YS Biopharma Co., Ltd.

Ladies and gentlemen, thank you for standing by and welcome to YS Biopharma's earnings call for the first nine months of fiscal year 2024. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a Q&A session. Please note that this event is being recorded. Now, I'd like to hand the conference over to your speaker host today, Ms. Melissa Lee, the company's investor relations director. Please go ahead, madam.

Thank you very much. Hello, everyone, and thank you for joining us today. Welcome to YSL Pharma's first nine months of fiscal year 2024 earnings conference call. Today, you will hear from our president and CEO, Dr. David Hsiao, who will provide an overview of our operations during the past quarter. Our CMO, Dr. Zanita Muharris, will then share more details on our product pipeline. Our CFO, Ms. Brenda Wu, will then provide a closer look into our financials. After the management team has given their prepared remarks, we will open up the call for questions. You can refer to our first nine months of fiscal year 2024 financial results on our IR website at investor.ysbiopharma.com. You can also access a replay of this call on our IR website when it becomes available a few hours after its conclusion. Before we continue, I would like to refer you to our safe harbor statement in our earnings price release, which also applies to this call as we will be making forward-looking statements. Please also note that all numbers stated in the following prepared remarks by management are in RMB terms. With that, I'm now pleased to turn the call over to Dr. David Hsiao, our President and CEO.

Hello, everyone, and thank you for joining us today for our first nine months of Fiscal Year 2024 Earnings Conference Call. During the first nine months of Fiscal Year 2024, our top line continued to experience the lingering impact of inventory issues from previously supply chain disruption at our YSGA rabies vaccine manufacturing facility. Thanks to operational enhancement, including improved supply of raw material and the refined inventory management strategy, our vaccine production has returned to normal, and our inventory situation is improving. As one of the top rabies vaccine producers in China, higher production throughput and a healthier inventory level of finished product, we have maintained our leadership position in the marketplace. Following the decline of our product sales in the first nine months, end of December 31st, 2023, we have returned to a growth trajectory and we estimate double-digit year-over-year growth in product sales during the three-month period ended March 31st, 2024. Based on the current information at hand, we expect the product sales in fiscal year 2020-25, starting April 1st, 2024, would like to increase by double-digit year-over-year. This would solidify our leadership position as one of the top redispecting producers in China. This guidance reflects our current and preliminary views on the market and operational conditions, which are subject to change. Let's begin by going over the details of our result for the first nine months of fiscal year 2020-2024. Our total revenue for the period was RMB 438.1 million, representing a year-over-year decline of 24.6%. Gross profit was RMB 351.7 million, representing an 8.3% gross margin. For the first nine months of fiscal year 2024, we recorded a net loss of RMB 260 million. At the end of the period, we had cash and cash equivalents of RMB 222.6 million, compared with RMB 370.4 million. as of March 31, 2023. Since we launched product sales of our YSGA Rebis vaccine in late 2020, market intake of the vaccine has been consistent and strong. As of December 31, 2023, we have sold more than 25.6 million doses of YSGA Rebis vaccine to approximately 1,746 CDC customers. which represents over 6% of CDC customers in China since October 2020. Next, I'd like to share some insights into our business initiatives. At the cooperative level, since late 2023, we have embarked a comprehensive series of initiatives aimed at fortifying our foundation for future growth. This includes the change to the board of directors and the senior management team, which we announced in recent months, as well as streamline organizational reporting line, the process. Additionally, we have implemented measures to enhance internal controls and governance. Starting in March 2024, we took further steps forward, including prioritizing our pre-clinic and the clinical pipeline and optimize human resources across all our subsidiaries in the US, China and Singapore. We have also implemented more effective cost controls in our manufacturing, sales and marketing and general administration functions. These initiatives, which include the cost controls and the improvement of operating efficiency, are ongoing and will remain a focus throughout the end of fiscal year 2025. We are confident that this effort will serve as pillars for our future growth. We also took steps to build out our infrastructure, expanding our total numbers of satellite warehouse to 26. These dispersed facilities enhanced our production distribution capabilities and helping us take advantage of the persistent demand for our YSGA rabies vaccine. Thanks in part to our effective implementation of this strategic adjustment, we are pleased to report that our production capacity returned to normal level during the third quarter of fiscal year 2024. Our second quarter of fiscal year 2024 was the last to come under significant pressure from impact of the past production delays. When resolving our inventory issues, we took steps to strike a balance with our current strategy, with the importance of building up our inventory against the need to fulfill market demand. This approach has led to improvement in our inventory situation to date. Ideally, we aim to hold nine to 12 months worth of finished product inventory at any given time. We are working towards achieving this target sometime during next year. Second, despite the short-term pressure on our top line, we continue to invest in our relationships with customers throughout China. As of December 31st, 2023, our sales network encompassed 30 out of 31 province-level CDCs and 1,746 CDC customers across China. representing over 6% of CDC customers in the country. Our sales and marketing strategy is based on a long-term perspective. The robust sales network we have built up over the past several years provides us with a solid foundation from which we can drive future success. Maintaining a network of loyal customers makes it easier for us to reap the benefits of production capacity improvement especially as the demand for YFJ Redis vaccine remains robust. Our enhanced production capacity combined with this expanded pricing power is a testament to the utility and the value of our existing sales network. With our CDC customers' recognition of the safety and efficacy of YFJ Redis vaccine, we are optimistic that this relationship will remain an integral part of our operational strategy. And finally, we believed our goal to reconfigure our research and development effort was reaching us for long-term business success. By late 2023, we had shaped our focus away from our PICA COVID-19 vaccine candidate in light of the evolving global health environment. While our R&D expenditures in the first nine months of fiscal year 2024 was still impacted by the 12-month monitoring period for the PICA COVID-19 vaccines phase three trial. We have delivered on our goal of prioritizing development of PICA-RIPS vaccine. We just recently announced interim results of multi-country, multi-center phase three clinical study of PICA-RIPS vaccine. The interim result of this study indicates that the Pica-Rebis vaccine has successfully met the primary endpoint of the clinical study and has the potential to achieve best-in-class accelerated production and meet the WHO's goal of a one-week Rebis vaccine regimen to replace the conventional three- or four-week-long regimens. After the completion of Phase III study, the production registration and eventual commercialization of our Pica leaves vaccine remain a top priority, and we are pleased with the progress we have made towards this goal to today. As such, we plan to craft a pricing strategy which distinguishes the Pika leaves vaccine from other market competitors. To summarize, while we have spent a fair portion of 2024 overcoming lingering production issues, the temporary setback we faced had primarily been overcome. as we refine our operations and bolster our resilience. Since late 2020-2023, we have embarked on a comprehensive series of initiatives aimed at fortifying our foundation for future growth. Looking ahead, we will continue to advance our product portfolio towards commercialization, focus on operational efficiency, and then leverage our refined inventory strategy and the robust sales network to build a sustainable long-term shareholder value. I will now turn the call over to our CMO, Dr. Zuneda Maharis, to discuss our product candidates in more details. Zuneda, please go ahead.