NovaBridge Biosciences (NBP) 2019 Q4 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by, and welcome to I-Mab Year-end 2019 Financial Results and Business Update Conference call. (Operator Instructions)

It is now my pleasure to turn the call over to Jielun Zhu, I-Mab's Chief Financial Officer and Director. Please go ahead.

Thank you, operator. Welcome to the I-Mab Year-end 2019 Financial Results and Business Update Conference Call. Earlier today, we issued a press release providing a review of our financial results for this period as well as an overview of our recent corporate highlights and upcoming milestones. The press release can be accessed on the Investors portion of our website at http.ir.i-mabbiopharma.com.

Joining me today on the call from I-Mab's senior management team are Dr. Jingwu Zang, our Founder, Honorary Chairman and Director; and Dr. Joan Shen, our Chief Executive Officer and Director. Dr. Zang will provide a high-level overview of our vision, recent achievements and upcoming milestones; and Dr. Shen will comment on the status of our key development programs in greater detail. I will then provide a brief summary of our full year 2019 financial results before we turn the call back over to the operator, so we may take your questions.

Please note the discussion today will contain forward-looking statements relating to the company's future performance and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this call. A general discussion of the risk factors that could affect I-Mab's business and financial results is included in certain filings of the company with the Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information, except as required by law.

During today's call, we will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial results and a reconciliation of GAAP to non-GAAP financial results, please see the full year 2019 financial results news release issued earlier this morning.

I will now turn the call over to Dr. Jingwu Zang, our Founder, Honorary Chairman and Director. Dr. Zang, please go ahead.

Thank you, Jielun. Thank you to everyone for joining us. This is a pleasure to welcome all of you to our first financial results and business update conference call. 2019 and the beginning of 2020 has been a period of significant progress for I-Mab. I'm very pleased to share with you a review of this progress and opportunities we have in front of us as we move closer toward our vision of becoming a leading global, fully integrated biopharma company.

Before I do that, let me first comment on the global COVID-19 pandemic in relation to our business operations. Fortunately, despite the current global situation, our staff and their families are all safe, and our business has not been materially impacted. We are largely on track to deliver a series of planned key development milestones throughout the remainder of 2020, including both clinical and partnership milestones in the U.S. and China.

First of all, the beginning of 2020 was highlighted by our successful listing on NASDAQ, raising approximately $114.5 million. In just a few short years, we have raised more than $500 million from previous private rounds and the recent IPO with the support of leading Asian and global healthcare and biotech investors. We view this as a testament to our team's strong scientific, clinical and operational capabilities, and we would like to thank all of our investors for their support. We view the completion of our IPO as a critical turning point for I-Mab, transitioning from I-Mab 1.0 to I-Mab 2.0. We believe we are in a strong financial position to execute on our business and our clinical development strategy.

I-Mab's goal is to capture the opportunities presented by the confluence of 2 major developments: the growing biologics market in China and globally and the recent scientific breakthroughs in immuno-oncology and autoimmune disease. As such, we continue to execute on our differentiated business model built on 2 core pillars: a fast-to-proof-of-concept global strategy with the initial clinical development in the U.S.; and our fast-to-market China strategy, consisting of late-stage clinical assets in-licensed from other global companies. In both cases, our intention is to advance innovative biologics with first-in-class or best-in-class potential in large and attractive markets, offering potential solutions for those suffering from cancer and autoimmune diseases with high unmet medical need.

With respect to our global strategy, we have assembled an innovative portfolio of 12 clinical and pre-clinical assets through our internal discovery expertise. In particular, we believe TJC4, our differentiated CD47 antibody, remains globally competitive due to its potential safety advantages that are being validated in the ongoing clinical trial in the U.S. We are particularly excited by the recent acquisition of Forty Seven by Gilead, which we believe confirms the potential of CD47 as a novel and an important cancer drug candidate. We will have our first clinical data from this program later this year. We also expect the first clinical data later this year from TJD5, our differentiated CD73 antibody, which we believe represents another promising immuno-oncology target.

