BeOne Medicines AG ($ONC)

Good day, everyone. Welcome to BeOne Medicines Q1 2026 Earnings Call Webcast. [Operator Instructions] At this time, I would like to turn the call over to the company.

Hello and welcome. Thanks for joining us today. I'm Dan Maller, Head of Investor Relations at BeOne Medicines. Before we begin, please note that you can find additional materials, including a replay of today's webcast and presentation on the Investor Relations section of our website ir.beonemedicines.com. I would like to remind all participants that during this call, we may make forward-looking statements regarding, among other things, the company's future prospects and business strategy. Actual results may differ materially from those indicated in the forward-looking statements as a result of various factors, including those risks discussed in our most periodic -- recent periodic report filed with the SEC. Please also carefully review the forward-looking statements disclaimer in the slide deck that accompanies this presentation. Reconciliations between GAAP and non-GAAP financial measures discussed on this call are provided in the appendix or presentation, which is posted to our IR website, along with our earnings release. All information in this presentation is as of the date of this presentation, and we undertake no duty to update such information unless required by law. Now turning to today's call as outlined on Slide 3. John Oyler, our Co-Founder, Chairman and CEO, will provide a business update. Aaron Rosenberg our CFO, will provide an update on our first quarter financial results and 2026 guidance. And Lai Wang, President and Global Head of R&D; will discuss our R&D and pipeline progress. We will then open the call to questions. And joining the team for the Q&A portion of the call will be Xiaobin Wu, President and Chief Operating Officer; Matt Shaulis, General Manager of North America; Mark Lanasa, Chief Medical Officer for solid tumors; and Amit Agarwal, Chief Medical Officer for hematology. I'll now pass the call over to John. John?

