HUTCHMED (China) (NASDAQ:HCM) released quarterly financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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The full earnings call is available at https://hutch-med.zoom.us/webinar/register/WN_BR93JELQRsizX7pDh49fDw#/registration

Summary

HUTCHMED (China) reported strong first-half financial performance with China product sales growing over 40%, driven by Elunate and Sulanda.

The company achieved a 70% increase in ex-US sales for FRUZAQLA through rapid geographic expansion, maintaining full-year revenue guidance of $330 million to $450 million.

The R&D expenses rose to $79 million, reflecting increased investment in clinical trials and discovery capabilities, including AI.

Strategic initiatives include advancing multiple ATTC programs into clinical trials and expanding the commercial footprint of key drugs like savolitinib and sovleplenib.

Management highlighted a robust cash reserve of $1.4 billion and ongoing discussions for potential collaborations on ATTC programs.

The company anticipates further growth opportunities, particularly through NRDL inclusion for key products and a focus on hematology and immunology fields.

Full Transcript

David, Investor Relations

Welcome everyone. Thank you for joining HUTCHMED (China) 2026 interim results announcement and presentation. Before we start, I would just like to go over the Safe Harbor statement and disclaimer on page two. The performance and results of operation of HUTCHMED (China) contained within this presentation are historical in nature and past performance is no guarantee of future results. Next, I would like to invite our Acting CEO and CFO, Johnny Chen, to start the opening.

Johnny Chen, Acting CEO and CFO

Okay, thank you, David, and welcome everyone again joining our interim results webcast tonight. Together with me we have our Deputy CFO, Lorenzo Jiu; also George Yuan, Head of Commercial; and also Dr. Dai, Head of Discovery and Global Portfolio Management. All of us will be sharing with you our first-half results and outlook. So on page four, as you can all see, we have achieved a lot. In the first half, China product sales had very strong results, especially Elunate and Sulanda, which grew by over 40%.

FRUZAQLA global in‑market sales were strong; ex‑US markets were up 70% after rapid geographic expansion. On the bottom left, we have received two approved label expansions, fruquintinib for RCC and savolitinib for GC. In addition, we have three NDAs in China under priority. On the top right, our next wave of innovation focuses on AATTCs. We have two first‑in‑class assets which have entered the phase one clinical trials. A third asset, HMPL‑830, has cleared its IND and will be entering the clinic in the second half.

At the same time, the global SAFFRON study and the China CENOVO study will have their data readouts in the second half. I will now hand it over to Lorenzo Jiu, our Deputy CFO, to discuss our financial results.

Lorenso Chiu — Senior Vice President Finance- Business Development & Reporting

Thank you, Johnny. On slide number six, I'd like to give more details of our financials for the first half of 2026. First of all, our oncology revenue was $162 million, including $121 million products revenue. This represents about 23% growth over 1H2025. Johnny already mentioned our China products have shown a very good performance in the first half, but I'd like to highlight that ex‑China demand for FRUZAQLA continues to grow as well, achieving an overall 40% growth in in‑market sales.

With this first‑half result, our full‑year guidance remains in the range of $330 million to $450 million. Altogether with other ventures' revenue, the total group revenue amounted to $278 million. Next please, on R&D expenses, which amounted to $79 million for the first half compared to $72 million for the first half of 2025. The increase reflects one thing: we initiated the global phase one trials of our AATTC assets, including 251 and 580. In addition, we increased our investments in our discovery capabilities, including our talents and AI.

On the bottom line, we continue to be profitable with net income of $16 million. It is important to note in last year we have included a $460 million SHPL divestment gain and also the share of the post‑divestments about $21 million. With this strong operating results and cash flows, we continue to have a very good cash reserve of $1.4 billion. Now I'd like to hand over to Mr. George, our Head of Commercials, to give an update of China commercial.

George Yuan — EVP, Head of Commercial

Thanks, Lorenzo. As Johnny mentioned, global geographic expansion continues to drive our FRUZAQLA growth. If we look at the first half, we see a 70% growth in geography outside of the US, which is very strong, and also if you look at Q2 the growth rate actually accelerated to 27%. We still believe there is opportunity to get more countries launched and also going to the reimbursement. Takeda already confirmed the fiscal year guidance of 25% growth.

