Zai Lab Limited (ZLAB) Earnings Call Transcript & Summary

Good morning, good evening, and welcome, everyone, to Zai Lab 2021 R&D Day. Today, we will take a deep dive into Zai Lab's broad, deep and truly differentiated product portfolio and pipeline, our organization and operational infrastructure and our strategy for fast growth. We have come a long way in our 7 years of operations, and the best is yet to come. As a reminder, during today's call, Zai Lab will be making certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our business plans and objectives and timing and success of our clinical trials, regulatory applications and commercial launches. Such forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. I refer you to our SEC filings for a discussion of risk factors that could cause our actual results to differ materially from those discussed today. I will now introduce our speakers. Today's presentation will be led by Dr. Samantha Du, Zai Lab's Founder, Chairperson and Chief Executive Officer. She will be followed by Tao Fu, Chief Strategy Officer; William Liang, Chief Commercial Officer; Dr. Alan Sandler, President and Head of Global Development, Oncology; Dr. Harald Reinhart, Chief Medical Officer, Autoimmune and Infectious Diseases; Jonathan Wang, Executive Vice President and Head of Business Development; and I will conclude our event. Here is our agenda for the day. With all the material that we have to cover, our event will take about 3 hours. Samantha will begin by presenting her vision for Zai Lab. Tao will follow and describe Zai Lab today and the capabilities that will enable our company to achieve that vision. William will discuss our commercial capabilities and our 3 successful product launches to date. Alan will follow up by walking us through Zai Lab's potential best-in-class pipeline in lung cancer, followed by what we believe to be a world-class pipeline in gastric cancer. We will then take a short break. When we resume, Alan will discuss our other oncology products. Then Harald will take us through the franchise we're building in autoimmune diseases. He will continue with the discussion of our innovative medicines in infectious diseases. Alan will return to describe our strategy for developing our internal pipeline, including overviews of several key assets. Jonathan will discuss our successful and sustainable business development strategy. I will conclude by speaking about how we can unlock Zai Lab's true value. We will then open up with a Q&A session involving all of the presenters, which we will handle just like the Q&A on our quarterly earnings conference calls. I'd also like to point out that the 2 leading oncologists in China, Dr. Shun Lu of Shanghai Chest Hospital, Shanghai Jiao Tong University; and Dr. Tianshu Liu of Zhongshan Hospital, Fudan University, have provided videos with their perspectives on unmet needs in lung cancer and GI cancer in China. You can find these videos on the microsite for this event. So with no further ado, it's my pleasure to turn our event over to Zai Lab's Founder, Chairperson and Chief Executive Officer, Dr. Samantha Du. Samantha?

Thank you, Billy. Good morning and good evening, everyone. Welcome to Zai Lab's R&D Day, and thank you for joining us. It has nearly 2.5 years since we last had an R&D Day, so we very much look forward to spending the next few hours with you doing a deep dive into our extensive product portfolio and pipeline. Zai Lab has become a fully integrated biopharmaceutical company with many important medicines and promising assets in discovery and development. The goal of today's presentations is to help you better understand the full potential we see for these products and for our company as a whole. Although you may be mainly interested in Zai Lab's future, that future is rooted in our present. So let me begin with a snapshot of our company today. Zai Lab is an innovative, research-based, commercial-stage biopharma company focused on bringing transformative medicines to patients in China and around the world. We aim to address significant unmet medical needs in large, fast-growing segments of the pharmaceutical market where we see the greatest opportunity to help as many patients as possible. We focus on 3 therapeutic areas: cancer, autoimmune disorders and infectious diseases. Within oncology, we have 5 disease area strongholds: women's cancer, lung cancer, gastric cancer, brain cancer and hematological malignancies. We already have launched 3 market products in Greater China, ZEJULA for ovarian cancer, Optune for GBM and QINLOCK for GIST. We expect all of them to become leaders in their therapeutic areas. We have a pipeline of more than 25 assets with 12 assets in late-stage clinical development. Our industry-defining business development team has secured partnerships with leading global biopharma companies that generate a broad pipeline and innovative marketed products and product candidates. Our value proposition to our strategic partners is clear and unmatched. Once Zai Lab becomes your strategic partner for this compounds, we have an unsurpassed track record in advancing them through clinical development to accelerate their global time line, in gaining regulatory approval in Greater China and in marketing them effectively to reach the patients who will benefit most. For the last 5 years, we have also built an in-house team with strong drug discovery and translational research capabilities and have established a pipeline of 11 proprietary drug candidates with global rights. We look forward to sharing information about several of these internal products later today. With the portfolio and pipeline of such breadth, depth and quality, it's easy to forget that our company is just 7 years old. By 2017, we had become a preferred partner for launching innovative products in Greater China. And today, we