While on the topic of our internal R&D capabilities and portfolio, and in light of current COVID-19 pandemic, we recently announced the development of TJM2, our proprietary GM-CSF antibody to treat cytokine release syndrome associated with severe and the critical illness caused by COVID-19 infection in the U.S. with plans to expand to other hard-hit countries. We believe this decision underscores our commitment to science and innovation to deliver a global impact on human health. We look forward to initiating the development of TJM2 following the R&D approval by the U.S. FDA.

In parallel with our clinical development in the U.S., we continue to leverage our development capabilities and regulatory expertise to diligently execute on our fast-to-market China strategy and to advance our portfolio of 5 clinical-stage assets in China towards potential BLA filings. Specifically, TJ202, our in-licensed CD38 antibody, continues to advance in 2 parallel registrational studies in China for the treatments of multiple myeloma. And TJ101, our licensed long-acting growth hormone for pediatric growth hormone deficiency, is on track for IND submission to initiate a Phase III registrational trial in China by the end of this year or early next year. We also look forward to releasing Phase II top line clinical data from TJ301 in patients with ulcerative colitis by the end of 2020.

We believe we remain on track for a series of China BLA filings beginning in 2021 and are poised to transition into a commercial-stage company within the next couple of years. All of these specific programs I have mentioned across our global as well as China portfolios represent our key clinical development priorities for 2020.

Before I turn the call over to Dr. Shen, who will discuss these programs in greater detail. I also want to acknowledge a few key recent highlights on the corporate side. This includes the recent appointment of Dr. Fernando Salles as Senior Vice President and Head of U.S. and Europe Business Development and Ms. Gigi Feng as Vice President and Head of Corporate Communications. We're very pleased to welcome them to I-Mab and believe the experience and successful track records will be instrumental to I-Mab as we continue to grow.

We remain active on the business development front. Over the past several years, we have entered into a whole series of global as well as regional partnerships with innovative biotech and pharmaceutical companies, and we expect this to continue. Specifically, we recently signed a strategic partnership with Kalbe Genexine Biologics for first right of negotiation for an exclusive license to potentially commercialize our CD73 antibody in ASEAN, MENA and Sri Lanka. The deal package is valued up to $340 million. The execution of the partnership is triggered if and when I-Mab and KG Bio enter into the definitive licensing agreement for TJD5. We expect to provide updates on multiple other business development deals as things materialize.

In summary, 2020 is poised to be an important year for I-Mab to transition into I-Mab 2.0. We're specifically focused on the 3 key business areas: one, to deliver the planned series of clinical as well as corporate milestones as described above; second, to initiate the process to build our manufacturing facility in China to support the clinical development of our programs in the U.S. and China and the future commercial production of our products; and third, to prepare our commercial strategy and the capability for future product launch. Together, the progress in these prioritized areas of our business will help I-Mab to achieve a high level of sustainable growth towards a fully integrated global biopharma.

I will now turn the call over to Dr. Joan Shen, our CEO, who will provide more details on the status of our key development programs. Dr. Shen?

Thank you, Dr. Zang. Let me first begin with our key development programs in the fast-to-proof-of concept portfolio. As Dr. Zang mentioned, all of the programs were discovered by I-Mab ourselves and consist of 2 molecular classes: monoclonal antibodies and bispecific antibodies. They are highly innovative compared to global competitor assets in the same or related classes. Three of these molecules are representatives: TJC4, TJD5 and then TJM2. They are already in the early stage of clinical development, both in U.S. and China. As Dr. Zang alluded, CD47 antibodies are being actively pursued in clinical development by other companies. However, the development efforts have historically been hampered by hematologic side effects, such as severe anemia due to their inherent binding to human red blood cells. Unlike our competitor's anti-CD47 antibodies, TJC4  is a rare antibody originally selected by design to purposefully avoid or minimize binding to red blood cells while maintaining a high antibody affinity and tumor-killing properties. This has been validated in a series of robust in vitro assays and primate studies, including a GLP tox study. We believe this unique property may enable TJC4 to be used safely in a broader cancer patient population. TJC4 is currently being evaluated in a Phase I dose-escalation trial in patients with advanced solid tumors in the United States. We have dosed 3 cohorts and have not observed any treatment-related severe adverse events nor severe anemia so far. The complete data of the dose-escalation portion are expected in the third quarter of 2020. This ongoing U.S. study is planned to expand into a combination treatment with pembrolizumab in patients with several types of solid tumors through a collaboration with Merck and also with Rituximab with lymphoma in collaboration with Roche. Simultaneously, we have started its development in China in patients with hematologic malignancies, such as AML and MDS. I want to share with you we have screened the first patient last week despite the interference by coronavirus infection outbreak. We expect the first patient dosing to happen very soon.

