Zai Lab Limited (ZLAB) Earnings Call Transcript & Summary

We'll go ahead and get started. Yes, so we're getting started with this presentation. Welcome, everybody, to the Tuesday afternoon session of the 2020 JPMorgan Health Care Conference. My name is Anupam Rama. I am one of the senior biotech analyst here at JPMorgan. I'm joined by Matt Bannon and Tessa Romero from the team. Our next presenting company is Zai Lab, and presenting on behalf of the company, we have CEO, Samantha Du. Samantha?

Thank you, Anupam. And thank you, everyone, for coming. Can you hear me better? Should I yell? I will try. And I'd like to start the company presentation with the slide and about our recent approval. We recently have ZEJULA second line approved in Mainland China in December 27, 2019. This is actually a very major event because this really transformed Zai Lab from a development stage company into a fully commercial, fully integrated, not just -- not only in Taiwan, not in Hong Kong, Macao, but also in Mainland China. And also, this is the first and only category 1 PARP inhibitor approved in China. The approval of this PARP inhibitor also set up the record time before 2019 for category 1 oncology drugs. Because this is truly address a big unmet medical needs in China. As you may know, ovarian cancer in China each year has 22,000 (sic) [ 52,000 ] newly diagnosed cases, and it truly represent a very significant market opportunity for ZEJULA. And this December 2019 approval also set up the space for Zai to be included in the upcoming NDRL discussion, so the timing is also very timely. And I will talk later on -- later about the first line. But I think we also, based on the results came from the PRIMA data.

The slides are not showing.

Oh, the slides are not showing?

Yes. Let me get you [indiscernible].

I could keep talking. Yes. I don't need the slides, right?

No. Just slide it.

