Hutchison China MediTech Ltd at JPMorgan Global Healthcare Conference

Jan 09, 2019 PM UTC 查看原文
HCM.L - Hutchison China MediTech Ltd
Hutchison China MediTech Ltd at JPMorgan Global Healthcare Conference
Jan 09, 2019 / 05:30PM GMT 

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Corporate Participants
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   *  Christian Hogg
      Hutchison China MediTech Limited - CEO & Executive Director

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Presentation
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 Unidentified Analyst,    [1]
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 Hi, everyone. Good morning. Before we start, we'd like to ask you to turn your cellphone to mute because we are webcasting this session. Thank you. My name is [Ellen Yan]. I'm from JPMorgan Healthcare Investment Banking division. I'm very glad to introduce Christian Hogg, the Chief Executive Officer of Hutchison China MediTECH, Chi-Med. Welcome. Thank you.

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 Christian Hogg,  Hutchison China MediTech Limited - CEO & Executive Director   [2]
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 Thanks. Thanks very much. So we've got 25 minutes. This is a really detailed presentation. So what I'm going to do is go through it but stop at areas that I think are relevant to discuss. And so we'll be moving quite quickly through some of the slides, but I'll stop at the important ones.

 So first of all, just on a very high level, Hutchison China MediTECH is a -- very much a global-facing biopharmaceutical company based in China. We have been operating for 18 years, almost 19 years now, with a real focus on the science and a focus on creating and developing novel targeted therapies for the global market. We have sort of 3 areas that we focus on. The first is global innovation. So everything we do is about trying to create differentiated small molecule tyrosine kinase inhibitors, or small molecule therapeutics that can be combined with any number of therapies for the global market. We currently have 5 assets in global development, 1 with AstraZeneca, savolitinib, and 4 of our own unpartnered assets are now in global development. We have a team of over 420 now scientists and staff in Shanghai, Suzhou and New Jersey that are moving these programs. So it's a large-scale operation.

 Our second area of focus is China oncology and with a subtext of immunology, but most of our assets at the moment are in oncology. The China oncology market is growing very rapidly because of the reforms that are underway in China, and we find ourselves in a very strong position, almost a first mover position, being the first company to have taken a novel oncology drug from discovery, all the way through to unconditional launch, which we achieved in November of 2018 last year. So we'll talk more about the market opportunity in China as we go through the presentation.

 And then finally, our existing business in China, over those 18, 19 years, we've built a commercial organization that now totals 2,400 medical sales reps in China. It covers all of China. We detail a number of drugs in cardiovascular disease, central nervous system disease, and it's a terrific foundation of know-how and infrastructure for us to now bring our oncology assets into the market.

 So that's the high level of the 3 areas that we focus on.

 You can see a 20-year odd -- 20-odd year journey that we've been on here in these 3 areas of global innovation, China oncology and the core business. You can see in the first 5 or so years, we did a bunch of deals. We went into China. We worked with Shanghai Pharma, with Guangzhou Pharma, with Sinopharm, and we've got a hold of assets that were the foundation for our learning of how to operate in the China pharma industry. We established Hutchison MediPharma very early on, which is our innovation platform. That is now, as I said, up to over 420 scientists and staff and has been the core driver of our innovation. And as you can see, as time went by, globally as well as in China, we submitted INDs on multiple assets. So globally, there are 5 red dots there for the -- for each of the programs that we got U.S. INDs and development going. And below -- and we've partnered with Astra, with Lilly, with Janssen, with Merck Serono in research and various compounds, and we've just moved along. So in China, what's shown here is the progress of Elunate, the third line colorectal cancer drug that we've just launched in China. So I'll talk more about that later.

 The management team has -- probably, the thing that differentiates it is its tenure with the company. The core management team there, there are couple of new joiners. But for the most part, the average amount of time with the company is over 10 years. We are people that are persistent. We are focused, and we deliver, generally.

 The integrated innovation organization, it's full-functional research and development, as I said, with over 400 people. And the commercial team is enormous, over 2,400 medical reps, another 1,000 salespeople and over 1,200 in our factories, big factories in China.

 The pipeline is extensive. This chart just summarizes it all. Some of these boxes actually contain multiple clinical trials, but you can see the red boxes are the global studies, so mostly in early development and proof-of-concept with the SAVANNAH study of savolitinib and Tagrisso. Actually, it's a global registration intent study -- it's a Phase II registration intent study that has kicked off very recently. And the blue boxes are all about China study, so you see a lot of registration studies on savolitinib, fruquintinib and surufatinib that are ongoing. And under marketed, you see Elunate, the blue box there. That's our first launched product in China, which launched on December -- I'm sorry, November 25 last year.