Now let me talk about TJD5, our differentiated CD73 antibody. It represents another promising immuno-oncology target under clinical development globally. We believe the key differentiation of TJD5 when compared to some other clinical-stage antibodies of the same class is related to its novel epitope, which works through a unique intra-dimer binding mode, resulting in a complete inhibition of the enzymatic activity and avoiding the aberrant pharmacologic property known as the hook effect. This unique feature makes it to have the potential of becoming a highly differentiated CD73 antibody. It is currently being evaluated in a Phase I dose-escalation study in patients with advanced tumors -- solid tumors in United States by our partner, TRACON Pharmaceuticals. Initial safety data are expected in the third quarter of 2020. In China, we have also initiated a Phase I clinical trial to evaluate the safety, probability, PK/PD and potential efficacy, primarily in patients with solid tumors, including lung cancers.

Now let me spend a few moments discussing TJM2. TJM2 is a neutralizing antibody against human granulocyte-macrophage colony-stimulating factor, or GM-CSF. It is an important cytokine that plays a critical role in acute and chronic inflammation. We have successfully completed a Phase I single ascending dose study in the United States last year in which TJM2 has exhibited favorable safety, tolerability, PK/PD and the immunogenicity profile. Early this month, we have announced the development of TJM2 to treat cytokine release syndrome, or CRS, in severe patients caused by COVID-19. CRS is characterized by surge of high level of circulating inflammatory cytokines and is an overreaction of the immune system under the conditions, such as CAR-T therapy and patients infected with SARS-CoV-2. Recent studies reviewed that high level GM-CSF, along with a few other cytokines, are critically associated with severe clinical complications in COVID-19 patients. High concentration of GM-CSF was found in the plasma of those patients, which accounts for approximately 20% of all patients, especially in those requiring intensive care. These research data provide the rationale to use TJM2 as a potential treatment for CRS associated with COVID-19 because the antibody effectively neutralizes circulating GM-CSF to control acute inflammatory responses.

Additionally, since GM-CSF blocks the cytokine release from the upper stream of the cytokine release cascade, it may exhibit potential advantages over conventional IL-6 antibodies in terms of reducing cytokine release. The development will start following the FDA's acceptance of our IND application, and the study will commence initially in the United States with plans to expand into other hard hit countries by this global pandemic. We plan to provide additional details on this study when we initiate the trial. The results will also be used for future evaluation in the potential therapeutic role of TJM2 in reducing or preventing CRS and neurotoxicity associated with CAR-T therapy and potentially other indications.

In 2019, we also received IND clearance for TJM2 from China's National Medical Products Administration or NMPA for a multiple-dose Phase Ib study in patients with rheumatoid arthritis or RA. Initiation of this study is expected in China during the second quarter of 2020. The results of this study will enable us to explore TJM2's potential for other indications, including rare diseases.

It is worth to mention beyond these clinical stage assets in 2020, we also plan to submit INDs to the U.S. FDA and subsequently initiate clinical studies with 2 novel monoclonal antibodies in the U.S. The first one is TJ210, a novel monoclonal antibody directed at C5aR for cancer indications through a partnership with MorphoSys. The second one is TJX7, internally discovered monoclonal antibody targeting CXCL13 with first-in-class potential for the treatment of autoimmune diseases. Simultaneous development in China for these 2 components have also been planned. Now let me move on to our Fast-to-Market China portfolio.