are a commercial-stage biopharma company and preferred global partner. We have [ used ] a fully integrated R&D platform with more than 1,600 employees globally, and we are only at the beginning of our journey. We aspire to become a leading global biopharma company. To get there, we are becoming increasingly well positioned in the 2 most important global markets, China and the United States. China is already the second largest product market in the world and one of the fastest growing ones. The 55 innovative drugs approved in China in 2020 represents 7x the number approved in 2016. And we have an emerging presence in the United States. We have positioned our operations at the heart of the U.S. biotech ecosystem with discovery labs and development team in the San Francisco Bay area and the new clinical development and business facility in Cambridge, Massachusetts. We have built a strong foundation for growth with the pipeline, platform and people necessary to drive our success for the remainder of the decade and beyond. We have an innovative, diversified portfolio of best-in-class and first-in-class assets that address the greatest unmet medical needs in numerous disease areas. We have built an open innovation model, sourcing our products, both from internal discovery and from global collaborations whereas the science is strongest. We have an excellent clinical team advancing more than a dozen products at one time through development and regulatory approval with unparalleled quality and speed. Our best-in-class business development team, supported by our strong R&D team, has established us as the clear partner of choice and provided us with a pipeline that represents a sustainable pillar of growth. Our commercial operations are driven by our strategy of building world-class disease franchises, which over time, will allow us to achieve considerable operational synergies. And as you will hear from our presenters today, we have built global expertise, proven leadership and the deep talent pool and across all functions in both China and the U.S. What will Zai Lab look like in 2025? We have big aspirations. We aspire to be one of the leading global biopharma companies. We will have more than 50 marketed products across more than 35 indications. We will have a leading portfolio and science-driven commercial platform. We will have a broad, innovative pipeline in late-stage development, which we will have built by expanding both vertically within our current therapeutic areas and horizontally into our new therapeutic areas to unlock orthogonal synergies through proprietary combinations. Our internal discovery engine is already generating one global IND per year, and we expect to do at least that many by 2025, producing a sustainable product pipeline. We will have globally leading franchises in multiple disease areas, including the franchises in lung and gastric cancers that are visible today. And in addition to doing well, we aim to do good. This has always been part of our identity and mission. We expect to become a leading global biopharma company that serves and impact many patients around the world. We take our role on the emerging global leader seriously. With that in mind, we recently published our first Environmental, Social and Governance Report. Zai Lab is committed to becoming a biopharma leader in ESG performance and reporting by 2025. And before I introduce to our next speakers, I would like to tell you why we chose the mountain climbing picture for our slides today. Many of you know that Zai Lab in Chinese means to once again reach the top of mountain. All the hard work over the past 7 years has equipped, energized and committed us to confidently leave the base camp and start climbing to the top of mountain. We're excited to have you on this journey with us. And now I'll ask the other presenters to speak to how we expect to achieve our vision of Zai Lab 2025, starting with Tao Fu, our Chief Strategy Officer. Tao?

Thank you, Samantha. And good morning or good evening, everyone. Today, I'd like to talk to you about Zai Lab's disease franchise and innovation strategy and our growing global infrastructure and capabilities. On my first slide, I highlight our disease area stronghold strategy to build our pipeline. As you can see, within oncology, we focus on 5 common tumor types that are highly prevalent in China. Altogether, these disease areas cover more than 3 million new cancer patients per year in China. Outside oncology, we focus on autoimmune disorders and infectious disease. Two areas that have significant and unique unmet medical needs in China. For example, the newly diagnosed cases of community-acquired bacterial pneumonia in China totaled more than 10 million annually. And the prevalences of the various severe autoimmune diseases that efgartigimod is addressing totaled well over 0.5 million. We believe this strategy will provide great operational synergies in both clinical development and commercialization and allow us to maximize combination opportunities. This model will allow us to scale up our business quickly and build the deepest, innovative pipeline in China. Zai's unique business model and our ability to work with the best companies in the world and their assets allow us to build a largely derisked, highly innovative pipeline and sets us apart from competitors. 5 of our products have already been approved in the U.S. for our partners, and the sixth is pending FDA review. 