CStone Reports 2024 Interim Results and Recent Corporate Updates

• Total revenue of RMB 254.2 million for 2024 H1; achieving first-time profitability with cash reserve at RMB 814 million as of June 30, 2024.
• NDA approval of sugemalimab (PD-L1) for Stage IV NSCLC in EU, marking the first successful international approval of a China domestic anti-PD-L1 mAb.
• Partnered with Ewopharma for sugemalimab commercialization in Central and Eastern Europe, expecting more global partnerships for sugemalimab in the rest of 2024. To launch sugemalimab in Europe and other ex-China markets in early 2025 and to support the company to achieve sustained profitability.
• Key Pipeline 2.0 asset – CS5001, the first ROR1 ADC with clinical anti-tumor activity in both solid tumors and lymphomas; initiation of a phase 1b study in lymphomas with registrational potential expected in 2024.
• Key Pipeline 2.0 asset – CS2009, a trispecific antibody targeting PD-1, CTLA4, and VEGFa; aiming for IND submissions in 2024 / 2025.
• Partnered with Hengrui Pharmaceuticals to commercialize AYVAKIT^® (avapritinib) in mainland China.
• AYVAKIT^®‘s manufacturing localization application approved by China NMPA; GAVRETO^®‘s (pralsetinib) application under review. Domestic manufacturing of both precision medicines will significantly reduce costs and improve long-term profitability.
• New NDA approval of sugemalimab (PD-L1) for first-line gastric cancer in China; NDA for Stage IV NSCLC currently under review by UK MHRA.
• The Company to host an interim results investor conference call in Chinese on August 26^th at 10:00-11:00 am HKT.

SUZHOU, China, Aug. 23, 2024 /PRNewswire/ -- CStone Pharmaceuticals (HKEX: 2616), an innovation-driven biopharmaceutical company focused on the research and development of anti-cancer therapies, today reported interim financial results for 2024 and recent business highlights.

Dr. Jason Yang, CEO, President of R&D, and Executive Director of Board at CStone, said, “The first half of 2024 marks an important turning point for CStone’s growth, achieving several critical milestones and outstanding financial performance. With diversified revenue streams and ongoing cost control, we achieved profitability for the first time and laid a solid foundation for company’s future growth.

The EU approval of sugemalimab for first-line Stage IV NSCLC represents a significant breakthrough in our global strategy. In addition to the commercial agreement reached this year with Ewopharma for Central and Eastern Europe, we anticipate expanding sugemalimab partnerships across Western Europe and other regions in the rest of 2024, with global sales to commence from early 2025. We are confident that sugemalimab – a potential best-in-class anti-PD-L1 antibody – will deliver significant revenue to support the company to achieve sustained profitability.

Pipeline 2.0 is the “new growth engine” for CStone. We will initiate a phase 1b study of CS5001 (ROR1 ADC) with registrational potential for lymphoma in 2024, and plan to present updated clinical data at the American Society of Hematology (ASH) annual meeting later this year. CS2009 (a trispecific antibody targeting PD-1, CTLA4, and VEGFa) is expected to enter an FIH clinical trial in 2024/2025. Meanwhile, we are advancing more innovative assets for oncology and autoimmune diseases with global rights towards clinical stage.

Following the commercialization agreement with and successful transition to Allist to commercialize GAVRETO^® (pralsetinib) in China last year, we entered a partnership with Hengrui Pharmaceuticals to commercialize AYVAKIT^® (avapritinib) in China to leverage its large and strong sale force. Earlier this year, we received the approval for AYVAKIT^®‘s manufacturing localization application and filed an application for GAVRETO^®. With reduced costs of goods from local supply and the strong commercial capability from our partners, we expect rapid sales growth for these two precision medicines to contribute sustainable profit to the Company in coming years.

In terms of regulatory progress, sugemalimab received approval in mainland China for first-line gastric cancer, further broadening its coverage in the domestic market. In ex-China market, the UK Medicines and Healthcare products Regulatory Agency (MHRA) is currently reviewing sugemalimab marketing authorization application (MAA) for first-line Stage IV NSCLC that has recently been approved by the European Commission (EC). We plan to submit additional MAAs to the European Medicines Agency (EMA) for other indications of sugemalimab, including Stage III NSCLC, first-line gastric cancer, first-line esophageal squamous cell carcinoma (ESCC), and relapsed/refractory extranodal NK/T-cell lymphoma.