Today, I will focus my remarks on 3 most advanced programs in this portfolio, which is TJ202, TJ101 and TJ301. The first one, TJ202, is a differentiated CD38 antibody originally developed by our partner, MorphoSys. We own exclusive license to develop it in Greater China. It is currently in development for the indications of multiple myeloma and autoimmune diseases, such as systemic lupus erythematosus or SLE. We believe TJ202 is potentially highly differentiated compared with the currently marketed CD38 antibody. First, under similar premedication conditions such as with dexamethasone, TJ202 has demonstrated a significantly shorter infusion time and the lower infusion reaction rate. Second, unlike the currently marketed CD38 antibody, TJ202 does not down-regulate CD38 expression on the surface of bone marrow myeloma cells in vitro, maintaining sensitivity of myeloma cells to TJ202 for repeated treatment. So we are currently conducting 2 parallel registrational trials as a third line monotherapy and as a second line combination therapy with lenalidomide. Both in patients with multiple myeloma in Taiwan and Mainland China. The trials are ongoing, and by now, we have 32 patients have been enrolled. Potential BLA submission in China is on track for mid-2021.

TJ101, originally developed by Genexine, is a potential highly differentiated long-acting human growth hormone that is being developed as a weekly treatment for pediatric growth hormone deficiency. We believe it has the potential to address the important clinical need and then to cover a significant market gap. We're in the process of preparing for submission for our IND application around mid-2020 for a registrational trial in China to assess the efficacy, safety and the pharmacokinetics in pediatric growth hormone deficiency.

Lastly, I will briefly discuss TJ301 or olamkicept. We acquired exclusive license from Ferring Pharmaceuticals to develop and commercialize it in Greater China and South Korea, with the option of licensing worldwide rights. Olamkicept is the only clinical stage selective interleukin-6 or IL-6 inhibitor that works through the trans signal mechanism. IL-6 is an important cytokine driver in the propagation and the maintenance of chronic inflammation in autoimmune diseases. Compared to the approved antibody drug that directly block IL-6 or IL-6 receptor, TJ301 is expected to provide a novel alternative for the treatment of IL-6 mediated inflammation result affecting some of the normal physiological functions of our IL-6. For example, acute immune response against infection and the metabolic regulation. We believe that TJ301 has a potential to become a highly differentiated therapy to target autoimmune diseases as part of our Fast-to-Market strategy for TJ301. We are conducting our Phase II clinical trial in ulcerative colitis. We expect to obtain preliminary data from this Phase II clinical trial by the end of 2020. After clinical efficacy and differentiation are validated, we plan to develop it in other inflammatory indications in which IL-6 plays a role.

I want to emphasize that all of the programs I discussed represent large areas of unmet need, both in China and globally, resulting in substantial potential market opportunities for I-Mab.

I will now turn the call back over to Jielun, who will discuss our financial results. Jielun?

Thanks, Joan. Now let me turn to review our financial results for the 12 months ended December 31, 2019. As of December 31, 2019, cash and cash equivalents, restricted cash and short-term investments totaled RMB 1.2 billion or USD 176 million compared with RMB 1.7 billion as of December 31, 2018.

In addition, as Dr. Zang mentioned, we successfully completed an initial public offering in January 2020, with total gross proceeds of approximately USD 114.5 million, including the partial exercise of the underwriters' over-allotment option. For 2019, total net revenues generated from licensing and collaboration were RMB 30 million or USD 4.3 million compared with RMB 53.8 million for the full year of 2018. Net revenues for 2019 were contributed by upfront and milestone payments from CSPC Pharmaceutical Group Limited.

R&D expenses for 2019 were RMB 840.4 million or USD 120.7 million compared to RMB 426 million for 2018. The increase in R&D expenses was primarily attributable to increases in CRO service fees to advance the company's pipeline, additional patent right fees, including an upfront payment of USD 15 million to MacroGenics and higher employee salary and benefit expenses due to increased R&D headcount.

Administrative expenses for 2019 were RMB 654.6 million or USD 94 million compared to RMB 66.4 million for 2018. The increase was primarily due to additional share-based compensation expenses of RMB 514.7 million or USD 73.9 million to the senior management, additional salary and benefits expenses resulting from increased headcount and the increased professional fees in relation to the preparation of I-Mab's IPO and to support expansion of I-Mab's business operations.

