Hua Medicine

HKEX:2552

Earnings Call Analysis

Earnings Call Transcript 2023-Q2

[Operator]

Hello, and thank you for joining Hua Medicine interim result announcement. Before we begin, please note the following disclaimer. Members of the media and press are not authorized to be on this call. If you are from the media or the press, please disconnect the call now. Please note that this call is being recorded. By attending the event, you agree to all these restrictions. [Operator Instructions]

I'll now pass the line to your host today, Christopher Lui from Jefferies. Please go ahead.

[Yue-Kwong Lui, analyst]

Thank you. Good morning and good evening to investors online. This is Christopher Lui, Asia Healthcare Analyst here at Jefferies. It's our honor to host Hua Medicine's First Half 2023 Earnings Call. We have with us Dr. Li Chen, Founder, CEO and Chief Scientific Officer; and Mr. George Lin, CFO, Executive Vice President. Let me now pass the floor to Dr. Li Chen. Dr. Chen, please.

[Chen Li, executive]

Hi, everyone. Thank you from London, New York, Hong Kong and rest of the world. I'm very pleased to have you in this 2023 interim results conference. We are the Hong Kong listed [ 49 ] companies and then here to displacement.

I will give you a company overview on Hua Medicine in the last 6 months progress, mainly representing with the major progress at Hua Medicine advanced ourselves from an R&D-based company into e-commercial company through the collaboration with Bayer in the commercialization of HuaTangNing, the dorzagliatin, which is the global first-in-class glucokinase activator where it treat diabetes patients through repairing their glucose homeostasis. As a novel therapy launched in China only and the sales in the first half and it behaved very well compared with all the other oral drugs that have launched over the last few years that with a very good market performance. And the sales increases roughly around 300% compared the second half of 2022, which we launched the drug after approval in September 30, 2022.

And as a biotech, we also enjoy a very good milestone payment from our partners. And this year, we have received RMB 400 million milestone payment in the early half of this year. So our cash balance now increased from roughly CNY 500 million now to CNY 880 million. And we are recently announced after -- recently announced the new milestone payment, we are expecting to receive another RMB 800 million milestone payment in this year. So overall, the company is transitioning well from an innovation-driven R&D company into a commercialization company. At the same time, we've been focusing on our primary capabilities of dorzagliatin as a monotherapy, which can improve the glucose sensitivity and the insulin sensitivity and repair the glucose homeostasis. It might offer additional opportunities and benefit to the human health in addition to the Type 2 diabetes.

We have recently demonstrated that dorzagliatin improves the GLP-1 secretion in Type 2 diabetes with obesity in the United States, and the papers was publishing the Nature Communication showing that for a short-term treatment of dorzagliatin, the glucose stimulated GLP-1 secretion was repaired, close to normal. At the same time, we have published our DREAM study in which we showed 65% of the diabetic can achieve diabetes remission for 52 weeks.

And then recently, while we have showed the results from the animal study demonstrating or further validating that the sustained diabetes remission is coming from an improvement or rescue, the function of pancreatic islet in the mice. I think this is a very important and then consistent with the mechanism of action of glucokinase in the neuroendocrine cells, which is in the beta cell and alpha cell in the pancreas, and the K cells and L cells in the intestine. And those are the major functions for GKA serve as a glucose sensor, which improves the glucose sensor activity would allow to improve the hepatic glucose control. And in this case, the drug will reduce the insulin resistance and thus improves the glucose and insulin sensitivity altogether.

Very novel drug. And obviously, the further investigation will be needed to follow up our GKA RA study in which we show that -- at a subminimal therapeutic dose that is, use the low dose of dorzagliatin to treat a disease generating GKA RAs and if you will prevent the GKA RAs to develop into the diabetes condition and the impairment of cognition, showing the balance of glucose homeostasis will eventually be able to contribute to the energy homeostasis that is highly required in the brain system. We're also conducting trials in Hong Kong and in China, looking to the opportunity to prevent diabetes, especially the IGT subjects, which have post-meal glucose abnormal and this function in the early insulin secretion. And those are the areas where dorzagliatin can play his role.

