IMAB - NASDAQ

Good morning, ladies and gentlemen. Thank you all for standing by. And I'd like to welcome you all to the I-Mab Biopharma Full Year 2021 Financial Results and Business Update Conference Call. This is Tyler Ehler, I-Mab's Senior Director of Investor Relations. At this time, all participants are in a listen-only mode. Later, we'll conduct a Q&A session and instructions will follow at that time. Earlier today, we issued a press release providing a review of our financial results for the full year ended December 31, 2021, 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 ir.i-mabbiopharma.com. Joining me today on the call from I-Mab senior management team are Dr. Jingwu

Thank you, Tyler. Thank you to everyone for joining us. It's a pleasure to welcome all of you to our call today to discuss our business update and the financial results for the full year 2021 Now I must say 2021 was a dynamic year for I-Mab. We made remarkable progress in a short period of time and closed the year with stronger fundamentals than we have ever had before. Firstly, on the top line development front, we met 20 key clinical milestones, including the successful completion of our registrational trial for felzartamab as our first - as our third-line therapy for multiple myeloma. We're now in the process of submitting the BLA package in China. We also achieved positive data readouts for two of our key assets, lemzoparlimab and uliledlimab, including the latest clinical data from our ongoing MDS trial, which will be discussed today in detail by Dr. Andrew

Thank you, Jingwu. It is really my pleasure and privilege to speak with all of you today. The focus of my discussion will be on our pipeline development in terms of the recent progress and updates, as well as the near term prospect of our exciting pipeline. With the progress made, it has become apparent that our pipeline is not only globally innovative but also advanced with 10 clinical assets that are either novel or highly differentiated. Our first wave of innovation focuses on highly differentiated monoclonal antibody of best-in-class potential such as lemzoparlimab and uliledlimab which will have now entered Phase 2 and Phase 3 clinical trials by year-end. The second wave innovation focusing on by specific antibodies are both first-in-class and best-in-class potential, such as L14B and CD4B are now in early stage clinical development. There will be more to come. The pipeline is also advanced as felzartamab, lemzoparlimab and eftansomatropin alfa are either in registrational studies or have already reached the BLA stage. They will soon become the core products of our near term commercialization. Today, I would like to take this opportunity to highlight seven key assets in our pipeline because they are value drivers. These assets are novel, highly differentiated and among the front runners globally or in China. I will go through each of them in more details. I'd like to start by reviewing our highly differentiated CD47 antibody lemzoparlimab first. This has attracted so much attention in the immuno-oncology field because of this potential as a best-in-class CD47 antibody and its leading position among the first CD47 antibody drugs potentially to be approved for hematological malignancies. I would like to remind you that lemzo is differentiated by design to avoid binding to red blood cells, while maintaining strong anti-tumor activity. This molecule differentiation has been validated pre-clinically and has translated to clinical advantages that are being validated. I-Mab's priority for lemzo is to achieve its first registration of lemzoparlimab in its class in China and facilitate global development in close collaboration with AbbVie for global registration and commercialization. To achieve this goal, five clinical studies of lemzo are ongoing in parallel, both in U.S. and China. We are running three clinical programs with lemzo in China, including NHL, AML, MDS and solid tumors. In addition, our global partner, AbbVie, is running two clinical programs globally. Based on the clinical data being generated, we hope to initiate one or two registration trials with lemzoparlimab this year for MDS and potentially NHL. Recently, Gilead's magrolimab has been put on clinical hold due to a SUSAR. As I mentioned earlier, lemzo is designed to avoid the hematological toxicities. We recently conducted a systemic safety data review of 180 patients who were treated with lemzo in various combinations. Of these, over 70 patients with MDS or AML have been treated in combination therapy with acidity. Overall, the safety data from both the U.S. and China studies continue to be favorable when administered without a priming dosing regimen, which is consistent with lemzo's differentiation. Among different combinations and across different indications, lemzoparlimab's MTD was not reached in any dose regimens. As of today, the majority of TRAE in solid tumors and NHL were grade 1 or 2. In AML MDS, the safety profile as a monotherapy and in combination with ACA was favorable as expected and no Grade 5 hematological TEAEs have been reported. We remain very encouraged by the therapeutic potential and safety profile of lemzoparlimab. This favorable safety profile with lemzo continue to build our confidence in rapidly moving this program forward to its registrational studies. In terms of efficacy of lemzo, three clinical trials are summarized here with the MDS and the Phase 2 studies to be finalized. Efficacy signals have been detected at higher dose cohorts in monotherapy in patients with advanced and refractory solid tumors. In a smaller group of solid tumor patients who were previously treated with PD-1 therapy, both PR and SD were detected. Our ongoing Phase 2 studies with lemzo is combined with PD-1 therapy in solid tumors in both the U.S. and China will provide more efficacy data. In a recent clinical trial where lemzo is combined with rituximab for NHL, we observed encouraging clinical efficacy. Of seven evaluable patients, CR rate is 57% or 71% and DCR is 100%. We expect to report more data in the second half of 2022 and may potentially initiate a registration trial in patients with NHL in China, pending approval by the NMPA. I'm now very excited to report to you the most recent preliminary clinical data on lemzoparlimab combination therapy with A