3 have been designated Breakthrough Therapies by the FDA. The rest of our assets are mostly first-in-class or best-in-class, and many have achieved clinical proof of concept already. This portfolio, combined with our exceptional execution capabilities, allow us to advance our pipeline rapidly with a high success rate. We received 3 oncology approvals in China in the past 16 months, all under accelerated regulatory pathways. Importantly, our pipeline expects to produce 10 to 15 approvals over the next 3 to 5 years, which provides a highly visible path to significant near-term growth. As Samantha mentioned, Zai Lab is still very early in our growth trajectory, and it will be a very different company by 2025. At Zai, we follow the science. Building a proprietary and competitive discovery pipeline where we own global rights to balance our late-stage, in-licensed pipeline in China is a key pillar of our growth strategy. Over the last few years, we have built strong in-house drug discovery and translational research capabilities within our focused areas in oncology and autoimmune disease, and our effort has started to bear fruit. Alan will speak to our discovery strategy and pipeline later in today's meeting. We believe that our 11 early-stage molecules with global rights and our discovery effort could create significant value for Zai and our shareholders. Importantly, we have an open innovation model that seizes the best opportunities wherever we can find them, internally or externally. Let me discuss this model in the next slide. Our open innovation discovery model is trying to harness the power of the entire biotech ecosystem in order to source the best targets and product candidates in our area of interest. Broadly speaking, our pipeline comes from a range of sources. We have collaborated with some of the leading academic institutions for novel targets and translational science. We have selectively built our internal discovery platforms such as a best-in-class, fully humanized transgenic mouse platform and a proprietary way to generate novel antibody epitopes. We spread our discovery capabilities across our 4 campuses in the U.S. and China, taking advantage of local talent and expertise. Importantly, we formed collaborations with leading biotech companies to tap into their platform capabilities and expand our global pipeline. For example, we're working with MacroGenics to build CD3- and CD47-based bispecifics and multispecifics. We're working with Schrödinger on a promising DDR target using their industry-leading computational chemistry platform. We plan to continue executing our open innovation discovery strategy to achieve sustainable productivity over the next several years. This slide is a snapshot of our growing global footprint. We currently have over 1,600 talented and hardworking employees, split roughly half and half between R&D and commercial. We have a large clinical development and operations team handling about 50 ongoing or planned clinical trials. We do these clinical trials ourselves and don't rely on CROs to ensure speed and quality. We have a growing commercial presence with over 830 employees in Mainland China, Hong Kong, Taiwan and Macau. We have 2 GMP manufacturing facilities, 1 for small molecules and 1 for biologics and a new R&D center and expanded manufacturing facility at our Suzhou campus are under development. Our planned 37,000 square meter R&D campus in Suzhou is included in China's National Strategic Emerging Industries Development Plan and supported by the government of Jiangsu Province. The first phase of construction will be completed by 2023. We're also planning a significant expansion of our existing biologics manufacturing plant, a small molecule production site and a major distribution center. Above all, Zai Lab is all about people. Our global R&D teams are led by Dr. Alan Sandler and Dr. Harald Reinhart, whom you will hear from shortly. Alan brings to Zai nearly 30 years of oncology and drug development experience across industry and academia. Previously, he was the Senior Vice President and Global Head of Product Development Oncology at Genentech, where he led all late-stage development for solid tumors and was responsible for the global development and regulatory approval of several innovative medicines, most recently, Tecentriq. Previously, he was Professor and Chief of Hematology and Oncology at Oregon Health Science (sic) [ Oregon Health & Science ] and served on the faculties of the medical schools of Vanderbilt University and Indiana University. Harald is an adjunct professor of infectious disease at Yale School of Medicine. He has had a distinguished industry career with Novartis, Bayer and Shionogi in the areas of infectious disease, autoimmunity and renal disease, among others. He was personally responsible for the development and approvals of numerous important medicines, such as Coartem, Sebivo, Cubicin and ciprofloxacin. Zai has built a strong leadership team shown here to support Alan and Harald. Our business development, manufacturing and G&A functions are also exceptionally strong. As you can see, our leaders such as Ty and myself came from the leading biopharmaceutical companies such as Johnson & Johnson, Bristol Myers Squibb and Biogen with significant executive leadership experience. Our business development leader, Jonathan Wang, worked at prominent investment and strategic consulting firms such as OrbiMed, Goldman Sachs and Boston Consulting Group prior to Zai. Our leaders are supported by our very strong teams. Our commercial team is led by our Chief Commercial Officer, William Liang. William is a trained medical doctor and one of the well-recognized commercial leaders in China. Before he joined Zai Lab, he was the Head of Oncology Business Unit for AstraZeneca. And prior to that, he was Head of Oncology for Roche. These are 2 of the best-performing oncology commercial organizations in China. William, collectively with his key leadership team, led the launch for commercialization of 8 of the top 10 innovative oncology products in China. We have built a science-driven commercial team with a proven track record of success. And now I would like to introduce William so he can tell you more about our commercial capabilities. William?