Finally, as we have been studied before, dorzagliatin can work together with sitagliptin, DPP-4 and empagliflozin and the SGLT-2 class. And also, most recently, we have shown its benefit in combination with GLP-1. So whereas this key function to restore the glucose homeostasis, the combination with existing therapy will further benefit the patients in diabetes, obesity and then neurodegeneration diseases. So Hua Medicine will continue in this area, especially with the new funding comes in, we'll drive the further innovation.

Many of you probably already know what dorzagliatin can do. I think this slide basically summarizes that dorzagliatin is a drug that impacted on 3 major pathways that in the clinic and to managing the diabetes. First is it repairs the early phase insulin secretion, and this is very important to control the post-meal blood glucose. And secondly, it manages the GLP-1 secretion, which controls the dietary and energy intake through the GLP-1 receptor system. And then the third, which I consider very important, and many people probably miss this point is that glucokinase is highly damaged in the liver under the disease conditions, whether it's in the MODY or is in the diabetes Type 1 or Type 2. The ability of converting glucose into glycogen and balance the glucose homeostasis was damaged because of the GKA dysfunction. Now dorzagliatin can restore the liver GK expression and also in clinic showing a very effective reduction of post-meal glucose. And this is a probably one of the kind as now compared with the other oral antidiabetics and the improving insulin to managing the post-meal glucose.

And the reason we consider this is important is that the diabetes complication, the fluctuation of blood sugar in Type 2 diabetes are mainly due to this uncontrolled and then rapid increase of blood glucose after meal. And then this is particularly important for the Chinese diabetic patients.

So we are getting to our commercial stage, and Hua Medicine has prepared and then published high-quality clinical results in Lancet and in Nature Medicine, as well as Nature Communication and diabetes and so on to show that the results of this well-designed, well-executed clinical studies can be used for the commercialization and then the discussion with our KOLs. At the same time, we have developing novel algorithms in the TIR calculation, and then we have published together with the Chinese experts in the clinical expert's consensus to recognize dorzagliatin as a first-in-class drug in the diabetes area and promoting the drug in the clinical setting.

At same time, the pharmaceutical experts, mainly those -- the pharmacists and pharmacologists, they also published a consensus and showing the mechanism of action of this drug and then the ability of bringing the diabetes remission into the patients that benefited from the dorzagliatin treatment. And this effort is aligned with our activity to prepare the NRDL application and then down the raw, the NRDL price discussion.

Here, a few slides just showing our results and how the drug be able to improve the GLP-1 secretion. And on the left side, the slide was showing that [indiscernible] has done a claim study showing that are the -- in the diabetics the GLP-1 secretion is significantly impaired compared with the healthy NDT or impaired the fasting plasma glucose patients, that's the IGT. And for those, and I think the important message showing that in the diabetes patients and GLP-1 expression is impaired. And Hua Medicine is, for the first time, demonstrated that dorzagliatin can restore and the glucose stimulated the GLP-1 secretion to the level on the IGT subjects. And obviously, there is an opportunity now for Hua to continue developing dorzagliatin in the area of GLP-1 secretion and through our recent experiment, we show the combination of GLP-1 and dorzagliatin will offer the benefit in glucose management.

With the recent study in the clinic, reports from the physician, has also indicated that a combination of semaglutide and then the dorzagliatin works really well in patients who had uncontrolled blood glucose using insulin and rapid and basal insulin therapy together with a couple of other oral therapies. So that gave us a further confidence that in the future we will continue to monitor and then also preparing the investigator sponsor the clinical studies in the real world and to follow up the progress of the combination of dorzagliatin with GLP-1. At the same time, as I reported earlier, prevention of the GK-RAs, the [ GKA-RAs ] to develop into diabetic condition and with preventing the elevation of blood sugar and also preventing the reduction of the targeted approaches.

And in this area, I think most importantly, we identified connection between the diabetes and cognition impairment through the insulin receptors and glucose transporters in the brain of this study animal. We will continue this study and elucidate the opportunity and to developing glucokinase-related therapies in the neurodegeneration area.

