Member Info for Jatw

Reflecting on the three items

Sovlep - revenues coming in 2025.

Suru PDAC - the “good” news is that the existing survival metric is less than a year, but I doubt an NDA will be possible before the end of 2026 (2 years for the study and 6m submission).

The 306 trial is on the roadmap with a 2027 NDA date

So very much a shop window and more jam tomorrow….I guess it does show how revenues and cash-flows can be increased in the future (assume 80% gross margin and 50% net margin on sales). Market penetration is uncertain, Fruq has done extremely well to take nearly 50% share in China, Suru has achieved 20%. You would hope clinicians opt for the most effective treatment and so the market becomes polarised with one of two large market shares and some subsectors going to more niche products.

Todays sessions are a technical examination of three programmes of work:

Sovlep (ITP and wAIHA)

Surufatinib in PDAC - this is presented as a major opportunity in China….if successful this has the potential to reopen the door to global development

306 - targeting a rare disease.

On registration for today’s event I received an email asking for questions by email. Before seeing the slides I have asked about:

The framework for assessing new drugs and their commerciality - given the prioritisation of the pipeline this seemed important to me.

What they had learned from partnership deals and what this means for Sovlep

What the status of Amdiz is as it appears to have disappeared

Why Surufatinib did not find a global partner and if this is based on competition in US and elsewhere what that means for Suru in China.

The slides dont lend themselves to addressing all of these questions but they may talk about the assessment framework and suru prospects if PDAC is positive.

Nothing on Taz / Amdiz / Fruq developments.

And today….what a bargain.

2022, H1 23, H2 23 and FY 2023 sales were

DB 2568, 1429, 1570, 2999 (+17%)

Ind 564, 470, 424, 894 (+59%)

Growing at 15% would give an H1 24 sales around

DB 1600 (continued growth but lumpy, so could be +/- 300m

Ind 470 (if recovers the H2 fall)

Now that GSK has sold its interest, our thoughts turn to Pfizer and what they will do……HLN cant move on and up until they sell (or push HLN into another entity (eg Kenvue)

Good operating results, cash flow from operations up and NAV /share £12.48 so for the non voting shares a 50% discount.

The dividend is not covered by profits so there may be some worries about its sustainability….the debt is the main worry, but this should start to fall and the burden reduce as interest rates fall a little during the second half of the year.

There has been commentary about pubs closing and being redeveloped into residential units….there may be more of this but that is no necessarily a bad thing as the weaker units can be redeveloped profitably…..I suspect the HK owner of GreeneKing may look to acquire another chain soon (it was bought in 2019) which will increase focus on the sector, not expecting YNG to be the target…but you never know.

Just meaning Friday….no company news on that day….

And up nearly 10% without any company specific news!

As a small cap this gets blown around by whatever winds are flowing across the China / HK / Biotech worlds.

I expect the financial reports for the next couple of years will each establish higher trading ranges as the ongoing profitability of the company becomes more apparent. 2025 should see an expanded product range drive own sales higher, with increasing royalties from Takeda as they continue to expand coverage in the main markets and beyond.

Https://www.frontiersin.org/journals/pharmacology/articles/10.3389/fphar.2023.1138996/full

Found this analysis of orphan drug (rare disease) availability and cost in China…..availability and affordability are key issues…..clearly there will be very specific circumstances for each drug, but it perhaps illustrates the difficulty of profitably distributing such drugs in China. The positive news is that the regulator has been improving its approach to encourage approval.

I feel there are valid questions to ask of management about their expectations of how many of the 16k patients they can expect to reach and what the pricing issues may be within China.

Today we have an additional NDA for Taz accepted for priority review. This is inline with the investor presentation. There are now three priority reviews and one standard review ongoing within China plus Takeda progressing Fruq in Japan (and also presumably other larger secondary markets (S Korea, UK…) and launching in EU.

China approvals appear to be 16-24months for standard and 9-12m for priority review. Unless they are unexpectedly rejected, there should be three additional sales opportunities available in China by the end of the year and Taz coming on stream mid 25.

Taz is targetting a rare disease with only 16k cases in China per annum. Anyone have any insight as to the pricing of rare disease drugs in China and whether they have any additional treatment within the state reimbursement regime (I will ask next week if there is nothing readily available on the internet)?

Just has released a press item about a £260m deal closed in March…..the lack of announcements about deals was beginning to worry me, but I suspect this is not a lack of business, just clients wanting some confidentiality….but still the bulks is about the margin…there are plenty of deals to be struck.

AZ has got its Imfinzi approval as a first line treatment and Imfinzi + Lynparza as second line in the EU.

Fruq+Sintilimab is going through approval in China……they could be going head to head soon for sales in China.

At the sales update in a couple of weeks (assuming it happens), I will be looking for what they say about margins on the bulk annuity deals and the volume of the individual annuity sales.

Bulk deals being lumpy and less predictable may not be ahead of last year, the persistently higher interest rate environment may well be promoting individual annuity sales.

Well that is not lasting long is it…..more poor sentiment from China sent the whole HK market down 2% and financials are geared on that so d-3% is about par for such a day.

We are all out of our depth when it comes to the science….what I want to know is that they have a framework to identify targets so they get the best bang for their $300m pa….and they reassess at regular intervals so they know the target has not been taken away from them by others.

This might be more commercial, but how do they select a global partner (and what have they learned from deals with AZ, Lilly and Epizyme (now Ipsen)) and how do they think about revenue sharing on collaborations so they get a fair share of the value created by the combination.

I am planning to listen to the English webcast…..if you cant attend but have a burning question I will type it in for you - there is usually that facility.

I would like to ask them about the criteria they use to progress a target market…and how they assess the US/EU markets for Sovlep (IPSEN openly says it will only partner a drug capable of earning $300m (maybe more as that preceded the recent burst of inflation).

I thought Fruq was a third line treatment? Not fourth line.

Not much of a reaction….it was unlikely to be refused after the CHMP announcement a couple of months ago….the reaction will come as Takeda makes progress in marketing and remits royalty payments to HCM….the fist assessable data will be the Takeda H1 results due in Oct/Nov then the Takeda 9m sales close to HCM 2024 results in Feb 25.

Yes HK could be interesting, the EU market is 3x US however I expect the pricing will be driven lower by state healthcare systems and take up may be relatively slower as the nations go through their value assessment processes.

I think it will be a slower start and take up to two years to see the book built fully whereas the US may reach a steady patient population early in 2025.

I see that Takeda has announced the results of a phase 2 ITP treatment and is progressing to a Phase 3 trial. It has orphan status and priority review in US.

It has a different mode of operation to Sovlep……therefore they could be competing products or complementary.

Not sure whether this rules Takeda out as a potential partner, there are risks that if T become partner they would not push Sovlep…..or a regulator may force a disinvestment….