 Very high level, savolitinib. We hope savolitinib is going to be the first selective c-MET inhibitor globally to be approved. We are developing it in kidney cancer, in lung cancer, in gastric cancer. We've got some big presentations this year around kidney cancer with the combination with immunotherapy. And in gastric cancer, these are Phase II studies that have been enrolling for a couple of years, and we'll present them at scientific conferences this year. And in lung cancer, we've now progressed into the combination with Tagrisso into a global registration intent Phase II study, and we anticipate making further announcements during the year around other lung cancer studies that we intend to initiate with savolitinib. Savolitinib is a highly-potent c-MET inhibitor that we've been partnered with Astra on for 5 or 6 years. And MET is a very important resistance pathway to Tagrisso. It's probably 1/4 or 1/3 of all patients that fail on Tagrisso, it's because of c-MET, and savolitinib is AstraZeneca and Chi-Med's attempt to address that resistance.

 Fruquintinib, this is the Kaplan–Meier chart showing overall survival in colorectal cancer that led to the approval of fruquintinib. We have multiple indications that we're working on, and we've just renegotiated our deal with Eli Lilly to amend our contract on fruquintinib. We worked with them for over 2 years to amend this deal, and the reason we've done that is so that we can broaden life cycle development on fruquintinib and go more aggressively. So I'll talk more about that later.

 Surufatinib is our neuroendocrine tumor -- pancreatic neuroendocrine tumor -- an extrapancreatic neuroendocrine tumor therapy in 2 big Phase IIIs that we'll have interim analyses this year in China. We are hopeful that if the data is strong enough, that might lead to early stop of those studies, but we'll have to see when we do those interims. We also have a Phase II/III study in biliary tract cancer that's about to kick off. But the Phase II data or Phase Ib data we have on surufatinib shows really step change efficacy in neuroendocrine tumor patients.

 And then 523 and 689, these are our Syk inhibitor and our PI3K-delta inhibitors. They are now building a large dataset in indolent non-Hodgkin's lymphoma patients in China and Australia, and we are about to start development of the Syk inhibitor and PI3K in the United States. We've got some great principal investigators interested in running these studies in the U.S. and very high-profile people, and we're going to move very rapidly on that.

 So on a very high level, the innovation -- the global innovation, it's about step change global innovation. We are not a me-too, sort of me-better-type company. Our team led by Dr. Weiguo Su is very focused on only putting into the clinic assets that we feel have high levels of differentiation.

 Kinase selectivity is our -- is one of our major focus areas. We feel there's -- in the whole world of small molecule-targeted therapies, you see a lot of multi-kinase inhibitors. While you'll never get total selectivity, we don't put anything into the clinic unless we see no material off-target toxicities.

 We believe also about hitting cancer from multiple angles. One of the reasons when you have highly selective compounds that is an advantage for you is that you can combine those therapies with other therapies, like Junshi, we have in the audience today, we've just done the deal on PD-1 with Junshi. It's just got approval of their PD-1 in China, the first local approval of a PD-1 in China. That deal is to combine surufatinib and their PD-1. You can do that because these kinase inhibitors that we have are clean and tolerable. I'll talk more about that later.

 Just as an example, savolitinib and fruquintinib or Elunate, as it's called, this shows the level of selectivity. So savolitinib is a thousand times more potent against c-MET as it is the next non-c-MET kinase. So the off-target toxicities on savolitinib are not noticeable. Fruquintinib, it's the same story.

 So the future is to combine. And if you look at the tyrosine kinase inhibitor plus tyrosine kinase inhibitor opportunities, you've got the Tagrisso compound. AstraZeneca presented this data recently at ESMO showing that on a molecular analysis of plasma and circulating tumor cells, 15% to 19% of Tagrisso refractory patients is because of c-MET. If you look at tissue, it's higher than that. It's more like 1/4 to 1/3 of patients. So Tagrisso plus savolitinib, these are 2 highly potent and selective-targeted therapies that can be combined to go after these resistant patients. The same for BTK. Our Syk inhibitor and PI3K delta, we will target BTK resistance, so BTK tyrosine kinase inhibitor resistance. So ibrutinib is -- has changed the game as far as indolent non-Hodgkin's lymphoma and treating those patients. But patients are now starting to become resistant to ibrutinib, and there need to be follow-on therapies. We believe a Syk inhibitor and a PI3K delta represent very important treatment alternatives.

