rare disease. It's even more rare than ITP. However, it has almost no treatment today. So it represents a very rare disease with an even stronger medical need. So we believe this mechanism should target this disease very well and and uh solar planet has has generated very strong proof of concept data um you know it will you know we already into the phase three in china and and uh likely we could do the same outside china wants to align with the usfda on itp uh when a dose when a dose optimization completes. Yeah, it could be an option. OK, thanks.

Thank you for the questions. One moment for the next questions. Next question comes from the line of Mike Mitchell from PennMirror-Gordon. Please go ahead.

Hi, everyone. Thanks for taking my question. Great performance. for the period. I've just got one focused question and one broader question, if that's okay. And the focused question on fruquintinib. I'm just thinking, of course, we have the submission in with the China regulator for gastric cancer, but in terms of ex-China development on gastric, what should we anticipate in terms of the appetite for potential further development? I'm just thinking about the overall survival endpoint and the standard of care reference used in the Frutiga study. So just thinking what else you might need to do to orient the product for other markets, or is that just not on the agenda at present?

You know, the short answer is not relevant for outside China in a second-line setting. You just mentioned the standard of care difference, for instance. As a matter of fact, at the ASCO plenary, There was a panel of experts on the call and kind of concluded great data could be a treatment option for patients in need. However, the data will not support outside China registration. Separate study needs to be done because of the center of care difference and patient difference as well. So yeah, the same study will not support global registration. However, you know, we continue to believe frequentinib has a role in gastric cancer, whether in, you know, in combination with chemo, such as paclitaxel, or in combination with IO, PD-1, for instance. We actually published very strong data in combination with PD-1 as well. So in gastric cancer outside China, We think there is a role for fulcintinib, how we design a study, which line to target. We're still assessing this opportunity.

Okay, got it. No, that's really helpful. Thank you. And then just on a more broad question, I know there'll be a little bit of give and take with the recognition of taquita payments in the P&L, but I'm just thinking about the balance sheet strength and how R&D tracks from here in light of the lower R&D spend versus last year. There was obviously a shift pre and post the new strategy in terms of how hard you wanted to push on R&D investment, but is this still going to be a story of managing it within a range, or is there an opportunity to fine-tune, perhaps accelerate internal investment from this point onwards?

Yeah. Good question. So, you know, as I mentioned earlier, we will be very careful on spending very prudent on spending and we actually routinely now do portfolio prioritization, looking at every compound every indication very carefully. Do you know, make sure just to make sure that we invest the highest value project possible. So we don't see any any expansion or any increase of R&D costs this year.

Okay. That's right. Many thanks again.

Thank you.

Thank you for the questions. We have no questions at this time. Allow me to hand the call back to management for closing remarks.

Okay. Yeah. Thank you all very much for attending the call. We'll be happy to be further engaged through email or any other communication channels. If you have any questions, let us know. Thank you.

That concludes today's conference call. Thank you for your participation. You may now disconnect.