Thank you, Dan, and welcome, everyone, and thank you for your time today. We entered 2026 with tremendous momentum and our Q1 performance reflects strong execution across the business and a very solid start to the year. From a financial perspective, we achieved significant product revenue growth and GAAP earnings per ADS. These results underpin our confidence to raise our 2026 revenue guidance range by $100 million as Aaron will discuss later. Our foundational hematology franchise consisting of BRUKINSA [indiscernible] and our BTK CDAC is rapidly progressing with approvals, launches and key pivotal trial milestones expected in the near term. Both our heme franchise and our solid tumor pipeline will be on display at ASCO and EHA where we have over 60 acceptances. At ASCO, we will present proof-of-concept data from 3 exciting solid tumor programs moving into late-stage clinical trials, which Li will tell you more about shortly. I'll begin today by highlighting the exceptional commercial and clinical progress of BRUKINSA, which has firmly established itself as the foundational BTK inhibitor. BRUKINSA continued its global leadership in the growing BTK market with first quarter sales of $1.1 billion, representing growth of 38%. We are seeing strong performance in all markets and all indications. BRUKINSA's large, consistent and expanding body of clinical and real-world evidence has elevated the benchmark for what is possible in CLL. We believe that the data shows that only BRUKINSA provides the long-term outcomes that patients and physicians should expect and should demand. From its inception, BRUKINSA was designed to provide the best-in-class 24/7 BTK inhibition. Our hypothesis was that achieving complete and sustained BTK inhibition would result in a superior therapeutic profile and that has been borne out in the almost 7 years since, which I'll cover in the next few slides. At ASH 2025 BRUKINSA set a new standard in frontline CLL with 6-year progression-free survival reported at 74% and overall survival of 84%. Adjusting for COVID, those are 77% for PFS and 87% for OS at 6 years. CLL is an indolent disease and admittedly, much of the data across the various medicines for the first 3 years looks similar, but outcomes beyond this are what truly matter to patients. So this slide builds on the scatter plot, but focuses on the landmark reported PFS at years 3 through 6 across Phase III trials in frontline CLL. On the left, we see the data for BRUKINSA in the 2 continuous BTK inhibitors recognizing the limitations of cross-trial comparisons, the early landmark PFS rates for BRUKINSA are higher and continue to diverge over time. In year 6, that reaches a delta of 12%, the equivalent of 1 in 8 patients not progressing. On the right, we see an even more pronounced delta between BRUKINSA's landmark PFS and that of fixed duration regimens such as [indiscernible] . In year 6, that's a delta of 21% or roughly 1 in 5 patients in the unmutated population, which is the majority of CLL patients. The difference between continuous BRUKINSA and VO is 27%, which is more than 1 in 4 patients who started the study. Now AV has not reported the long-term landmark PFS data to be fully represented on this chart. But I will note that despite AMPLIFY being studied in a young fit population, which has a median age of 61 versus SEQUOIA's median age of 70. It has the lowest PFS of any regimen at 3 years. The last amplified data cut was April 30, 2024, over 2 years ago. An additional follow-up data has not been provided though. Of course, it exists. BRUKINSA is the only BTK inhibitor that has demonstrated superiority on efficacy versus ibrutinib in a head-to-head trial. Here, we can see the Kaplan-Meier curves from BRUKINSA and the other BTK inhibitors in their respective head-to-head trials versus ibritinib in relapsed/refractory BTK naive CLL patients. BRUKINSA demonstrated superiority with a hazard ratio of 0.69 and a p-value of 0.001. When we presented the initial early cut of these data to the CLL community, the universal feedback was, this is great. But in an indolent disease, we need to see longer follow-up. And there was an important scientific reason for that. Ibrutinib has a known tolerability issues that could potentially influence the patient's ability to stay on the therapy during early treatment. In the ELEVATE-RR study, acalabrutinib, had previously showed early PFS separation from ibrutinib, but that early separation was not sustained. As you can see in the middle panel, acalabrutinib actually crossed over and became numerically worse than ibrutinib at roughly 33 months and reported a hazard ratio of one. And again, while early separation was an encouraging signal, CLO prescribers wanted to see with BRUKINSA sustained separation with longer follow-up to be convinced. You can see that in Alpine, BRUKINSA showed exactly that. After these data were presented. The adoption of BRUKINSA began in earnest. Pirtob with a very short follow-up period of only 18 months shows the weakest early separation versus ibrutinib with a hazard ratio of 0.845 and a p-value of 0.4102. The CLO community needs to see much longer follow-up data from Pirtob. But given this curve, Hero may face challenges demonstrating statistical superiority on PFS. So what about tolerability? Pirtob is self-described as a third-generation BTK inhibitor, with the hope that it would be more tolerable than the second-generation covalent BTK inhibitors. In reality, the BRUIN-314 study, Pirto demonstrated numerically more adverse events leading to discontinuation than ibrutinib. This is important because it has potential ramifications for use in specific subgroups such as older patients. Notably, in the BRUIN-313 trial in first-line CLL, the average age of patients randomized to Pirtob was 65 years old, roughly 5 years younger than the respective first-line trials for both of the second-generation covalent BTKis. But taken together, Pirtob's limited follow-up lack of differentiation on efficacy and tolerability over ibrutinib and its mechanistic rationale designed for covalent BTK resistance do not support moving it from the relapse setting, where it currently plays a much-needed role. BRUKINSA's comprehensive body of evidence continues to expand. It consistently is supporting it as the foundational best-in-class BTK inhibitor. Last quarter, we highlighted 3 published studies that illustrate BRUKINSA's efficacy and safety benefits over the existing fixed duration regimens, VO, IV and AV. And at ASCO will present new evidence from over 58,000 real-world patient data sets each of which demonstrate the significant real-world benefits of BRUKINSA. While BRUKINSA's momentum as the foundational BTK continues, we're aggressively moving to redefine the fixed duration treatment landscape with our next-generation foundational BCL-2 inhibitor, Sonro. We intentionally designed Sonro to be 14x more potent and 6x more selective than venetoclax and with a much shorter half-life to minimize drug accumulation. This differentiated profile may enable a simpler ramp-up compared to the burdensome monitoring that is required by the first-generation agent. The trial studying this optimized ramp-up schedule is progressing well. Sonro's first approvals are as monotherapy but it's true transformative potential lies in combination with BRUKINSA. The clinical data that we're generating with the combination of BRUKINSA and Sonro is truly exciting. In the 101 trial shown here, ZS demonstrated a UMRD rate of above 90%, a remarkably flat PFS curve and a favorable safety profile. This compares very favorably with AV on the right. We're in a much healthier, younger population. They saw UMRD of only 34%. We look forward to sharing updated data from this trial at ASCO. With 3 Phase studies underway, the ZS combination has the potential to change the first-line CLL treatment paradigm and enable B1 to participate in half of the market where today we have no presence. Finally, I want to highlight the progress of our BTK CDAC, a novel potential therapy for patients who have progressed on other treatments. Our BTK CDAC is first-in-class. It shows complete BTK degradation and it holds a clear mechanistic advantage in terms of BTK mutation coverage. Data presented at ASH 2025 showcased its profound efficacy in heavily pretreated patients, including those with mutations conferring resistance to both covalent and non-covalent BTK inhibitors. In our Phase I/II study, the patients receiving the recommended 200-milligram dose achieved an outstanding 94.4% overall response rate with responses deepening consistently over time. Based on the strong efficacy and favorable safety profile of the molecule, we're advancing highly ambitious clinical development plan, including several Phase III trials that are well underway. We've guided to a potential accelerated approval submission in the U.S. relapsed refractory CLL in the second half of this year. In summary, our foundational hematology franchise has never been stronger. BRUKINSA is driving continued global revenue growth. Sonro is poised to disrupt the fix puration market, and our BTK CDAC is leading the next wave of innovation in CLL. Only BeOne is uniquely equipped to provide the best-in-class therapies for every CLL patient regardless of their stage of disease. We're looking forward to ASCO and EHA this year, where we will have a large leadership presence highlighting our foundational medicines and [indiscernible] and our 3 rising stars from the solid tumor portfolio, which Li will tell us more about shortly. With that, I'll pass it over to Aaron to provide our financial update.