Thanks, Tao. Good morning and good evening, everyone. It's great pleasure to share with you our commercial progress at Zai Lab and our winning strategy for the future. First, I'd like to give you a brief overview of China market to help you better understand our growth strategy. Second, I will discuss the strength of our people and our promotional strategy. Then I will describe the performance of our individual brands, and I will conclude with our bold ambition. We are leaders in several large therapeutical areas in China: oncology, autoimmune disorders and anti-infectives. Oncology and autoimmune are the fast-growing markets with plenty of room for further growth. Based on the speed of innovation and a huge unmet patient needs, which Alan and Harald will discuss, there will be a sharp rebound in demand in 2021 after soft performance in 2020 due to COVID. It may surprise you to know that anti-infective market is quite large in China from the point of view of the West. It's the second largest therapeutical area behind the only traditional Chinese medicine and a patient are in dire need of new therapies. As Harald will discuss, there's an urgent need for novel antibiotics to overcome multi-drug resistance. So Zai portfolio strategy fits in well with the current and the future needs of patients in the Chinese market. The COVID pandemic is reshaping the payer landscape in China. Prior to COVID, commercial health insurance premium totaled about $100 billion. Now according to McKinsey report, the premium is expected to reach about $300 billion in 2025. City supplemental insurance is an emerging new form of commercial health insurance. To supplement NRDL, supplemental insurance provided by province and the cities is playing a more important role in patient coverage. Since 2015, more than 100 cities and 26 provinces launched city supplemental insurance, with the majority being added in 2021. Back in October 2020, more than 20 million people enrolled for city supplemental insurance scheme in just 9 months. As of July 2021, more than 60 million people are enrolled. We believe this number will be over 100 million in 2025. This represents a tremendous growth opportunity to reach more patients with coverage. This is an important development for oncology brands like ZEJULA. We have a strong NRDL team in place, and we are expanding capabilities in our commercial insurance team. Since I became the first commercial employee at Zai Lab in June 2018, I'm very proud that we have built our organization to become the only China biopharma with a commercial footprint in all regions, Mainland China, Taiwan, Hong Kong and Macau. Our field force cover about 2,500 hospitals in 300 cities, representing 90% of the market potential for oncology market. We have successfully launched ZEJULA, Optune, QINLOCK across regions. We believe we have built the best biopharma sales team in China. This sales leader are very experienced and science-driven, with backgrounds at multinational companies. They have a proven track record of selling top brands in China. We have grown our team rapidly. Today, we have over 800 people in our commercial organization, which we expect to grow more and more than 1,000 by year-end. Our sales and marketing teams are organized by therapeutical area. One of our key strategy is to focus on building disease area strongholds. With a portfolio-driven strategy, the same sales force can detail multiple products and achieve operational synergies. For tumor treating fields, we created a single sales team across multiple tumor types because of its unique business model as a medical device. The shared functions serve all the therapeutical areas. We believe this kind of organization will maximize our efficiency and effectiveness. It positions us very well to maximize the evolving landscape in China and reach more patients. Our commercial business model has evolved in response to market dynamics. We are shifting from a product-driven to a patient-driven model, particularly to improve market access for patients. In order to differentiate Zai Lab from competitors, we are not only striving for innovation in our R&D work. We are also being innovative in our commercial business model. For example, we have established a diagnostic team, our data management team and our digital team. Our industry-leading market access team has made tremendous contribution to all 3 of our product launch. ZEJULA had the best hospital listing performance posting RDL among Chinese biotech companies, even including some multinational companies. QINLOCK is the first product in a name patient program in which patients can take the drug outside of Hainan. Optune is the only medical device listing supplemental insurance. With our industry-leading strategy and our team's holding execution, we have successfully launched 3 products in just 16 months. Our first half revenue of $57 million was nearly tripled at the same period of last year. In terms of highlights for each product, ZEJULA, the number of his -- hospitals listing has increased sevenfold to more than 800 from the date of NRDL implementation to end of June. For Optune, it's the first and only innovative medical device supported by supplemental insurance. More importantly, China has become the #3 marketer after U.S. and Europe in 1 year since launch despite being in the private paying market. For QINLOCK, we are very proud that QINLOCK has been approved across all Greater China regions within 6 months. Now let's dive into products, starting with ZEJULA. As I already mentioned, ZEJULA is ranked #1 among China biotechs in our NRDL lending performance. It's actually a long road from NRDL publication to patients receiving a treatment. This picture shows you the critical steps in NRDL lending. After NRDL negotiation, the central government published a drug list and the provincial city and accounting government opted their reimbursement procedures. Most provinces only allowed hospital-listed drugs to be reimbursed. So hospital listing is another important test for our company's capability. Within hospitals, you must be approved by the drug formulary committee, which takes 1 to 6 months. Hospital purchasing then takes an additional 1 to 2 months. ZEJULA outperformed others because we create several dedicated team, including a central government affairs team, a local government affairs team, a hospital management team and the distribution team to focus on each step. We did this with a comprehensive plan and flawless execution. This was a remarkable accomplishment, and I'm so proud of our team. In addition, we continue to maximize ZEJULA's business potential by penetrating into emerging markets. We have a hybrid sales and marketing strategy for this market, which we believe is more cost-effective for us at this stage. Our core market is about 600 hospitals in so-called Tier 1 and Tier 2 cities, representing about 2/3 of the market. And we have assigned the majority of our sales rep to the core market. For the emerging markets, and we also have established a partnership with the distributors in a program called ZAILINK to further penetrate lower-tier cities. Our investment in emerging markets will support all future product launches. Let's move on to Optune. We are succeeding in shaping the market through building centers of excellence in the top 20 hospitals. Since launch, Optune has been established as the standard of care driven by guidelines CME programs. As a result, we have more than doubled the number of HCPs, who have recommended or prescribed TTFields to patients. As we discussed, supplemental insurance is an emerging form of coverage within China payer system. We have a private insurance team focused on partnering with commercial health insurance companies in order to help improve patient access. Optune was the second most reimbursed treatment in supplemental insurance in first half of 2021, second only to KEYTRUDA with many major indications. Going forward, we will build upon our early success for supplemental insurance inclusion to benefit more patients. Moving to QINLOCK. We had a successful launch campaign in the spring. By end of June, we have expanded our dedicated sales force to more than 100 employees. Since approval, we have had very successful road shows. And despite the COVID challenges, we have reached thousands of HCPs online and off-line. We are also well positioned in guideline inclusion. QINLOCK has been listed in the CSCO treatment guideline as the only agent with 1A-level evidence in fourth-line GIST. QINLOCK is also leading in supplemental insurance coverage, now covering 2 provinces and 10 cities. To conclude, while looking to the future with bold ambitions. In the near term, we aim to become the market leader for ZEJULA, Optune and QINLOCK and set a solid foundation for future success. In midterm, we are ready for 10 additional product launch in Greater China. And in the long term, we want to establish therapeutical area leadership in both China and the U.S. as we emerge as a leading global biopharma company. Finally, I would like to emphasize, it's all about execution. It's all about teamwork. That's all-in for patients. Thank you. And now I'd like to introduce Dr. Alan Sandler. Alan?

