Good day everyone and welcome to BeyondSpring Inc's Second Quarter 2019 Financial Results Conference Call. My name is Melissa and I will be the operator on today's call. Please be advised that today's call is being recorded. At this time, I would like to turn the call over to your host for today, Stephen Kilmer, Investor Relations. Please go ahead.

Thank you, operator and thank you everyone for joining today's call. I would like to advise listeners that remarks made on today's call may reflect forward-looking statements relating to such matters as BeyondSpring's clinical and preclinical research and development activities and results, regulatory and commercial plans, industry trends, market potential, collaborative initiatives and financial projections, among others. These statements are based on currently available information and management's current assumptions, expectations and projections about future events. While management believes that its assumptions, expectations and projections are reasonable in view of the currently available information, you're cautioned not to place undue reliance on these forward-looking statements. The company's actual results may differ materially from those discussed during this call for a variety of reasons, including those described in the forward-looking statements and risk factors sections of the Company's 20-F and other filings with the SEC, which are available from the Investors section of BeyondSpring's website. Joining us on today's call is Dr. Lan Huang, Chairman and Chief Executive Officer, who will begin the call and provide a brief overview. Dr. Ramon Mohanlal, Executive Vice President of Research and Development and Chief Medical Officer, who will provide a clinical update; Richard Daly, Chief Operating Officer, who will discuss BeyondSpring's marketing and partnership strategy; and Edward Liu, Chief Financial Officer, who will provide a financial update. It is now my pleasure to turn over the call to Dr. Huang. Lan?

Thank you, Steve. Thank you for joining the call today, ladies and gentlemen. For those of you who are new to our story, BeyondSpring is a global, clinical-stage biopharmaceutical company focused on developing and transforming immunooncology cancer therapies to address severely unmet medical needs. Our lead asset, a first-in-class asset, Plinabulin is in two Phase 3 global clinical programs, one as a direct anticancer agent in the treatment of non-small cell lung cancer and the other in the prevention of chemotherapy-induced neutropenia or CIN. Since our last call, we continued to generate new data that characterize Plinabulin's unique study design and differentiated profile that further supports its potential to significantly improve cancer care. In second and third line non-small cell lung cancer with EGFR wild type, which accounts for 70% to 85% of Western patients, there are currently only four approved therapies available with limited survival benefit at around 8 to 10 months median overall survival, and certain SAEs such as severe neutropenia. Even PD-1 antibody’s response rate is around 20% and only has 2.8 months median survival benefit compared to docetaxel, the standard of care in this patient population. In CIN, the current standard of prevention care is G-CSF, such as Neulasta. However, the vast majority of patients with high-risk chemotherapy still develop grade 3 or 4 neutropenia, some over 90% after using Neulasta. Grade 3 or 4 neutropenia requires the chemotherapy dose be reduced, the next cycle be delayed, the chemo regime be downgraded, or discontinued altogether. We call them the 4 Ds. All of this results in significantly worse survival outcomes for patients. As a result, both indications present significant unmet medical need. Plinabulin has the potential to disrupt the current treatment landscape and greatly improve the overall patient outcome. Earlier this year, we reached the first…

Thanks, Lan. First, I would like to provide an update on our registrational trials for our lead asset, Plinabulin. Study 103 is a 554-patient, Phase 3 registrational study evaluating the anticancer effects of Plinabulin in combination with docetaxel compared to docetaxel alone in the second and third line non-small cell lung cancer with its primary endpoint of median overall survival. To date, we have enrolled approximately 450 patients in the US, Australia, and China. The study has two pre-specified interim analysis; the first, at one-third of patient death events; and the second, at two-thirds of patient death event. Earlier this year, we reached the first interim analysis, and DSMB recommended the trial to continue. The second interim analysis is expected in the fourth quarter of 2019 or the first quarter of 2020. If the p-value for the median overall survival and the second interim analysis is less or equal to 0.012, the trial may stop early. If the p-value is greater than 0.012, the trial will continue and final results of the trial at a death event of 439 patients are expected to be available in 2020. If the p-value for median overall survival for the final result is less than or equal to 0.046, the study can be claimed successful. The study's novel design in targeted population selection was presented at the IASLC World Conference on Lung Cancer last week. Study 105 and Study 106 evaluate Plinabulin's effect in the prevention of chemo-induced neutropenia. Study 105 is a Phase 2, 3 registrational trial of Plinabulin, after the standard regimen of docetaxel in advanced breast cancer, hormone refractory prostate cancer and advanced non-small cell lung cancer patients in the US, China, Russia and the Ukraine. The primary endpoint of this trial is duration of severe neutropenia or DSM in the…

