I-Mab (NASDAQ:IMAB) H1 2022 Earnings Conference Call August 30, 2022 9:15 AM ET
Company Participants
Tyler Ehler – Senior Director of Investor Relations
Jingwu Zang – Founder, Chairman and Acting Chief Executive Officer
Andrew Zhu – President
John Long – Chief Financial Officer
Conference Call Participants
Kelly Shi – Jefferies
Andres Maldonado – H.C. Wainwright
Albert Lowe – Piper
Tyler Ehler
This is Tyler Ehler, I-Mab’s Senior Director of Investor Relations. At this time, all participants are in a listen-only mode. At the end of this call, 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 six months ended June 30, 2022, as well as an overview of our recent corporate highlights and upcoming milestones. The press release can be accessed on the Investor Relations portion of our website at ir.i-mabbiopharma.com. Joining me today on the call from I-Mab senior management team are Dr. Jingwu Zang, our Founder, Chairman and Acting CEO; Dr. Andrew Zhu, our President; Mr. John Long, our CFO; and Mr. Richard Yeh, our Chief Operating Officer. Dr. Zang will provide a high level overview of our recent achievements and upcoming milestones while Dr. Andrew Zhu will provide an update on our R&D progress. And finally, Mr. John Long will provide – will then provide a summary of our financial results for the six months ended June 30, 2022.
Before we turn the call over to the operator to take your questions, please note that today’s discussion 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 discussion. The 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. We will also discuss specific non-GAAP financial measures for comparison purposes only during today’s call. Please see the financial results news release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results.
With that I’ll now turn the call over to Dr. Jingwu Zang, our Founder, Chairman and Acting CEO. Dr. Zang, please go ahead.
Jingwu Zang
Thank you, Tyler. Thank you to everyone for joining us. It is a pleasure to welcome all of you to our call today to discuss our business updates and the financial results for the six months that ended on June 30, 2022. Since the start of 2022 calendar year, we’ve been facing challenges similar to many of our peers across the industry. The company has acted effectively to reposition itself to focus on our fundamentals. Today we will report how the company is laser focused on key business priorities and a high value milestones and catalysts as we continue to drive value to our shareholders. On the pipeline development front, we met seven key clinical milestones, including positive data readouts for three of our key assets: uliledlimab, lemzoparlimab and TJ-CD4B.
Our goal is to prioritize our resources on the value driver assets in our pipeline. To this end, we’ll focus on five clinical assets and 10 clinical trials, some of them are ongoing and some of them are yet to start. For lemzoparlimab and uliledlimab, we will present more data on lemzoparlimab from our Phase 2 clinical trial in combination with AZA and MDS patients in China at ESMO in early September and plan to initiate a Phase 3 clinical trial in China. With the rapid progress in the cohort expansion Phase 2 lung cancer study of uliledlimab, we expect to present more data later this year. On our new STAR project, TJ-CD4B is also progressing well in a Phase 1 clinical study in the U.S. and China. Dr. Andrew Zhu will further highlight this asset later in today’s discussion.
Now with the progress on uliledlimab and TJ-CD4B we expect to facilitate our BD deals as part of our business strategy and as one of our key priorities. As a result of the progress made in the first half of 2022 and a continued progress to be made in the second half of 2022, we expect to deliver two or three BLA submissions for approvals for felzartamab and eftansomatropin alfa along with four to five new drug molecules moving towards the IND stage or into a Phase 1 clinical trial in the next three years. Our pipeline has significantly advanced to a completely different stage from when we look back to our pre-IPO two and a half years ago. It is not only globally competitive with a potential first-in-class assets such as lemzoparlimab and uliledlimab, but also advanced with two assets here BLA and our product launches within the next three years. Meanwhile a portfolio of new molecules is moving towards the clinic.
On the corporate development front, during the reporting period, we have seen a clear path to commercialize felzartamab and eftansomatropin alfa. We were partnered with a leading domestic big pharma companies with a proven commercialization capabilities and established sales forces and channels for eftan and felzartamab. We have already established a commercial partnership with Jumpcan for eftan, a market leader in a pediatric therapeutic area in China and have working with them to prepare for the BLA and a subsequent product launch. We’re working on a similar commercial partnership for felzartamab. Therefore with the commercial partnership strategy, we will be able to avoid draining significant resources into building large sales forces establishing our own commercialization capability for these two near market products in this difficult time when our cash runway is essential. We must focus on our competitive advantages to prioritize our resources in the development of our high value assets. Additionally, I’m pleased to report that our state-of-the-art GMP manufacturing facility owned by I-Mab Hangzhou is operational and has successfully manufactured batches of clinical grade material, including lemzoparlimab. Our Phase 2 facility is on track to be completed by 2024 for commercial production.
Now, I would like to emphasize that we maintain a strong cash position with $586 million cash on hand. On top of that, we will continue to receive potential milestone payments from the existing out-licensing deals, including the development milestones from the amended deal with AbbVie and Jumpcan deal. As we will continue to deliver the project milestones within the next several years, we expect to collect a significant amount of milestone payment as agreed in the respective agreement. As a result, our cash is sufficient to fund business operations through 2025 for over three years. On the capital market front, during this reporting period, the company has completed the process by its previous commitment to engage in a U.S. based public accounting firm that is subject to inspection by the public company accounting oversight boards the PCAOB for the preparation of its audit reports commencing from the fiscal year of 2022.