Thank you, William. I'd like to begin by providing you with some background about lung cancer and its treatment in China. My colleague, Dr. Shun Lu of Shanghai Chest Hospital and Shanghai Jiao Tong University, has provided us with a more in-depth discussion of the subject in a video that we've included in the microsite for this meeting and that you may access. After my brief introduction to lung cancer in China, I will discuss the exciting, potentially best-in-class franchise of drug candidates in lung cancer that we are developing. Lung cancer is the most common cancer type and the leading cause of cancer deaths in China, and I've given you several visuals here to support that. Over 800,000 new cases in China, 4x as high as you see in the U.S. The challenge with lung cancer is that the majority of patients are diagnosed at an advanced stage. Almost half of patients are diagnosed at Stage IIIB or IV, which is locally advanced, unresectable or metastatic. As a result, many patients have a poor prognosis with a 5-year survival of 82% at IA, Stage IA, but only 6% in Stage IV or metastatic disease. 5-year overall survival across all stages averages only about 20% and has not improved much in recent years. Let's see what treatment advances we've achieved though in lung cancer in the past several years. I will start with precision medicine. Here's a slide that takes you from where we've been on the far left when the diagnosis was made under the microscope. And we did not even distinguish small from non-small cell lung cancer, and patients were treated in the same way with cisplatin-based chemotherapy. Over time, we've been better able to define the histologic approach. And then using molecular pathology, we are able to determine various genetic aberrations and resulting targets like EGFR and ALK. In addition, as we went beyond that and cancer immunotherapy began to play a role, other means of differentiating patients, such as PD-L1 expression or tumor mutational burden have come into play. This next slide illustrates that although there are many choices available for various driver mutations in the United States, patients in China do not typically have the same choices. What we've shown you here in blue are those agents that are FDA-approved, but not NMPA-approved. Importantly, there are numerous agents that Zai is developing to address this lag in approved medicines in China, including repotrectinib, TPX-0022, CLN-081 and adagrasib. This slide here illustrates the continued growth of biomarker testing in China. The graph on the left shows that molecular testing has increased quite dramatically over the past 10 years based on a survey of 49 hospitals. This is reflective of the greater availability of targeted agents over this 10-year period. As all physicians were taught in medical school, there's no reason to do a test unless you're going to do something with the results. So testing for mutation makes far more sense when you have something to treat the patient with following that news. Testing is going to continue to increase in China as more and more targeted therapies are approved and with the use of NGS. Again, the key element is you see very high testing for patients in ROS, ALK and EGFR because those drugs are available to patients. For those mutations or abnormalities where there is not effective therapy, the testing is less frequent now, but we expect those to continue to increase. Here, we show you our broad-based and differentiated portfolio, including several targeted therapies in lung cancer that we have at Zai Lab. Targeted therapy is a very important aspect of our portfolio in general. And of course, lung cancer specifically. Our portfolio, looking at ROS1 and NTRK, EGFR exon 20 mutations, MET alterations and KRAS G12C represents nearly 1/4 of all newly diagnosed non-small cell lung cancer patients in China. In addition to our targeted approach, we also have a checkpoint inhibitor backbone therapy for I/O, retifanlimab, along with very unique therapeutic entity tumor treating fields. Let's begin with repotrectinib, which we are partnering with Turning Point Therapeutics. Reprotrectinib could very well be a best-in-class ROS1 and NTRK therapeutic agent. It has already shown efficacy in both TKI-naive and TKI-pretreated patients. This first slide demonstrates the mechanism of action for repotrectinib, and I'll highlight a few interesting points. It is highly potent, as noted in the table below, and preclinically, it has already demonstrated high potency against fusion ROS1 and TRK A/B/C and emerging resistant mutations that you can see below. It's designed to bind completely inside the ATP pocket, as you can see on the right, and this provides it with the potential to address resistance from prior lines of TKI therapy. When used in the frontline setting, it may help to prevent or delay emergence of new resistant mutations. From a clinical perspective, here's a slide that shows you a waterfall plot, preliminary Phase I, Phase II data of repotrectinib in ROS1-positive TKI-naive non-small cell lung cancer. It's immediately striking when you see that all of the buyers are going in the right direction, that is downward, showing tumor shrinkage in virtually all patients and a confirmed overall response rate in the Phase I and II portion of 91% out of 22 patients. Although the data is relatively early, you see there's also evidence for considerable duration of response. In the pretreated population exhibited here, again, you see the waterfall plot on the left showing considerable clinical activity in 27 patients. And on the right, in the table, you'll see the specific data. The confirmed overall response