HUTCHMED (China) Ltd (HCM) 2024 Q4 法說會逐字稿

Welcome, everyone. Thank you for joining HUTCHMED 2024 full year results call. (Operator Instructions) This session will also be recorded and the recorded webcast will be posted on the platform in about a day or so.

And just to go over some of the safe harbor statement, the performance and results of operation of HUTCHMED contain within this presentation are all historical in nature and past performance is no guarantee of future results.

Forward-looking statements are based on current beliefs and expectations of management regarding future events and are subject to significant known and unknown risks and uncertainty. So one of these risks materialize and the assumption may be proven to be incorrect and actual results may vary from what was mentioned in the forward-looking statement.

Today, we will have a very good lineup of presentation. First, our Chief Executive Officer, Chief Scientific Officer, Dr. Su, will have the opening. And then our Chief Financial Officer, Johnny Cheng, will go over the 2024 financial review and outlook.

And then our Head of Commercial, George Yuan, will go over our commercial aspects and that will be followed by our Head of R&D and Chief Medical Officer, Michael Shi, to talk about our pipeline updates and also our new ATTC platform, and then we'll be followed by closing remarks by Dr. Su and then we will have the Q&A. So without further delay, I will pass over the presentation to Dr. Su.

Okay. Thank you, David. Good morning, good evening, everyone. Welcome to our HUTCHMED results conference call. Today, we announced 2024 full year results. We are pleased and proud to report a net profit for 2024. Behind the global commercial success of FRUZAQLA, the management will share more details on the 2024 results and provide an update for 2025.

Overall, financially, FRUZAQLA did exceptionally well. with total sales of $290.6 million. On the pipeline, we saw savolitinib full approval in China with expansion into the first line for Exon 14 skipping down small cell lung cancer.

Globally, savolitinib, SAVANNAH, [Safron] studies progressed well, positioning us well for potential global registration. Towards the end of 2024, we reported positive [sachi] interim analysis in China in second-line EGFR mutation-positive MET-amplified non-small cell lung cancer patients leading to NDA submission before end of 2024.

For fruquintinib, towards the end of the year, we received approval for second-line endometrial cancer in combination with sintilimab. We believe these new indications and new approval of new products will help drive China commercial.

2025 is shaping up a big year for the pipeline. Mike will go through the details with you. And looking forward, we are starting to get excited about our next-generation innovations and these are ATTC now starting to move towards clinic. The success of these programs will ensure our long-term growth beyond 2030.

With that, let me invite my colleague, Johnny, our CFO, to go through the results. Johnny, please?

Thank you, Dr. Su. And yes, we end the year with cash resources of over $830 million, which reflects a small reduction of around $50 million from 2023. A portion of the use of the cash resources will utilize for our long-term incentive plan to retain talent. Another portion was attributable for working capital to support our [XTRANA] collaboration with Takeda.

Moving on to the next page. On the financial results, we recognized consolidated revenue of $630 million and reported a net income of $37 million. Our oncology business revenue met our guidance last year to achieve over $360 million in revenue.

Overall, profitability was the result of strong commercial performance, ongoing recognition of deferred revenue tight control over selling and admin expenses as well as scaling down our ex-China R&D operations from the restructuring initiatives we started in 2023.

On the right-hand side of the page, as you can see, the 2025 revenue guidance for our oncology business is $350 million to $450 million. As compared to last year, this guidance has taken into account the non-recurring service and manufacturing income from Takeda to support regulatory approval and also commercial launch in various jurisdictions in 2024.

I will now pass on to our Head of Commercial, George Yuan.

Thank you, Johnny. If we look at the commercial side, the overall catchment oncology portfolio delivered a very solid performance with USD0.5 billion sales which is in-market sales and more than double the sales of 2023.

The growth is mainly driven by FRUZAQLA as our CEO mentioned, and also [Lett and Surendar] continued to deliver growth in a very complicated market environment. Our path is a little bit flat with more competition to the market. As everyone knows, there's now there's a 5-MET inhibitor in the market nowadays. In 2025, we continue to look for an ambitious target with more than 30% growth for our combined portfolio.