Thanks, John. In Q1, we sustained strong business momentum across our product portfolio. Product revenue reached $1.5 billion in the quarter, representing 34% year-over-year growth. BRUKINSA Global revenues totaled $1.1 billion, with strong growth and performance across all approved markets and indications. In the U.S., BRUKINSA Q1 sales were $761 million, principally driven by volume growth of approximately 28% versus Q1 2025. U.S. saw a mid-single-digit pricing benefit on a year-over-year basis with nonrecurring gross to net favorability of approximately $20 million in the period. Excluding these items, we continue to expect relatively stable pricing in 2026, consistent with prior commentary. Q1 results reflect the typical seasonality patterns seen across the BTKI class, including inventory dynamics and one fewer shipping week in the first quarter. The business performed nicely relative to our range of expectations for the quarter with increasingly positive demand signals in March, which have carried through to April. We are confident around performance in the U.S. for the year, and this is reflected in our guidance update. Meanwhile, TEVIMBRA reported a 20% increase with sustained market leadership in China despite the competitive environment. We are pleased with contributions from launch markets with approximately half of the growth for TEVIMBRA coming from markets outside of China. In license and other products also showed continued strength, growing 27% year-over-year including robust performance from our Amgen in-license portfolio. XGEVA continued to perform very well in the quarter with $90 million of revenue, of note, we did see several biosimilar entrants filed for approval in April, which could lead to enhanced competition for XGEVA. We are pleased with the early market reception for sunrotoclax our foundational next-generation BCL-2 inhibitor approved in China for post-BTKi CLL/SLL and relapsed/refractory MCL. We continue our solid execution across all geographies. The U.S. remains our largest market, generating $766 million with year-over-year growth of 36%. China revenue totaled $465 million, a 17% increase compared to the first quarter of 2025, of which 5% was driven by foreign exchange. We continue to see good performance and sustained leadership from TEVIMBRA and BRUKINSA. Europe contributed $191 million, representing growth of 64%. Foreign exchange contributed approximately 11% of this growth given euro strengthening on a year-over-year basis. We continue to drive demand growth for BRUKINSA in Europe in all major markets, and there remains plenty of opportunity to increase brand share, given BRUKINSA's differentiated long-term data across all patient types. While the AB combination has yet to achieve broad market reimbursement, we have observed BCL2 BTKi fixed-dose treatments gaining traction in some early markets. As we've discussed, Europe is a more mature market for these fixed dose treatments given the legacy availability of venetoclax plus ibrutinib. The long-term data is clear on the efficacy and durability of BRUKINSA across all patient risk factors particularly for the large unmutated population, which we expect will continue to support growth moving forward. Rested World markets grew 104% driven by market expansions and new launches in key markets such as Japan and Brazil. Now turning to the other components of our GAAP P&L. Gross margin improved to 89% from approximately 85% in the prior year. This improvement primarily reflects the benefits from favorable product mix, price and cost efficiencies. Operating expenses grew by 16%, totaling $1.1 billion as we are investing to support our commercial growth and rapidly advance our innovative pipeline. The weighting of growth between SG&A and R&D is expected to normalize over the course of the year, with both converging toward rates consistent with the overall OpEx growth implied by our full year guidance. Income from operations totaled $250 million, an increase from $11 million in the prior period. Income tax expense totaled $32 million for the first quarter, primarily reflecting cash tax expenses in certain geographies. Altogether, net income totaled $227 million with GAAP diluted earnings per ADS of $1.96. Our non-GAAP P&L includes adjustments for typical items with a full reconciliation provided in the appendix. Non-GAAP income from operations totaled $414 million in the first quarter up from $139 million in the prior period. And non-GAAP net income came in at $375 million for the first quarter, which translates to diluted non-GAAP earnings per ADS of $3.24. We generated free cash flow of $161 million in the first quarter, an increase of $173 million over the prior period. Note that operating and free cash flow is typically lower in the first quarter due to working capital seasonality. Now turning to our 2026 financial guidance update. We like what we see so far in the U.S. with strong demand growth and with relatively stable net pricing. Growth is anticipated in all markets and will benefit from continued global expansion and we anticipate modest full year initial contributions from our launches of zanidatamab and Sonro. And our guide incorporates all current and anticipated competitive market dynamics. Given our Q1 performance and assessment of recent trends, we now project 2026 revenue to be between $6.3 billion to $6.5 billion, an increase of $100 million across the range. Our estimate of GAAP gross margin remains in the high 80% range with continued benefit from mix and a full year of productivity from improvements implemented last year. GAAP operating expense expectations are unchanged between $4.7 billion and $4.9 billion. Given our top line improvement, GAAP operating income estimates are updated to be between $750 million and $850 million with a corresponding change in non-GAAP operating income. In summary, we are pleased with our start to the year and are confident with how 2026 is shaping up. And with that, I'd like to pass the call over to Li.