For the full year of 2019, I-Mab reported a net loss of RMB 1.452 billion or USD 208.6 million compared to a net loss of RMB 402.8 million for the full year of 2018. Non-GAAP net loss, which excludes the share-based compensation expenses, was RMB 936.7 million or USD 134.6 million compared with non-GAAP net loss of RMB 399.3 million for 2018.

With that, we would now like to turn the call back over to the operator, so we can go ahead and take your questions. Operator?

(Operator Instructions) Your first question comes from the line of Xipeng Feng from CICC.

Okay. This is Xipeng from CICC, and I have 2 questions. And the first one is the COVID-19 has become a global epidemic and has brought huge influence globally, so will I-Mab's clinical trials presented be delayed or be naturally affected due to such COVID-19 outbreak? And I just wonder what's the worst situation or the worst impact we can consider given there is epidemic? And my second question is, could you please share the updates on potential business development plans on CD47. I mean any out-license you're declaring or relvant corporation?

Okay. This is Jingwu. I will take your question. Thank you for the question. For your first question, the impact of COVID-19 on our clinical trials and business. In China, during the peak of COVID-19, we did experience some modest delays in our clinical programs, simply because the hospitals had to switch their clinical resources to deal with the outbreak, but the delays are relatively minor. With the situation in China now improving drastically, now it's under control, the business is gradually going back to normal. So we are in a much better position now to control or to manage our project time lines in China, and we have the possibility to catch up some of the lost time. Now in U.S., the situation now is different, but I want to say that our clinical trials in the U.S. are on track at this point because our trials involve multiple clinical sites in the U.S. All of those are not located in the hard hit areas, so the trials are still on track. But we are also aware of the situation and monitoring the situation in the U.S. and to see how this situation will unfold. But we're not just watching, we have already prepared some of the backup clinical sites if needed. So that's how we deal with the current COVID situation.

And for your second question, as we mentioned earlier, our TJC4 clinical trial is going really well. It's on track in the U.S. We are in an early stage discussion with a number of big pharma groups for global partnership. But at this point, I'm not in a position to disclose details, but we'll do so when things materialize.

Maybe I can dedicate -- elaborate a little more to address these 2 questions. Just for the first question in terms of COVID-19 impact, I just want to give you some flavor to what we have done to mitigate the delay. We have been very fortunate most of the sites, not most all of sites, were not in Wuhan, the hardest-to-hit place. And then we made the trackers for all the sites to monitor as soon as the outbreak is in control, we resumed the enrollment or screening of the patients or follow-ups. One of the example is for our TJ202 study, we were able to recruit 6 more -- 6 new patients right after the pandemic in China. And also, we had remoted the initiation of the studies for CD47 and CD73 in China simultaneously despite the effect on the pandemic. So we are in -- like fully monitoring of that. And secondly, I want to address more about CD47, which is going in parallel in both China and the U.S. So even with the effect right now in U.S., we were able to continuously enroll patients for these important studies. So far, we have completed the dosing of the 3 cohorts without any further delay. We also, so far, didn't have any severe adverse events associated -- treatment associated severe adverse events, including anemia. So far, everything is on track. And in China, we also initiated a study for the hematologic malignancies. By now we have screened the patients and then we will be able to enroll patients any time soon. So just to give you a little more flavor on the status. I hope that answered your question.

Our next question comes from the line of Fei Zheng from Crédit Suisse.

So I just have one general question. So since we have both in-house development products and also the licensing products, how we are going to balance our budget in these 2 categories. And moving forward, are we going to lean towards 1 category or the other? Or we just have equal -- equally budget for both?

Yes. Thank you for the question. I'll give you a high-level answer on your question and perhaps Jielun can further elaborate on your question. We are managing a quite large top line at this point, 17 clinical and preclinical assets. We have a focus on 2 groups of key assets at this point. The first group, I call it first wave assets consisting of TJ202, TJ101 for China portfolio. Because both assets are most advanced and we expect if all the clinical trials are successful, we expect to launch those products, these 2 products in China in 2022 and 2024. So they are very important in the short-term value realization. And then the other 2 are TJC4 and TJD5 because they are globally competitive. We're advancing both assets in China and U.S. We expect -- if all the clinical trials are successful, we expect to have global partnerships within this year, next year with global pharma groups. So this is, at this point, really the focus of our top line.