rate in the combined studies for previously treated patients is 50%, that is 6 out of 12 patients. Again, limited numbers of patients, but you're already beginning to see clear evidence of activity in ongoing studies. In addition to the activity seen in ROS1, there's activity in limited numbers of patients in NTRK advanced solid tumors. These are TKI pretreated solid tumors in the TRIDENT-1 study. You'll see 3 out of 7 patients responded, corresponding to a response rate of 43%, which again correlates to the waterfall plot on the left. From a safety perspective, with considerably more patients, total of 185 patients from the combined Phase I and II trials, repotrectinib has been very well tolerated. The majority of treatment-related AEs are Grade 1 or 2. And in fact, there were no Grade 4 or 5 treatment-related adverse events. And the most commonly reported treatment-emergent adverse event was low-grade dizziness. We're very excited about the opportunity of repotrectinib. So to summarize, there's considerable incidence of ROS1 rearrangement in non-small cell lung cancer patients in China, around 2% to 3%, and this represents about 17,000 patients annually in China, along with an additional 0.5% of patients in both non-small cell lung cancer and other solid tumors with NTRK abnormalities. Repotrectinib has exhibited both efficacy and safety in these patient populations. The time line is shown here, and the first patient was enrolled in TRIDENT-1 in the first half of 2021. Let's move to CLN-081, from our partner, Cullinan. This is another potential best-in-class agent, an EGFR inhibitor targeting the exon 20 insertion in non-small cell lung cancer, which has been a very difficult target to treat. This particular molecule is an oral agent with a unique scaffold, which is a pyrrolopyrimidine, highly selective for exon 20. It has limited activity for the HER2 wild-type and exon 20 wild type being selective for the activating mutations. As a result, it's great potential to differentiate both with respect to clinical activity as well as safety given the limited impact on the wild type. Therefore, you would anticipate fewer toxicities in terms of skin and GI events. On the lower portion of the slide, you'll see 2 graphics supporting these concepts. On the left, the dotted area shows the higher selectivity for the exon 20 mutations when compared to other inhibitors. And on the right, you see that the selectivity supports utility in traditional sensitizing mutations such as exon 19 deletion, L858R and T790M mutations as well. From a clinical perspective, there certainly is encouraging preliminary antitumor activity illustrated in this table. I'd like to emphasize the box in green. There are 13 patients noted, with all patients showing stable or better disease and an overall response rate of 54%. It's important to mention that this is a heavily pretreated patient population. And in fact, more than 2/3 of the patients were treated with at least 2 prior lines of therapy. On the far right, we've provided you with a summary in 42 patients in multiple doses ranging from 30 to 150 milligrams, again, showing a consistent response rate of 50%, in this case, 21 out of 42 patients and a 98% disease control rate. The safety profile shows acceptable overall safety and tolerability, and in particular, the GI toxicity profile is quite encouraging with no Grade 3 treatment-related AEs for diarrhea in doses below 150 milligram and no Grade 3 rashes. So our key takeaways for exon 20 insertions, there are no improved targeted therapies in China at this time. There's an annual incidence of approximately 30,000 patients with this mutation in China, and these are patients who clearly don't do nearly as well on approved EGFR therapies as those patients with the more traditional EGFR mutations. We've shown you a response rate of 46%. The compound has a favorable tolerability profile. It's been challenging in this area to find a highly selective agent that does not impact the EGFR wild type with resultant toxicities. We believe the CLN-081 does, in fact, meet that need. The China time line is for anticipated enrollment of the first patient in the Phase IIb study in Greater China next year, and plans for future studies may include select pivotal studies such as monotherapy in frontline, combinations also in first line, second line and beyond. Let's move to TPX-0022 from our partner Turning Point. This is a potent inhibitor of MET, SRC and CSF1R tyrosine kinases as supported by both biochemical and cellular assays with its inhibition measured in nanomolar concentrations. On the right, you see the screen of 373 kinases, and you'll note that TPX-0022 is highly selective as it's only in the very distal branches of the kinase tree shown here. Although designed as a potent MET inhibitor, there was also the targeting of SRC and CSF1R, which may improve clinical efficacy as SRC is a downstream met effector that's involved in malignant transformation, metastasis and drug resistance. CSF1R plays an important role in the regulation of tumor-associated macrophages. Therefore, we see a 3-pronged approach, and all 3 should favorably impact efficacy in this patient population. We have Phase I data to suggest evidence of activity in patients with various MET genetic alterations, such as exon 14 deletion, amplification, fusion or oncogenic kinase domain mutations. This activity was seen in a range of diseases, including gastric and colorectal cancer, which I'll discuss later in another presentation. For MET positive lung cancer, we had 1 out of 3 patients in the TKI-naive achieve a PR; 3 out of 5 of those were previously treated with the TKI and had stable