Thank you, Andrew. It's a pleasure to be here with you all today to see you again. Following the update on our pipeline development given by Andrew, I will spend the next few minutes discussing with you our focus on the commercialization strategy, the progress and the few next steps. On Page 18, you can see that our innovative and advanced pipeline will generate two waves of commercial portfolios. The first portfolio, which is a near-term product portfolio between 2023 and 2025 consists of felzartamab, lemzoparlimab eftansomatropin alfa and potentially another hematological oncology-focused pre-BLA product that is currently in late-stage negotiations to be licensed in. By leveraging our product differentiation, the cost advantages from being a locally manufactured product and our commercial synergies, these three core products, when combined, will have the potential - will allow us to become a market leader in the hematological oncology area in China. Additionally, our long-acting growth hormone, eftansomatropin alfa, is positioned to be a significant player in the growth hormone market in China, and that market is vast and fast-growing. With planned BLA filings, a large part of our corporate focus this year will be to prepare for the commercialization of our near term product portfolio. We are building a commercial team which is being, currently as we speak, assembled to prepare for the market launch of these products to allow us to move quickly towards commercialization following the NMPA approval in China. Additionally, in establishing a commercial partnership with, for example, Jumpcan in China for eftansomatropin alfa, we can rapidly gain market share among patients with pediatric growth hormone deficiency market, while focusing our internal commercial efforts on our core hematological oncology franchise. These are some of the key steps we are taking to rapidly transition I-Mab to a specialized global biopharma and realize the commercial value of our key assets for our shareholders. Now our longer term portfolio from 2026 to 2028, is focused instead on solid tumors. We have products like uliledlimab, efineptakin alfa, enoblituzumab and lemzoparlimab in this portfolio. These are potential drug candidates to bring innovative and more efficacious medicines to address unmet medical needs in the solid tumor space. Next page, I will take a deeper dive into our near term product portfolio. Again, as I mentioned, this product portfolio consists of felzartamab in third-line and second-line multiple myeloma, lemzoparlimab in first-line MDS and second-line NHL, eftansomatropin alfa, long-acting growth hormone, in the pediatric growth hormone deficiency patients, as well as a novel late-stage hematological oncology therapy that we are planning to in-license, to round out and solidify our near term product portfolio in the hematological space. We anticipate lemzoparlimab to be the first-in-class in the Chinese CD47 market, with internal estimates at 30% to 50% of the market share and peak sales potential of over US$1.1 billion. In addition, felzartamab's lower injection reaction rates and shorter infusion time for outpatient use, while potentially being the first locally manufactured CD38 antibody product, will position it well in the Chinese market with potentially over $260 million in peak sales potential. Meanwhile, eftansomatropin alfa is the only pure protein-based long-acting growth hormone with the advantage of weekly versus daily use, which is the currently mainstay in China with no PEGs or chemical linkers and offers a stronger safety profile and compelling efficacy in a clinical setting. As a result, a conservative estimate gives 15% to 25% of the market share in China, with over $800 million in peak sales potential. Lastly, we expect a potentially in-licensed first-in-class product for the Chinese market to bring a strong additional source of revenue. We expect these assets to provide a solid foundation in areas of high unmet medical needs with significant market potential as I-Mab commercializes and transitions to a global biopharma. On page 20, on this slide, we will bring the market potential for the near term product portfolio together. Now according to reputable third-party analysis and some of our own internal estimates, the near term product portfolio that includes felzartamab, lemzoparlimab, eftansomatropin alfa and a potentially in-licensed pre-BLA product, has the potential to generate cumulative revenue in the range of $300 million to $400 million in the first 3 years, that is between 2023 and 2025, and revenue in the range of $1.3 billion to $1.6 billion between 2026 and 2028. Meanwhile, the expected licensing income we have from existing BD deals, including the deal we have with AbbVie and also the deal we signed with Jumpcan last year, has the potential to bring in around $800 million to $850 million between 2023 and 2028. We are very excited by the potential value of our pipeline and the potential these products can bring to the patients with high unmet medical needs, and then also the value to our shareholders. The last slide in my section, page 21. I want to talk - say a few words about our manufacturing facility. To support the company's rapidly growing and maturing pipeline, we have made very quick and rapid substantial progress in the construction of the -- of our state-of-the-art GMP manufacturing facility in Hangzhou. A process development lab in our Phase 1 GMP manufacturing facility is already operational to handle CMC project needs. Three times 2,000 liters production lines will become operational in about three months time, that is around June 2022, to produce clinical trial materials for I-Mab's clinical studies around the world and also prepare for the local manufacturing needs for our key product, felzartamab. The Phase 2 commercial production facility is being constructed as we speak to accommodate up to eight times 4,000 liters, commercial production lines and is on track to be completed by 2024, that is in 2 years time. Now without much further ado, I will turn the floor to John, our CFO, to provide you with corporate and financial highlights of the company. John?

