Welcome to the annual Global Morgan Stanley Healthcare Conference. Appreciate your time today. We have the pleasure of hosting Gyre Therapeutics for the first time here at our conference. Just before we get started, my name is Ryuk Byun. I am Head of West Coast Healthcare Investment Banking for Morgan Stanley, joined here by Ying Luo, CEO of Gyre Therapeutics. Now, before we get started, given that this is your first time, tell us a little bit about yourself. Oh, I'm a molecular biologist by training. I started the original company called Shanghai Genomics because I like drug discovery. Later in Asia, I spent most of my time in China, Japan. We invested in Japan, it's called GNI Group. From GNI Group, we invested in many things, including Gyre Therapeutics, which is my most favorite investment. That's why I'm also CEO of Gyre Therapeutics. Starting from a scientist career, I moved up into more operation investment. That's my whole career path. Got it. Thank you for that. Now, tell us a little bit about Gyre Therapeutics. Well, Gyre is formed through a combination of the previous Gyre and the new Cullgen. We combined them together and form today's Gyre Therapeutics because, in this way, we can cover from discovery all the way to commercialization. The previous Gyre is strong in commercialization in China and really missing the early pipelines. Cullgen was formed using the protein degradation technology to discover new drugs. That's how we decided to combining them together gave us a full coverage and multiple portfolio products and also reduced the risks. Certainly, the operation, the commercialization in China will help the R&D in the early stages, too. That's how we look at this, and I think this is a very synergistic combination to give us the access to both the Chinese market and the U.S. market, and also give us the complete coverage of the value chain of pharmaceutical. Great, thank you. Now, you have a commercial organization, also a clinical and R&D organization. What is the unifying strategy, and why are these businesses more valuable together than separately? As I said, I think Gyre adopted a very unique model. That is, our wet labs are all in China, but all of the research innovations are within San Diego, the Delaware company. Then with the commercialization arm, we can utilize our cash flow generated in China to fund our research. This has significantly extended our cash runway and also gave us early commercialization possibility. Certainly, we want to focus on certain disease areas such as oncology, autoimmune disease, and also pain. These are the areas. But with our China cash flow, we can address more portfolio products than our peers and give us the possibility of evaluating many products in parallel and select the most promising one, the de-risked one, and then move to global development. So that was our strategy, and I think this strategy seen today is even more meaningful when we look at not just the cost efficiency, but also the speed and the scale efficiency. That kind of advantages is what Gyre is now enjoying. They enable us to develop more products. Well, the more products develop and the risk is certainly reduced to some degree, and that gave us a higher chance of success, multiple shots on goal. Great. Maybe let's elaborate on your strategy, in particular, how you are using your China infrastructure. You are using your Chinese infrastructure to generate and de-risk candidates, and then initiate clinical development in China or the U.S. or both. What determines when a program is ready to advance, and where should it start? Ryuk, that is a very good question because it is case by case. In my mind, I look at many factors that may affect my decision process. For example, if the target in the past has many failures due to, let us say, toxicity issues or due to the potency issues. Then I will be very careful to moving forward towards global development because even if we have a de-risk the assets more than others, but we still want to try it out first in the phase I study in China first, and before we think about the global development. Only when we feel comfortable enough, we move to a global development because much more costly. Secondly, I think for some products, if the target is fully validated and there are already multiple products in phase II, phase III in global development stages, then I probably will not hesitate to move to the U.S. if I see this lead products are safe enough, has a potency advantage, and I do not see any significant risks in the early development. Then that will be moved to global development probably earlier than the other products. Not saying that the other products is less important because the other products we are developing in China could also potentially benefit a lot of patients. Maybe after we verify such kind of the potency and the safety, then we can move them to the global development stage. These are a two-way street between global development and China development. We are looking at, depending on the results, then we decide which one is more appropriate at what time for global development or for China development only. Got it. Thank you. Can you try to give us some sense of the scale of the infrastructure that you have in place in China? Yeah. Our wet lab operations are all in Shanghai, and we occupy three buildings with a lot of labs. That is our research center. Our commercialization team is based in Beijing. They have a nationwide sales distribution network with roughly 500 people. They are doing a very, I would say, profitable operation. This is very important because we are looking at the cash flow to fund our further drug development. This is something I have been insisted from the very beginning to have a profitable operation in commercialization. The team in Beijing mostly in charge of manufacture and sales. But in Shanghai, focus on R&D. In San Diego is all of our brains and all of the drug designs and U.S. clinical strategy planning and regulatory compliance. Most of our department heads are based in San Diego. That is our, I would say, very efficient structure. We can decide our strategy and implement all over the world, in Beijing, China, and the U.S. Got it. Thank you. I think Shanghai has really become a major global hub for biotech, and it is incredible that you are ahead of the game and you have established presence early on. That gives you probably flexibility and the optionality and efficiency that some of your U.S.