Thank you, Aaron. Hello, everyone. Thank you for joining us today. This slide highlights recent progress across BeOne's pipeline. In hematology, BRUKINSA's [ Mango ] Phase III study in [indiscernible] mental cell lymphoma remains on track with interim PFS readout expected next month, supporting a potential first chemo-free regimen in this setting. [indiscernible] is approaching a key inflection with U.S. PDUFA decision expected soon alongside EU submission and asthma guideline inclusion. Our BTK CDAC continued to advance with potentially pivotal Phase II programs in relapsed, refractory cell and Waldenstrom under the Phase III head-to-head study versus Pirto is on track to complete enrollment in early 2027. In solid tumors, [indiscernible] received U.S. party review in H2 positive gastric cancer. In parallel, the CDK 4 capture has activated its first Phase III site under the GPC3/4-1BB bispecific is involving a potentially pivotal HCC study. In addition, we acquired an exclusive option to license a novel PD-1 VGF CTLA4 trispecific, which is expected to enter the connect in June. In immunology, we made a data-driven decision not to pursue IRAK4 in rheumatoid arthritis, while the BTK CDAC CSU Phase II study is on track to initiate by year-end. The progress you just saw reflects the very deliberate way we are building our pipeline. Our strategy starts with focus, selecting a small number of disease areas where we believe we can lead and then building depth not just the single assets. What enables this approach is our in-house technology stack, expanding CDEC novel payroll ADCs, cell therapy and emerging platforms like T cell engagers. We're not bound to a specific target or platform alone. We systematically match the right biology with the right modality to build a pipeline that is deep and sustainable. The engine has clearly accelerated from 2011 to 2020. We delivered 11 new like entities building the foundationwith assets like Zanio and Tesla. Between 2021 and 2023, we added another 10 MEs, demonstrating consistent productivity and execution. The momentum stepped up again in the last 2 years with 18 MEs across small molecules, CDAC, ADC and tristate antibodies, reflecting the maturation of our in-house platforms. Looking ahead, we expect to sustain a cadence of roughly to TMEs per year from 2026 and beyond innovation that BeOne is accelerating systematic and built to scale. As our innovation engine accelerates, it is producing a broad but intentionally focused pipeline across our key disease areas, we have built depths with multiple mechanisms and modalities to existing within the same indications. This is important because it creates unique opportunities for proprietary combinations developed entirely within our own portfolio, which drives higher return on investment rather than relying on external assets. 2026 marks a true inflection year for our solar tumor portfolio. After several years of disciplined build-out, we now have a new wave of programs advancing toward registration. In breast cancer, our CDK4 inhibitor is moving to late-stage development in a large, well-established setting, while the BMH4EDC continues to advance with encouraging signals in gynecological and breast cancers. In liver cancer, the GPC for BB bispecific represents a focused, first-in-class approach designed specifically for HCC with a potentially pivotal study actively enrolling. We're also advancing our PMT filing capture, which has already been evaluated in first-line settings, underscoring its potential relevance in earlier lines of therapy. Finally, based on the exciting early data, we are planning pivotal charge for our CADC, further strengthening the solid tumor portfolio. Taken together, our solar tumor pipeline is clearly shifting from early promise to late-stage execution with multiple programs advancing towards meaningful late-stage milestones. While several of these programs we highlight are in large well-understood cancers, such as CDK4 in breast cancer, there remains less appreciation for the opportunity in hepatocellular carcinoma, HCC. As we said at JPM, there is much work left to do in cancer and HCC is a clear example. As the sixth most common cancer worldwide, it is the third leading cause of cancer death, reflecting this more 5-year survival rates that are well below many other major cancers. A truly potentially game-changing approach in this setting can meaningfully improve patient outcomes and expand what is already a multibillion-dollar market. The unmet medical need, you just saw HCC demands not only innovation, but the ability to execute with a sense of urgency. Our first-in-class program, GPC [indiscernible] BB is a clear demonstration of our enunprecedented clinical execution capability. We moved from first-in-human dosing to enrolling the first patient in a potentially registrational study in just 19 months. This is exceptionally fast for a novel bispecific in solid tumor. Those escalation was completed under 6 weeks per cohort. We have enrolled over 200 patients in 20 months, including over 45 first-line HCC patients treated in combination with Tesla and [indiscernible] give us early experience across clinical meaning for settings. Along the way, the program has received a fast track and orphan drug designation by FDA. At the bottom of this slide is the simple view of the potential pivotal study design with overall [indiscernible] as the primary endpoint. ASCO 2026 will be an important moment for BeOne. We have 24 abstracts accepted, including 3 oral presentations underscoring both the breadth and the momentum of our pipeline. You will see the clinical updates across key programs, including our CDK4 inhibitor, BS4 ADC and the GPC 341 BB. Please join us at our ASCO Investor Relations event on June 1 to learn more about our clinical data and why we are so excited about these assets. That will [indiscernible]. We move quickly to clinical proof of concept and advance only programs with the strongest data into late-stage development. You can see how that discipline is being applied across the portfolio and the actions we are taking this year. We will have additional data disclosure this year for programs such as PMD 5 and the CADC. While new assets like Adam ADC and the KRG have recently entered the clinic. At the same time, we have made a data-driven depoletization decisions in programs such as CDK3 inhibitor, GFR CDAC, met inhibitor and the [indiscernible], allowing us to reallocate resources towards the potentially highest in [indiscernible] opportunities. This is exactly how our strategy is in candidate to work, move faster to proof of concept, identify the most promising candidates and invest aggressively to maximize patient impact. In addition to our focus on our internal breakthroughs. We are further strengthening our pipeline through selective external innovation. BON 110 is a good example of the approach and it represents a potential backbone for our solid tumor portfolio. What differentiates the trispecific from PD-1 VG bispecific is the addition of a CTLA4, which gives the potential for deeper and more durable immune activation. Importantly, this creates a broad opportunity for poor combinations across our pipeline, including ADCs and 4-1BB-based programs. This program -- this is on track to enter clinic next month. We have covered most of the milestones already, so I will just called 3 remaining 2026 catalysts. First, we expect to initiate the Sonro Phase III study in second-line plus multiple myeloma later this year, extending our BCR2 strategy into a new important patient population. Second, in the half -- in the second half of this year, assuming the data is supportive, we expect an accelerator submission for our BTK CDAC in relapsed refractory CLL. And finally, we anticipate a U.S. approval for TEVIMBRA in first line positive gastric cancer, marking a meaningful regulatory milestone in solid tumors. I will now turn it back to John.