Now, on August 26, 2022, the PCAOB of the U.S. signed a statement or protocol with the China Securities Regulatory Commission and Ministry of Finance of the People’s Republic of China governing inspections and investigations of audit firms based in Mainland China and Hong Kong. We have noticed this as a significant step towards resolving the de-listing issue. The company has now taken the stance to continue implementing the ongoing work to achieve audit switch as planned, while waiting to see how the agreements is evolving between the two governments. This development may ultimately mitigate delisting risks under HFCAA. However, our goal is to ensure the de-listing risk is completely resolved for the fiscal year of 2022. Therefore the company will either maintain the status quo after the agreement is executed within the next few months, or will switch to a U.S.-based auditing firm to meet PCAOB requirements as originally planned.
Now here I would like to emphasize I-Mab’s unique business model for value proposition. I-Mab has a powerful and proven R&D engine that is our competitive advantage. I-Mab’s innovation comes in three waves. Lemzoparlimab and uliledlimab are the best examples of I-Mab’s first wave of innovation. They are now in Phase 2 and are ready to move towards Phase 3, while we complete the global deal for lemzoparlimab and are working on a potential deal for uliledlimab.
The second and third waves are comprised of novel bispecific antibodies our uniquely formatted therapeutic drug molecules. Some of them are already in clinical trials and others are in pre-clinical development. We expect to have four to five new molecules moving towards the clinic within the next three years.
With the competitive advantage of our R&D and progress in pipeline development, I-Mab’s value proposition is really two-pronged. One is to out license the global rights of innovative assets after early clinical validation. Lemzoparlimab is a one prime example. As a result, the company has received a cumulative cash amount of $249 million so far from multiple deals and will continue to receive additional development milestone payments as we deliver upon those agreed project milestones. In addition, we continue to explore potential partnerships for uliledlimab and a TJ-CD4B bispecific antibody.
Next, we expect to create value through commercial partnership deals in China. More specifically, we developed the clinical assets towards commercial stage in China and partner with pharmaceutical companies that have established sales forces and sales channels to rapidly gain market share as they exemplified in the commercial partnership with Jumpcan for eftan growth hormone. We typically receive upfront payments, as well as milestone payments and a fifty-fifty profit split for our products to be marketed in China.
We’re now working on a potential commercial partnership for felzartamab. This model of value proposition is unique and relies on I-Mab’s R&D competitive advantages in immuno-oncology and business development capabilities. At I-Mab, with multiple successful examples in the past few years, this value proposition model has been proven and it works well in our hands. We will continue to deliver the expected results. This model also helps prioritize and focus our resources on high-value business activities while it avoids spending resources to build our own commercialization capability.
Now, since the beginning of this year, we have been focused – we have been facing the same challenges that many other companies have faced in this market. So how do we best position the company to not only survive, but also thrive in this turbulent market, as we continue to strengthen our fundamentals? For I-Mab this means being laser-focused on delivering value drivers in the next three years. So we work to bring the most value to our shareholders.
Now the first aspect is to prioritize our resources and value driver assets in our pipeline, and create near term value for our shareholders. As I have already mentioned, our pipeline is rich, but we must focus on assets that we believe have the most potential. Through our systemic science and business review we have prioritized five high value assets associated with the ten clinical trials. Some of these trials are ongoing while others have yet to be initiated. For these key assets we expect three potential BLAs in the next three years, more BD deals to reinforce our value creation model, and extend our cash runway beyond three years.
Now, the second aspect is our continuum hunt for commercial partnerships. This includes partnership for the near term commercialization of felzartamab for multiple myeloma and Eftan long-acting growth hormone for PGHD.
As discussed earlier, we will choose to partner with the leading domestic big pharma companies with proven commercialization capabilities with established sales forces and channels. We have already established a commercial partnership with Jumpcan, a market leader in pediatric therapeutic area in China for Eftan long-acting growth hormone. We are now in the process of contemplating potential commercial partnership deal for felzartamab.
The third aspect is to continue investing in our next-generation pipeline assets. This area is one of our core strings. These next-generation assets include novel bispecific antibodies and immune adjuvants, which we believe have the potential to lead global trends in immuno-oncology. We’re under way to generating novel portfolio of next-generation programs to bring four to five such new drug molecules to R&D and clinic within the next three years. It is also worth mentioning again that our current cash runway with cash on hands plus the expected milestone payments over three years and is sufficient to support our core business activities as I just laid out.
With that overview, I’d like to ask Andrew to take a deep dive into our key pipeline assets and provide our expectations for the rest of 2022. Andrew, over to you?
Andrew Zhu
Thank you, Dr. Zang. It’s my pleasure and privilege to speak with all of you today. The focus of my discussion will be on our pipeline development. I will highlight the recent progress and update as well as the near-term prospect of this very exciting pipeline. At I-Mab, we have 20 assets in development and 10 assets that are in clinical stage. Today, I would like to highlight five prioritized assets in our pipeline because they are value drivers. These assets are novel, highly differentiated and are highly competitive either globally or in China.