And then the other group of assets, I'll call it second wave, including, for example, TJ301, TJ107 and TJX7, assets like that. And our focus is to direct sufficient resources to advance those assets into next clinical milestones because those assets are still at a relatively early-stage clinical development and carry certain risk. We must be smart in making judgments as to how to balance the probability of success and development risk. So in a nutshell, we allocate our resources in relation to our top line priority. And it is very important that we allocate sufficient resources to first support advancing the first wave clinical assets, as I mentioned earlier and we also will allocate certain resources to support the second wave assets. And that's how we see our pipeline will advance in the next few years. Now Jielun, could you elaborate further on this question?

Okay. Thanks, Dr. Zang, and thanks, Fei, for the question. Just to supplement on what our Chairman said, our highest priority in terms of funding is placed on the first tier or first wave assets, namely TJ202, TJ101, TJC4 and TJD5. Historically, the majority of our R&D spend in 2018 and 2019, was on these key assets. And we do expect that this spending trend will continue into this year. However, on the other hand, it is also important to note that we have allocated sufficient funding with the help of the recent IPO to advance the second wave assets, including, but not limited to TJ301, and TJM2, TJ107, TJX7 and TJ210 to the next clinical milestones where we expect heavier or more substantial R&D spending to occur in the next several years. So we have a thoughtful and balanced approach in terms of funding these assets of different priorities. I hope this answers your question.

Our next question comes from Xiang Gao from Macquarie.

I have 2. One is small and one big. Let me start with the small first. Have you already checked out the crystallization structure of the CD47, the antibody, the structure and the binding type? Can you give us some color on how it binds to the target? And how it is different from other drug pipeline candidates from other competitors? That's my first question.

Yes, I can take this question. So our antibody, CD47 antibody, TJC4, is screens, but designed to minimize expanding to red blood cells. That was the starting point when we screen this antibody. And after that, we have generated a very extensive series of in vitro, in vivo data. To answer your question, we successfully crystallized the structure of our antibody binding to CD47. Now it's very interesting that we realized from our crystal structure that the epitope recognized by TJC4 is located on red blood cells in an area that is highly glycosylated. We do not expect that when we started. Now we are quite clear from this crystal structure that our -- the epitope recognized by our antibody is hidden in the area that is covered by heavy glycosylation. And it's a natural barrier on red blood cells, preventing our antibody TJC4 to bind to red blood cells. And also, it's also important to mention that we have a very extensive data to support that TJC4, our CD47 antibody, binds strongly to tumor cells because the glycosylation on tumor cells is completely different. And the epitope recognized by antibody TJC4 is exposed on tumor cells, but contrast is hidden on the red blood cells. And this is what we found, and we have all the data to support this conclusion. And this is something we're very excited because this is the underlying mechanism that explains why our antibody has this unique property with a minimum bonding to red blood cells.

Okay. I got it. So basically, this screen is to find the antibody that doesn't bind to the red blood cells, right, which...

Correct. Correct.

Okay. Okay, I got it. All right. And my second question is about the recent deal between Gilead and CD47. With these deals, like more and more common in overseas, I'm wondering if this is going to be -- show up more and more in China to just one check with management. If you think this is also going to happen in China, kind of when do you think it is going to happen?

Thank you for your question. By strategy, our product assets from our global portfolio, we like to -- after clinical validation of novelty, safety and some efficacy of our assets in the U.S. We plan to work with global pharma groups. And for them to continue working on -- working through Phase II, Phase III clinical trials and launch the products globally. This is our strategy. And at this point, we are in early stage discussion with a number of global pharma companies for global partnership. And depending upon the data, we will disclose in third quarter and there's a possibility that we will have a global partnership. But at this point, this is a very early stage discussion. I don't have details to disclose, but when things materialize, we will release more data.

Okay. Maybe -- yes, just one very quick follow-up question. So now like in China, the collaboration is more related to some very specific drugs, right? But while in overseas, it's very common that A company acquired the B company, right? So do you think that it is also going to happen down the road in China, just A company totally acquired another company instead of just do some collaborations related to some specific drugs?