Thanks, Lai. We'll now open the call to Q&A. Can you please limit the number of questions to ensure that we have time to hear from as many attendees as possible. Operator, can you please go ahead?

[Operator Instructions] Our first question is from Yigal Nochomovitz, Citigroup.

John, you've consistently highlighted BRUKINSA as the only BTK to demonstrate superiority versus ibrutinib in Alpine, as you just noted on Slide 10. I'm just curious because one of your competitors, Lilly has also been highlighting [indiscernible] performance versus as recently as some of their materials in the recent earnings call stating percent risk reduction versus ibrutinib in treatment naive and 27% PFS risk reduction in relapsed/refractory BTK naive. So I'm just wondering if you could help contextualize that and sort of sort out the apparent disconnect there.

Thanks for the question. I appreciate it. And I think that's probably best handled by Amit.

Yes. Happy to take that, John. Thank you for that question. So unequivocally, what we're saying is correct. BRUKINSA is the only BTKI to demonstrate superiority to ibrutinib in a head-to-head study. So before I talk about some of the specific problems with the Porto claims. Let me just talk about a couple of important study conduct principles. So an open-label study, when you have 2 arms being compared, the standard industry practice based on regulatory guidance is to actually look at the data assessed by an independent review committee or an IRC rather than relying on investigator assessments. This is for the obvious reason that investigator assessments can favor the experimental arm over the control arm. Also, it is important to ensure that there is no discordance in the investigator and IRC results, and I'll come back to that in a minute. A second important aspect is that there should be predefined alpha allocation for the subgroups being tested and the order of testing itself. So all of the claims have to be based on alpha-allocated predefined subgroups rather than exploratory subgroups. So with that, to talk a little bit more specifically about the BRUIN-314 based claims. Now what you may have seen in some of the presentations is a claim on risk reduction compared to ibrutinib in the relapse setting of about 26%. But if you actually look at the IRC data and John had this previous in this presentation, what you see is that there are only 2 events that separate the 2 arms. So the perdoarm has reported 48 events and the [indiscernible] has noted 50 events. So if you compare this to the investigator curves, you can see that there is a significant discordance,and this really highlights the importance of the IRC [indiscernible] . Now with the 2 event difference here, the likelihood of this comparison showing statistical significance even with longer follow-up seems to be very low and John made the important point that with ibrutinib in particular, as patients are able to tolerate it, we've seen what happened with the ELEVATE-RR study as well. Now moving on to the treatment-naive group, the claims are even more questionable because this is a very small subgroup of the overall trial population. And according to the JCO paper is not even listed in the hierarchy of testing. So this is not a predefined group. And moreover, even in this group, when you look at the IR CSS difference, that is not statistically significant. And finally, for the treatment-naive group, given the extremely short follow-up of the BRUIN study questions around long-term safety, treatment sequencing as well as overall benefits over other BTK inhibitors remains quite questionable. So I think really to conclude what I can say is based on all of this data, BRUKINSA remains the only BTK inhibitor to have shown clear superiority. Thank you.