Next slide. If you look at FRUZAQLA, the 2024 is the first full year performance commercialized by Takeda outside China. Of course, US play a dominant low for the success. But within the 12 months period, the FRUZAQLA approval in 12 countries. And we also believe that the market in European once we -- the major market in European once they get a reversal, the growth will further be drive and also the guideline international guideline being supported to the brand for the growth. For Japan, with Takeda's experience in GI, especially with the previous experience with [Vector picks], we have a high expectation as well.

Next slide. [ELUNATE] in China, we know that China is an aging population. And with the lifestyle change, the CRC is now a leading cancer type in China. Anti-VEGF treatment is well adopted in the later-line treatment of the MCRC, In (inaudible) achieved USD115 million in 2025 and still keep the third line MCIC market leader position with very strong data and guideline support.

Of course, the market becomes more and more complicated and also the competition becomes severe with more recognitive but generics going to the market and also the test will to get reimbursement. And in December 2024, ELUNATE received its EMC second-line approval, and this is bringing the VGF TK combo with PD-1 into the gynecology market and will further drive our growth in the future.

Next slide. Then we ship the gear to talking about neuroendocrinology tumors, which is a relatively neglected area in the onco community. Due to the low incidence and widely distributed in various organs across the body. Recent year with more medical education in which HUTCHMED a critical law that received a lot of attention by the oncologist and surrender with its differentiated profile, become the leader of the TKI and continue to gain market share according to the IQ survey.

In 2024, Surana continued to deliver double-digit growth, but of course, on the FX side, we see a lot of players coming to the market, especially you see the new SSA coming to the market as well as a lot of new medicine under development.

Let's talk about ORPATHYS. ORPATHYS is the first best inhibitor being approved in China, and we are proud that ORPATHYS really change the metal alteration and cancer patients live in China. In 2024, there is a four new players, both from local and from multinational into the market, especially when we received an ideal coverage for the first line, while ORPATHYS is still the second line coverage.

But with AZ's commercial capability, inland cancer area and also wide coverage, ORPATHYS will hold the sales number and continue to penetrate in vast China market. We believe the full approval of first-line and the reimbursement listing afterwards, plus the potential business opportunity to combine with TAGRISSO for MET [aberrated] patients will regain the momentum of the brand. Thank you. Now let's shift to Michael.

Yes. Thank you, George. Good morning, good evening, everyone. I'd give you a pipeline update. So we have made tremendous progress on our late-stage products. So in addition to global approval in CRC fruquintinib is also expanding into new indications in endometrial cancer and RCC. So two other compounds, savolitinib, surufatinib also in late-stage devalue multiple indications.

Our second wave of hematology product, Sovleplenib and tazemetostat are all our NDA stage and the registration trial for new indication development. And also I want to bring attention to our third wave of products, fruquintinib, our FGFR inhibitor, and the [renocitinib] IDH1 and 2 (inaudible) inhibitor are also at a pivotal trial stage to provide future growth. Next slide.

On the life cycle indication development, we received a conditional approval in China for the fruquintinib plus sintilimab in the trimon second-line indometal cancer. [EMC] indicated the incidence, the mortality are projected to grow in China and the patients who progress on first-line therapy remain with [him] and the pivotal trial for [Zika 1].

We have presented data in ASCO 2024. The combination of fruquintinib and sintilimab show meaningful efficacy and manageable safety profile. The overall response rate in 87 efficacy value patients was 35.6%, including two complete responses, and the DCR was 88% and duration of response was not reached.

And also the median PFS was 9.5 months and the median survival was 21 month. So up to now, the most common therapy option for second-line in (inaudible) cancer is chemotherapy. So the fruquintinib and sintilimab combo, the new chemo-free regimen, this group patient is very high on my need. Okay, next slide.

Increased the mortality rate and renal cancer in China also outpaced other developed nations and the second-line treatment options remain very limited in China. FRUTIGA 2, is a Phase III results in the second-line RCC with fruquintinib plus entellumab versus axitinib or everolimus as a comparator.

So I'm very pleased to report that today earlier, we announced the positive top line results for FRUTIGA 2 trial. And NDA preparation is planned. So if proof this will be the first immune checkpoint inhibitor and the TKI combo in China for the second line RCC. So very excited to report this in the upcoming scientific conference. Next slide.