Next slide: if we look at China, we have very robust growth for Elunate in a highly competitive market. If we look at the first half, we grew 41%, and the current NRDL renewal brings us continuous growth opportunity with the second‑line mCRC included, and also we synchronized our mCRC reimbursement scope with our label. The NRDL renewal actually provides us a unique opportunity for future growth, and also we keep our price flat. Second‑line RCC got approval in May 2026, and this provides us another opportunity to apply for NRDL this year.

Based on IQVIA hospital audit and our ATU study, Elunate continues to be a market leader in second‑line mCRC. Next slide: beyond FRUZAQLA and Elunate, we also have strong performance on Orpathys and Sulanda. For Orpathys, we are targeting to include such indication in this year's NRDL renewal by end of this year, and also we get approval of third‑line MET‑amplified GC. In the coming months we are looking at SAFFRON and CENOVO readout. For Sulanda, we have strong growth in first half based on the highly recommended by CSCO guideline for NET, and also the CSCO guideline changed the recommendation about the SSA.

The SSA dose escalation will not be recommended after the disease progression. Also this growth is a result of our focus strategy focused on top‑tier cities and the top hospitals. Next slide: looking to the future, sovleplenib, our SYK inhibitor, will bring us into the hematology and immunology fields. This is a first‑in‑class medicine and can help patients to transform their treatment both in ITP and wAIHA. If we look at ITP in China, we have 360,000 patients and the current treatment, TPO‑R agonists and steroids, still cannot meet the medical needs of those patients.

With this product we provide very unique value for those patients for long‑term, stable, predictable disease control. Also for wAIHA, which is a relatively small indication but it's under critical needs for new medicine, we will be the first targeted therapy. After 30 years in the field, we will significantly reduce blood transfusion for those patients. Now I will hand over to Dr. Dai.

Dr. Dai

Thank you, George. Now let's transition into our R&D updates. Over the next few slides, I'll share how our late-stage clinical programs are progressing toward key commercial approvals and how our innovative platform is unlocking brand-new opportunities to address major unmet medical needs. Next slide, please. Looking at our recent achievements, we've hit several critical milestones across both solid tumors and hematology. Our novel ATTC platforms represent a huge strategic growth driver for us globally.

The early biological profiles of ATTCs give us high confidence in their ability to target major solid tumors and differentiate from other ADC products. We've officially taken the first two ATTCs into the clinic: A251 and A580, initiating global Phase I trials. The third, ATTC 830, recently cleared the IND in both the US and in China. We secured approval for fruquintinib in renal cell carcinoma in June 2026. This is another important approval for fruquintinib after CRC and EMC.

With [Xerufenib], we have kept momentum strong with our Phase 3 trial in first-line PD on track, addressing an aggressive cancer subtype with very few viable options. Our second inhibitor is making rapid progress on lung cancer autoimmune indications. The NDAs for ITP and wAIHA are currently under priority review. These mark huge steps towards establishing a new, highly effective standard of care in these conditions. The pivotal Phase 3 data of ESLIM-2 was recently presented at EHA.

This year, savolitinib expanded its commercial footprint with the third-line gastric cancer approval. This is the fourth regulatory approval for savolitinib after previous lung cancer approvals, and 760, our potent BTK inhibitor, successfully initiated its Phase 3 trial in second-line DLBCL, and [Thermigranib] reached a pivotal moment with its NDA acceptance for FGFR-positive intrahepatic cholangiocarcinoma. The data was featured at ESMO GI this year.

Together, these achievements reflect a highly efficient R&D engine, strengthening our commercial presence today while laying the foundation for our global ATTC platform tomorrow. Next slide. Let's dive a bit deeper into our individual core assets, starting with savolitinib, our second potential global commercial product. Savolitinib targets lung cancer driven by MET alterations, which remains an area of significant unmet medical need. We are fast approaching several important milestones in the second half of this year.

We expect data readouts from two key studies, SAFFRON on a global scale and CENOVO in China. SAFFRON is our global registration Phase 3 trial. It targets second-line patients with EGFR-mutant non-small cell lung cancer who developed MET amplification or overexpression after progressing on Tagrisso. Currently, these patients are on heavy chemotherapy. SAFFRON directly compares our oral combination of savolitinib plus Tagrisso against double chemotherapy.

