CG Oncology, Inc. Common stock Morgan Stanley 24th Annual Global Healthcare Conference
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My name's Sean Lannan. I'm the Head of U.S. Mid Cap Biotech Equity Research here at Morgan Stanley, and welcome to our Global Healthcare Conference. Before we begin, to make you aware of some important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions on that, please reach out to your Morgan Stanley sales representative. With that, we have the pleasure now to welcome from CG Oncology, their CEO, Arthur Kuan. Welcome, and thank you for your time today, Arthur.
Thanks for having me. Maybe do me a favor and answer some of my macro questions.
The first one is the rise of China-originated innovation, and if at all, how does that change competitive positioning or thoughts around R&D or thoughts around business development?
Certainly based on what we've seen coming out of China, it is something to be respected, and I don't think we should take it lightly. More broadly, I think we think a lot about when it comes to U.S. innovation, what is the competitive advantage? I still think that being close to the U.S. market, being close to the providers and patients, that in of itself, I think continues to be something that could be differentiated in terms of the rate and speed of innovation, making sure that we're well set up for clinical development and clinical operations that's fit for purpose in the U.S. population.
Sure is also very critical.
Sure. Yeah. Now, moving on to AI.
Have you or are you implementing AI adoption within your business? Have you seen it, or can you give a description of something that's changed, whether it's on the cost front, a decision, maybe a POS assumption?
Sure. I think we're, first of all, definitely embracing AI in all aspects of our operations. Moving beyond sort of the meeting minute summary and email summaries, I think we're now asking every function within the company, from finance to accounting to CMC to clinical development, to really break down their existing workflows and work streams. Because in order to give AI the right context, you first really need to figure out and dissect your current work stream. It's basically a process of being very honest and auditing your own workflow.
Sure. How ideas come to be, how ideas are embedded.
The more descriptive you can be, the better it is to train your AI agent or teams of AI agents. Directionally, I think the near-term gain is going to come from productivity increase and more of an efficiency gain in the first step.
Sure. Thank you. And last one before we dig into CG specific, but which policy variable? Is it FDA, Medicare negotiation, MFN, tariffs, global pricing, matters most to your economics?
Yeah. So I would say in that list, the one that is still up in the air remains to be the MFN.
I think we're watching that very closely and looking at what the bigger companies are doing with their negotiations there. But certainly, that has an impact on how you think about, for example, EU pricing.
Sure. Thank you. And now we'll get on to CG, but thank you, Arthur Kuan. I appreciate it. Let's start with the BLA for cretostimogene grenadenorepvec and where it stands. So you've been submitting on a rolling basis and got it to completion in the fourth quarter with the CMC module as the final piece. What's actually left? And coming out of your manufacturing-focused alignment with the FDA, how much submission risk do you think is truly behind you?
Sure. From a CMC perspective, one of the most important things that the FDA wants to see in the module before we submit is can you prove that the process is reproducible? Is it robust enough? Is it repeatable? Do you have full control over different aspects of your process? One of the things that many companies do during this phase is they figure out new improvements to their process such that they get a higher yield, for example, or they learn that, hey, the clinical opportunity is a lot bigger than what their scale could support. Certain tweaks are made. I am happy to share that our process that led to all the clinical GMP products that enabled our clinical trials is a process that we intend to launch commercially.
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