In partnership with AstraZeneca, we are making great progress on savolitinib global and the China development. These are the late-stage trials as three lab by AstraZeneca and four lab by HUTCHMED in multiple cancer types with med aberrations, including non-smart cell lung cancer papillary renal cell carcinoma and gastric cancer.

So we're excited to see the global Phase II trial. SAVANNAH will report top line results next week at the European Lung Cancer Congress in Paris. The [Madison] 14 non-small cell lung cancer confirmatory Phase IIIb trial also reached a positive readout, and we received the fourth approval in the second line and also expand the label to first-line indication. So the updated results, OS results were also presented at ELCC next week.

China Phase III randomized trial of savolitinib plus simertinib versus chemo after progression on EGFR TKI also reached positive top line results at the preplanned interim analysis. So we have submitted a DA received the breathrough therapy designation.

The India is currently under priority review. The global [Samita] trial in PRCC also completed enrollment. And other trials led by AZ and China also currently enrolling patients in lung cancer and gastric cancer. Next slide.

The [Sachi] China Phase III trial met the primary endpoint of PFS at the interim analysis. So we had the Breto desination and then the NDA under priority review. So such evaluate the combination of savolitinib and tagrisso for the treatment patient with the EDR mutant non-small cell lung cancer with met amplification after progression of first, second and third-generation TKI and compared with chemotherapy structure pemetrexed plus plant and doublet, and the results will be submitted for presentation of the coming scientific conference. Next slide.

In October '24, we announced positive results for SAVANNAH global Phase II study demonstrated a high clinically meaningful and durable response rate. Combat Amplification or overexpression represent about 34% of tagrisso refractory patients.

In the World Lung Cancer 2022, is reported 52% overall response rate, 7.2 month PFS 9.6 months duration of response in chemo-naive patients. So despite the Mariposa 2 and Oreng 31, the second-line treatment remained very limited because Sachi and SAVANNAH data support the chemo-free option for biomarker-selected MET-positive EGFR-mutant patients who progress on the EGF TKI.

So the combo have a very balanced safety, efficacy, and quality of life profile. And also the global Safron Phase III trial also will evaluate the efficacy and safety of this combo in meta overexpressed or amplify patient versus chemotherapy. So the recruitment is expected to complete this year. Next slide.

Our next wave product [Tazemetostat] is a global first-in-class EZH2 inhibitor and our first in-license product on Ipsen. Tazemetostat is approved in the US board certain epithelia sarcoma and follicular lymphoma and also in Japan for EZH2 gene mutate a positive follicular [infoma].

We have completed China bridging study, and the results are consistent with the global study. We are planning to report the top line results later this year. The NDA is currently under review for third line follicular lymphoma, we see EZH2 mutation, and we expect approval made this year. And also, China is participating in the global Phase III SYMPHONY trial, evaluating test metostat plus square in the second-line follicular lymphoma with the potential indication expansion. Next slide.

We reported the first immune autoimmune agent sovleplenib is a highly differentiated oral SYK inhibitor. And it offers a dual mechanism targeting both B cell to prevent autoantibody production and also prevent macrophage displaying the platelet.

So this is a IQA report on the China ITP treatment landscape. We believe sovleplenib not only can compete in this 25 million ITP patients who are currently on alternative treatment but also potentially help patients with loss follow-up, primarily due to no alternative effective treatment. Next slide.

The Phase III ESLIM-01 result we reported the result last year at the European Hematology Association meeting demonstrate robust over response rate of 71% and a durable response rate of 48% in relapsed refractory primary ITP patients. These high response rates are on par with almost all the other alternative treatment and particularly in this patient with a highly pretreated patient.

Over 75% of the patients had priorly treated with TPO TRA. So updated results were also presented at the ASH meeting last year, showing a long-term treated treatment lead to durable response with 51% and also the overall response rate, 81%. So significantly better than many other treatment options. Next slide.

So the sovleplenib, I mentioned that NDA is currently under review, and we are working closely with MMPA and look forward to bring this innovative medicine to the patients. And also, we have another indication, autoimmune disease in development.