This is a slide basically showing that why we think dorzagliatin improves the beta cell function and leads to the diabetes remission. Here is the animal islet. And the blue one on the left side is the normal animal and then the red one is the obese diabetes rat, right? And with the infusion of glucose, and we can see the amount of insulin secreted and the time for the insulin secretion has been moved away from the healthy animal. And then on the right side, we can see with dorzagliatin treatment, we will be able to restore the insulin secretion in full capability. And here is the overlapping of the control animal versus the treated animal. So that in this case, this is a very good demonstration that diabetes remission is closely related to the repairment of the pancreatic islet function in terms of glucose limit insulin release. And obviously, the theory for local kinase in the glucose-stimulated insulin secretion is well established by Franz Matschinsky, who received Rolf Luft Award in 2020, recognizing glucokinase as a glucose sensor and play a central role in glucose homeostasis.

Now we have recently published our results in DAWN. In this publication we further showing that for the subject diabetes patients who received the dorzagliatin treatment and achieved a very good TIR control. On the top left panel you can see that the green line is before treatment and then after 20-week treatment, and then you see this blood glucose fluctuation curve start to falling in the LC range, which is defined by the time-in-range, a new measure, which has been implemented in 2019 through ADA and then 2020 in Europe and then 2021 in China as a new indicator, showing the effectiveness of getting the blood glucose control. Because the traditional methods of the HbA1c only measures the average blood glucose among 3 months, i.e., say, 3 months blood glucose average does not really reflecting how bad is the fluctuation of the blood glucose and then how far away the patients is in a disease condition from the healthy glucose homeostasis control.

TIR offers a very good measure, and improvement of the TIR from roughly less than 60% to 80% during the treatment by dorzagliatin is a very significant improvement in the blood glucose control. And we believe that this level of improvement in the glucose homeostasis will lead to additional benefit in the prevention of diabetes complication and also improve the pharmacoeconomic value of this drug so that benefiting us to get good NRDL entry. Additional data showing that dorzagliatin improves the TIR is correlated with the improvement of the beta cell function in this phase, which include disposition that the early phase insulin secretion index, the HOMA-beta and then the HOMA2-%S -- HOMA2-%S is the matter of the improvement of insulin sensitivity. So in this way we are improving the overall homeostasis and which can further avoid the diabetes complications and the corresponding medical spending probably is 10x according to the international diabetes federation that 10x for the diabetes complication treatment compared with the diabetes treatment.

So we talked about our current status and then the progress. Obviously, we have now as a commercialization company driven by R&D, we have 2 indications by dorzagliatin now can be used in the clinic. One is for the drug-naive diabetes and then the other is to the metformin-tolerated uncontrolled Type 2 diabetes. And at the same time, due to the excellent clinical pharmacology of dorzagliatin, the DKD patients can be used -- can use the dorzagliatin in the DKD patients without any dose adjustment. This is especially good news for China or the patients in U.S. in the DKB, especially in the Stages 3, 4 or end stage of chronic disease condition. For them, there is no good drug to help them to control the blood glucose. Dorzagliatin can just do that.

Also, a good combination and allow to do the combination with DPP-4 sitagliptin and then the empagliflozin and to the patients who all need the treatment in combination or they have already on DPP-4 SGLT-2 with a poor blood glucose control and they can use dorzagliatin in clinic as a combination therapy. We are developing our fixed dose combinations. And then the most recent events showing that the fixed-dose combination with metformin has switched a good stage. The new formulary has been developed, and we are preparing to bring this new drug into the clinical study next year.

We are also advanced the second-generation GKA. For the first-generation GKA, we have a twice-a-day therapy, and then we are developing a once-a-day therapy, especially focusing on its capabilities to treat diabetes with obesity. Now I think we are planning to file the IND toward the end of this year or beginning next year. We are completing the preclinical safety studies, and the final report will be in, in the end of this quarter. And the filing preparation is ongoing. So we are very excited to see that the second generation of GKA has demonstrated a very good pharmacological response and pharmacokinetic properties in the larger animal compared with the dorzagliatin.

Also, we continue looking to the new areas in the glucose homeostasis control and for the congenital hyperinsulinism. And those patients was born with a genetic defect have low blood glucose levels and which is life-threatening. And we are looking for solutions to helping those patients as we moving along in the diabetes homeostasis control. At the same time, we've been working with AscendRare, a new company recently acquired by Hua Medicine, the fructokinase diagnostic methods and that will further enhance our fructokinase inhibitor development and accelerating our management 2 kids, and the better control technology in the glucose homeostasis, managing the fractal impact in this homeostatic control.

mGluR is a program has been with Hua for a while. We are now looking to the glutamate homeostasis control and then initiated a new program related to the mGluR related activities, and then we'll start to moving this program toward the clinical study next year.