-based peers can only dream about. But now maybe getting into your programs. With several programs in or approaching the clinic, what are your maybe two or three highest priorities today, and how do you determine that ranking or prioritization? Well, Ryuk, that's a question that I ask myself every day. As of this moment, my most favorite is our CDK2 cyclin E degradation program, because I think this represents a huge opportunity, not just for CDK4/6 inhibitor-resistant cancers, but also for cyclin E overexpression cancers. That's our, I would say, my personally most favorite program. It's moving into clinics hopefully in the early part of next year. This program represent a very unique opportunity that shows that during our R&D, we can find the significantly increased potency and very good safety window for the breast cancer, ovarian cancer, and gastric cancers. This is a program that will represent our-- We hit the delicate balance of degradation of both CDK2 and cyclin E. I would say this is a very unique advantage of targeting two proteins which is pair and in the cell cycle. That's something I think that's the reason that make me feel most interested in this program. The second program working on the TYK2/JAK1 degradation, again, it's a sweet spot because recently we already seen another approval of a dual inhibitor of TYK2 and JAK1. In our case, we degraded TYK2 more than 90%, but we only degrade the JAK1 to a much lesser degree, and gave us the combined potency. Also, on our hand, so far the safety looks good. That's why that's my another favorite program to move into clinics with dual targeting and not just targeting TYK2 only. Certainly, we have another pain program is already in clinics, and that's for bone cancer pain. We want to move forward and generate some early proof concept results, which is also targeting a very broad medical need. So these three programs are favorite, but as I said, we are constantly evaluating all of the other programs. If there is some core programs doing well in China trial, we'll move it to a global development stage. It all depends. It's the data that driving our decision. My favorite programs are these. It doesn't mean that we'll stick to the program, but we need to look at the data and to decide which program is the top priority. At this moment, as I said, those three programs are my favorite programs. Great. Thank you. Let's get deeper into your platform and the underlying science. You have dual degrader programs and degrader antibody conjugates. Where do those two approaches have the clearest potential advantages over conventional inhibitors or other degraders or ADCs? What type of data would further validate that differentiation? Well, for degraders, certainly the advantage is the scaffolding function of a protein will be eliminated compared with inhibitors. That's everybody talk about. But for dual degrader, it give us another look at the signaling pathway of cancer and inflammation. For example, TYK2 and JAK1 belong to the same family, and maybe just inhibiting TYK2 only may not be sufficient. Especially it may be sufficient in psoriasis, but it may not be so in lupus or rheumatoid arthritis or IBD. So we feel like for the autoimmune disease and taking some of the JAK1 out will be very beneficial to the autoimmune disease, to some of them. So that's why we have to, as I said, the balance is super important because JAK1 is also known to be involved in infection. So we need to be super careful on to what degree to degrade the JAK1, instead of degrade 90% of it, which is most people talk about, like we need to deep depletion of the protein. But I think deep depletion of TYK2 may be very beneficial, but deep depletion of JAK1 may not be. So that's the thinking process of us to look at the dual degrader compared with the single target degrader. Then we look at conjugation of degrader to antibody. This is a new direction that we are super excited about. Because we develop thousands of degraders, many of them have very, very strong potency, but at the borderline case of whether the window is big enough for us to continue to develop. So, conjugator as antibody will certainly added another layer of safety, because antibody's selectivity. So that's something at the beginning, we thought about that the increased safety is beneficial, but now we think even the potency is significantly increased. That's something pretty surprising to us. So we are moving forward with our degrader antibody conjugation platform. This platform also has the advantage to move on in China because ADC in China has been the source of the products for the whole world. So the infrastructure, the people, the knowledge and know-hows are all there. So I think for Gyre in the coming years, maybe roughly half of our products will be based on the antibody degrader conjugate, that will give us a significant advantage over just the degraders itself. So that's my positioning of Gyre in both the dual target degradation and also the antibody conjugate. That's what I believe Gyre in the future can generate most of the lead products from. Great. Now, you've mentioned this a few times, but