Thanks Amit. And I don't think that's a like technical statistical answer. I think this is the governing chart, IRC, that the industry recognizes and as Amit shared, the data is what the data is. So anyway, we're very comfortable with that statement. Okay thank you, operator can we have next question pls?

Our next question is from Karl Pittato from Wolfe Research.

One on BRUKINSA's CELESTIAL TN CLL trial. We were expecting MRD results, but we didn't see that on the slide deck. So curious on the update there. And then second, for the degrader, the CDC, what hurdle are you targeting? What efficacy hurdle for filing for accelerated approval?

Thanks so much. Those are great questions, but I think we're back to you, Amit.

Yes, happy to take those as well. Thank you, John. So -- for the Celestial MRD question, let me start by talking a little bit about how that study is set up. So just as a quick reminder, the CELESTIAL-301 study effectively has dual primary end points. One is the UMRD at the end of the treatment in the 2 arms and the other is PFS or progression-free survival. So in our case, progression-free survival is the traditional regulatory end point and is the base case for our filing. So we expect PFS to be the endpoint that will support regulatory approval for that regimen. UMRD is not currently accepted as a regulatory end point but obviously, it remains scientifically very interesting as well as there's efforts ongoing from a regulatory perspective as well. So in Q3 of this year, our IDMC will review the UMRD data across the arms and tell us whether statistical significance has been met or not. Irrespective of the outcomes for UMRD, we would disclose that externally at the next proximate opportunity and the study will continue to the PFS readout, essentially unchanged with no change in the study conduct. Now it is worth noting that demonstrating statistical significance versus VO is an extremely high bar. And if positive, the CELESTIAL-301 study would be the first study to show you MRD superiority for a BTK and BCL-2 combination overview. In prior large studies, VO has shown the highest benchmark UMRD rates. So just as an example, if you look at the recently reported CLL 17 trial, the UMRD rates for VO are 73.3% and for VI they are 47.2%. Even with the UMRD rate difference of 25% in the 2 arms, the PFS for VO and VI are essentially superimposable. So you can imagine that even if the ZSUMRD rates are on par with the VO rates, we will actually feel quite good about the likelihood of demonstrating PFS benefit. Based on this data and the data that we've seen to date with the SONRO-101 study, we remain very confident in achieving the PFS endpoint, even if MRD is not statistically significant. Also, we have a separate ongoing Phase III head-to-head versus AV, which we feel, based on the data presented so far represents a meaningfully lower bar for MRD than real in terms of the MRD rates. And either trial can enable global registration in that frontline setting. So we look forward to bringing ZS to patients based on these 2 trials. Now quickly, just on the degrader. We've been enrolling patients in the relapsed/refractory patients in a Phase II study. And as far as benchmarks are concerned, I think this is an evolving area depending on what are considered available and approved therapies in the U.S. But certainly, based on that study and as well as the studies run with [indiscernible] monotherapy. We're sort of looking at the benchmark of somewhere between 50% to 70% depending on the population.

Thanks so much for the answer. And could we have next question please?

Our next question is from Jessica Fye from JPMorgan.

I was just hoping you could give us a status update of what inning you think we're in of BRUKINSA's launch in Europe? And then for the BTK CDAC, which I believe you suggested could be launching next year in relapsed refractory CLL following potential filing later this year. Can you talk about how we should think about the initial launch ramp for that one?

Perhaps I can kind of answer the first question. I'm not very good at innings because from Pittsburgh and our baseball team is not so great. But I think as we all know, Europe takes a while to launch and to work your way on to reimbursement. And I think we've always been behind there versus the U.S. We're very encouraged by what we see, but I think that it's still pretty early in those days, and we see the opportunity for substantial growth for BRUKINSA as a single agent. Of course, with the combination when Sonro comes into play, we think this is game-changing. And the opportunity for that is just tremendous in every country across the world. That's the first question. The second question on the CDAC launch ramp, I think that's a question that we could refer to [indiscernible]

Glad to take that question around CDAC launch ramp. I think you've already heard from Amit and also from John about aspects of the CDAC clinical profile, which we anticipate will be very strong and particularly not the head-to-head trial design versus pertain those later lines of therapy. So in terms of overall launch ramp, we think that it should be relatively robust. Would anticipate a typical S-shaped uptake curve, but again, we think it's a well-prepared market, and we're confident about its prospects.

And I think one of the nice things about that program and Sonro is both of these largely leverage the existing infrastructure that we have in place which is great for us and makes it much easier effort, but it's also economically highly favorable. So that's a great thing about having several programs that overlap on the clinicians that are using those medicines.

Our next question is from Leonid Timashev from RBC.