When approved, this trial will replace chemotherapy with an oral targeted option and open access to major markets like the US and Europe. CENOVO targets the first-line setting. We know that a significant subset of lung cancer patients present with coexisting EGFR mutations and MET overexpression at initial diagnosis. CENOVO evaluates combining savolitinib with Tagrisso directly upfront versus Tagrisso alone. By attacking both targets from day one, our goal is to deliver deeper response and prevent resistance from emerging.

Then, together with our proven Phase 3 SARCI data, which showed a dramatic hazard ratio of 0.32 in PFS over chemotherapy, these upcoming readouts from SAFFRON and CENOVO position savolitinib to capture leadership across the entire treatment paradigm in MET-driven lung cancer. Next slide. This slide highlights sovleplenib, which is spearheading our next wave of hematology and autoimmune products. wAIHA is a debilitating disease where red blood cells are destroyed prematurely, leaving patients severely anemic, and often they rely on high-dose steroids and frequent blood transfusions.

In our Phase 3 ESLIM-2 study presented at EHA, sovleplenib achieved a 66% durable response rate compared to 15% in the placebo group. Patients on sovleplenib reached target hemoglobin levels in a median of 3.1 weeks, twice as fast as the placebo, with a substantial drop in rescue therapy and transfusion. Only 16% of sovleplenib patients required rescue therapy compared to 54% on the placebo. Furthermore, red blood cell transfusions were significantly reduced to just 11% versus 43% in the control group, allowing patients to taper or completely discontinue their baseline steroids.

Then, when you compare this to the emerging peer options like nipocalimab, sovleplenib shows a clear competitive efficacy advantage, delivering a much higher durable response rate without forcing patients to stay on chronic high-risk immunosuppressants. We are eager to bring sovleplenib to a patient population that hasn't seen a new targeted therapy option in 30 years, and currently the NDA is under priority review in ITP. What sets sovleplenib apart from standard-of-care agents like TPOs and TPO-RAs is exceptional efficacy without the associated thrombotic complication warnings found on their peer labels.

In ITP, sovleplenib achieved a striking durable response rate compared to placebo, even though 75% of the enrolled patients had failed prior TPO therapies. ESLIM-1 study is also under priority review in China. Next slide. Then, turning to slide 17, let's look at our highly potent, selective, and reversible BTK inhibitor characterized by long target engagement. Currently, this is the only BTK inhibitor in late-stage clinical development targeting the second-line DLBCL all-comers.

Our Phase 2 study showed encouraging response rate, PFS, and safety profile. Our Phase 3 registration study in China is actively ongoing, comparing 760 in combination with R-GemOx against placebo plus R-GemOx, with primary endpoints of PFS and OS, and we expect to complete enrollment by the end of 2027. Next slide, please. Here I want to highlight our novel ATTC platform, starting with A251. ADCs like Enhertu have transformed HER2-positive cancer treatment, generating billions in revenue.

However, acquired resistance to DXd, the cytotoxic payload used in Enhertu, remains a major clinical hurdle as patients inevitably progress. The DXd-induced resistance model on the bottom shows that Enhertu loses potency almost completely, shifting the curve far to the right. In the same resistant cell model, because A251 utilizes completely distinct mechanisms targeting the PI3K and PIKK signaling pathways rather than DNA-damaging toxins, its killing activity in DXd-resistant cells, shown in the green curve, remains identical to DXd-sensitive parent cells, shown in the blue curve.

Next slide. And beyond treating drug-resistant tumors, A251 has strong potential as a frontline treatment, as shown in these gynecological cancer and GI cancer xenograft models. Combining A251 with the first-line standard of care yields significant tumor volume reduction compared to either therapy alone, and, crucially, this synergistic effect does not come at the cost of added toxicity, proving A251 can safely be combined, which is what we aim to achieve with ATTCs in the first place, which is better efficacy and better safety.

Our clinical strategy is twofold: a monotherapy track for a fast-to-market approach in late-line setting, and the combination track targeting frontline indications. And our extensive preclinical data support the A251 dual-track strategy. The clinical trial is on track at dose-escalation stage. Next slide. Our second ATTC asset is A580, which pairs the same payload with an EGFR-targeting antibody. Blockbuster drugs like Tagrisso treat EGFR-mutant non-small cell lung cancer, but resistance eventually develops.