The warm antibody autoimmune hemolytic anemia. And the Phase II results were also presented (inaudible) last year and the subsequent publishing LENSA Hematology. The sovleplenib demonstrate encouraging hemoglobin benefit compared with placebo with over response rate of 43% versus 0% in the placebo group the first eight weeks and also the overall response rate of 67.7% and the durable response rate of 47.6% during the 24-week of sovleplenib treatment. It also demonstrated favorite safety profile. So we initiated the Phase III portion of the ESLIM-02 study in the WAIHA and we're currently enrolling patients and on track to finish enrollment this year. Next slide.

And pancreatic cancer is a deadly disease with huge unmet need with a five year survival rate is less than 13%. it is an immune cold tumor and urinary respond to immunotherapy. And surufatinib, already marketing neither is a VEGF, FGFR and CS1R inhibitor and also show immunomodulating function.

So we're currently condoning a Phase II/III trial of surufatinib in combination with (inaudible) and the chemotherapy treatment naive pancreatic cancer. And this study was informed by an investigator initiative trial presented at ASCO GI last year using sovleplenib combined with carlizumab the (inaudible) PD-1 inhibitor plus the chemotherapy in the frontline setting.

And the over response rate was 50% versus 27% in the chemo arm. And the median PFS OS reached the 9 months and 13 months, respectively, compared with only 5.8 months and 8.6 months in the control group. So the Phase II stage, we're already fully enrolled, and we're expecting to have the Phase II readout later this year. Next slide.

Here, I'm going to update you about our antibody target therapy conjugate, the ATDC platform. So for the past three years, we really did invest a significant resource into this new platform, which should provide multiple drug candidates in the future. And compared with the traditional ADC that the toxin payload is replaced with the target small molecule.

And the ATDC has several key differentiation compared with the traditional ADC platform. It could have better efficacy through antibodies more molecule combination that will target specific mutations. It can overcome drug-resistant and potentially support combination. With target therapy with chemo and immunotherapies. So particulate in the early stage -- early line of setting with the standard of care.

On the safety side, it has improved the safety given with the lower on-target and off-tumor toxicity of small molecule. In less myelosuppression compared with chemo-based and you really have -- we can think have a better quality of life than cytotoxin-based conjugate. It also has attracted PK profile resulting from antibody-guided delivery to target sites will improve the viability -- bioavailability and reduce drug drop interruption.

Okay. So -- and also the ATDC platform has the potential to incorporate high molecular weight drug payload? Protects or protein inhibitors Okay. Next slide. Yes, this slide I'm going to show you a preclinical proof of concept of our target ATDC. So in this case, and our target antibody is linked to a target therapy payload, the TD-1, with a special linker.

So on the last figure here, you can see the target antibody, which has shown a green gear and a small molecule payload TD-1 showing red have a growth -- tumor growth inhibition. And the combination of both actually have more synergistic. But it's very importantly, a single dose of the target therapy the ATDC show a robust antitumor activity. When it compare with either the antibody alone payload alone or a combination of the antibody and the payload together.

More importantly, on the right-hand side, we also show. The small molecule TD-1 payload alone were in combination with the antibody actually will not tolerate very well. It shows a body weight reduction. But the ATDC dosing does not influence the body weight. So it is a very important preclinical proof of concept of ATDC, it show a single-dose ATDC deliver 14 days of tumor progression -- regression than the -- and also the good tolerability. So this has really demonstrated the unique feature for this ATDC platform. Next slide.

So our next ATDC generation technology leverage our expertise in target therapy and also small molecule inhibitor and also the payload chemistry. And the candidate potentially have a key advantage over traditional ADCs.

On the right-hand side, it targets protein required for cancer growth has a synergistic combination effect with functional antibody and also the ability to combine with I/O chemo or target therapy as a standard of care, particularly in the frontline siding. And they can overcome chemo-resistant, which is delivered by the driver mutation.

So the benefit for further optimize this can also overcome the small molecule with a narrow therapeutic window. So a reduction of on target of tumor toxicity, our platform is designated to deliver high potent concentration of small molecule.

So it can be those long term with the improved safety window, and we also reduce systemic toxicity of small molecule. Okay. So -- the -- our first ATDC will -- as Dr. Su mentioned, we are conducting the IND-enabling study and they could potentially our first global clinical study with it later this year.

So to recover R&D progress, [ratchets] a deep broad portfolio in oncology, hematology and recently autoimmune disease. Our R&D team and the global partners remain focused and executed well for the past year, and we have multiple near-term NDA approvals and also late-stage development catalysts in the next year. So in addition, our novel ATDC platform will also lead a multiple potentially first-in-class globally competitive assets into the clinical development in a few years.