Looking ahead, CStone will work closely with our commercial partners to drive the commercial performance of AYVAKIT^® and GAVRETO^® in China and sugemalimab globally, continue to advance the innovative assets in Pipeline 2.0 to the clinic, and expand our global business to achieve sustained profitability.”

Financial Highlights

International Financial Reporting Standards (IFRS) Measures:

• Revenue was RMB254.2 million for the six months ended June 30, 2024, composed of RMB118.3 million in sales of pharmaceutical products (avapritinib and pralsetinib), RMB122.6 million in license fee income and RMB13.3 million in royalty income of sugemalimab, representing an increase of RMB122.6 million in license fee income which largely offset a decrease of RMB128.6 million in revenue from sales of pharmaceutical products, such that total revenue decreased by RMB7.3 million, or 2.8%, period-on-period.
• Research and development expenses were RMB66.2 million for the six months ended June 30, 2024, representing a decrease of RMB120.6 million from RMB186.8 million for the six months ended June 30, 2023, primarily due to a decrease in milestone fee and third party contracting costs and a decrease in employee costs.
• Administrative expenses were RMB46.7 million for the six months ended June 30, 2024, representing a decrease of RMB42.5 million from RMB89.2 million for the six months ended June 30, 2023, primarily due to a decrease in employee costs.
• Selling and marketing expenses were RMB62.8 million for the six months ended June 30, 2024, representing a decrease of RMB68.6 million from RMB131.4 million for the six months ended June 30, 2023, primarily attributable to a decrease in employee costs.
• Profit for the period was RMB15.7 million for the six months ended June 30, 2024, representing a turnaround from a loss of RMB209.2 million for the six months ended June 30, 2023, primarily attributable to a substantial decrease in operating expenses and an increase in gross profit.

Non-International Financial Reporting Standards (Non-IFRS) Measures:

• Research and development expenses excluding the share-based payment expenses were RMB71.0 million for the six months ended June 30, 2024, representing a decrease of RMB127.1 million from RMB198.1 million for the six months ended June 30, 2023, primarily due to a decrease in milestone fee and third party contracting costs and a decrease in employee costs.
• Administrative and selling and marketing expenses excluding the share-based payment expenses were RMB109.6 million for the six months ended June 30, 2024, representing a decrease of RMB73.5 million from RMB183.1 million for the six months ended June 30, 2023, primarily attributable to a decrease in employee costs.
• Profit for the period excluding the share-based payment expenses was RMB10.8 million for the six months ended June 30, 2024, representing a turnaround from the loss of RMB183.0 million for the six months ended June 30, 2023, primarily attributable to a substantial decrease in operating expenses and an increase in gross profit.

Business Highlights

For the six months ended June 30, 2024 and as of the date of this announcement, tremendous progress has been made with respect to our product pipeline and business operations. Key achievements over this period include:

Key Pipeline Highlights:

Immunotherapy

• Sugemalimab (anti-PD-L1 antibody)
  • EU Approval: In July 2024, the European Commission (EC) approved sugemalimab (Brand name: Cejemly^®) in combination with platinum-based chemotherapy for the first-line treatment of adults with metastatic NSCLC with no sensitizing EGFR mutations, or ALK, ROS1 or RET genomic tumor aberrations. This marks the first successful international approval of a China domestic anti-PD-L1 monoclonal antibody. Sugemalimab’s MAA for first-line Stage IV NSCLC is currently under review by the UK MHRA.
  • Strategic Partnership: In May 2024, we entered a strategic collaboration with Ewopharma to commercialize sugemalimab in Switzerland and 18 CEE countries. CStone will receive up to $51.3 million consisting of an upfront payment and additional payables upon regulatory and sales milestones.
  • Fifth Indication Approved in China: In March 2024, sugemalimab was approved in China for its fifth indication – sugemalimab in combination with fluoropyrimidine- and platinum-containing chemotherapy as a first-line treatment for unresectable locally advanced or metastatic gastric or gastroesophageal junction (G/GEJ) adenocarcinoma with a PD-L1 expression (Combined Positive Score [CPS] ≥5).
  • Publication in Nature Medicine: In February 2024, the progression-free survival (PFS) final analysis and overall survival (OS) interim analysis of the GEMSTONE-304 study (first-line ESCC) were published in a top-tier medical journal – Nature Medicine.
  • Long-Term OS Data at ESMO: In July 2024, the long-term OS analysis of the GEMSTONE-302 study (first-line Stage IV NSCLC) was accepted for poster presentation at the 2024 Congress of European Society for Medical Oncology (ESMO).
  • Guideline Inclusion: In 2024, Cejemly^® (sugemalimab) is recommended as a Tier-1 treatment based on Class-1A evidence in multiple Chinese clinical guidelines, including the CSCO guidelines for gastric cancer, esophageal cancer, and immune checkpoint inhibitors, and included in the Chinese Expert Consensus on Immunotherapy for Lymphoma.
• Nofazinlimab (PD-1)
  • Global Phase III Study: In March 2024, we completed a prespecified interim analysis for the global phase III trial of nofazinlimab in combination with LENVIMA^® (lenvatinib) for the first-line treatment of patients with unresectable or metastatic hepatocellular carcinoma (HCC). No new or unexpected safety signals were observed, and the independent Data Monitoring Committee (iDMC) recommended continuing the trial without protocol modifications until the final OS analysis.

Pipeline 2.0

• CS5001, a receptor tyrosine kinase-like orphan receptor 1 (ROR1) antibody-drug conjugate (ADC)
  • First-in-Human Study: The global first-in-human (FIH) is ongoing in the US, Australia and China. As of the date of this announcement, the dose has been escalated to the 10^th level without observing any dose-limiting toxicities (DLTs) or reaching the maximum tolerated dose (MTD).
  • Promising Antitumor Activity: CS5001 has been well tolerated and safe and has exhibited encouraging anti-tumor activities in various solid tumors and hematologic malignancies. CS5001 is so far the first ROR1 ADC known to demonstrate clinical anti-tumor activity in both solid tumors and lymphomas.
  • ASCO 2024 Presentation: On June 1, 2024, we presented the latest FIH data at the 2024 ASCO annual meeting in a poster session. We also plan to disclose more lymphoma data at the 2024 ASH annual meeting.
  • Phase 1b with Registrational Potential: We plan to initiate phase Ib dose-expansion studies with registrational potential in multiple indications for dose optimization by the end of 2024.
  • ROR1 Antibody Development: We have identified a promising candidate ROR1 antibody clone for immunohistochemistry (IHC) and plan to evaluate the relationship between ROR1 expression and efficacy in phase 1b.
• CS2009 (PD-1, CTLA4 and VEGFa Trispecific Antibody)
  • Potential FIC/BIC: CS2009 is potentially FIC/BIC next-generation I/O backbone that targets three critical immune suppressive pathways in tumor microenvironment and has the potential to enhance the efficacy of PD-(L)1 therapies in high-prevalence cancers, including NSCLC and HCC.
  • IND Submission: Currently under IND-enabling process; IND submissions expected in 2024/2025.
• FIC/BIC ADCs
  • CS5006 (Novel Target) & CS5005 (SSTR2): Two FIC ADC programs are advancing toward PCC nomination. CS5006, targeting high-prevalence tumors with a novel tumor-associated antigen identified using in-house machine-learning bioinformatic algorithm, is expected to submit IND in 2025. CS5005 (SSTR2 ADC) has demonstrated encouraging in vitro and in vivo efficacy with its conjugated lead molecules; IND submission expected in 2025.
  • CS5007 (EGFRxHER3 Bispecific ADC) & CS2011 (EGFRxHER3 Bispecific Antibody) are progressing towards PCC nomination. CS5007 (CS2011) targets EGFR and HER3, and both are well-validated targets with proven syngeneic antitumor activity. IND submissions are expected in 2025.
• Autoimmune Multispecific Antibody
  • CS2013, which is a bispecific molecule targeting two key pathways critical for B-cell development, is in discovery stage, with selection of lead molecule expected by the end of 2024.
  • CS2013 is designed to address unmet needs in treating systemic lupus erythematosus (SLE), IgA nephropathy (IgAN), and other B-cell mediated autoimmune diseases.