Thanks Ramon. Our most recent data releases continue to support a differentiated product profile and we believe that Plinabulin can improve the standard of care and positively affect the lives of patients with cancer, those who require prevention of neutropenia and those seeking options for the treatment of non-small cell lung cancer and we continue to advance the organization toward commercialization. This morning, I'll be addressing three components of our commercialization prospects; the CIN opportunity, the evolving non-small cell lung cancer market and our business development strategy that supports the excellent work of our clinical team. First, the CIN opportunity. 4 million cycles of monotherapy G-CSF are used worldwide each year to prevent CIN today. In May of this year, Wilson and colleagues published a study in the Lancet forecasting the growth of oncology and chemotherapy regimens through 2040. Wilson stated that they expected cancer diagnoses to grow from 17 million cases worldwide to over 26 million. Additionally, the number of first course chemotherapy cycles will grow by 53% over this time from 9.8 million to over 15 million. As a result, we expect the use of supportive care therapies like Plinabulin to participate in this growth. As Lan noted earlier, there is an opportunity to improve on the standard of care and improve the outcome for patients. The clinical profile that both Lan and Ramon referred to presents a clear case for superiority in the prevention of CIN and the potential for increasing compliance and persistency with chemotherapeutic regimens with the hope that outcomes will be improved. Our market research demonstrates the opportunity to build the case for Plinabulin as a therapy that can improve the standard of care through maintaining dose intensity and keeping patients on their scheduled dose intervals. These are critical success factors in the treatment…

Thanks, Rich. I'll now briefly discuss our second quarter 2019 financial results. For greater details related to these results, I'll refer you to our press release issued this morning and our 6-K filing, both of which can be accessed on our website. With that said, I'll just highlight some key numbers. R&D expenses in the second quarter of 2019 were $5.2 million compared to $11 million in the same period last year. The decrease of $5.8 million was largely attributable to a $3.9 million decrease in expenses incurred by CROs and other service fees related to clinical trials, a $1.1 million decrease in manufacturing expenses and a $0.8 million decrease in non-cash share-based compensation. G&A expenses were $2.1 million in the second quarter of 2019 compared to $1.4 million for the same quarter of 2018. The increase was mainly due to non-cash share-based compensation. Net loss attributable to BeyondSpring in the second quarter of 2019 was $7.4 million compared to $12.2 million for the same period last year. Cash balance on June 30th 2019 were $0.7 million. In recent months, we have strengthened our balance sheet through a number of equity financing transactions. On July the 19th, we closed a $35 million public offering led by Decheng Capital. The transaction attracted strong demand from high quality US-based investors and was highly oversubscribed [ph]. In June and July, our China subsidiary entered into a series of equity purchase agreements with certain investors led by Efung Capital to acquire a 4.76% stake in the China subsidiary for approximately RMB100 million or $14.5 million. We have so far received approximately $10 million. In May, we put in place an ATM facility and raised approximately $30 million before it was suspended in July in anticipation of the aforementioned public offering. We believe our cash resources, including the net proceeds from these financings are sufficient to support our clinical trials and submit NDA in China for Plinabulin for the treatment of CIN and non-small cell lung cancer and to advance our immuno-oncology pipeline as well as our ubiquitination protein degradation research platform. With that, I'll now turn the call back to Lan. Lan?

Thank you, Edward. We are very pleased with the progress at our clinical development and the consistency that generated so far that further supports Plinabulin's favorable drug profile to improve cancer care. Looking forward, we expect many important data and regulatory milestones over the next 12 to 18 months, which will transform us from a clinical stage company to a commercial stage company. Together with our shareholders, investors and partners, we are working hard to continue to create value and to deliver innovative medicines to the patients in need. I look forward to keeping you updated on our progress towards the goal in the coming months. We named our company BeyondSpring with two meanings. First is beyond borders, we integrate US and China resources together to achieve time and cost efficiencies and to target these two largest pharmaceutical markets in the world. This unique and scalable business model will maximize the return for our shareholders. Second is beyond season. We like to go from sowing a whole season of spring directly to the harvest season of NDA. As you are all aware, the harvest season or autumn is just around the corner. This concludes our call today. Thank you everyone for joining.

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Andy Hsieh with William Blair. Please proceed with your question.

Hey, thank you for taking my questions, and congratulations on all the progress Lan and the BeyondSpring team. So, I have a couple. I think Lan, you mentioned some pre-clinical assets, basically 002, 003, and 004. Can you provide a little bit more information about, is that from the ubiquitin class or it's more similar to the Plinabulin follow-on asset?