So next, I'll turn to Dr. Su.

Okay. Thank you, Mike. Just to sum it up, we think the most important milestone for us in 2024 is that we achieved profitability ahead of our schedule. And looking forward, we are quite excited about the growth prospects. As you can see here in the near term, we expect a top line and a bottom line growth to accelerate behind through Zeca launches around the world. And the new indications in China such as EMC this year and potentially RCC next year sometime.

And for savolitinib, we believe the new indication behind Sachi study in China in second-line EGFR mutation-positive MET-amplified patients once approved, should give a big boost since it's targeting a much bigger patient population.

Certainly, more importantly for savolitinib, we are hopeful that SAVANNAH and Safron studies, if successful, will support registration globally and allow us to bring this important medicine to patients globally. In addition, new product launches, tazemetostat, sovleplenib and our now FGF4-inhibitor, FNGF4-inhibitor HMPL453 will add further to the growth.

And looking ahead, midterm, we plan to leverage our strong cash to explore acquisition of products or M&A opportunities in China to add further to our commercial portfolio. And longer term, of course, we believe ATDC will deliver and will ensure our long-term growth. Thank you very much. David, back to you.

Thank you, Dr. Su. We will now proceed to the Q&A session. (Operator Instructions) So the first question will be Goldman Sachs' Paul Choi. Paul, (Operator Instructions)

Hi, this is [Gil] calling in for Paul. Thank you so much for taking our question. I guess a couple of quick ones from us. I apologies if you already mentioned this, but just curious about your Phase III plans for savolitinib in combination with TAGRISSO ex China. And then secondly, I know you mentioned M&A briefly there. How should we think about the types of assets you're looking at and the implications for your cash balance in 2025? Thanks so much.

Okay. Thank you for the question. With regard to the Phase III savolitinib. We talk -- I'll just ask Mike to provide any details. Mike?

Yes. So globally, for savolitinib, right? We have this Safron trial Phase III program is the TAGRISSO plus savolitinib, in EGFR-resistant patient population, the actually TAGRISSO-resistant patient population with met amplification and overexpression.

So the Phase III trial is ongoing very well, is it has 20 country participating in over 200 sites open for enrollment. So we anticipate AZ will finish recruitment this year. So we are also based on the Sachi and SAVANNAH data, we actually will be very interesting to see that will lead to the global potential registration, yes. So since it's a randomized trial, it has the potential to -- if it is positive, it will support a global registration, including US, EU, and Japan or so.

Okay. Thanks, Mike. Yes, with regard to your second question, M&A or product acquisition or in-licensing products, I mean it's really to leverage our strong cash position. We have over $800 million in cash now. And as you know, we announced -- we are in the process of divesting our non-core business that will add further to our cash balance.

And in terms of the type of products or acquisitions or M&A, it's all about adding products to our portfolio, but profitably products in oncology, immunology area where potentially with synergy with our pipeline. So we'll be exploring potential opportunities. Thank you.

Got it. Thank you so much. Congrats on the progress.

Thank you.

Jefferies, Clara Dong.

Hi, good morning. This is Clara on for Kelly. Thanks for taking our question. Congrats on the progress. So -- so maybe can you probably talk about your strategy to integrate your AGTC programs into your portfolio like what kind of development pattern indication choice you might initially pursue as you are moving your first candidate into clinics.

And also, I think you mentioned a platform has potentially to generate multiple programs. Could you talk about what are your key criteria to nominate those programs? And you mentioned first trial could be initiated this year. Are you looking to run the global trial with a partner or independently?

Okay. Thank you very much, Clara. Obviously, we think these ATDC have really big potential, obviously, targeted therapies with the first few targets we are working on are targeting major signaling pathways and these are genetic alterations and none to be driver alterations and with incidence rates 30%, 40% or higher in all tumors.

And also, there is a lot of evidence that patients or tumors with these kind of genetic alterations tend to benefit less to chemotherapies or to IOs or to traditional toxin-based ADCs. So these are -- with this inhibition of this genetic alterations, hopefully, will allow these patients to benefit better to the treatments.