Thank you, Jielun. And thank you, everyone, for attending our call today. Next, I will provide you with an update on our 2021 key financial highlights. First, let me review our financial results for the full year ended December 31, 2021. As of December 31, 2021, our cash and cash equivalents and short term investments amounted to total RMB4.3 billion or US$671 million compared with RMB4.8 billion as of December 31, 2020. For the full year 2021, our net revenues were RMB88 million or US$13.8 million compared with RMB1.543 billion for 2020. While both periods included licensing and milestone payments from our strategic collaborations, 2021 fiscal year also included revenues from supplying our partners with clinical trial materials. Now let me turn to R&D expenses. Our R&D expenses for 2021 were RMB1.213 billion or US$190 million compared with RMB985 million for 2020. The increase in R&D expenses was primarily due to the rapid advancement of our pipeline with more Phase 2 and Phase 3 clinical trials ongoing, especially for lemzoparlimab, uliledlimab, felzartamab and the eftansomatropin alfa. Administrative expenses for the full year 2021 were RMB899 million or US$141 million compared with RMB402 million for 2020. The increase was primarily due to higher non-cash share-based compensation expenses and increased payroll expenses as we built out in preparation for product launch and commercialization. We had several non-core and non-cash expenses booked in 2021. The share-based compensation expenses in R&D was RMB202 million or US$31.7 million. The share-based compensation expenses in administrative expenses was RMB407 million or US$63.8 million. In 2021, we also booked RMB354 million or US$55.6 million equity loss from I-Mab Hangzhou, which is our affiliate company providing manufacturing services to I-Mab. Non-GAAP adjusted net loss for our core business was RMB1.285 billion or US$202 million. I also want to highlight that our 2021 actual operating cash burn was about RMB1 billion or US$165 million. Next, quite importantly, in light of the recent U.S., China regulatory concerns, we would like to reiterate that I-Mab has taken multiple proactive measures to address these concerns and risks. First of all, the company has implemented additional business processes and control changes to meet the requirements outlined in the U.S. HFCAA. These measures include, subject to compliance with applicable rules and regulations, engaging an accounting firm that is subject to inspection by the PCAOB to prepare its audit report starting from 2022 fiscal year. Such compliance measures are expected to take effect in our 2022 annual report. In addition, as previously disclosed, the company is also pursuing a new primary listing on the Main Board of Hong Kong Stock Exchange. We believe that the dual listing will offer our existing ADS holders the enhanced trading flexibility in addition to NASDAQ and complement our current investor base. Recently, we have seen positive signals that U.S. and China regulators are working together on a solution to resolve the U.S. HFCA issue and ADR audit inspection requirements. We are happy to note that the China Financial Stability and Development Committee came out in early March in support of Chinese companies listed overseas, with the Vice Premier, Liu He, stating that, "policies that are favorable to the market would be introduced." So we are reasonably optimistic that a solution will be reached between the two countries and that the regulatory risk will be mitigated or reduced as the discussions and actions move forward. It is also important to reiterate that the company maintains a strong cash balance with US$671 million at the end of 2021. Our current cash position, combined with expected incoming milestone payments from existing out-licensing deals and collaborations is going to further strengthen our cash balances and sufficient to support our key business activities through 2025. This cash runway actually does not factor in additional cash upsides from potential new business payouts and new financing arrangements. We firmly believe that our cash position provides us with ample insurance and flexibility to support our R&D activities, expand our commercialization capabilities and ultimately transition us to a global specialty biopharmaceutical company over the next 3 years. I will now turn the call back to Dr.

