Gyre Therapeutics, Inc. Common Stock Morgan Stanley 24th Annual Global Healthcare Conference

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 Rock Bian. 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?

Rock, 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.