Okay. Thank you, Andy, for the questions on our pipeline. So, actually 002, 003, and 004, they are the immune related pre-clinical assets. I will let Ramon to tell you a little bit more in detail, but in addition to that, we do have ubiquitination and degradation platform and that's in a very advanced stage of development, and our first target is the KRAS and that's the Holy Grail target. So, probably you I turn to Ramon to answer the questions on the pre-clinical assets.

Yes. The 002, 003, and 004 assets are immune enhancing agents. They are small molecule agents. So, this is a small molecule play as opposed to biologics. 002 is like a CTLA-4 like costimulator, 003 is a signaling pathway modulator, and 004 is a drug that can induce the neo-antigens in cancers that typically do not express enough antigen to stimulate immune system.

Great. Okay, Yes. I just wanted to clarify that fact. So, I also wanted to check my understanding. So you talked about the first interim look. I believe, in the first interim look basically asks a question about threshold, the hazard ratio of threshold of 0.75. If it's above, then the enrollment was designed to increase to capture the full powering of the study. So, is it correct to assume that at least in the first 33% of the population, you are seeing a hazard ratio of 0.75 or less? Is that a correct assumption for research [ph]?

Yes. Yes, so because -- so, there's no change in the design, no increase in sample size, so this is an estimate of hazard ratio equal or less than 0.75.

Okay. Got it. And then about the National Reimbursement Review in China, I believe that happens every other year. So, this year, it is going to be a little bit later. So, when submitting for National Reimbursement Review next year, is that going to be for the 2021 cycle or the 2020 cycle? I just want to get a sense of the kind of the review seasonality?

Yes. So actually, in China the previous years every eight years, they're going to do this national insurance evaluation. But now, actually it's increasing the frequency of reviewing of the assets for national insurance and it could even be more than just every other year. So ,we see agents like Tagrisso and other actually very -- national like China develop its assets, also getting to the national insurance right after the approval. So I'm expecting that if we're so lucky to get this drug approved by 2020 or 2021, we should be able to start negotiating with the government probably right after the approval.

I see. Okay. And I think I have a question for Rich about the biosimilar impact. So Amgen has this Onpro, which improves on the convenience. So with the biosimilar entry back to the market, do you see the convenience factor getting worse because patients receiving the biosimilar probably have to come back and get that shot. And do you think that's an opening for BeyondSpring to offer a more convenient product on the market?

So, I think that's a really good question. I think that this is becoming from a biosimilar and innovator on the G-CSF side, it's becoming a pretty price sensitive market because there's no incremental innovation. The value that Plinabulin brings is incremental innovation in combination with G-CSF. So, you pulled back to your point, we see Coherus having great success. They predict -- in their most recent announcement, they're going to end up with a 20% volume share. We see share coming down slightly for Amgen, price coming down significantly, obviously as you see the biosimilars take share. But for us, because we're at 30-minute infusion, 30-minutes after chemotherapy on the day of chemotherapy, we think this is a pretty significant advancement and convenience. But the market research that we've done Andy, the doctors are incredibly excited about the standard of care improvement for the patient. So, we see even with Onpro, if you look at some of the data that Amgen has generated with, they did some work with IQVIA, 200,000 cycles they did. Even with that, there's a significant amount of dose delays. So, patients are experiencing challenges with their chemotherapy, and 25% of the patients have dose delays because of neutropenia or other issues, even with Onpro. So, we're seeing the opportunity to go in here and say, we can actually improve on the standard of care and work with biosimilars or work with the innovator, the brand. So our convenience, I think is good. The physicians in our market research respond very favorably to the convenience and for the clinic flow because obviously the patient is there and they're in the chair already and so we think we have a really good story all the way around from convenience to working with biosimilars or with the innovator and then improving on the standard of care. We think we can really work all the way through the entire story.

Great. Thank you for that. And last question from me, I promise. So Edward, I think you were mentioning several subsequent fundraising events. Would you mind providing us with like a rough cash balance at this moment?

Well, as you know and also as we disclosed, we raised $13 million from the ATM. We raised $35 million from the follow-on offerings in July and also we've raised approximately $10 million from the China subsidiary offering. So that gave us approximately close to $60 million. And I think so far we are a little bit down from there due to some payments to the vendors over the last two months, but these cash we think is sufficient to support both lead indications to complete the NDA both for China and US. So yes, I hope that answers your question.

Yes, that's super helpful. Thank you. Thank you very much. Yes. Well, thank you very much for answering all my questions.

Thank you, Andy.

Thank you. [Operator Instructions] Our next question comes from the line of Joe Pantginis with H.C. Wainwright. Please proceed with your question.