you have a commercial China business that is generating revenues. How does that change how you think about your funding model, and how do you decide which programs to fund internally versus partner? Well, we never exclude a partnership from our business model, and partnership is important, not just for the validation of technology, but also for the cash flow. Partnership is certainly a part of our business model. But we do have a commercialization, especially we have one more NDA in China pending. If that NDA for HBV liver fibrosis approved, that could be a very significant change of our revenue stream and profit. I would say that's really something for near-term catalyst because in addition to HBV fibrosis, it could also be used in MASH and other fibrosis. We are exploring that, and that's why I think China revenue stream profit can also be used to fund our research operation in China. That gives us the capability to move the right products into global development. I think this model is easy to say, but very difficult to establish because establishing a revenue stream in China takes a long time. Fortunately, we have been thinking about this model for a long time and implementing each step. That's why today we can benefit from this model. That's what I see the current revenue stream will be sufficient even without accounting the potential new revenue after our second product approved for liver fibrosis. It could generate a much stronger, I would say, support, the financial support for our R&D. Certainly we also know that global development costs a lot of money, and so that's a totally different financing need. That's why we are here for. Thank you. For your cancer-induced bone pain program, what would constitute a convincing phase II proof of concept, and why is this indication well-suited to demonstrate the value of the platform? Well, our cancer pain program is based on the theory that the TrkA and TrkB are both involved in the pain signaling. Because the human genetic study demonstrated that the superfamilies losing these two genes, either of them can lose the pain feeling. We have been working on this and demonstrate that our degraders taking out both TrkA and TrkB will be very potent in all the animal models, and so far the safety profile is very satisfactory. That's why we are moving forward to the proof of concept study to show that this dual degrader of TrkA and TrkB will hopefully generate the proof of concept results in China, and that enable us to move forward to global development. Pain killing is a very difficult area, and there are many billion-dollar assets before, and they never generated any satisfactory results. We're fully aware of that. That's why we are moving forward cautiously to demonstrate that really the TrkA and the B together are important for the killing of the pain feeling. It's a huge amount of medical need, especially in cancer pain market, and that's what we are trying to address using clinical development in China. Hopefully next year we can see some POC data and then it enable us to make decisions for global use. Great. As you kind of look at your portfolio, what do you think the market is currently most underappreciative of Gyre today? Which milestones over the next one to two years would provide the clearest evidence that your strategy is working? Oh, that's a very interesting question because I think underappreciation is the right word for many things. I think our model is very unique. Most people probably very hard for them to comprehend why we have such a structure that has a significant revenue in China and a lot of wet lab operation in China, but we seek global development. Because this kind of model, I think in the biotech world is still very rare. People cannot comprehend the valuation of what's the meaning of those revenues, especially in China, traditionally the statistic analysis of various disease. Still, I think not as solid as outside. It's difficult to judge the market size. That's why, for example, we look at liver fibrosis in China, that's just HBV infection, 75 million. You look at even 20%-40% of them develop fibrosis. It means 15 million - 30 million people with liver fibrosis. But with this kind of target population, what is the accessible market? It's not something easy for outside to appreciate. Because traditionally this is an area that lacks sufficient statistics. That's one part I think the market or the outsiders underappreciate the strong market potential in China. It's also because we have multiple products, and actually, I think that's a good advantage for us to really give multiple shots on the goal and also de-risk a lot of things. Not the traditional way of looking at one or two products and bet on it. That's something different from most of the biotech models. Because I'm trying to build a long-lasting, self-sustainable business, and that's a different goal. We try to develop things from our own discovery platform instead of licensing in to get a quick jumpstart. Those are the areas that outside, I would say, underappreciate Gyre's strength. Because Gyre's strength is rooted in this kind of business model. This model's uniqueness makes people take a while to understand it. But I think that right now, more and more people are starting to appreciate this kind of sustainable model and also with a huge upside potential. That's what I see the change of attitude towards our business model. That's very encouraging. Thank you. Talking a little bit around your fibrosis franchise. What continues to drive the durability of ETUARY? Also, how can your existing commercial infrastructure support the broader fibrosis franchise and a potential near-term launch? Well, actually I started the lung fibrosis study in 2001 and 2002 period. At that time, there was a huge unmet medical