disease. The compound was well tolerated with no treatment-related grade 3 or greater ALT or AST elevations and no ILD or pneumonitis of any grade. On the right, you'll note the traditional approach to the Phase I study with dose escalation across multiple diseases involved with MET genetic alterations, as I mentioned. And then you'll also note the activity in the waterfall plot on the right. So to summarize, there are approximately 83,000 patients annually in China with MET alterations in non-small cell lung cancer. And this comes from about 20% of patients having some sort of MET-derived abnormality, whether it be exon 14 deletions, amplification or association with EGFR TKI resistance. There was only 1 MET TKI currently approved in China, and that's specific to the MET exon 14 skipping non-small cell lung cancer. There are no approved targeted therapies for MET amplification following frontline EGFR TKI therapy. This is especially important because of the large population noted in China. The encouraging preliminary Phase I data suggests a pan-MET potential. And we anticipate enrollment of the first patient in the Phase II portion in Greater China in the first half of next year. Moving on to adagrasib from our partner, Mirati. We believe it is a potential best-in-class KRAS G12C inhibitor. And as a thoracic medical oncologist, I can say that KRAS has been a target that many people have attempted to address for many, many years. It's certainly exciting to see an agent with the level of activity seen with adagrasib. To review, adagrasib irreversibly locks the mutant protein in its inactive state and is designed to fully inhibit KRAS G12C for the entire dosing interval. This is an important point to mitigate against potential escape mechanisms. Some additional key characteristics that I'd like to highlight from preclinical studies are shown here. Adagrasib is potent with nanomolar potency, has a long half-life, is highly selective with a very wide therapeutic index and achieves extensive and broad tissue distribution. So let's move to the clinical efficacy in pretreated patients with non-small cell lung cancer. This will be data pooled from a set of Phase I/Ib studies with 600-milligram BID dosing. In the first 14 clinically evaluable patients, there were 6 responses noted. Looking at that data set in combination with early data from the Phase II study at the same dose, we now have a total of 51 clinically evaluable patients. We see responses in 23 patients for an overall response rate of 45%. The safety profile is in 110 patients showing only 4.5% of those with treatment-related AEs leading to discontinuation of treatment and only 7.3% of all AEs leading to discontinuation of treatment, representing a very tolerable safety profile. I think it's quite apparent that the KRAS mutation is certainly an unmet medical need. It represents 43,000 patients annually in China when you look at non-small cell lung cancer, colorectal cancer and pancreatic cancer combined. Again, there are no currently approved targeted therapies in China. Patients with KRAS mutations respond poorly to other standard therapies such as chemotherapy. We believe the differentiation for adagrasib is both its clinical efficacy and a very favorable tolerability profile. Later, during my presentation on GI malignancies, I will show you data for colorectal cancer. With respect to the China time line, we'll be participating in multiple mono and combination therapy global trials next year and beyond. In addition, we'll also be running exploratory local studies in combination with our own assets. So now let's take a look at a very interesting and intriguing therapeutic endeavor, tumor treating fields from our partner, Novocure. It provides electric fields and frequencies tuned to target dividing cancer cells. This slide shows the frequency band from low frequency used in cardiac defibrillators and pacemakers, all the way to the far right for ionizing radiation and resulting DNA damage. You'll note within the intermediate frequencies is where tumor treating fields has its impact on those malignancies that have a higher rate of replication and also have a higher differentiated frequency. This allows for the potential for a therapeutic index and result in safety that you've seen. Currently, there are now 3 approved FDA indications, 2 of which are NMPA-approved for newly diagnosed and recurrent glioblastoma with 5 additional indications in late-stage development. The global Phase III pivotal LUNAR trial in non-small cell lung cancer following platinum failure is ongoing, and I'll discuss this further on the next slide. Please note Novocure is also working with Merck on a Phase II study in the frontline non-small cell lung cancer TT fields in combination with pembrolizumab. Here is the Phase III LUNAR pivotal trial in which there was an interim analysis earlier this year. The rationale for conducting LUNAR trial is based on efficacy seen in a pilot Phase II study, revealing a 13.8-month median survival comparing quite favorably to a pemetrexed historical control. The original LUNAR study was designed to have 534 patients with 18-month follow-up and the anticipated final data sometime in 2023, using a primary endpoint of overall survival. However, following evaluation by the DMC, the DMC recommended and the FDA accepted an adjustment to the protocol to reduce the number of patients to 276 and the follow-up period reduced from 18 months to 12 months, with the final data now anticipated sometime in 2022. It's well known that non-small cell lung cancer is an important unmet medical need globally and in China specifically, with an annual incidence of nearly 700,000 