So all I need to talk about is this slide, right? So what -- so why don't I talk about this slide? So Zai Lab, okay? When we started with Zai Lab, our goal was to build a China-based, innovative global company and with anticipation to become 1 of the national champions out of China, just like Takeda back 2 decades ago. And I'm very fortunate to say, we are not too far from our -- to reach that goal. And -- so 5 years in operation since the inception, we are now 2020, and we already IPO-ed. And in 2017, September 2017, on NASDAQ, especially we licensed in 2017 with 4 clinical-stage assets, each with multiple indications, and we established partner of choice for China. As you know, we have 2 business. We have 2 like strategy. 1 like was -- 1 like is in-licensing global -- best-in-class programs for China. We achieved that by successfully in-license those programs, but also by expanding those programs into -- now we have 9 late stage, mainly in oncology products. And also, we have now by working very hard diligently, internally, we have generated a very rich internal preclinical pipeline. So this year, we'll file at least 1 to 2 INDs with global rights. In 2 -- we also, through our approval in Hong Kong, Macau, now in the Mainland China, we established significant China commercial footprint. Looking into the near term, we believe Zai, as I have mentioned earlier, our goal is to build a Takeda-like company coming out of China, but being a big player on a global stage. We are looking into near-term with our steady stream of approvals in -- and the commercial launches in Greater China across multiple TTs areas, but also through our internal generated global pipeline, which will reach pivotal stage combined with our continued partnerships, we believe Zai Lab will be in a very good position in the near future. For those of you who do not know Zai Lab, I just like to reiterate Zai Lab's mission. Zai Lab is a -- Zai in Chinese means once again. So Zai Lab in Chinese means once again reach to the top of the mountain. Hopefully, this time is Everest. Do you like Everest? So Zai is an innovative, research-based, commercial space, biopharmaceutical company focused on global first-in-class and/or best-in-class treatment options for patients with unmet medical needs around the globe. Right now we already have 2 launched products in Greater China and also with recent China ZEJULA approval, we also have a Mainland China launch imminent. We also have 2 China MAA and NDA under regulatory review, and we have 9 late-stage programs with multiple indications, each with multiple indications. Our partners also have 4 U.S. FDA approvals across 6 indications, which really give us the very bottom line protected, but upside is unlimited portfolio. For investment, I think you have a very safe bet here, but you also have a very big upside. And throughout the last 5 years BD effort, we have established our gateway to China for innovative assets. And since 2016, after IPO, we continuously bringing new programs. We in-licensed 6 deals. We also have 5 global co-development programs ongoing. Our discovery has become much more mature, now 5 years in operation. As I mentioned, we -- as I mentioned actually in IPO, we wanted to file 1 to 2 global INDs with our internal assets with global rights, and now, we are in the position to file 2 INDs in this year. This just show you the footprint of Zai Lab. We have operations in 7 different places. And I'm not talking about rep offices because sales rep offices, you need to be pretty much all over Mainland China and Greater China. But we also have operations in U.S., Boston and San Francisco. We have approximately 700 employees with 350 people in R&D and about 300 in commercial organization. And we have also planned and also ongoing 25 plus trials. We filed 5 NDAs and with 3 approvals and also 2 under regulatory reviews. This just a snapshot of our very unique first-in-class and best-in-class portfolio. As I mentioned, this very -- this is -- in each of these assets represent its -- it represent multiple treatment options in this franchise itself can be a franchise. And we also have multiple approvals from our partners in ex China, especially in U.S. and Europe, but also, we have China approvals and China NDA files -- filings as well. And we're also working with our partners aggressively on advancing other indications for multiple center -- with multiple center trials. This is just a slide shows 1 of our programs, niraparib, and we had talked about earlier in my first slide about niraparib. We've got a second line approval for maintenance in Mainland China. But what is even more exciting about this program is the first line and this data is from our partner, GSK, based on their PRIMA results. It shows this is the only PARP in first-line ovarian cancer has the all-comer opportunity. What is also exciting with this outcome -- with this data is we will be able to, with this data, we will be able to accelerate our China NDA filing in first half 2020. This is several quarters ahead of our original time line. And as most of you may -- some of you may attended yesterday 1 of our partner's, Novocure's, presentation. And our partner, Novocure, has amazing TT field and treatment. They have demonstrated survival benefits in GBM and mesothelioma in multiple global Phase III trials. And the results also -- with this result, will also brings to significant upside for the company, for our partner and for us, in Mainland China. So we are expecting if we had got Phase III waiver in China, Mainland China, we will be able to get a imminent approval in 2020. Again, the Phase III waiver is first time ever, if we achieve that, and we're working closely with the agency. We're also going to file in second half 2020 for mesothelioma, which also recently approved by -- in U.S. We're working with our partner on other late-stage programs, which affecting over 1 million patients a year in mainland -- in China alone. This is another very exciting program from -- we partnered with Deciphera and the ripretinib. And if you look at their -- from their INVICTUS trial. They showed significant PFS benefit in the placebo control. And if you look at the data, it shows even the hazard ratio is 0.5, and for an oncology drug, it cannot be getting -- it cannot be better than this. And so Deciphera already filed an NDA and also got us the breakthrough designation by the FDA. Again, this will give Zai Lab the opportunity to seek a potentially accelerated approval pathway in China. We are already in discussion with the agency. Again, this will be a couple of quarters ahead of our original planned time line. Margetuximab, many of you probably heard about the SOPHIA trial. So our partner, MacroGenics, has already filed a BLA. And on top, we're also going to conduct bridging study for breast cancer in China and -- but what is more exciting to us, specifically, is about the gastric cancer opportunity. As some of you may know, there are approximately 700,000 patients with gastric cancer diagnosed each year in Mainland China. Specifically for HER2+ patients, there are 90,000 newly diagnosed patients. So the opportunity and unmet medical needs is huge. And so we will join Scott -- Scott is just coming in, our partner and the CEO of MacroGenics, in the MAHOGANY in our Phase II data, the [ OSS ] actually is double the control group, which -- the control group is PD-1. So this will be a first-line -- MAHOGANY trial will be a first-line PD-1 plus margetuximab. Of course, as I mentioned, we'll be joining the MacroGenics in this global submission. So as we promised in our -- in IPO in 2017, we will work hard on internal discovery effort and here's a chart shows we currently have multiple discovery assets. This year, again, we will have 2 potential programs into clinics, in oncology and also autoimmune. Before I end the pipeline discussion, I want to recap on our pipeline strategy. We want to build a either first-in-class or best-in-class pipeline. And also, in our pipeline, we have target therapies. We have immuno-onco therapies. We also have TT fields. Those are all [indiscernible] that creates opportunities to do combos within the 9 existing portfolios. So in our commercial franchise, we organized around major tumor types, but also with multiple assets in each subcategory. But also, we have build the capacity, build the -- also build the manpower and with the potential to expand on more unmet medical needs. Of course, that creates more opportunities for business development. Our commercial organization is very experienced, and we've been building this organization over the last year. And that we -- this team have members coming from the top oncology companies in China from like AstraZeneca, Roche, Novartis and BMS. And I wouldn't say we don't have people from Pfizer. I'm one of those Pfizer'ite in the '90s. And these people together has build -- has launched 8 of the top 10 oncology drugs in China. They have amazing track record in their previous positions, but together, in Zai Lab, they also successfully launched our hub -- our first product in Hong Kong and Macau. If you look at the -- if you see the launch record in -- for ZEJULA, for example, we already reached -- in fourth quarter, we already reached 77% of the market share. After the [ 4th ] of the year launch versus our competitor only owns 23% of the market share. Not only for ZEJULA, we have achieved amazing launch success in Hong Kong, Macau. We also have done so in -- for Optune. According to our partner, Bill Doyle, who is the Founder and the Chairman of Novocure, I think Bill talked about China opportunities in his yesterday's presentation. And according to Bill, we have Hong Kong was one of the -- he said was the best launches. But -- globally, but I think I put a [indiscernible] as one of the best launches globally. Just to -- in case I got a FCC inspection. So with that, our team, our track record coming into China launch for ZEJULA second line, we are fully prepared. We have done extensive prelaunch medical programs, scientific changes with KOLs and physicians. And we have touched upon more than 100 [ PPIs ] throughout the prelaunch education. Specifically, we are ready to launch these products imminently. Well, let's talk about our financials. I think a lot of investors in the room would be very interested in if we still have cash. I can tell you right now we are in a very good position on the cash. We -- since company inception, we reached 600 -- over USD 670 million, and we only spent $285 million by June 2019. And by -- of course, we are filing semiannually. I can only disclose by June 2019, we still have more than USD 393 million. So we're in a very good position to going forward. Now let me end the presentation with our near-term milestones. And I think 2020 truly have a major inflection points, multiple inflection points. By the way, my second language is Russian. [Foreign Language], so please excuse my Russian-Chinese accent. So we had multiple near-term inflection per catalyst points and also catalysts across commercialization, across regulatory filing, across development and, of course, in reaching existing pipeline, both through internal discovery, but also through licensing. And we are in a very good position to keep climbing mountains, even though I think we are only at the -- only ready to climb Everest. Are you ready to join us? I think I am and, also, a lot of people on the front would be. Thank you. Thank you for your time and attention.