The five value driver assets include the two late stage assets, felzartamab and eftansomatropin alfa with our BLA to be delivered in 2023 and 2024. And two Phase 2 and Phase 3 ready global access, lemzoparlimab and uliledlimab, alongside with our new Star, the bispecific CD4B. I’ll go through each asset in more details.
First, let me start to highlight our two pre-BLA assets, felzartamab and eftansomatropin alfa. Felzartamab is our most advanced asset. We have successfully completed the registration trial in China for felzartamab as a third-line treatment for multiple myeloma. Our study confirmed the efficacy of felzartamab with additional benefits, such as lower infusion related reaction rate and shorter infusion time. This allows the use of felzartamab in outpatient setting.
In January 2022, the company signed a partner agreement with Hangzhou Qiantang Government in China to manufacture felzartamab locally to accelerate its commercialization. The local manufacturing plant is expected to significantly reduce the cost of goods and allow felzartamab to be commercially more competitive. In terms of the second-line treatment for multiple myeloma, a randomized Phase 3 registration trial of felzartamab in combination with lenalidomide completed patient enrollment in September 21.
When the top line data is fully mature, we expect this data to support our BLA submission in 2023. In parallel, we are exploring a possible study of felzartamab in combination with lemzoparlimab for multiple myeloma. We expect to publish the preclinical data of felzartamab in combination with lemzoat ASH 2022. Multiple myeloma remains a significant unmet medical need in China, considering the relevance of this therapeutic target. It is important to note there are approximately 20,000 new cases of multiple myeloma each year in Greater China, with approximately 100,000 second-line or third-line relapse or refractory multiple myeloma patients in China as of 2021. This represents an annual growth of approximately 2% to 3% per year.
Felzartamab is uniquely positioned as the only locally manufactured CD38 antibody product with a distinct profile where it can be administered in an outpatient setting because of the short infusion time and lower infusion rate. We have also demonstrated compelling efficacy including in elderly patients with multiple myeloma.
Next is eftansomatropin alfa or TJ101 are differentiated long-acting growth hormone as the weekly treatment versus commonly used daily injections. Eftansomatropin alfa is the only natural long-acting growth hormone in its proprietary fusion protein format i.e. a pure protein-based molecule and is not chemically linked with PEG or other linkers. It’s safety, tolerability and efficacy have been well demonstrated in a Phase 2 clinical trial conducted in Europe.
As shown in the figure in the middle panel, a weekly or biweekly treatment with eftanso alfa showed comparable efficacy to daily Genotropin injection. Our registration Phase 3 TALLER trial is ongoing and we have completed patient enrollment in May of this year. And are on track for BLA submission in 2023 or 2024. There are advantages using a weekly versus daily injection for treatment of pediatric growth hormone deficiency. This includes improved patient compliance with patient more likely to consistently take their treatment in a weekly or biweekly schedule versus a daily setting.
In 2021, we entered into a strategic commercial partnership with Jumpcan, to leverage Jumpcan’s vast commercial network as a commercial leader in pediatric therapeutic area. Our agreement include upfront and potential milestone payment of US$315 million, as well as a 50/50 profit sharing. Although, double-digit royalties on revenues. This partnership represents one of China’s biopharma markets’ largest deals which is a testament to the products potential and to I-Mab’s development capabilities.
Meanwhile, we expect eftansomatropin alfa to be highly competitive on 3.4 million addressable patient populations. We believe the China growth hormone deficiency market is largely enough to give Jumpcan and I-Mab the fighting chain. And we have a real chance to take a substantial share of the market. Furthermore, given the lack of a pack and of chemical linkers, eftanso is the only long-acting growth hormone in the pure protein format which offers potential safety benefits.
Next, I would like to highlight our highly differentiated CD47 antibody including lemzoparlimab and a new CD47 antibody therapy. 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 molecular differentiation has been validated pre-clinically and has translated into clinical advantages that are being validated.
I-Mab’s priority for lemzo is to achieve the first registration of lemzo in this class in China. This will allow lemzoparlimab to be the first 40 – CD47 to the market in China, and potentially the first globally approved CD47 therapy. Multiple clinical studies of lemzo are ongoing in parallel in both the U.S. and China.
As in here, you can take a look at our global clinical development plan, outside of China, we have partnered with AbbVie, who is spearheading global efforts in the development of renewal CD47 antibody. And I would discuss the amended partnership on the next slide.
In China, I-Mab is leading the efforts in the 47 space. The most significant study is the Phase 2 clinical trial in MDS/AML. This trial in combo with AZA. Our plan remains to initiate a registration trial for MDS patient by the end of 2022. We believe the differentiating feature of lemzoparlimab has gained preliminary clinical validation. The differentiation includes the expected favorable safety profile with no priming dose required, less RBC mediated zinc effects and compelling anti-tumor activity across several trials, which is consistent with lemzoparlimab’s differentiation.