In a non-small cell lung cancer model carrying the challenging EGFR exon 19 deletion and the resistant mutation, third-generation TKIs like Tagrisso completely lose control of tumor growth, as shown by the red curve. A580, represented by the blue curve, achieved profound and sustained tumor regression as a single agent. This highlights its enormous potential for lung cancer patients. Next slide. Then, by combining A580 with an EGFR inhibitor, we can simultaneously shut down primary receptor signaling and the downstream escape pathways.

The preclinical data reflect a highly significant synergistic antitumor efficacy, supporting our long-term plan to move this asset into frontline cancer regimens. This global asset entered a Phase I trial earlier this year. The trial is going very well, recruiting patients from China sites and US sites in parallel. Next slide. What makes our ATTC platform so unique is the payload itself. Historically, the industry has struggled with PI3K/AKT/mTOR pathways.

Pan-PI3K or dual PI3K/mTOR small molecules were simply too toxic to be delivered systemically, resulting in severe side effects like hyperglycemia or mucositis. Single-node inhibitors were safer, but their efficacy was limited. Our innovation was to design a highly selective payload that harvests multiple key nodes along both the PI3K and PI3K/AKT pathways with very high affinity, and then tether it to an antibody. This ensures the payload is delivered inside the tumor cells, maximizing intracellular kinase inhibition while sparing healthy tissues from systemic toxicities.

The kinase tree on the right illustrates this high selectivity of the payload. Next slide. The ATTC approach opens up massive opportunities. The PI3K/AKT pathway is the single most frequently altered pathway across all solid tumors. It plays a dominant role in breast cancer, lung cancer, gastric and ovarian cancers. By effectively targeting this pathway with our ATTC technology, we can potentially reach millions of patients across a wide range of cancer types.

Next slide. With A251 and A580 currently in global trials, A830 entering the clinic soon, and more candidates behind them, our pipeline is well positioned to deliver sustained growth for years to come. Thank you, and I'll give it back to John.

Johnny Chen, Acting CEO and CFO

Thank you, Dr. Dai. A quick highlight on our outlook. So, on the innovation side, as mentioned by Dr. Dai, multiple ATTC programs are progressing well, and we believe around this time next year there should be a total of five programs already in clinics. More importantly, our efforts in AI will be transforming and accelerating further discovery and development in our innovation platform. On the commercial side, we expect Fruzaqla's sales growth to continue.

We anticipate it will reach its next sales milestone in the near term. Regarding our hematology portfolio, our commercial team is preparing for the launch of our immunology asset, which is anticipated to commence next year. And finally, we are continuing to engage many multinational companies on collaboration discussion regarding our ATTC program. I will now pass it back to David to begin our Q&A session.

David, Investor Relations

Thank you, Johnny. We will now start our Q&A session. Before we start, I just would like to repeat the instructions to ask questions. On the bottom of your screen, you can see the raise hand button. Just press on the button and we will call your name and unmute your line. And when you start, please do mention the name of your company as well as your name. So the first question comes from Matthew of CLSA. Matthew, you can now talk.

Matthew, Analyst at CLSA

Thank you for taking my questions. This is Mazio from CLSA. I have three questions. First is regarding the collaboration opportunities for the ATTC programs, two in clinic and one about to be in clinic. Could you elaborate more on the kind of progress? Because I think there has been some expectation of maybe early-stage collaboration before, so can you comment on that? The second one is regarding your HMPL-760, the BTK inhibitor. As you mentioned, you have initiated the Phase 3 trial for DLBCL in China.

May I understand how this drug is different from other BTK inhibitors, and why you chose DLBCL to proceed for Phase 3 as there are no BTK inhibitors approved for these indications, including the covalent ones and also the non-covalent ones? None are approved. And the third question is on the financial side. I know that Other Ventures is a low-margin distribution business, but could you still have some color on why in the first half, on a constant exchange-rate basis, it declined by almost 20%?

Okay, that's my question. Thank you.

Johnny Chen, Acting CEO and CFO

Thank you, Matthew. I will invite Dr. Dai to answer the second question and Lorenzo to answer the last question. On the first question regarding the collaboration opportunity, we are continuing and have active multinational companies engaging in discussion with us on not just one program but multiple ATTC programs. As you know, our programs are still at a very early stage, so there are different expectations in terms of timeline and information to be provided from outside potential partners.