Thank you, John. Thank you, John. Now we are approaching the end of this call, let me just give you a brief forward-looking for 2022. I must say 2022 is already shaping up to be another exciting year. We are determined to focus our corporate priorities in the three value-driving areas to continue building even stronger fundamentals. The first area is to deliver on the key pipeline milestones and catalysts. We aim to achieve 20 key clinical milestones, including the initiation of one or two registrational trials for lemzoparlimab and look forward to a set of five exciting clinical data readout events. These milestones are highly significant and impactful and are expected to drive the value of our pipeline. To further advance the pipeline development, we expect to initiate eight clinical trials in 2022 and five IND submissions or approvals in both the U.S. and China. But at end of 2022, our pipeline will have advanced to include three or four registrational trials, 11 Phase 2 clinical trials, three Phase 1 clinical trials and a step closer towards near term commercialization. Now the second area I'd like to mention is to deliver on the key corporate milestones, including out-licensing BD deals for uliledlimab and possibly our bispecific antibodies. As I mentioned earlier, we are also working on finalizing the deal for a pre-BLA product to enrich our near term product portfolio. Last but not least, we are moving fast to build our capabilities and prepare the company for the near term commercialization. So going forward, revenue generation will be a corporate focus of the company, by combining the cash flow from the existing cumulative milestone payments with the near term sales revenue expected in the next few years, to bring the company to a stronger financial position. So with that, I would like to end this call and thank you all for your participation and your continued support. Tyler, over to you.

Thank you, too, Dr.

Can you hear me?

Yes.

Yes.

Okay, great. Thank you for taking my questions. And congrats on the progress. I believe this is the first time we have heard a mention [ph] data from lemzoparlimab in combination with azacitidine. We mentioned that response rate is comparable to magro in MDS. I'm wondering, are you referring to the data sets that 90% ORR and 40% complete response rate of magro and aza combo in front-line MDS? And also, could you please provide more commentaries regarding the safety differentiation you have observed to date? And then lastly, would you be able to provide more specific timetables for the key data readouts for lemzo program? Thank you.

Thank you, Kelly. Yeah, for your questions, I'd like to ask Andrew to elaborate. Andrew?

Thank you, Jingwu. Thank you, Kelly, for your very, very insightful questions. You're right. You know, Gilead definitely reported the magrolimab efficacy data in 2020 ASCO meeting, where they actually described the efficacy of magrolimab in combination with azacitidine for first-line MDS treatment. In their report of 33 patients who were treated for about four months duration, ORR was around 90%, CR rate was about 40%. So we look at our preliminary data with first-line MDS. You know, we have actually found that a combination of lemzoparlimab and A

Thank you, Kelly. And our next question comes from Louise Chen at Cantor. Louise, please go ahead.

Thank you for taking my question and congratulations on all the progress in the second half of the year. So just curious how you plan to deal with the regulatory risks associated with the HFCAA. And also, could you please follow up on your current dual listing progress? Thank you.

Thank you, Louise. Yeah, I just want to say a few things, and then I will ask John, our CFO, to elaborate on the details. So our position is that we are quite optimistic that this potential risk can be mediated by the actions that we are taking at this time. We're working hard on the two main actions, one is to switch our current auditors to an auditor that is recognized by PCAOB and meets all the necessary requirements by the SEC. And as I mentioned earlier, there are successful examples by other companies, our peer companies, so it can be done. And the other action we are taking is to accelerate a dual listing process for Hong Kong Exchange. So maybe, John, you can elaborate more on the details.

Sure. Thank you for the question, Louise. Like most of you, we are closely monitoring the negotiations between U.S. and China regulators and are also following the practice from our peer companies in China ADR sector. In addition to that, the company has taken proactive actions to mitigate the potential risk. We have actually started the process to evaluate the feasibility in terms of changing principal auditor in the U.S. based on our own situation and assess necessary requirements according to SEC and the PCAOB guidelines. Specifically, we have already engaged professional firms to support our assessment in this regard, including review and analysis from regulatory, legal, operation and internal control perspectives, in order to meet the regulatory requirements from both China and U.S. on all the information provision and disclosure. In terms of timetable, we are working closely with our counsels, aiming to complete the process by the end of 2022. Of course, it's subject to compliance with all applicable regulations and the laws from both countries. At the same time, as Dr.

Thank you, John. Thank you, Dr.