In terms of initial development plan, I mean you can think of initially late lying as a single agent potentially single-arm pivotal studies. But in parallel, I think the ultimate goal is to move these products into front lines I think the major advantage of these ATDC that we don't expect overlapping toxicities with frontline chemo-based frontline therapies, including chemo-based ADCs.

So hopefully, they can be combined with whatever frontline SoCs. So we can move these to front lines to target a much bigger patient population. So that's obviously, ultimately, it will all -- it will be clinical data that will guide us where to go. And hopefully if proven in clinics, I think we believe they have huge potentials. Thank you.

Thank you very much. Next question is from Bank of America, Alec Stranahan. Alec, your line is now open.

Okay. Great. Thanks, guys, for taking our questions. And congrats on the progress last year. I guess two questions from us. First, when you look at the EU opportunity for fruquintinib I guess, how do you see this adding to the top line over the course of 2025, could this support or maybe even accelerate the already strong growth ex China? Or is it maybe more of an incremental opportunity.

And then secondly, on [Savo] what sort of incremental info from SAVANNAH should we expect next week at ELCC. And as a follow-up to that, what would you want to see in Safron for you and Astra to feel confident to proceed to global submissions? Is it essentially just confirming what we've seen in SAVANNAH? Or are you may be hoping for something more there? Thank you.

Yes. Alec, thanks for the questions. So fruquintinib is obviously very early in global launches. Last year is mainly US, while approved by EU by EMA, but it takes time to gain access. So really towards the end of the year, it was launched in Spain. So there are many more countries to go, and I'm sure our partner, Takeda, is highly focused on EU.

And also Japan finally gained access in Japan and launched in Japan around Thanksgiving time. So a lot to go in Japan as well. I think all these markets will certainly accelerate the growth. Same in the US as well. I think -- we think we think Takeda will do a great job as they've been very strong in the launches.

Savolitinib in terms of SAVANNAH and Safron. SAVANNAH is a single-arm study. It will only support conditional approvals in US and maybe a few other small countries that support this kind of system. It is Safron ultimately, it will support full approval around the world.

So Safron obviously, is the most important study. And yes, it's enrolling very well, as Mike pointed out and indicating a strong unmet medical need with targeted therapies in this patient population. So we are quite hopeful that Safron study will complete enrollment very soon, and we can ultimately support the global registration. Thank you.

Thank you.

Thank you very much. Next question goes to [Panmure Liberum], Julie Simmonds. Julie, I think your line is now open go ahead with your question. .

Thank you very much. Yes, just following on fruquintinib. Just wondering as far as sort of you're now looking at additional indications in China and getting some data on those. Wondering how that is potentially could get into global markets and what's required there?

Yes. I mean, obviously, IO and VEGF-TKI combo has proven synergistic, the successful trial with fruquintinib and sintilimab combination in second-line endometrial cancer and now in a randomized study in renal cell carcinoma, clearly confirms the synergy.

In terms of outside China. So obviously, we share all the data with Takeda. And this is clearly low risk and proven clinical activity. I think the only challenge is that sintilimab is not approved outside China. So whether we can replace sintilimab with a different PD-1 or other IO, it just makes it a bit more challenging. But clearly, PD-1 and VEGF combo is a proven mechanism that will result in synergy yes. .

Excellent. Thank you. And then just wondering back on the M&A side of things, what sort of stage of programs would you be looking at? Is this wanting to add to the later-stage pipeline or back at the sort of early part of what you're doing?

I think it will be open minded, but certainly preferably late stage, something that could really immediately accretive adding to our commercial portfolio.

Lovely. Thank you.

Thank you. Next question goes to Cavendish, Adam McCarter. Adam, your line is now open. Go ahead.

Thank you very much. Thanks for taking my questions and congratulations on the results. So my first question really is just on savolitinib again. So last month during AZ's earnings call, we heard AZ executives say that what they're hearing based on the Mariposa study data is that utilization of J&J's drugs is likely to be most impactful in the second line in non-small cell lung cancer. So based on this, I'm just interested to hear what management view is on how they see the Mariposa trial potentially affecting stable position as it does feel there's going to be an impact there.

Second question is on Prozac. I see from the announcement that Prozac sales primarily in the fourth line with growth potential in the third line. So do you have a feel on the levels of market penetration that can be achieved for Prozac in the US based on the sales, it seems that you've taken quite a bit significant contribution to the market already.