Just wanted to ask on the immunology programs. It looks like CSU is moving ahead potentially to a Phase II, I guess, is that suggesting that you're encouraged by what you're seeing out of the Phase Ib. And related to that, could you maybe provide some color on why the IRX and RA was discontinued?

Sure. I think probably Lai, your best to answer that question, please.

Yes. We are planning to initiate the Phase II for our BTK CDP program in the CSU by the end of the year in them based on the con data we have seen from the Phase I study. In terms for the IRAK4 in the material this we decide to not further pursue the trial based on emerging new data. We're in the process of analyzing the data and decide the next steps for this program.

All right. Operator, can we have the next question, please?

Our next question is from Ziyi Chen from Goldman Sachs.

Congrats on a very strong first quarter. Just one question regarding the recent deal on the TH60 the PD-1 VGF CTR trispecific. Could you share a bit more about your view on the asset acuity amid the competition of emerging PD-1 VEGF bispecific and also different strategy for trispecific. Can I also talk about the Fc silence strategy, it's definitely going to be reduced toxicity of DC but also it's going to lose potentially direct depletion. So what is your view on that?

Sure. Thank you so much for the question. Again, I think we'll go right back to Lai.

Yes. This molecule we call BB10 previous the H160 was engineered to simultaneously block industry well-established pathway and there certainly has been bispecific between the PD-1 VGF and the PD-1 CTL4 demonstrating clinical activity. We believe by adding the CTLA-4 arm will present potential differentiation from the current existing bispecifics. As for the tuning out the function is to exactly to the point you raised is to try to mitigate the talks concern. We do believe from precon data, this kind of engineering will be able to still retain the efficacy by removing some of the safety liabilities.

Thank you. All right. We have another question, please?

Our next question comes from Gregory Renza from Truist Securities.

Congrats on the quarter. Maybe I'll weave in Aaron here for a bit and just ask a bit on the guidance. Aaron, you acknowledged that you like what you see with the growth in the markets, but also some assessment of recent trends. Perhaps you could just elaborate further on the pieces that enable you to feel confident about revenue performance for the rest of the year? And if you could, if I may just ask a bit about. So some of the factors to consider when it comes to the net pricing. I think we heard you mention consistency, but just wanted to give you an opportunity to elaborate further on maybe some of those headwinds, but also the pressures if they are, by and large, passed it into guidance at this point.

Great. Thanks for the question, Greg. So as I said in the prepared remarks, we really do like what we see and the setup for the year. Q1 came in on expectations, but particularly, we were encouraged by performance in the United States, both in March and into April. You mentioned price. When we issued our original guidance, we talked about relatively stable net pricing. We feel very confident in that as we enter the year, given where we are with our various contracting opportunities. So we feel really good about that moving forward in the -- for the balance of 2026. I did touch on in Q1, we had $20 million or so of nonrecurring gross to net. So that obviously occurred in Q1, and we anticipate that will pass through for the year. So overall, we really like where the business is sitting, strength in the United States, but really strong performance across all of our geographies. I think you see really strong growth with our European business. our China business continues to perform and demonstrate leadership and we're still in very -- using Jessica's analogy very early innings in Rest of World where the business doubled again in the first quarter. So we really like to set up. That's what gives us confidence for the guidance update with the $100 million improvement across the range.

All right. Thank you, Aaron. Could we move to another question, please?

Our next question is from Michael Schmidt from Guggenheim.

Congrats on the great first quarter here. Perhaps switching back to the pipeline, a question about the GPC3/4-1BB bispecific where sounds like there's things are starting to emerge that are quite interesting. And -- perhaps could you just comment a bit more about the pivotal study in second-line HCC. How should we think about the efficacy bar in this setting? It seems like there's an ORR readout plant. And then longer term, how do you think about the overall opportunity for this asset, perhaps in frontline HCC and other opportunities.

Thanks for the question. Good to hear your voice, and perhaps we can have Mark answer that. And if Mark doesn't jump in, we'll have Lai answer that. Maybe he's been disconnected.

So happy to address this question. In terms of the -- we're in the process of having the discussion with the health authorities to discuss about the bar. You will see our -- the Phase I data at this year's ASCO the abstract should be released soon, but we will have further data updates at the ASCO our presentation as well as our investor relationship -- relation events. We're quite confident about the early data we have seen with this asset. And certainly, we have already enrolled over 40 patients in the frontline HCC in combination with teclizumab as well as [indiscernible] the early data is quite encouraging. We're looking forward to bring this effective medicine to patients around the valve with HCC.

Thanks so much, Lai. Could we jump to the next question?

Our next question is from Reni Benjamin from Citizens.

Congratulations on a great quarter. My question is regarding [indiscernible] and the launch in China. Can you talk a little bit about kind of how that's going? Kind of is it tracking like [indiscernible] or -- is it tracking according to internal expectations? And maybe related to that, what do you think might be the competitive dynamics once inaniclex is approved here in the U.S., even though it will be for MCL, any sort of on-label or potential off-label use that might impact BRUKINSA or the CLO market as a whole.