Finally, we have been very grateful to have our first generation being able to successfully launched in China and then had a good feedback from the clinicians for this drug having the ability of controlled post-meal glucose, improve the beta cell function and achieve diabetes remission. And obviously, the second generation will add additional opportunities for us to move into the global international opportunities.

The rare disease area, as I just described, is not just looking into the genetic disease. Just like GKA, genetically the homozygous GKA mutation will cause a permanent neonatal diabetes. The subject was born with diabetes and have to take insulin as a lifelong therapy. But understanding the GKA in the Type 2 diabetes situation and which make it more clear that the impact of the genes in those rare disease can have a larger indication in the disease setting. That is where we are now. We will continue to expand the GKA therapy in the diabetes in their early stage, in the prevention, and then toward the late stage in combination with the GLP-1 insulin. But in the rare disease area, we really consider those teams offers a great proof-of-concept and a validation of these chronic diseases so that will come up with a more effective way to address a broad medical healthcare needs.

Now this is a slide that we basically summarized the undergoing activities at Hua Medicine with dorzagliatin as a monotherapy or in combination with metformin and other therapies. We are looking for the diabetes remission and also the prevention of diabetes complication. We are looking to this IGT fields, and globally, we now have over 500 million IGT subjects. And those are the prediabetes condition, and dorzagliatin is positioned to prevent the value to those subjects. And other areas, as I already mentioned, the new formulations and second generation and fixed-dose combinations will serve as the effective tools while allow us to do a more personalized diabetes care.

And just 1 update on this is that we have recently ran the unbiased machine learning program using the data confront our clinical study, hence we able further to classify the diabetes patients into 6 categories. And we are planning to conducting studies among those different categories and then testing the different combination, and then based on the mechanism of action, which is connected to the underlying disease conditions of the 6 subgroups.

Now forward-looking, we can see that as China moving to a modern development and the requirement for control of diabetes is very clear. As I mentioned, dorzagliatin alone or combinations will be able to address the diabetes and diabetes progression, prevention of the complication and also have the potential in the diabetes prevention.

We are working with Bayer, and they are bringing in [indiscernible], which is a very effective CDK drug, chronic kidney disease drug and is a perfect fit with dorzagliatin for the DKD and then related area, and Bayer China and Hua has a joint promotion team for the [indiscernible] and dorzagliatin started in May this year. And then I was confident that this combination in the market promotion will eventually bring a broader benefit to the patients in China and then potentially in the rest of the world.

I mentioned that a personalized diabetes care. And I think with dorzagliatin now, we have 10 classes of antidiabetic drug. We historically addressed the glucose sensor function and restored glucose sensitivity and insulin sensitivity. And add on to a current therapy will bring a more precisional treatment guided by our AI-based algorithm. We're also looking to the management of the neurodegenerative diseases, the connections of glucose generating ATP environment where the disease early has happened because of lack of good glucose metabolism in the neuron system.

So we are -- as we're moving towards second half of the year, we are currently working with our partners to accelerating our progress and activity related to the NRDL discussion and also working with our partners to expand our production capabilities, and that include in the manufacturing of API and also for the tablet manufacturing. Additional activities, including also the work with Bayer and to receive this 800 million milestone payment, which I think is moving along very well. And also additional payment in the future related to the milestones, mainly, I think is related to the -- what we just discussed, the combination therapies and new indications and as well as the milestones that are related to the manufacturing skills.

So the company is in good shape, have a good cash balance to help our R&D pipelines and engaging all the well-planned clinical studies to get started next year.

For the financial section, I think, George will give you the update. George?

[Cheng Lin Chien, executive]

Sure. Thanks, Dr. Chen. So as Dr. Chen had mentioned, a lot of good progress in the first half.