Yes. I think based on our experience in China, working with many companies and also our experience in the U.S. And I think down the road, well, at this point, you see a more focus around acquiring assets. But down the road, we will see more cases, the focus may not just be on the assets but on the companies themselves. And I can see the trends because in China, many of our tech companies are growing. They're getting more sophisticated and they have more innovative assets working on, so there's a trend going forward.

Our next question comes from the line of Kelly Shi from Jefferies.

I have 2, firstly for TJ101. Can you detail when is to be accomplished to reach IND submission? And also, could you please clarify on the time line. Is it IND submission by mid-2020 and initiation of the study in early 2021? And I also have a second question on CD47. So first, I want to clarify the data presentation in Q3. Is that right? Or is after Q4? And also, we have seen some very good efficacy data from CD47 antibodies in liquid tumors. However, not so much from solid tumors. Could you actually share your view on the challenge of developing CD47 antibody in solid tumor indications, particularly? And what are strategy rationale for tackling these challenges?

Thank you for the 2 questions. Maybe I can answer your second question first, and let Dr. Shen address your first question on TJ101. So as you know for CD47, there are 2 major challenges for the antibodies to be successful as a drug. One, of course, is to address its safety challenge. And this is where our TJC4 antibody has a differentiation. Now the other challenge is the one you mentioned, it's related to the role of CD47 antibody in the treatment of solid tumors. I think we are still at a relatively early stage of clinical development on this topic. There are some early efficacy signs from clinical trials conducted by other companies. For example, Forty Seven, Alexo, indicating that CD47 treatments may lead to some early-stage efficacy signal in cancers like ovarian cancer and head, neck cancers, but the data are not conclusive. And we are also in the race to explore our TJC4 in the treatment of solid tumor. And we have our development plan already worked out to focus on also a translational study, analyzing tissue samples from cancer patients to understand how CD47 is expressed on different tumor types. And the data from those translational studies will guide us as to what tumor types may have a better response to CD47 treatments. And that perhaps will help us to increase the probability of success in terms of how we're going to select solid tumor types to start with. At this point, I perhaps ask Dr. Shen to comment on the TJ101.

Thank you, Dr. Zang. Yes, clearly, to further elaborate on CD47 before I go to TJ101, just as far as you know that the recent data from ALX-148, it was encouraging in solid tumors. You can tell we have gained 2 fast-track designation for FDA in terms of the head and neck indications and also gastric cancers. Also, even the magrolimab, their data -- recent data on the ovarian cancer is showing like PD-L1 higher expression one had some partial responders. So I think overall, it is still encouraging. It's too early to say, it's not working. But as Dr. Zang has specified, it requires lots of translational work to further tackle these areas, and we are very confident. So that's why we are simultaneously developing both in U.S. and China for both solid tumors and liquid tumors.

So now let me just give you a little bit update on the TJ101. So as you mentioned, we are on target so far for the IND submissions to China NMPA in the middle of this year, and everything is on the track. And recently, we actually received the Pre-IND feedbacks again, mandating or like endorsed further about our clinical plans. So we are very positive this will happen in the mid of the year. And then -- so the trial will be initiated earlier next year, as you mentioned. So far, we are -- everything is on target. We plan to complete the study by 2023 and getting the BLA approval around 2024.

And also, I want to clarify part of your question for TJC4, the safety part of the data will -- we will release the data in Q3, not Q4.

Okay. Operator, I think given the time constraint, perhaps we take 1 or 2 more questions before we wrap up. Thank you.

Our final question comes from the line of Zhongping Yuan from Huatai.

Okay. And first, I want to ask a first question about TJ101. And you know that Changchun High Tech or GeneScience is the leader in this field and recorded over RMB 5 billion revenue in year 2019. And so I want to know what the advantage of our TJ101 compared to its the long-acting growth hormone? And what's the future schedule for commercialization of our product, yes, this one.