The unique glycosylation around the binding side of lemzo serve as a natural barrier to prevent lemzo from engaging RBC. This means that red blood cells are only minimally accessible by lemzo. By contrast, the binding side on tumor cells does not have similarl glycosylation and is fully exposed, which explains why lemzo binds strongly to tumor cells.
In a safety review of approximately 200 patients up to date who are treated either with lemzo alone as monotherapy or in various combinations. We have seen a compelling safety profile today. Overall, the safety data from both the U.S. and China studies continue to be favorable when administered without a priming dosing regimen. MTD was not reached in any dose regimen, mild TRAE in solid tumors and NHL, good safety profile in combination with executive in AML/MDS and no grade 5 hematological TRAEs have been reported here.
Here I’d like to highlight some of the high level data from our Phase 2 trial of lemzoparlimab in combination with AZA in first line higher risk MDS patients in China that we shared at our R&D date in July. In this patient group, we have again seen good safety profile with lemzoparlimab well tolerated in combination with AZA, despite the more severe baseline features related to underlying disease in this cohort.
We have also observed comparable efficacy to magrolimab within overall of 87% and the CR rate between 31% and 40%, depending upon the treatment duration. We are trying to present this detail dataset in a perfect presentation at ESMO on September 10, 2022 for the organizers embargo policy.
Additionally, as mentioned, we plan to initiate a Phase 3 registration trial before the end of 2022, and we have already submitted the communication package to CDA to push this registration trial forward. Importantly, AbbVie and I-Mab have entered into an amendment to the original license and collaboration agreement. Both parties will continue to collaborate on the global development of anti 47 antibody therapy. For the new anti 40 – CD-47 antibody therapy, the company will be eligible to receive and AbbVie will pay up to US$1.3 billion in development, regulatory, and sales milestone payments and the tiered royalties will be at rates from mid-to-high single digit percentages on global net sales outside of Greater China. The company retains the exclusive right to develop and commercialize all licensed products under the agreement in Greater China.
Globally, AbbVie will focus on the new therapy, which is currently under development. And this continue the Phase 1 study of lemzoparlimab. In parallel in China, I-Mab will continue advancing its leading position on lemzoparlimab with a focus on the initiation of a Phase 3 clinical trial in patients with MDS in China. Today, Phase 1 and Phase 2 clinical studies of lemzo in U.S. and China with nearly 200 patients have supported a good safety profile without a need of a priming dosing regimen. Lemzoparlimab in combination with AZA has shown to be efficacious in patients with higher risk MDS in the Phase 2 study.
Next is uliledlimab map another global front runner that we are developing for solid tumors with a focus on non-small cell lung cancer and ovarian cancer. As previously reported, uliledlimab is differentiated by design to avoid the hook effect. So the hook effect is simply characterized by an abnormal phenomena where a drug molecule paradoxically loss fab at higher doses. Uliledlimab’s differentiation comes from a unique binding epitope, epitope and these terminals. We believe the differentiation gives uliledlimab a better therapeutic window and more flexibility when combined with other anti-tumor drugs.
In addition, uliledlimab has potential advantages over small molecules with a non-competitive inhibitory effect that is not blunted by the high levels of CD73 enzyme substrate have normally accumulated in the tumor micro environment, which could be expected for small molecule competitive blockers.
The Phase 1 study presented as going June 2021, where patients with solid tumors were treated with uli in combination with atezo among the 30 valuable patients, or was at 23% and DCR was at 46%. The results although preliminary are very encouraging. We are conducting two Phase 2 clinical studies in both the U.S. and China. I hope to share the data as soon as possible.
I also want to mention alongside the planned data readout we continue to explore global partnership opportunities. With the data cutoff as of March 29 of this year, we recently shared this key patient cohort in the uliledlimab trial, where we saw encouraging efficacy signals in advance non-small cell lung cancer patients who were unsuitable for or declined standard chemotherapy treatment.
In this cohort, most of the patients have stage 4 non-small cell lung cancer, approximately 80% of the patient in this cohort is low PD-1 expression in baseline tumor samples, and that is tumor proportion score, TPS 1% to 49% or negative at TPS less than 1%. These patients are generally considered less responsive to PD-1 therapy. For example, in the KEYNOTE-042 study, patient with low TPS, i.e. 1% to 49% achieve a response rate of 16.9% and patient with negative TPS appear to benefit even less likely.
Off the 19 efficacy valuable patients in our study, the response rate is 26% and DCR 74% with 5 PR and 9 stable disease observed with a medium follow-up of 3.3 months. Interestingly, in this study seven out of 19 patients, 37% had a high expression of CD73 using 35% as a cutoff. When looking at patient with high CD73 expression, we noticed our disease control rate at 100% and also overall response rate at 57%. We have four out of seven patients exhibited a PR. In contrast in 11 patients with low CD73 expression, only one PR was observed.
We’re very happy to share some update on our expanded Phase 2 clinical trial. At this moment, we have 47 non-small cell lung cancer patient enrolled, and we’re targeting the enrollment of 60 patients by October. We continue to observe encouraging efficacy signals in these 47 patients and a correlation of CD73 expression with clinical efficacy.