Next slide. Dr. Chen, can you move to the next slide? So as you can see here, this is the cash balance as reported. As of June 30, 2023, we had CNY 881 million of cash, and that's a significant increase from our year-end balance. That cash increased about CNY 390 million. You can see CNY 258 million came from operating activities, which was the receipt of CNY 400 million from Bayer offset by investment in the launch in inventory sales, et cetera. Investing activities was negligible.

We did draw down from some of our loans in China as we become a commercialization company. We've been blessed in having 2 different banks -- provide bank loans, which we've been able to draw down for working capital and inventory buildup, which is great. So that's the net cash from financing activities. As everybody probably is aware, we have not issued any equity since the IPO. And so as you can see, there's been a significant increase from CNY 490 million to CNY 881.3 million. This does not account for the RMB 800 million that is duly received in the fourth quarter of this year from the Bayer development milestones.

Dr. Chen, next slide. You can see here the revenue, a significant increase, CNY 17.6 million to CNY 70.3 million for the first half of 2023. This is typical for our launch. We're very excited about this. One thing to keep in mind is this significant increase, about 300% of sales was achieved despite the fact that we obviously are not in the NRDL and have very limited access of hospitals that actually include our drug. Online activity actually contributed close to 50%, which again is great that consumers themselves are directly reaching out for this. So we expect to see continued growth in the second half as well. So you should see a nice uptick again for second half sales.

Gross profit margin is what we want to be focused on. Obviously, the second half of 2022 was quite depressed and not normal because it was launched, and there was a lot of investments high per unit cost. We now are starting to normalize and even this is not normalized as we increase our [ Schedule C ], this gross profit margin go up even higher, but we were able to see in the period an increase of 18.9 basis points going from 43.7% gross margin rate to 62.6%. We expect this to continue moving up for the full year 2023. Second half should go up as well. There's some additional work that Dr. Chen and the CMC team are working that should definitely do that.

Other income, not much to discuss here. Government grants and interest income. We're trying to get as much interest as we can from our building up of cash, which is great. And our loss has decreased. One significant change to mention is that our selling expenses is undergoing a change and has increased dramatically because since we've launched, we now have to account for the promotion expenses that we pay to Bayer as selling expenses before it was just our promotion team. Now a lot of that expense has moved in to Bayer. It's not all the Bayer cost. We do also have a marketing team, but a big percentage of this, as you know, is accountable or attributable to Bayer.

Next slide. And then R&D expenses under really good control. Although now that our cash has built up significantly and our programs are in the right place, I would say that Dr. Chen and the clinical and scientific team are going to flex their muscles, if you will, and stretch their legs to start moving forward, as he mentioned, on the second generation as well as IND filing in the U.S. and potentially thinking of new pathways to get that developed faster. He mentioned rare disease, both for CHI, potentially for other indications in the U.S. as well, and then there'll be work on the FKI as well as the mGluR. But for the most part, you can see that it has declined because we didn't have that much activity, except for these preclinical studies that we have been doing both in China -- mostly in China, but some of the work was also done in the U.S. for the second-generation drugs as well.

Next slide, my last one. Yes. Admin expenses, again, under control, so dropped by 21%. As we've been able to kind of figure out how we want to run this company with current focus on China sales of dorzagliatin and splitting resources with Bayer, who's principally committed to selling our drug, we've been able to leverage this over our increasing sales. So this is pretty good. We don't expect admin expense to increase that significantly, even though we do expect our revenues to increase pretty significantly with NRDL. If we do get into the NRDL, obviously, probably more expenses will be committed to compliance and other matters of that sort to keep up, but it won't increase lockstep for sure with revenue. So this, again, is a very positive. So overall operating income margin should actually remain on the down -- on the upslope, operating expenses should be continue to contract.

I think that's our last slide. So maybe with that, Christopher, you want to kick it off with any questions or open the floor to other people with questions.

[Yue-Kwong Lui, analyst]

Yes, definitely. So thank you, Dr. Chen and George for the detailed presentation. [Operator Instructions]

While we poll for questions, let me have the luxury to kick off our discussions by asking two questions. One on the second-gen GKA and another one on the reimbursement. Can we talk about the second generation GKA? What is our development strategy, especially in the U.S. given we have done very comprehensive trials with dorzagliatin in China? Will you give us some color in terms of cost [ as well as ] partnerships as well.