They have different requirements. All I can say right now is we are in active discussions with multiple parties, and the discussions are progressing well. When the discussions come close to mature and there are disclosable items, then we will make an announcement to the public. Maybe, Dr. Dai, you can answer question number two regarding the 760 BTK.

Dr. Dai

Sure, Johnny. Yes, we have actually started a Phase 3 study with 760. It is a combination of 760 plus R-GemOx versus R-GemOx. We picked DLBCL because it's the largest lymphoma subtype, accounting for about 40% of lymphoma, and no other BTK inhibitors have been approved for this particular subtype of lymphoma. So it represents a huge unmet medical need and good market potential. With our 760, it's a reversible BTK inhibitor, and in earlier clinical study it demonstrated a very good selectivity and safety profile.

We actually had a Phase 2 study validating its efficacy in the second-line setting; it is the same study design, and we achieved a very impressive overall response rate and CR rate and a very favorable safety profile, which encouraged us to go into the Phase 3 study. It is a very exciting opportunity for 760, and we hope to achieve enrollment completion as fast as we can. Thank you.

Lorenso Chiu — Senior Vice President Finance- Business Development & Reporting

Johnny, I'll answer question three. As for the Other Ventures, I think you're right to point out that our Other Ventures is a low-margin business, which is not our focus. We are putting our focus on our major oncology revenues. As you can see, the growth is there, and that's the reason that there was some decline in the Other Ventures business. But I don't think we need to look too much behind this because, as you said, it's low margin and it's not our core.

Johnny Chen, Acting CEO and CFO

Maybe I just supplement that. As highlighted by Lorenzo, this is not our core business and it is basically a logistics distribution business. The reason that there has been some decline is because the volume-based procurement list in China has been expanded. So some of our previous customers in the logistics distribution side have actually been affected by volume-based procurement in terms of the selling price and so forth. So that service business is not what we focus on because of the high working capital requirement for this business.

As a way to manage this business, we try to just maintain this line of business to help gain insights into the commercial channel in Shanghai. I think that the drop doesn't actually affect the bottom line and doesn't affect the entire business operation of HUTCHMED (China).

Matthew, Analyst at CLSA

Okay, that's very clear. Thank you very much.

David, Investor Relations

Thank you. Thank you, Matthew. Thank you, Johnny. The next question is from Chen Chen of UBS. Chen Chen, we will now open up your line. Your line is now unmuted.

Chen Chen, Analyst at UBS

Sure. Thank you for taking my questions. My first question is on sovleplenib. This candidate is expected to receive approval next year. Could you please elaborate on your commercial preparation strategy in China, including pricing, market access and NRDL, and your sales force? In addition, what are your overseas R&D plans and priorities for this asset? My second question is on ATTC. What is the expected timeline for clinical data results from your candidates one and two?

Thank you.

Johnny Chen, Acting CEO and CFO

Thank you. May I ask George to answer the first question and Dr. Dai the second question?

George Yuan — EVP, Head of Commercial

Yeah. Thanks. Chen Chen, for sovleplenib launch preparation we are focused on a few areas. First is market access and value proposition. We need to make sure this product goes into the NRDL, and we expect this product to get approval maybe in the first half of next year and qualify for the NRDL negotiation. One of the challenges is how we can position very well to achieve an affordable and realistic price in this disease. One of the understandings is we will do HEOR data based on our clinical trial.

On the other side, we also would like to work with patient groups and opinion leaders to understand the pain points of clinical treatment and make sure we really leverage those patient insights so the government understands there are many needs and there is quality-of-life compromising for those patients who receive other treatments. This will help us in the future. On the other side, we definitely will do the guideline work, KOL engagement, as well as physician education programs, also patient advocacy group engagement as well.

If you look at the current setup for the launch, we have already built up a dedicated hematology team with a lot of experienced people in hematology. We are starting to work with our partners to understand the market potential and figure out our first-wave targets: hospitals, territories, and resource deployment.