Precision Medicine

• GAVRETO^® (pralsetinib)
  • Manufacturing Localization in Process: In April 2024, the application of manufacturing localization for GAVRETO^® has been accepted by CDE of China NMPA and is currently under review.
  • Commercial Transition: Following the exclusive commercialization agreement for GAVRETO^® in November 2023, we transitioned commercial activities to Allist in 2024 H1 and are in close collaboration.
• AYVAKIT^® (avapritinib)
  • Manufacturing Localization Approved: The manufacturing localization applications of AYVAKIT^® (300mg and 100mg) were approved by China NMPA in June and August 2024.
  • Partnership with Hengrui Medicine: In July 2024, we entered an exclusive partnership with Hengrui to commercialize AYVAKIT^® in mainland China. CStone received an upfront payment of RMB 35 million and will continue to book sales revenue from AYVAKIT^® in mainland China in our financial reports, with service fees payable to Hengrui.
  • Inclusion in National Reimbursement Drug List (NRDL): AYVAKIT^® was included to the 2023 NRDL in China for the treatment of adults with unresectable or metastatic GIST harboring the PDGFRA exon 18 mutation, including PDGFRA D842V mutations. The updated NRDL has been implemented since January 1, 2024.
• Guideline Inclusions: GAVRETO^® and AYVAKIT^® were included in 15 national guidelines in China, covering multiple therapeutic areas such as NSCLC, thyroid cancer (TC), GIST, systemic mastocytosis (SM), etc.

Future and Outlook

Looking forward, we remain committed to advancing our innovative pipeline and maximizing commercial value of our marketed products. Anticipated near-term catalysts include

• Sugemalimab: MAA approval for the first-line treatment of Stage IV NSCLC in the U.K. expected in 2024 H2, and more global partnerships expected in 2024.
• CS5001: Presentation of the latest clinical safety and efficacy data at international academic conferences (e.g. ASH in 2024 H2), initiation of phase 1b trial with registrational potential in 2024, and global business development (BD) partnerships expected in 2024 or 2025.
• CS2009: IND submissions expected in 2024/2025.
• CS5006: IND submission expected in 2025.
• CS5005: IND submission expected in 2025.
• CS2011/CS5007: IND submission expected in 2025.
• GAVRETO^® (pralsetinib): Approval for manufacturing localization expected in 2025 H1.
• Nofazinlimab: Final OS analysis expected in 2025 H1; seeking ex-China partnership opportunities.

Interim Results Investor Call

The Company will host a 2024 interim results conference call at 10:00 a.m. to 11:00 a.m. (Hong Kong time) on Monday, August 26, 2024. Please attend the conference call through the link: https://s.comein.cn/AHDiL (Password:564723).

About CStone

CStone (HKEX: 2616), established in late 2015, is an innovation-driven biopharmaceutical company focused on the research and development of anti-cancer therapies. Dedicated to addressing patients’ unmet medical needs in China and globally, the Company has made significant strides since its inception. To date, the Company has successfully launched 4 innovative drugs and secured approvals for 14 new drug applications (NDAs) covering 9 indications. The company’s pipeline is balanced by 16 promising candidates, featuring potentially first-in-class or best-in-class antibody-drug conjugates (ADCs), multispecific antibodies, immunotherapies and precision medicines. CStone also prides itself on a management team with comprehensive experiences and capabilities that span the entire drug development spectrum, from preclinical and translational research to clinical development, drug manufacturing, business development, and commercialization.

For more information about CStone, please visit www.cstonepharma.com.

Forward-looking statements

The forward-looking statements made in this article only relate to events or information as of the date when the statements are made in this article. Except as required by law, we undertake no obligation to update or publicly revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this article completely and with the understanding that our actual future results or performance may be materially different from what we expect. All statements in this article are made on the date of publication of this article and may change due to future developments.

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