Second question is on reimbursement. Of course, it's a game changer. Do you have an approximate time line? And more importantly, what should we expect in terms of ASP, sales volume and net margin that you will accept should that be being reimbursed? We know metformin in China is booking over RMB 1 billion in sales, which has been a mainstay in NRDL and also in VBP now. Should we expect dorzagliatin to be in that ballpark of yours? That's it for me.

[Chen Li, executive]

Well, I will take a shot and then let George finish up. I think for the first -- second generation, the major part offers is focusing on the different type of diabetes in the States and the rest of the world. As we're evaluating the diabetic conditions, the Asian or China diabetes has early impairment of pancreatic function so that dorzagliatin is very effective, directly address that issue and then get disease control, remission and so on. For the majority of Western diabetics, they have a relatively stronger pancreas, but they're obese. So with the reduction of the body weight and then you will need to repair their -- or maintain their pancreatic function.

So the body weight and fat is causing the insulin resistance and reduce the glucokinase expression in the liver and pancreas and so on. But that disease etiology and the requirement led us to consider and position dorzagliatin second generation as a once-a-day therapy also address the diabetes kidney disease in U.S., as well as other related diabetes or glucose management disease have potentially monogenic or rare disease in nature. So those positions differently from what dorzagliatin been used in the clinic, obviously, benefiting from what we have learned about dorzagliatin in the 18 clinical studies in China and in United States, and this is also supported by our personalized diabetes treatment strategy.

So going to the second question related to NRDL. I think you probably have heard that in the last 6 months or so, there has been a lot of discussion related to the drug pricing policy. We know there has been a pretty steep price cut on the new drugs getting to the NRDL discussion, and then this has been recognized by the local and the central government and understanding that the difference between the generics and then innovative drug that have played a different role in the health care system and thus, the management and the price and then valuation of the drug will be different.

For example, dorzagliatin can lead to the diabetes remission and also improve the beta cell function as well as improvement of the blood glucose fluctuation, and those are the things where the existing drug cannot offer. And then this is also the opportunity to slow down or prevention of the diabetes complication, which justify its higher value in the socioeconomical estimation and discussion with the regulatory agencies related to the drug price.

Shanghai government has recently published announcement, which is through a combined efforts in 6 or 8 bureau, involving drug administration, involving the price bureau, involving the health committees, talking about that gave the innovative drug an opportunity to enter into hospitals in Shanghai without worry about the DIG and DRGs, which is a very good sign for China to start to recognize the innovation value of the new therapies and also guide the industry from doing a generic drug [ V2 ] to the first-in-class in worldwide therapy to address the unmet medical needs. I think those are the very good signs -- and to differentiating the traditional or so-called standard care as well as offer the patients and especially in China, we have 140 million diabetes and roughly close to 300 million prediabetes. And then the diabetes complication costs is over RMB 1 trillion and is really a major disease burden and health economic burden to the country.

So I think we historically attend the opportunity to bring remission to slow down the progression of the disease and potentially prevent the diabetes complication will offer a unique value to the system. George, do you want to add more to this?

[Cheng Lin Chien, executive]

No. We would love to add a lot more and give a lot more guidance, but this is a first-in-class drug that really is treating the root cause. I think what has been appreciative just from afar and watching the team in Shanghai and Dr. Chen leading that with Bayer in the discussion, with preparation, with Bayer on the NRDL discussion is that, this has a very, very big impact, right, on the Chinese health care community. Not to belittle kind of some of the other drugs that are getting into the NRDL, but those populations are much smaller, very life-threatening serious disease. But you can imagine when the government agrees to allow a chronic disease drug like dorzagliatin and also it's happening with obesity as well.

What kind of huge impact that does have, right, on the future care and the receptivity to look at pharmacoeconomics, but yet the data has not yet cut out. But the science actually suggests that this is a good thing, is if you see remission, well, you're probably going to save a lot of money on complications. If you see a reduction in obesity and loss of weight and obese people, then you're going to have less cardiovascular incidences. So these are the type of things think that are important.