We expect to have a more complete data readout by the end of this year or early next year. We have reached an agreement with WuXi Diagnostics to develop a CD73 metro diagnostic kit for the patient selection of uliledlimab ongoing Phase 2, and planned Phase 3 clinical studies in non-small cell lung cancer. We are excited by this preliminary confirmation of a correlation between higher CD73 expression and an increased or in parallel, we are exploiting a potential global partnership of uliledlimab.
The last compound I’d like to touch on today is our TJ-CD4B, the novel Claudin18.2 x 4-1BB bispecifi antibody that has made significant chronic progress as well.
Of note, our TJ-CD4B is a novel Claudin18.2 and 4-1BB bispecifi antibody capable of binding to tumor cells expressing Claudin18.2 and stimulating intra-tumoral T cell by the 4-1BB arm, which is designed to become active only upon tumor engagement to avoid systemic toxicity. Previous generation of 4-1BB agonist antibodies encounter significant challenges, for example, for urelumab, the hepatic toxicity was a major concern. And for utomilumab less efficacy was observed. Our TJ-CD4B has several distinct advantages that it can draw upon. It binds to a distinct 4-1BB epitope that only triggers 4-1BB signaling upon Claudin18.2 binding.
Our antibody is a unique conditionally acted 4-1BB antibody that could simulate the 4-1BB signaling only when bispecific antibody engages the Claudin18.2 positive tumor cells. And therefore, our bispecific antibody greatly reduce the systemic and liver toxicity, which are observe in other conventional 4-1BB antibodies. The results from the GLP tox inside the monkey showed that this bispecific antibody was well tolerated at the highest tested dose at 100 mg/kg.
Conditional T cell activation upon TAA engagement allows for localizing immune activation in the tumor microenvironment, and drastically reduces the peripheral T cell activation and hepatic as well as systemic immunotoxicity without compromising antitumor activity. Additionally, this allows for minimal systemic toxicity. We believe this platform has the potential to assess multiple targets for their therapeutic development.
At one of the core assets in our highly innovative bispecific antibody pipeline, TJ-CD4B is currently undergoing Phase 1 clinical evaluation in both the U.S. and China. In parallel, our ongoing dose escalation study is progressing very smoothly, TJ-CD4B now at 8 mg/kg in the U.S. trial and 5 mg/kg in the China trial. So far, we have already observed one PR, a patient with esophageal gastric cancer, who failed the standard three prior lines of therapy. In addition, we have observed three stable disease and we currently have no unexpected safety signal encounter. This study is on track to generate more data by year end.
I would like to reemphasize our goal of translating cutting edge science into innovative drugs to specifically address areas of unmet medical need. To achieve this goal, we focus on three wave of discovery to generate potential first-in-class and best-in-class assets. The first wave is monoclonal antibody or fusion proteins with unique differentiation, including the unique programs such as lemzo and uli. All of which have been in Phase 2 already for Phase 3.
In addition, we’re also developing novel monoclonal antibodies that targets the driver immune checkpoint pathways and are designed to synergize with the existing clinical assets as combo therapies. The second wave is bispecific antibodies and these are in Phase 1 or in the IND-enabling stage. These assets are designed to target specific cancers, such as gastric, pancreatic, and ovarian, and to target a PD-1 or PD-L1 resistant cancers by turning a cold tumor to a hot tumor.
The third wave is super antibodies that were enabled by new technologies and formatted with novel modalities, most program now in the preclinical stage. Among them, the immune adjuvants are an area of focus, which is designed to prime and amplify immune response in tumors by different cytokine adjuvants such as efineptakin alfa and a few new assets.
Here, I would like to cover the two newcomers to our innovative pipeline. On the left is our C64B, which is the third bispecific molecule develop, leveraging our condition of 4-1BB platform, which has the advantage of minimizing liver toxicity with an increasing therapeutic window. It is specifically designed to simultaneously target Claudin6 expressed by tumor cells and 4-1BB expressed by T cells to mediate the T cell killing of Claudin6 expressing tumor cells. Claudin6 is regarded as an attractive target due to a tumor specific expression pattern showing on the middle lower panel. It is specifically expressed in ovarian cancer along with testicular cancer.
We have now demonstrated TJ-C64B can active T cells through 4-1BB stimulation only upon Claudin6 engagement, providing a more localized immune activation in tumors without – with good efficacy and reduce systemic toxicity.
On the right is our TJ-L1IF and this is a novel PD-L1 interferon alfa antibody cytokine fusion protein, which is specifically designed for the treatment of PD-L1/PD-1 resistant tumors through the addition of a strong immune adjuvant interferon alfa in attempt to convert cold tumors to hot tumors on top of a PD-L1 antibody to achieve superior anti-tumor activity. TJ-L1IF was developed using Affinity’s TMEA technology, and is now under preclinical development.
TJ-L1IF is a pro drug in that interferon alfa-2b moiety is masked by a PEG group through a protease-cleavable linker rendering the drug inactive in the systemic circulation, thus strongly reducing the systemic toxicity. We hope that these pre-clinical assets will reach to the IND-enabling stage very soon.
With that, I would like to turn the call back to Dr. Zang. Dr. Zang, please.