Dr. Dai

Okay, I'll get the second question. The first and second ATTC assets are both in the middle of Phase 1 dose escalation. The trials are moving very fast. Enrollment has been going strong in the US and in China sites. Investigators are very excited about the novel mechanisms and the differentiation. They understand the rationale and they are enthusiastic about the new mechanism of the ATTCs. We will find the right time to disclose the clinical data sometime in 2027.

Thank you.

Chen Chen, Analyst at UBS

Got it. Thanks, George and Dr. Dai.

David, Investor Relations

Thank you. Chen Chen. The next question comes from Paul Choi of Goldman Sachs. Go ahead.

Paul Choi, Analyst at Goldman Sachs

Hi, can you hear me?

David, Investor Relations

Yes we can.

Paul Choi, Analyst at Goldman Sachs

Thanks. Hi. Thank you. Good morning. Good evening. I want to first ask on sovleplenib and, as you sort of look at the warm autoimmune hemolytic anemia landscape and the other products or candidates that are in that category, how do you think about potential developments and planning for a global trial outside of China, and any additional thoughts on what aspects or differentiation are needed there? And then I had a follow-up question.

Dr. Dai

Yeah. HMPL-523, now both studies in ITP and WAIHA were completed in China. We are waiting for CDE's feedback on our NDA data. But ex-China, our strategy is to develop this asset through partnership.

Paul Choi, Analyst at Goldman Sachs

But any thoughts on, again, what clinical differentiation might be needed versus development strategy?

Dr. Dai

Right now, the treatment paradigm for, for example, WAIHA, the first line is mainly steroids, like George mentioned earlier. We are targeting the second-line patients, which don't have a lot of choices besides steroids. So the unmet medical need is very high in China as well as in the US. As you can tell from our Phase 3 data, the overall response rate looks very promising compared to the other competitors, which is the FcRN antibody product. So we think this asset has great potential.

We are actively looking for partnership to co-develop this asset outside China.

Johnny Chen, Acting CEO and CFO

Yeah, maybe I can add, because WAIHA is regarded as a rare disease and we also have a plan to apply for U.S. orphan drug status.

Paul Choi, Analyst at Goldman Sachs

Okay, great. Thanks for that clarification. My second question is on HMPL-453, fenregratinib. You advanced it through the second-line ICC population on the oncology side, but I want to ask what your thoughts are on potential endocrinology applications such as achondroplasia and other bone growth disorders, and if you think this might be a potentially appropriate candidate there. Thank you.

Dr. Dai

With 453, our main focus right now is intrahepatic cholangiocarcinoma, second line. We have started the confirmatory trial to get this indication confirmed in the same setting. Thank you.

Paul Choi, Analyst at Goldman Sachs

Thank you.

David, Investor Relations

Thank you, Paul. The next question comes from Adam McCarter of Cavendish. Adam, your line is now unmuted.

Adam McCarter, Analyst at Cavendish

Hi there. Thanks for taking the questions. A couple of questions from me just on the commercial portfolio. It was encouraging to see the recovery across Elunate and Sulanda. But just on Orpathys, you did highlight the opportunity for NRDL inclusion following the SACHI-based approval. I'm just wondering how significant you think that could be commercially. Do you expect that to be a key driver of a recovery in China sales? Or is the more meaningful inflection point still the savolitinib readout and the opportunity to further broaden adoption?

That's my first question.

David, Investor Relations

Josh, you would like to.

George Yuan — EVP, Head of Commercial

Yeah, I think the such inclusion in the NRDL will significantly improve the growth potential for the brand. If we look at the data, if you look at the EGFR-resistant patients, there are quite a significant number of patients with MET amplification, and so far there's no other choice. And the bispecific monoclonal antibody in China is not included in the NRDL from Johnson & Johnson. So we still have growth potential. Also, this combination will extend the Tagrisso treatment duration as well, and as well as kind of levels for AstraZeneca to compare with other TKIs.

That's why we believe there is strong growth potential. Having said that, one of the hurdles is we still need secondary biopsy, so there's a kind of adoption at practice in the medical side.

Adam McCarter, Analyst at Cavendish

That's great. Thanks very much for clarifying. My second question, again in the commercial side of things, is for Zakla. Just wondering how we should think about the growth trajectory for US sales going forward. Should we now be thinking about a period of steadier growth, with ex-US markets becoming an increasingly more important contributor to incremental growth for the brand?