Hey, guys. Thanks for taking my question and congrats on all the progress here. Maybe one for me on the pipeline. For the Phase 2 uliledlimab data expected at ASCO, maybe can you speak to some of the high level details on this data set? Such as how many patients, what tumor types will be the focus? And whether you've been able to look at the CD73/PD-L1 dual biomarker in this trial? And then maybe as a follow up, what are your current expectations around the potential to execute on a global licensing collaboration for this program? Thanks.

Thank you, Joe. Well, maybe, Andrew, could you elaborate on that question?

Yes, sure. Thank you, Joe, for that question. You're right. We did actually submit an abstract for this year's ASCO. This is a Phase 2 trial with our uliledlimab in combination with toripalimab, an approved PD-1 antibody in China in patients with advanced solid tumors. And for this data set, we have a very comprehensive safety analysis for over 90 patients. And also, we will report the efficacy data in over 40 evaluable patients. In addition, as you suggested, we definitely plan to analyze the potential biomarker correlation with clinical efficacy, including CD73, PD-L1 expression and also some other biomarkers. And with regard to the patient population, this is mainly dealing with non-small cell lung cancer with different treatment modalities. Your second question has to do with generating more clinical data. So hopefully, we can secure a global business deal. So on this front, we are continuing our clinical development program so that we can generate more robust data for uliledlimab. This includes our ongoing efforts in the states, where we have a Phase 2 clinical trial program of uliledlimab in combination with atezo in patients with ovarian cancer and also other solid tumors. And as you know that Astra

Joe, I'd also like to add that CD73 as a drug class is still relatively early and it's not as mature as a CD47. So it's quite natural for companies, they want to see more data. So uliledlimab is a very attractive CD73 antibody because it's differentiated. It's also globally competitive. So we hope that the new data being generated will facilitate our ongoing discussion with the big pharma groups for a global partnership deal. And we are actually in discussion with two or three big pharma groups. Like I said, the more data, Phase 2 data, will help to facilitate.

Thank you, Dr.

Yeah. Thanks for taking my questions. And I reiterate my congratulations on the progress thus far. So my first question is, outside of increasing the manufacturing capabilities, how is your commercialization efforts expected to further evolve in the upcoming year? And then on the bookkeeping side of things, could you maybe provide additional details on the cash burn rate? And any expected revenue milestone payments we should be on the lookout for? Thank you very much.

All right. Thank you. Thank you, Andres. Maybe the first question, I would like to ask Jielun to elaborate. Jielun?

Sure. Thanks, Dr.

John, could you elaborate on Andres' second question?

Sure. Thank you, Andrew, for the question. As we reported in the slides before, the company had $671 million cash and cash equivalent at the end of '21. On top of that, we now expect to receive over $250 million cash between 2022 and 2025 from multiple out-licensing deals, including existing AbbVie and Jumpcan deals that we have successfully completed over the past few years. With regards to current cash burn. Our actual operating cash burn for 2021 was US$ 165 million, and we expect to manage operating cash burn between $180 million to $220 million for 2022 and 2023. Again, with the cash balance in bank and the expected incoming milestone payments from the existing deals, we are confident that our cash position is sufficient to support our business operations for at least 3 years. Thank you.

Thank you, John, and thank you, Jielun. And thank you, Andres, for your question. We'll take one last question before we wrap up. Next question comes from Yingqi Peng [ph] at UBS. Yingqi, please go ahead.

Yes. Many thanks for taking my question. I have a question regarding to TJ202. So what is the latest update on TJ202's BLA submission in China? Could you please explain the difference in declaring it as an imported product compared to a domestic product for BLA submission? And when do you expect the BLA filing to be completed? Thanks.

All right. Thank you. So I'm happy to take this question. Now in 2021, we successfully completed this registrational trial for felzartamab for third-line multiple myeloma. The results are good, met both the primary, secondary endpoints and also demonstrated its advantage with a shorter infusion time and lower injection reaction rate, allowing felzartamab to be used in the outpatient setting, so this is all good. Now there's a slight delay in submitting the BLA package. The reasons are two-fold. On the one hand, we are in discussion with the China CDE in light of a new CDE policy for conditional approval. So we're communicating with the CDE on that. On the other hand, we wanted to submit a different BLA package with a localized manufacturing plan embedded to significantly reduce the cost of goods, making felzartamab the only locally made CD38 product, to be commercially more competitive. So we are putting all this information together, and this is also supported by the Hangzhou local government for the local manufacturing. So through active communication with the CDE, we hope to submit a new BLA package very soon this year in 2022.

Thank you, Dr.

Thank you.

Thank you.

Thank you all.