Jingwu Zang
Thank you, Andrew. Now I would like to talk about what would be the next second half of 2022 looked like in terms of key milestones. Now, the first area is to deliver on the key pipeline milestones are catalysts under clinical development front with our lemzoparlimab as first line MDS treatment. We have already submitted application package in the process of communicating with the CDE.
In addition, we expect to achieve a few new data readout clinical trial at [indiscernible] additional – and also additional data readout for uliledlimab Phase 2 non-small cell lung cancer trial and also a preliminary clinical data readout for TJ-CD4B as Andrew already mentioned. We also plan to initiate three new clinical trials in the U.S. and China.
The second area is to deliver key BD milestones, including potential – our licensing BD deals for uliledlimab alongside the possibility for our bispecific antibodies to be our license. Additionally, as I mentioned earlier, we are working on a potential commercial partnership for felzartamab in China.
The BD deliverables I will take time and our dependence on negotiations with our potential partners. We will do our best as it is critical to our business. Last but not least, as previously mentioned we have completed the process to engage a U.S. based public accounting firm that is subject to inspection by the PCAOB for the preparation of its audit reports. The new development is that U.S. and China regulatory bodies signs a state of protocol relating to the inspection of audit firms based in mainland China and Hong Kong.
This may ultimately removed delisting risks in an event of the state of protocol does not meet the deadline for the company to mitigate delisting risks from the audits of 2022 financial report will finalize the change to our U.S. based auditor as originally planned. Additionally, our manufacturing facility of I-Mab Hangzhou has already successfully manufacturing batches of clinical trial material and our R&D center has been operational in San Diego with a focus on translational medicine. So we are determined with the refocused strategy to deliver this critical milestones to drive pipeline value by shareholders.
Now, I would also like to highlight I-Mab’s current value proposition. Firstly, we have a two late-stage assets near BLA and commercialization in China was very significant market value for felzartamab, we’re exploring a potential commercial partnership for this asset. Eftansomatropin alfa is expect to become a major player in China growth hormone market with BLA expected 2023, 2024. And we are working with our commercial partner Jumpcan on the product launch operation.
Secondly, our leading global assets including lemzoparlimab and uliledlimab have a significant value to be realized as they advanced towards Phase 3 development. For lemzoparlimab, we are on track to initiate a Phase 3 clinical trial in China for first line MDS treatment by the end of 2022 depending upon the regulatory process and the preparation of the clinical sites around the country. We have amended our agreements with AbbVie for new CD47 antibody therapy with $1.3 billion in milestones plus royalties. For uliledlimab, we’re expanding our lung cancer Phase 2 clinical trial with encouraging clinical results. We expect to provide another Phase 2 data readouts of 60 lung cancer patients very soon and continue exploring a potential global partnership.
Thirdly, we have not talked about other clinical stage assets and multiple preclinical assets under development in our pipeline. One of our priorities is to bring some of those assets to clinical validation. The potential value of this portfolio is not being considered in our market capitalization today.
Fourthly, although delays due to various reasons, we continue pushing hard with additional BD deals for uliledlimab, TJ-CD4B and additional new assets from our pipeline along with a commercial partnership for felzartamab. It’s worth mentioning as of June 30, 2022, our cash position is $586 million which will be sufficient to support our business operations for over the next three years, plus we will receive additional milestone payments from the completed partnerships.
With that, I would turn it over to John to briefly review our financials. John?
John Long
Thank you, Dr. Zang. And thanks to everyone for listening today. First, let me provide an overview of our financial results for the first six months ended June 30, 2022. As of June 30, our cash and cash equivalents and short-term investments amounted to RMB3.9 billion or US$586 million compared with RMB4.8 billion for the first six months in 2021. In the first six months, our total net revenues were RMB51.9 million is consisted of revenues from the current strategic collaborations and from the supply of investigational products under the collaboration agreements.
Now let me turn to R&D expenses. R&D expenses during this period were RMB453 million or US$67.6 million compared with RMB593 million for the comparable period last year. The significant decrease was many driven by the reduced demand of investigational products as we have prepared sufficient stock and the lower share-based compensation expenses in 2022.
The administrative expenses for the first six months were RMB392 million or US$58.6 million compared with RMB452 million for comparable period in 2021. The decrease was mainly due to lower share-based compensation expenses and savings from our cost expenses initiatives implemented during this period. For the first six months, our total net loss was RMB1,047 million [ph] on the GAAP basis, inclusive of RMB181 million equity losses in our Hangzhou [indiscernible].
The net loss on a non-GAAP basis was RMB848 million. The difference between GAAP and the non-GAAP was mainly driven by the non-cash share-based compensation expenses booked during this period.
Next page, as mentioned by Dr. Zang, we want to reiterate that the company even turns a strong cash balance with US$586 million on hand. Our current cash position compared with potential upcoming milestone payments from previous out-licensing deals and collaborations is expected to further strengthen our cash reserves.
We are quite confident that our cash position remains sufficient to support our key business activities beyond 2025. The cash runway does not factor in potential upsides from additional cash related to potential new business payouts or new financing arrangements. We believe that our cash position provides us with ample insurance and flexibility to support key R&D activities over the next three years and beyond.