George Yuan — EVP, Head of Commercial

Okay, maybe I'll just comment on this one. I think for, for seca, for the last year almost, I think there was some Medicare impact in terms of the growth to net. But as you can see, the growth momentum is through the geographic expansion of the ex-US markets in the first half, especially—we have looked at a 70% growth there. And also I think one point to note is although the geographic has expanded, the NRDL in those markets is only 50% so far. So we believe there will still be a lot of opportunity for ex-US. Earlier we have also shared with all of you that, from our information from Takeda, they expect US size—basically the size of US peak sales versus the rest of the world—will be kind of a 50/50 ratio. So we believe there's still a lot of growth momentum behind this global sales of FRUZAQLA.

Adam McCarter, Analyst at Cavendish

Great, great, thank you. And if I could, maybe a final question. Just obviously you reiterated the guidance, and could you just help us try and understand the key drivers that determine whether the business lands towards the lower or the upper end of the range? In other words, should we primarily be thinking about the contribution from milestones, continued recovery of the China portfolio, or ongoing growth in ex-China for FRUZAQLA revenues? Thank you.

Johnny Chen, Acting CEO and CFO

Yeah. Well, I think as you can look, in the first half the guidance for this year is actually 330 million to 450 million. So with our baseline achievement—it is without any business development contribution in there—we will be at least meeting the lower end of the guidance. But with certain potential partnering which will recognize some upfront income, we can reach higher or even exceeding the high end of the guidance. So that is the range. But also other factor that can affect the second half is, as we mentioned for SECA, that we do anticipate that it will reach another level of sales milestone that would contribute again some one-time commercial milestone income that would also help us to meeting or even exceeding our target that we have given out to the market. So we are quite confident that we will be able to achieve this guidance that we have given out to the market earlier.

Adam McCarter, Analyst at Cavendish

Great. Thanks very much for answering my questions.

David, Investor Relations

Thank you, Adam. Just to repeat the instruction, if you have any question, do press the raise hand button at the bottom of your screen. The next question comes from Julie Simmons of Panmure Liberum.

Julie Simmons, Analyst at Panmure Liberum

Thank you for taking the question. Thank you. Julie Simmons from Panmure Liberum. Just again on the milestones, there was a milestone in the first half from Takeda. I was just wondering what that related to. And then beyond the sales milestone to which you just referred, are there any other milestones anticipated? I was wondering if there's anything due from AstraZeneca on the SAFFRON trial readout.

Johnny Chen, Acting CEO and CFO

No, actually in the first half, just to clarify, it was from the approval in RCC (renal cell carcinoma). So it was from Eli Lilly. And yeah. So in terms of our second half, you know, besides the sales milestone, so far we do not expect any other milestones from our partners yet. But in terms of if we achieve good results for our surufatinib, we will be receiving milestones more likely next year, not this year.

Julie Simmons, Analyst at Panmure Liberum

Lovely, thank you very much. And then just as far as sort of the overall margins are concerned, you've done slightly better, I think, probably, in terms of sort of balance between sales and spending than maybe I thought you might do. Is the aim to continue to remain, to continue to be broadly break even to slightly profitable going forwards in your sort of thinking of how the business is going and using the cash in potential business development activities?

Johnny Chen, Acting CEO and CFO

Yes, definitely. I think it is a strong commitment requirement by our board that we will continue to be break even, and that's a commitment that we made a couple of years back, and this is a strong commitment from all our management team. So this is not going to be changing. And of course we will balance with the investment in areas definitely that would drive growth and creating value for shareholders. So that's why we're accelerating the ATTC program.

At the same time, of course, we are exploring business development opportunity with our partners so that we can basically create—accelerating our ATTC innovation opportunity.

Julie Simmons, Analyst at Panmure Liberum

Lovely, thank you.

David, Investor Relations

Thank you, Julie. Again, if there's any question, please do press the raise hand button. At this moment I don't see any further question online. Johnny, would you like to make a concluding remark?

Johnny Chen, Acting CEO and CFO

Yes, I think—thank you everyone for joining this interim results, and we look forward to meeting again. I think later on we will be planning for an R&D day sometime later this year, and we will make relevant announcement in due course. Thank you.

David, Investor Relations

Thank you everyone. And this concludes our interim result presentation. Thank you.

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