Second question is about a recent deal between the Innovent Biologics and Alector is involving the so-called SIP1a antibody. And it seems that although the SIP1a and CD47 is quite related, but most researchers are done on CD47. So I want to know is there -- why the research is mostly focused on CD47? And what's the future? Do you think -- what's the future of SIP1a antibody, do you think here?

Thank you for your questions. Maybe I can answer your second question first, and let Jielun -- both Jielun and Joan to comment on your second question. Now SIP1a and CD47 belong to the same pathway. SIRPa is expressed on the macrophage and CD47 is expressed on tumor cells. By comparing to CD47, SIP1a has 2 important challenges that people are working on it, okay? One is that SIP1a has its unique polymorphism. So there are 2 isoforms for SIRPa expressed on the macrophage. One is called V1, the other is called V2. And this polymorphism adds a layer of complexity. The reason is that you have to select the right patients for your antibody, because for one antibody usually that particular antibody only works for one type of polymorphism. If it works for V1, it doesn't work for V2. If it works for V2, it doesn't work for V1. So the complexity is that one has to introduce into a diagnostic tool to identify what are the patient target population for your asset. So that's one challenge. And the other challenge is that for SIP1a, as a single agent, it does not work well. It has a low potency as compared to CD47 when worked as a single agent. So for SIP1a to work better, it requires a combination of second agents. And again, this adds another layer of challenge. So in a nutshell, SIP1a is also an interesting target because it's related to the same pathway. But SIP1a has its own challenges that one has to consider really well how to advance assets on this particular target.

Now I'll turn to your first question to perhaps Jielun, could you comment on that question on TJ101?

Yes, sure. Thanks, Dr. Zang. Your question about the commercial potential for this drug category in China, we strongly believe that this is a very, very fast-growing and a sizable market as is. You mentioned GeneSci or its parent, Changchun annual report, which came out, I believe, last week. So they reported for that for their own growth hormone portfolio, which consists of the short-acting version and their own long-acting version. The total revenue was close to RMB 5 billion, as you mentioned, and that is a very big number, and the market has been growing fairly quickly. We believe that our product, TJ101 has a clearly differentiated profile in terms of the convenience of use, the weekly dosage as well as the potential safety benefit in terms of -- in long-term use. So we have confidence that in terms of the commercial strategy, this product will be priced and brought priority to the current long-acting version of the drug in the market. We also have started thinking about other questions like market access, reimbursement whether we want to get on to the NRDL in China. So these will also be dealt with when we are close to product launch of this product in China.

Well, maybe I just want to add one more point on that. In terms of GeneSci nonacting growth hormone, they are pegylated form versus pegylated form of growth hormone you are aware, there's a long-term potential safety issue because of the pegylation, it could be the chemicals penetrating through the blood-brain barrier or maybe deposit into important organs like kidneys. We are talking about 3 to 10 years of old case. So this long-term use could be a potential concern in safety. First, our TJ101, which is a natural based protein using the hybrid Fc technology. So this is a key differentiation in terms of safety profile in addition to others. Hope that answers your question.

We have one last question from Bing Zhao from China Renaissance.

This is Zhao Bing from China Renaissance. I have a quick question regarding the R&D expenses in the next 3 years.

Yes, thank you for your question. Jielun, could you elaborate?

Sure, sure. Thanks, Bing. Thanks for your question. So let me just answer this question by recapping what we talked about in the first half of the call, if you look at our P&L last year, the total R&D spend in 2019 was approximately USD 120 million, but that included a onetime upfront payment of about $50 million to MacroGenics in relation to the in-licensing agreement of enoblituzumab, which we in-licensed last year. And then we also had total administrative expenses -- was about $93 million last year, but there was also a large component of share-based compensation expenses of about $74 million in there. So looking forward, based on the -- our historical spend, we think that our total R&D spend as well as total admin expenses this year will most likely experience increases that are commensurate with the progress of our clinical trials. And also expansion of our business operations, taking out some of the potentially onetime or noncash items from 2019, such as the upfront payment as well as the share-based compensation expenses. We also want to note that through prioritization of our pipeline and business focus, we will effectively control such a budget increase in reference to the spend in 2019. I hope this answers your question.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating.

[MOU1]32:00 这个是真听不见被微信音盖过去了