 The combinations of PD-1. So if you look at the bar chart in the top left-hand corner of this slide, you can see that when you combine a VEGFR inhibitor with a PD-1, you get absolutely breakthrough efficacy in renal cell carcinoma. Actually, this is one of the reasons that we recently changed our strategy on a kidney cancer study that we've been running because the game has changed. The landscape has changed in renal cell carcinoma around combinations of immunotherapy and targeted therapies. So we believe strongly this is an area of interest for us. Because our assets are so selective, we've now done global deals with Junshi, with Innovent and with AstraZeneca to look at combining our small molecules with their immunotherapy agents, and those studies are all getting ready to go.

 So about 15 or so global studies that we have underway on savolitinib and our 4 other assets. And ultimately, we will move those as rapidly as possible. We've established a clinical regulatory team now in New Jersey during 2018. It's up and running. We've got some very high-quality people that are now part of our company. And you can see it as you look down here, the list of principal investigators that have signed up to work with us on our global programs is very exciting. So Nate Fowler is a good example on 523, the Syk inhibitor, from MD Anderson. So we're really moving globally on these assets.

 Where are we coming with regards to sort of next innovations coming in? When you've got a discovery organization of well over 200 people within that 420-person scientific team, you can create a lot of innovation. So you can see our team led by Weigou is working on a number of targets: ERK, RIP1 kinase IDH, IDO. We tend to look at difficult targets, ones that other companies have tried, have failed, and we use our unrelenting persistence to try to figure them out. You can also see in green that we are starting to work on various antibody targets as well. And I think as a company, we realized that you can't just be a single small molecule company. You need to have an antibody, a large molecule strategy as well.

 So global innovation, the plans, is get savolitinib and Tagrisso approved over the next 2 or 3 years, build out our global development organization, accelerate development of our 4 unpartnered global assets and aim to bring one novel new drug candidate into the clinic every year. So that's our focus, and that's where we feel we'll build a lot of value.

 So now to the second area of our focus, which is China oncology. Obviously, the world is starting to wake up to the fact that you've got 30% of the world's cancer patients in China. It's a major unmet medical need, and there's a lot of innovation, a lot of investment in trying to create therapies to meet that medical need. We're a first mover having brought fruquintinib to the market, and we believe it's a major commercial opportunity.

 I won't spend a lot of time on these charts, but they say what everybody knows. The China oncology market and the China pharma market is moving very rapidly. The reforms that the FDA -- that the SFDA has been implementing are helping companies like us innovate. The investment is coming in very rapidly from outside of China and inside of China, and priority review and the numbers of drugs that are being approved and included in the reimbursement list in China is growing rapidly, and the patients in China are benefiting from this. And we are in perfect position to take advantage of these trends.

 These charts show -- it's quite interesting charts looking at it, as an example, Herceptin and Avastin. These are Roche drugs that have been put onto the national drug reimbursement list over the last 1.5 years. You can see while prices have come down dramatically, price reductions of sort of 60-odd-percent to get onto the reimbursement list, you can see the volume has increased fourfold-plus. And as a result, total sales of Herceptin and Avastin have increased a lot. So getting onto these reimbursement lists, broadening your penetration is really important. And you can see in the bottom left-hand side, what that's leading to is very aggressive growth in sales of innovative cancer therapies in China, and Tagrisso being a great example. Second year sales, USD 130 million, USD 140 million. It took Iressa 10 years to get to that level, and this is just second year sales of Tagrisso.

 So some pictures of the launch in November of fruquintinib in China, lots of singing and dancing. It was an 11-year effort to get this product to market. We haven't put out any data yet as to the level of prescriptions and the level of penetration that we're seeing. But I can tell you, we're really happy with what's going on. And I think Eli Lilly is doing a wonderful job of launching this in China for us, so we really look forward over the next 6 to 12 months to see fruquintinib really play out.

 It's a big patient population, 57,000 patients on the third line colorectal cancer setting. Our patient access program and pricing is very aggressive. So the cycle -- monthly cycle price for Elunate is USD 3,300, which is a lot. However, we are -- we have a patient access program that only requires patients to pay for 3 months. The rest is free. So essentially, it's about USD 9,900 to get onto fruquintinib for as long as you need it. And we see that patient access program seems to be taking off pretty well.