Last and importantly, I’m happy to report that with our prioritization strategy, we have implemented cost initiatives to save about 17% expenses compared to our original budget. This represents a positive cash impact of US$32 million to the company. We will continue to implement expenses initiatives and further reduce the company’s cash burn rate in the second half of 2022 and beyond. For the end of this year, we are on track to maintain our strong cash position and keep the balance at over 500 million target. This would allow us for estimated run rate of over three years with potential addition to our cash position along the way.
With that, I will just turn the call back to Tyler for Q&A sessions. Tyler, please.
Question-and-Answer Session
A – Tyler Ehler
Thank you, John. And thank you, Dr. Zang and thank you, Dr. Zhu for that helpful overview of our interim earnings. With that, if there are any questions, please use the raise hand function. I see a couple hands raised. First question goes to Kelly Shi from Jefferies. Kelly, please go ahead.
Kelly Shi
Hello. Thanks. Thank you for taking my questions. Could you share more details about this new CD47 antibody therapy regarding molecular design and the development status? And how does it differentiate from lemzo and also what triggers the switch to this molecule from lemzo? I also have follow up. Thank you.
Jingwu Zang
Yes. Thank you, Kelly. Well under the partnership with AbbVie we’ve now a new CD47 molecule. Both parties have decided to continue collaborate on a global development of this new molecule, which is in active development. I also mentioned that the mandate agreements around this new molecule is about $1.3 billion and I-Mab owns the exclusive China rights of the new molecule.
Now, in terms of the properties of this new molecule and a detailed information we are under a confidentiality agreement with AbbVie and both parties are quite strict about this, this confidentiality agreement to share data and everything. So at this point we’re not able to disclose more data but we hope that as we move forward as we generate more data we’ll be – we’ll be able to identify a appropriate time to disclose the data.
Now as discussed today, lemzoparlimab has a leading position in China. It’s a very competitive position based on around 200 patient safety data and the recent Phase 2 efficacy data as Andrew talked about. So we are – we’re committed to initiating a Phase 3 clinical trial very soon while working with AbbVie on the new molecule. So at this point that’s all we can talk about.
Kelly Shi
Thank you for the information. Also just quickly for the Phase 3 trial in MDS, when are you going to start enrolling and how many patients do you plan to enroll? And also [indiscernible] do we expect more data beyond what has been released on the webcast? Thank you.
Jingwu Zang
Yes. Thank you, Kelly. That question, maybe I can ask Andrew to address. Andrew?
Andrew Zhu
Thank you, Jingwu Zang. Thanks Kelly for your interest in our Phase 3 trial. As all of you are fully aware MDS is a very challenging therapeutic space. At this moment, moment, as visiting AZA remains to be the standard treatment. So as a result, our Phase 3 clearly will use AZA as our comparator arm. And we are currently in active discussion with CDE regarding the proposed Phase 3 optimal design. And we will definitely take into the consideration of the optimal endpoints. We are considering our CRR we are considering EFS and also OS as potential primary endpoints. And obviously the selection, we will definitely dictate the sample size. We are also taking a very close look at the potential stratification so that we can actually balance the prognostic variables in both arms. So all these details are actually currently ongoing with CDE and also we hope we can share with you even more details very soon. And also we are confident that we can actually maintain our initial target initiation of our Phase 3 hopefully by the end of this year. Thank you.
Tyler Ehler
Thank you, Kelly for your question, and thank you Dr. Zang and Andrew for detailed response.
Next, we have Andres Maldonado from H.C. Wainwright. Andres, please go ahead.
Andres Maldonado
Great. Thanks for taking my questions and congrats on the progress. So starting with felzartamab, in your considerations on the use of the hybrid commercialization model, it is safe to assume this will be for multiple myeloma only, or what are your thoughts on how this extends the autoimmune diseases? And curious on what should be our expectations in terms of deal size in there? Thank you very much.
Jingwu Zang
Yes. Thank you. This is Jingwu. I can answer this question. We are in active discussion with potential commercial partners for commercial deal for felzartamab. This potential partnership does includes autoimmune disease indications. This is pretty much based on MorphoSys recent data, autoimmune nephritis. So the data published by MorphoSys are quite exciting indicating that treatments with felzartamab does provide clinical benefit in that disease setting. So we believe that this commercial partnership will help to maximize the value of felzartamab by leveraging our partner’s strengths. So to put together this commercial partnership will include multiple myeloma and also autoimmune indications. At this point we’re not in a position to disclose the size of the commercial partnership as we are in confidentiality in negotiating with our potential partner. Thank you.
Tyler Ehler
Thank you, Dr. Zang for taking the question and thank you Andres for your question.
Next we have [indiscernible] from Cantor. Wayne, please go ahead.
Unidentified Analyst
Hi. This is Wayne for Louise. Congrats on the progress and thanks for taking our questions. So our first question is; could you share more details about the TJ-CD4B and the 4-1BB platform. How does it compare to CD3 bispecs? And then secondly, with the cost saving initiative, what is our cash burn rate for 2022 and 2023? Thank you.
Jingwu Zang
Thank you. What maybe the first question I will ask Andrew to address.