So just interested how much more headroom is there in there for you to go at. And my final question is just on R&D expenses. Obviously, those were down quite a bit over the period. Just wondering how we should think about the outlook on future R&D expenditure, particularly with the level of investment you're going to be putting into the ATDCs and perhaps just overall sort of OpEx in general. Thank you very much.

Okay. Thanks for the questions. I'll give you a quick answer on those, and then I will ask Mike to answer your question on several and also the R&D expenses or budget. So for [secular], yes, in EU, Japan, it's all fourth-line indication or label. So clearly, we'll be -- initially, it will be for flying.

In the United States, the label is third line and above. Obviously, fourth line is blank, right, before the approval. So it's the low hang through there. I'm pretty sure the label will cover the third line, I'm pretty confident our partner together will try their best to penetrate the third line.

Really, it's a very different therapy with proven efficacy and safety without the chemo without myelosuppression, certainly, particularly for easily patients, all the immunocompromised patients, mild suppression could be a problem. Salvo and R&D, I'll leave it to Mike.

Yes. Thank you. Yes. So for -- in terms of competition, right, I mentioned the Mariposa is really in an unselected patient population and also it's a chemo combo, right? So you're going to see it not only the traditional chemo-based toxicity, myelosuppression, the hematology toxicity, but also there are some very challenging toxicity or skin toxicity.

And the big disadvantage is really the dosing, right? So they have to do the split dosing -- very frequent infusion. So it is really present -- certainly, it is approved, but it's a very -- not a very clear biomarker selected patient population.

For savolitinib and TAGRISSO combination, it's really a very convenient, all oral regimen and also have a very precision selected target patient population. I think just from -- for the Sachi, for the SAVANNAH data, you're going to hear next week, Sachi in the future is metamplified, overspread patient is really represented a very a big group of patients, 34% of patients with metaexpression amplification have -- it's a larger patient population with a clear driver mutation.

And this target therapy is really being effective, very convenient. So we believe if it is -- I mean, if it is approved or it has an alternative has certainly has a convenient and the precision medicine-based approach. So I think just by looking all this therapy, this is a really high unmet need and with convenient dosing.

So we think even -- I think AZ is also thinking this is really the competitive advantage for the -- oral target therapy combination. And R&D expense, right? So we are actually very excited about our ATDC platform, right? This is truly the first-in-class. We think all these assets are very globally competitive assets. And I think the strength also for our platform is we are very carefully selected the antibody. Dr. Su alluded to these potential broad tumor type, higher, higher percentage of the driver to mutation with a lot of commercial opportunity down the road.

So certainly, we do want to take these assets as our priority to invest. My envision is really initially we're going to do a rapid global dose escalation, really have as a late-line expansion, clinical proof concept. So once we demonstrate clinical activity, so we can still leverage a lot of opportunity, not necessarily everything has to be done by ourselves, right? Because certainly, we have multiple assets by this platform. We can pretty much duplicate and repeat the process.

And hopefully, when the clinical concept is demonstrated, we can bring potential party in, not necessarily just really exponentially grow our R&D budget, but to potential BD opportunity we can manage the expense. But certainly, these are potentially exciting competitive molecule assets, we certainly will be a priority for a company to invest for the future growth.

Thanks so much again, and congratulations.

Thank you.

The next question go to UBS, Chen. Chen Chen, you're line is now open. Go ahead with a question. Thank you.

So it's very great to see the encouraging premium data of your ATDC, I'm just wondering like how many ATDC candidates can move to clinical stage this year. So are you just focusing on one key candidates or you will focus on like a few can candidate?

Yes. The short answer is multiple. As you heard from Mike, right, we have already multiple payloads, targeting different genetic drivers. But every payload will have -- has the potential to be linked to different antibodies based on the tumor antigen expression levels in various different tumors.

So it's all about deliver these highly potent targeted therapies to different tumors. So yes, there will be multiple. But this is the year that we'll get started, maybe IND filings, maybe one or two, maybe two this year, depending on timing and how the preclinical IND-enabling talks progress. Certainly, one could be to, but there will be more to follow later next year or even beyond.

