Hua Medicine (2552) H1 2020 earnings summary

Executive summary

• H1 progress centered on dorzagliatin: pivotal China trials advanced, combination and kidney-disease opportunities expanded, and a China commercialization partnership with Bayer was signed.

• The Bayer model preserves ownership and manufacturing responsibility while sharing commercialization economics; Bayer is to provide sales-force access and bear related costs.

Financial highlights

• Period-end cash was CNY 949 million, versus CNY 1.1 billion at year-end 2019; operating cash use was ~CNY 167 million, including CNY 91.3 million for R&D.

• H1 loss before tax was CNY 173 million, versus CNY 235 million in H1 2019; R&D expense was CNY 112 million versus CNY 166 million.

• H1 administrative expense was CNY 66 million, versus CNY 74 million in H1 2019; lower share-based compensation and consulting fees partly offset higher rent.

Outlook and guidance

• H2 2020 cash burn was forecast at ~CNY 450 million; management expected a CNY 300 million non-refundable, non-dilutive Bayer payment in 2020.

• HMM0302 full trial completion was expected in September 2020, with data cleaning and top-line results targeted before year-end; NDA filing was planned for H1 2021.

• Management expected the Bayer partnership to lower commercialization costs and reduce execution risk; dorzagliatin revenue generation timing was not changed from the previously stated timeline.

• Additional trials with GLP-1, insulin, PPAR and AGI combinations were planned; global partnering discussions were underway, with regional partners to be selected by market.