need, and there was no lung fibrosis drug approved ever at that time. At that time, we didn't even have enough doctors who can make a diagnosis of lung fibrosis. That's why when we got our drug approved in 2011, we needed to really establish our own manufacture and sales network in China just to commercialize it. It was a huge challenge to me. But we did it. Since the launch, it's been still one of the-- I would say among all of the world pirfenidone sellers, we're probably still producing one of the top ones. I don't want to say the number one, but. That demonstrated our capability to manage the drug life cycle very well. Due to that process, we have our own manufacturer, our own sales in China, sales network in China. That is we cover all except Tibet, all of the provinces in China. That enables us to quickly launch our second liver fibrosis product. We don't need to build a new team, and we even probably just need to hire more people instead of building a new team from the ground up. That save us huge amount of time. Also during the lung fibrosis drug launch, we have be familiar with the insurance application process, all of the distribution channel management. It gave us, I would say, great ease in managing the second launch. Actually the company is actively preparing, and that's something I would say we don't feel intimidated by the way the sales distribution anymore. That would be very important because, as I said, the companies now, the new pipelines are all focused on protein degraders. Many of our expertise in the current sales distribution channels are from oncology area. I think if we get our products approved, that will be launched much faster than before. That's something I feel we can manage it very well now. That lung fibrosis product was just our first example of that we can do it from beginning to the end. I think our second one will just be much bigger scale. Then we're looking forward to our protein degraders that keep coming, and some of them will probably see early commercialization in China, and some of them will be moved to global development stage. Great. Now, on talking of going back to chronic HBV associated liver fibrosis, there's currently no approved anti-fibrotic treatment options, is that right? There is no approved anti-fibrosis option to my knowledge. Yeah. Okay. Now, once you're approved, how do you intend on or how do you perceive you changing the current treatment paradigm and the way that physicians may manage these patients? Well, that's a very interesting question that we are also looking at it. Because currently, there's no, I know that MASH drug really has some effect on liver fibrosis. Our compound demonstrated efficacy in HBV fibrosis. Whether we should move on to MASH fibrosis, it's a very important question, either by ourselves or through a partnership. That's something that we are actually looking at it because the whole company in the future will focus on oncology pipelines, autoimmune pipelines. Some of the pipelines actually has a very good synergy with our current fibrosis trial. How to coordinate these activities because I know we are a company of limited size. We have to focus on things instead of spread out too big, although we do have a capability to spread out much wider than other biotechs. But even though we still need to carefully evaluate. We're still evaluating this strategy, and then we will let you know afterwards if after we make decisions. But I really think because the patients of liver fibrosis still has a huge unmet medical need for new drugs. This will definitely be very helpful and to change the treatment options of physicians. Great. Thank you. One last question and slash observation is when now these days when you get on a flight to go to Shanghai, you see a lot of pharma BD people, bankers, VCs, mainly all going there to look for assets. With the way you've constructed and built and developed the company, you have the unique ability to straddle with the access to Chinese infrastructure and the efficiency outputs, with the ability to marry that with your scientific organization in the U.S. and also potentially the U.S. markets. Outside of yourselves, BeOne, Zai Lab, are there any other companies that are sort of operating in both countries and really utilizing kind of the benefits of having the two organizations? One added question is how hard is it to replicate what you are doing from a business model perspective? Well, I don't think, as I said, this model has been built since the beginning, more than 10 years ago, and it's not something that is easy to replicate because you need to have a revenue stream and you know in pharmaceutical how long for you to take you to get a revenue stream. You also need to have a profitable revenue. That's even more challenging. Otherwise, your whole model will just fail. I would say it's not easy to replicate, and it takes a very strong will to get it done from the very beginning. You want to have your own manufacturer instead of just simply licensing. I'm not against licensing. I think that's a fantastic way, but I think right now the changing is, as you said, many BD people of the pharma are going to China looking for early-stage targets, early-stage products. I would say it's significantly different from even five years ago. I would say the discovery capabilities in China is now become part of the global development of almost the whole drug industry. I look forward to Gyre to play an even bigger role in this area because we are the early people in this model. Hopefully, we will also have more collaboration deals with pharmas and attract investors worldwide. Great. Well, thank you so much for your time today. Really appreciate you coming. Good luck with the rest of your meeting schedule, and we'll stay in touch. Thank you. Thank you.