Hi. Good morning, everyone. Thanks for taking the questions. I have two questions, if you don't mind. First, regarding the upcoming interim, just the logistical question for Study 103. If you don't hit the interim p-value of 0.012, as Ramon mentioned, would we expect to see a press release, that's the typical continuous planned press release or would you look to provide any additional information?

Thank you so much, Joe. Thanks for the question. Yes. So if we are so lucky to hit it, of course, we have to go through the DSMB and FDA and announce the good news. But if we don't, then as you know, that we will just issue the study is going to continue as planned.

Okay. Now that's helpful. Just wanted to make sure. And then my second question is really wanting to focusing on the background activities at the companies with regard to the upcoming or expected CFDA filing in China for Plinabulin. What can you be doing ahead of data or what are you doing ahead of data with regard to the filing? Have you been able to submit anything yet? Do you have to submit it all at the same time? And then also concomitantly, what are you doing in the background with regard to potential commercialization preparations?

Thanks. I will take the first question on the China submission and then Rich will answer about the commercial readiness question from you. Those are all great questions. So for China, we have different rules there. As you know, October 2017, China government had to issue to really promote innovation, and also to target this cancer -- this is severely the indication for the population. So what they say is for those life-threatening diseases including late stage cancers, the companies can do rolling submission of the NDA and they can use interim data with the efficacy trend to submit. And then the government will give the conditional approval based on the efficacy trend and then later, of course, the company has to finish the whole study and get to the final look and then that if it still supports the approval, then the government will give the approval. So this is how we follow with the current strategy. So as you see that for the CIN study, for the 105 Phase 3 interim we did announce last December that meet the interim analysis to have statistical significance. DSMB has also agreed with that and also we have from topline I will have superior data. So both of them will enable us to submit with China conditional approval for the CIN. And then as you see for the non-small cell lung cancer, we do have a pretty positive interim analysis in the first look, right. [Indiscernible] ratio points is tremendous, right. Even with the nivolumab versus docetaxel in this severely affected [ph] population there has a ratio in 0.73 and then for ramucirumab plus Docetaxel, the approval was only based on ratio 0.86, right. So that's a very encouraging trend in efficacy that enable us to also through the rolling submission. So far we haven't submitted yet, but that's why in our press releases we say in the quarter one of 2020, because there's a lot of things going on for the submission package. For the CMC, we are done, for the pre-clinical we are also done, but also to the CSR and other things, it does take time.

Got it.

So, okay. So, Rich will answer you on the commercial question.

So thanks, Joe. So philosophically, we're aligned between the US and China. So between the two countries, the global amount of G-CSF unit is 66% of the global utilization of G-CSF. So our price is significantly better, obviously from previous statements we've made from the company, 75% of the global value is in the US but China is growing at a 33% clip on a dollar basis. So we believe there's tremendous value and tremendous opportunity in China, not only because of the volume of cancer cases, but obviously because of the G-CSF growth and the opportunity to improve care for patients who are suffering with cancer in China. So our goal is to hold onto as much value in these two critical markets as possible. With that said, we want to be smart about entering China. We want to be really thoughtful about it because obviously it's a very complex market. Also taking into consideration, the size of the market, but the concentration of cancer care. Cancer care in China is concentrated basically into five cities. So one does not have to cover, I should say companies does not have to cover the entire country to cover cancer care. So we're working right now on the BD front to identify and we are in deep discussions with companies who can -- top companies who can actually cover these markets and our experience in these markets -- cancer market, specifically. But I'm sort of giving you the back and the forth on it. The most recent capital raise we had in China gives us great confidence that we can be a very strong negotiation partner with these companies. So we're looking at creating, again, as much value as possible for our shareholders by holding on to as much of the long-term value for the asset as possible. What we don't want to do is get into a situation where China continues to grow and we've -- our license at a very low residual. So we're looking to make sure we get the best partner possible. It is complex. I want to be really clear. It's not necessarily first order priority to build an infrastructure in China on the back of one molecule. However, we believe that the P&L can support a product like Plinabulin because we believe price will be relatively healthy and cost of goods is solid. It's a very good cost of goods and cost of sales will be very light compared to other products and especially with the concentration of care in China, we think this is a really good opportunity for us or for our partner as we think about entering to China. So our discussions are advanced in China and we believe we are a very strong negotiation adversary or partner there as well. So we're looking for the best value possible and the quick [indiscernible] given the timelines that Lan has discussed in the past.

Got it. Very helpful Lan and Rich. Thanks a lot.

Sure.

Thank you, Joe.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to management for final comments.

Well, thank you so much for joining the call today and your continued interest and support of BeyondSpring. Have a nice day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.