In terms of your detailed question about the ASP and what kind of margin we would expect, we're not providing that kind of guidance. This is a very sensitive time. Just bear with us again for at least probably 2, 2.5 months. Just like all the other folks, we will announce what the agreed or not agreed. We have to say that as well. We can't promise that it will go in. But for now, publicly, it's been -- you can check this on yourself. Publicly, we've been passthrough Phase I or Stage 1, right, the formal pass. Others -- some others have been knocked out. We're still proceeding forward. They're studying us. Very difficult to get color under anticorruption environment, et cetera.

So Dr. Chen and Bayer and the team continue to press forward. But that's probably all the guidance we get. They obviously want it, we want it. It is a game changer, but it will increase the number of hospitals immediately, but that doesn't mean that we don't have to work. So we're working really hard with Bayer to prepare ourselves to continue to push because there's other people that get an NRDL and the sales aren't that great, right? So we got to continue pushing. We've got other work to do on the sales side as well.

CMC is very well in control to be able to capture the reimbursement. I think that isn't as big of a risk factor.

[Yue-Kwong Lui, analyst]

Got it. We don't see any questions online, but let me ask two very quick ones. One on your thoughts on current anti-corruption campaign, the impact on Hua, especially. And also, what kind of numbers should we be expecting this year given current run rate?

[Chen Li, executive]

I think, overall, for the anti-corruption, the activities and actions happen around the world. One was at Roche in U.S., we've been there before, and I think now China is a good thing to help the community recognize the good drug, a high-quality drug that really brings the benefit to the patients rather than some of the old drug or generics that potentially has been eliminated or less used in the U.S. and Europe and still now getting the promotion channel in China. So I think for that part, I think, is a very good gesture for the innovation and for Hua Medicine. George, do you have your insight?

[Cheng Lin Chien, executive]

No, I think that's right. I think the anti-corruption is impacting everyone. But I would just say that for us, high volume, lower -- high-volume, extremely high-volume class of drug, lower price per unit, right, we're probably not as impacted as much as some of these very expensive cancer drugs and also medical device stents, et cetera. So we don't see that, but it does affect our ability to organize conferences with medical doctors. Hospital's people are more shy about wanting to hold those and accept that. So it will impact.

We're not giving any sales guidance because it is -- the monthly charts give Dr. Chen and I heart attacks as we see ups and downs. I would say what we've seen is at the beginning, our lead hospitals talking up on inventory, so very, very high growth. I think we're seeing more stabilized. So something a little bit more than what we've done already in the first half is probably fair for the second half. I think, at the end of the day, it doesn't really matter what our year sales are because they're going to be a lot less than the CNY 1.2 billion we're going to collect this year, right? We're not going to exceed that.

So we can tell you that our year-end guidance cash balance will be far in excess of CNY 1 billion, probably close to the CNY 1.2 billion, CNY 1.3 billion range, which actually I looked was -- actually comparable or even higher than what our IPO, post-IPO balance was, and we haven't raised any money through nondilutive equity financing during that period. This has all been collected through payments through dorzagliatin. So we're pretty excited that our cash continues to accumulate, and we've got this NRDL to help launch our sales and increase and broaden access in the hospital. But unfortunately, we just can't give you sales. I'll tell you very honestly that Dr. Chen and I had been off on our estimates already a couple of times internally as we speak with Bayer. So we'll continue pushing to increase the sales and access on that.

[Chen Li, executive]

Yes. Overall, I think the expectation is roughly 8 to 10x after NRDL. Anyway, so those are the things that how we can talk about. But most importantly, those are the collaborative efforts between Hua Medicine and Bayer. And Bayer is at the front end to meet with physicians and talk about the mechanism of actions, the benefit of the, and scientific medical educations. We are confident with our partners. They can do their job very well, and they have been doing their job very well with their attributes in China. So I think we have another call around 10.

[Cheng Lin Chien, executive]

Yes. You have a Chinese one. So we'll need to wrap it up, Chris. I'll let [indiscernible] anymore. I think we'll need to conclude.

[Yue-Kwong Lui, analyst]

Yes, wrap up. Thank you, Dr. Chen and George, and I hope to speak with you soon. Thank you.

[Cheng Lin Chien, executive]

Yes. Thanks for listening. Thank you everyone. Bye.

[Chen Li, executive]

Thank you. Bye-bye.