 The Lilly amendment that we announced in December wasn't very well received by the market, strangely, but this is a deal that we had spent multiple years negotiating. It was always around our view that fruquintinib is -- it's -- first of all, it's our most important China asset as of today. We believe that it is a global best-in-class small molecule tyrosine kinase inhibitor. And if you look at VEGFR use in oncology, VEGFR TKI use in oncology, it's -- VEGFR TKIs are approved in 30 different solid tumor settings around the world. So for us, it was always about get the first drug approval, get the first indication approved and then go into multiple life cycle indications with partners as well as on our own.

 So as we talk to Lilly about these expansions, we realized that Eli Lilly, while totally committed to the launch of fruquintinib in China and committed to the drug, we felt that their enthusiasm for broadening into dozens of indications was less than ours. So we went to them and said, "Look, we don't want fruquintinib to be constrained here due to investment in life cycle indications." We were happy to step forward and take on some of the financial risk, but in return for reward. So we required our milestones to be increased. We required our royalties to be taken from 15% to 20% to 15% to 29%. So big increase in royalties. And that was the plan. That's what we agreed. So we would step forward, take on more financial risk, expand into multiple life cycle indications. And 2 or 3 years down the road, fruquintinib and Lilly as well as China will benefit greatly from this. During that process, we were also able to get Lilly to agree to carve off 30% to 40% of China and give us the commercial rights in China in those territories. And so that was important because we were coming forward with more financial investment. We wanted also to have more commercial control. So at the end of the day, this Lilly amendment is, in my mind, is an inspired deal for Chi-Med and for Lilly, actually, in that we get more control, we get more ability to be aggressive on life cycle indications, and ultimately, we get control of commercial in a portion of China. So it's terrific from my standpoint.

 I won't go through all of the China studies here, but we have basically over 2 dozen China studies underway on 8 clinical drug candidates. The savolitinib MET Exon 14 skipping program is probably closest to being the next NDA. Hopefully, surufatinib as well and neuroendocrine tumors can also -- we can be considering NDAs maybe later this year or early next year. So we feel that we've got fruquintinib across the line, but we've got savolitinib coming behind it, and we've got surufatinib coming behind it. And then onto the Syk inhibitor, you see very active. We now have 6 studies underway in China on the Syk inhibitor, 4 expansion studies on indolent non-Hodgkin's lymphoma and moving very rapidly.

 So what are we trying to do in China over the next 3 years? It's establish Elunate as the best-in-class VEFGR TKI in the China market. There are a lot, but in our view, fruquintinib is the best. It is the cleanest. It is the most tolerable, and it is the most effective. So we intend to establish that in the market and broaden our life-cycle programs because of the amendment that we've just made. Also launch our unpartnered drugs, so surufatinib using our commercial team, which is now numbered up to 30 people in oncology. It's kind of a precommercial team. We are already building it, and they're being involved in enrollment of our various clinical studies, and it's moving nicely. Get savolitinib Exon 14 NDA in place and progress our early development.

 So onto the third area, the China -- existing China business. While we spent 17 years building it out, China has been growing very rapidly. I won't go through it all in detail, but it's a big operation. You can see here some charts I'm pretty proud of, having started this from nothing 18 years ago. You can see the commercial success we've had has been considerable, and the profit on the right-hand side has also been considerable.

 This year, 2018 or the results we'll present on 2018, as we guide, we'll be over $40 million -- well over $40 million in net income, and so we're very happy about the progress of that business. It's everywhere in China, 2,400 reps covering the best part of over 100,000 physicians in China. And it shows that we can operate a commercial organization of this scale, which is not easy for sort of early-stage biotech companies.

 Some examples of products we've taken over from Astra and Merck Serono, terrific performance. So this commercial team is very adaptable. We've taken over Seroquel. We've taken over Concor, and the growth has been substantial.

 So on the China business, I think we'll continue the organic growth. I think we'll see high single-digit growth in the coming years. We'll continue to build synergy with our oncology operations. We may do some M&A. We may sell off some noncore assets, but we're focused on cash generation on this business.

 High level, the -- since we've got 0.5 minute left, the burn on the business is about -- on the pipeline is about $150 million. Because we get income from various places, that leads to a loss of about $70 million, $80 million. We've got $320 million in cash at the midyear, so it will be a bit less by the end of the year, but we're in good shape cash-wise.

 And then overall, the targets, I've mentioned them all. But here in detail, you can see we'll be reporting a lot of news over the next 12 months, and we expect it to be a very big year for us in 2019. So thank you very much.




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