I see that's quite clear. And second question is very quick. So previously, you guided breakeven in 2025. And it's very exciting that you have already achieved this in no I just want to double check, like your breakeven target in 2025. But is this the guidance now?

The short answer is yes. Maybe Johnny can provide more color on this. Certainly, we think we'll be profitable from here on. I will be -- we believe we reached a self-sustaining kind of mode of operation, yes.

Yes. Thank you, Dr. Su. So Chen Chen, we have only been giving out this revenue guidance for our oncology business. But I think in terms of our target, as Dr. Su mentioned, that we have -- in advance achieved our self-reliance, self-sustaining profitability mode already in 2024. In fact, we made profit 2023, thanks to the upfront income that we recognized from Takeda. And this year, we have from our ongoing business, we have been able to make breakeven and a slight profit this year.

And going forward, as we said, we will maintain this go, and we will continue to have this pathway. But this is not our guidance structurally to the market. But one can take because of the divestment of our non-core business, we will be recognizing substantial high amount of profit in 2025.

That's great. Thank you.

Thank you. We have one question on the line. This is from Morgan Stanley, Jack Blaine. This is questions regarding our ATTC platform. Question one is, is there any molecular difference or modification in the TKI being used in the payload of ATC as compared to the traditional TKI being consumed orally. So that's question one.

Question two is, would it be possible to use more potent payload similar to how ADC technology has allowed to use more toxic payload that would normally not be able to use systematically. That's question number two. And the final question is what do we think about the future potential dosage or dosing frequency of our ATC drug candidate?

Okay. Thanks. It's a lot of questions here. So certainly, structure of the TKIs. These are all novel structures, chemical structures will be protected by patents. So they're obviously different from whatever is available out there. I actually don't even think anything approved against these targets.

In terms of toxicity, all very potent TKIs, I mean that's the whole idea, right? The ATDC, we hope to improve clinical activity through combination with the -- between the antibody and the payload at the same time, reducing toxicity because the free circulating small molecule payload will be extremely low. So the -- any toxicity associated with the payload will be -- will hopefully be a much reduced. So yes, that's -- I think that's the key rationale behind ATDC

Certainly, as Mike already explained in detail, the clear definition from traditional toxin-based ADCs that these ATDC, they are targeted therapies, they are much less we expect much less myelosuppression or overlapping toxicities with the chemos, and hence, can be combined, hopefully, much better with frontline chemo-based standard of care. So really the big potential is in combination.

Thank you. Dr. Su. Maybe we'll have the very final question of the night. HSBC, Cindy Chai. Cindy, your line is now open. Please ask your question.

Hey, thanks for taking my question, and congrats to the achievement. I just have three questions. So I know -- we know that there were US tariffs here. And I just wonder, as a frequent is still produced by HUTCHMED. And what's the tariffs impact in the future? And also, what's the progress of our manufacturing transfer to Takeda and whether they will -- and after the manufactory transfer finished, whether they will produce procratinib in US or in Japan? Thanks so much.

Okay. Thank you for the question. Obviously, tariffs on pharmaceutical products being proposed by President Trump, but no details at the moment in terms of level and -- but as you all know, right, the cost of goods or cost for manufacturing for all pharmaceutical products are always relatively low.

So the impact to our products, let's say, through FRUZAQLA remains to be assessed at the moment, it's really not clear. In terms of tech transfer to Takeda, it's going very well. We both API and drug product ultimately can be sourced outside China. So China can remain as a supplier, HUTCHMED remain as a supplier, but at least there will be multiple sources to support global market. Thank you.

Thank you, everyone. I think we'll wrap it up here. Thank you for all the questions. Dr. Su, would you have like one last remark.

Yes, absolutely. I just want to thank everyone for participating in this call. And as we presented here, HUTCHMED is in a very good position. We have very strong cash. We have multiple products this year going through regulatory reviews and hopefully come out positive.

We have -- through Zeca going well and expected to continue the momentum and savolitinib behind SAVANNAH or Safron ultimately, hopefully, we are hopeful that we can bring this important medicine to patients globally.

And all these will ensure accelerated growth for us for years to come. And of course, longer term, it's all about next wave of innovation, particularly ATTCs. Thank you all for participating in the call and look forward to interacting with you.

Thank you, everyone. We will now end the call.