Thanks for the question. Xiaobin, do you want to start? Maybe I can finish.

Yes. So the launch is very encouraging. In China, we got approval in January and 8 days later, we launched the product. So far, TD, we have hospitals across the country start to treat patients in China. And also Soronto is also included in China, in the Cisco guideline for first line, second line there and also second line mental set and also for the -- so second line ML is also listed in the guideline. And we are very, very happy the initial feedback from hospital over and [indiscernible] So this is China situation.

Thanks so much, Xiaobin. I think that with the launch in the U.S., we're very encouraged by everything we see with Sonro. As we've described it's a more potent, more selective, specifically designed PK parameters to try to make this a very differentiated and more effective medicine. We believe that will be the case in the initial indication, where it's approved as a single agent. And the combination data, it's just in our minds, game-changing. Now you have to work your way to approvals before your official commercial product, and we are working our way through that process. At the same time, we will take the data that we have, and we'll share it with the guideline committees all across the world and see if they are willing to have those join the guidelines, and it's great data. So hopefully, there's some chance that, that can occur. But we're very, very excited about this as game-changing medicine and many indications based on the data we see today. Okay. Thank you so much. Could we take another question or 2, and then we probably have to wrap up.

Our next question is from Yaron Werber from TD Cowen.

Great. Maybe a couple of questions. Just the first one, you mentioned a little bit that AV, Aaron, is gaining some traction in some markets. I wasn't sure if those were sort of ex U.S., and I don't know if you can expand on that. And then secondly, on the CDK4 inhibitor at ASCO, any sense sort of what can we expect? How mature would the durability data be at that point on efficacy?

Thanks, Yaron. Nice to hear your voice, too. You stuck in 2 questions there. I think on the AV question. I think that what Aaron was referring to probably is the statements that they've made that they're having some international success in some perspective. I think from our point of view, it's not something that we've seen widely in the U.S., and it's hard for us to track exactly. From the CDK4 perspective, at ASCO, I do believe that we have Mark back connected. So let's see if he can handle that question, and we can hear him.

Thank you, Yaron, for the question. We're very excited to share our updated data at ASCO for our CDK4 program, we encourage everyone listening to the call to visit our poster, which will be on Monday morning of ASCO. We will be sharing data from approximately 60 patients who are frontline for stage IV disease treated in combination with letrozole. What we will show is a strong response rate across a range of doses tested that informed our Phase III dose selection. We'll also be showing early but encouraging data about the beneficial effect of food and improving the GI tolerability profile. Because the anticipated progression-free survival for frontline breast cancer is over 2 years the maturity still remains quite low at this time. But again, we're very excited to share the early efficacy and safety data.

Our final question is from Sean Laaman from Morgan Stanley.

John, in the business, you're showing some really strong operating leverage, and you've now got meaningfully positive operating income and net income -- maybe it's a question for Aaron. But looking out, how would you characterize sort of growth in OpEx versus the top line and just the efficiencies that you're really showing in your R&D engine.

Great. Thanks for the question, Sean. I happen to -- this happens to be amongst my favorite questions because that means our pipeline has so much opportunity is going to make such a difference for patients -- and ultimately, as you know, that's what creates value in this industry. We don't provide long-term guidance, but I've shared a number of times. We really have 2 objectives as we think about managing the business financially. The first is that we are undoubtedly a growth company. You see that in our performance and in our guidance. And the second to do that in a sustainable way, which means driving continuous operating leverage. Now we've talked about moving toward margin expansion continuously but in a measured way that matches the opportunity in front of us. So we really like the setup to be able to hit on both of those objectives and look forward to running the business and making a difference relative to our purpose for the long term.

Thanks a lot, Aaron. And I do want to thank everyone for participating in the call. I think, again, in summary, we delivered a very strong first quarter and a solid start to 2026. We executed against our priorities. We drove revenue growth, and we're raising our full year outlook. At the same time, as you can see, the pipeline is entering a really critical phase of execution with foundational strength in hematology and a clear inflection point in solid tumors as our programs are advancing into later-stage development. We have demonstrated, again, the power of the B1 super highway and our strategic competitive advantage that we have in executing help make investment in R&D more attractive in our organization than other places in the industry. And again, the aspiration and vision of our company, which we feel closer to than we ever have is to be the company that is creating the most impact for cancer patients globally. That means lots of medicines and lots of indications that are truly game changing for patients. And I feel more confident today than I ever have that we're on a path to being that company not in decades, but in years. I really want to thank the patients and the families that we serve, our physicians and our partners and our more than 12,000 colleagues and their families who focus and urgency make our progress possible. We're really encouraged by the momentum. We're confident where we're headed, and we're focused on developing medicines that are great for patients. So thank you all so much for joining us today, and have a wonderful week.