Andrew Zhu
Sure. Dr. Zang. Thank you, Wayne, for that interesting question. As we all aware bi-specific T-cell engager platform has attracted more attention lately particularly with the approval of the recent CD3 buys from Roche and also J&J recently. I think if you compare the advantage of the CD3-based T cell engager versus the 4-1BB clearly, the 4-1BB platform has the advantage in that, the T cell engagement is only related to the matured T cells. In addition, our platform has the added advantage of engaging T cell only upon the tumor imaging binding, for example in our Claudin 18.2 4-1BB molecule is only upon, the binding of CD Claudin 18.2-positive tumor cells, and will allow the T cells to be active at the tumor side.
And so definitely this will allow, for more favorable safety profile and, we can spare the systemic toxicity. That’s actually has been reported, in the CD3 platform, including cytokine release syndrome and also we do actually maintain the anti-tumor activity. So we feel very strongly our platform strikes the balance of actually improving the safety profile, but also maintaining the anti-tumor activity. Our trial definitely right now is progressing very smoothly. We have, escalated dose up to 8 mg/kg dose level without encountering DLT. So we hope, our clinical experience, will validate the utility of this platform.
And also more importantly if we can really validate this platform with our ongoing Phase 1 trial is really opens the doors of targeting additional, more relevant tumor specific antigen using the similar platform. Thank you.
Jingwu Zang
Thank you, Andrew. Maybe for the second question I would ask John to address. John?
John Long
Thank you, Wayne. Well let me give you a brief answer to your question about the cash burn. The actual cash burn in the first half was around $85 million, and we expect to reduce the cash burn in the second half, which is the implementation of our cost and expenses initiatives just discussed. The annual cash burn rate, we expect to range that – in the range of $150 million to $160 million for 2022.
For next year 2023, we will continue to execute on our prioritization strategy and the expense initiatives including facility consolidation and projects prioritization, and the headcount – we need to further reduce the operating cash burn to around $100 [ph] million going forward. Thank you.
Tyler Ehler
Thank you, Wayne for that thoughtful question. And thank you, John and Andrew for those detailed responses. In the interest of time, we’ll ask one more question. Albert Lowe from Piper. Albert, please go ahead.
Albert Lowe
Hi, this is Albert on for Joe Catanzaro. Thanks for taking our questions today. I’d a question on the uliledlimab cohort expansion, where are – the enrollment stages and when will you provide future updates and maybe a follow up after that?
Jingwu Zang
Yes, thank you. Thank you, Albert. May be, Andrew could you address that question?
Andrew Zhu
Sure, Jingwu. Thank you Albert for that question. So indeed our CD73 antibody, uliledlimab is continuing with the current Phase 2 trial. Since the initial report that we share with you, 19 patients in the treatment naive non-small cell lung cancer cohort, definitely we have demonstrated the encouraging efficacy signal with an, ORR approaching 26%. And also interestingly we have demonstrated the potential correlation of baseline CD73 expression with the overall response in the initial cohort.
Since then we have continue the efforts are trying to rapidly expand this cohort to gain additional confidence of the clinical efficacy, but also giving additional gauge on the utility of baseline CD73 expression in terms of predicting the overall response. So, I think I’m very happy to share with you at this moment, we have definitely continued the enrollment up to 47 patients.
We are targeting the finish the targeted enrollment of this cohort up to 60 patients by October. So with adequate follow up, we hope we can share the data with you by the end of this year or early next year. But at this moment even with the, 47 patients at this stage, I think I’m very happy to share with you with a high level data that the trend of the ORR still holds. And also interestingly that the baseline expression of CD73 continues there, show the trend of correlating with the overall response rate. So obviously we like to see this data to be more mature.
Albert Lowe
Okay, great. Thank you. And I was also wondering if you would be sharing more details on the potential Phase 3 design.
Andrew Zhu
Yes, no, Albert our goal is definitely trying to move forward based on the existing data so that we can actually design the critical registration trial. It is very clear we will target non-small cell lung cancer as a tumor type, and we will also target in the advanced non-small cell lung cancer. I think with regard to the specific Phase 3 design, as this is a very competitive space as well with multiple agents available.
So we are taking a very close look at the adequate space that we can leverage the Phase 3 design. Currently we are in close discussion with the KOL, both in China and also in the U.S. So we hope that we can share with you with the final Phase 3 design relatively soon. But of note we are currently developing a diagnostic kit, in collaboration with WuXi Diagnostics, so that we can have a CD73 expression diagnostic kit that hopefully will be implemented timely with our Phase 3 trial upon this activation. Thank you, Albert.
End of Q&A
Tyler Ehler
Thank you, Albert, for your question and thank you Andrew, for that detailed response. With that, I’d like to conclude I-Mab Biopharma’s Financial Results and Business Update Conference Call for the six months ended June 30, 2022. Thank you to Dr Zang. Thank you to Dr. Zhu and thank you to John for your discussion today and thank you everyone for the questions and thank you for all our stakeholders for dialing in. If there are any questions, please contact your local IR representative. Thank you.
Jingwu Zang
Thank you.
John Long
Thank you all.
Be the first to comment