patients. Tumor Treating Fields, with its safety profile, has the potential to combine with multiple therapies moving forward. Its differentiation relates to its unique mechanism of action and tolerability. We'll be submitting an MAA for malignant pleural mesothelioma sometime later this year. You also can see key milestones that our partner, Novocure, is anticipating. And now I'd like to move from lung cancer to GI cancers, whereas in lung cancer, we have a very well differentiated and targeted portfolio and a potential world-class franchise. GI cancers consist of gastric, liver, pancreatic and colorectal cancers. My colleague, Dr. Tianshu Liu of Zhongshan Hospital, Fudan University, has recorded a video with an in-depth discussion of GI cancers in China that we've included in the microsite for this meeting and that you'll be able to access. As with lung cancer, I'll begin with an overview of these diseases in China. The prevalence of GI malignancies in China is the highest in the world. The instance of GI cancers is significantly higher than that of the U.S. and Japan, especially for gastric cancer and liver cancer, where the annual incidence is 18x more than that's seen in the U.S. Also very concerning, GI malignancies in China are associated with an extremely poor prognosis, generally worse than in the U.S. and Japan. Of note, the 5-year survival rate for gastric cancer is only 36%; and for liver cancer, only 14%. Gastric cancer is the third most common cancer in China after lung and colorectal cancer. China accounts for almost half of the world's deaths from the disease. It is mainly caused by unhealthy dietary habits as well as high incidence of H. pylori infection and smoking. The early diagnosis rate for gastric cancer and the rate of gastroscopic evaluation in China are much lower than that in Japan. More than 60% of Chinese gastric cancer patients are diagnosed at an advanced stage when compared to 12% in Japan. For advanced stage gastric cancer, the prognosis remains poor with a very low 5-year survival. Thus, gastric cancer represents a significant burden for China due to high incidence, late diagnosis and high mortality. The slide shows the emerging trend of precision medicine in gastric cancer. Previously, gastric cancer was one disease and chemotherapy was the only treatment for advanced gastric cancer with modest impact. In the past decade, HER2 has emerged as the first target for gastric cancer. Now more genomic alterations are identified as therapeutic targets and more therapeutic agents are under development. The table on the right shows examples of gastric cancer genomic alterations and the respective prevalence rate. I would like to point out that Zai Lab's current gastric cancer portfolio covers 3 highly prevalent alterations shown here: HER2, MET and FGFR2 as well as KIT and KRAS not shown in this table. So let's move to our gastric cancer franchise. And by utilizing a precision medicine approach, Zai will actually cover about 50% of all gastric cancer patients in China. Our targeted therapies in GI cancer include bemarituzumab in FGFR2b, margetuximab in HER2, TPX-0022 in MET alterations, ripretinib in [ CKIT ] in PDGFR alpha and adagrasib in KRAS. We also have additional opportunities in immuno-oncology with tebotelimab in combination with niraparib, our PARP inhibitor, in gastric cancer. We're also studying tumor treating fields in gastric, pancreatic and liver cancer using electric fields to inhibit malignant cells from dividing. Let's start with bemarituzumab from our partner, Amgen. Bemarituzumab is an IgG antibody that is specific to the FGFR2b receptor. We think Bema can be first-in-class in China. It was engineered to enhance tumor cell killing via ADCC, and it also selectively avoids many of the problems associated with electrolyte abnormalities seen with the TKIs in this setting. The mechanism of action is shown on the right, blocking the FGFR2b receptor and also the ability to activate ADCC. Both of these events leading to tumor cell death. Clinically, there was antitumor activity of 18% seen in late-line FGFR2b-positive gastroesophageal cancer with bemarituzumab monotherapy, prompting an evaluation of combination therapy. The FIGHT Phase II study was initiated by Five Prime Therapeutics later acquired by Amgen. This study looked at a combination of FOLFOX6 plus bemarituzumab or placebo in 155 patients. The Kaplan-Meier curve on the right shows a remarkable difference in overall survival with the addition of bemarituzumab to chemotherapy revealing a hazard ratio of 0.6 and an improvement in median overall survival from 13.5 to 19.2 months. With respect to safety signals, overall TEAEs were balanced between the 2 arms, despite an arm that contains more therapeutic agents . There were some corneal and stomatitis adverse events more frequent in the bemarituzumab arm, which were expected based on the mechanism of action. However, they were reversible. And no adverse events of retinal detachment or hyperphosphatemia were identified in the bemarituzumab in chemotherapy arm. So to summarize, bemarituzumab is a first-in-class FGFR2b inhibitor with a sizable market opportunity in Greater China. There are significant unmet medical needs in China for gastric cancer in general. And patients with tumors that FGFR2b represent, about 1/3 of those gastric cancer patients, there are no specific approved therapies for these patients in China. And in addition, FGFR2b may play a role in other epithelial cancers, including squamous cell carcinoma lung, breast cancer, ovarian and other organs. Zai contributed to the Phase II FIGHT study, and our plan is to initiate the confirmatory Phase III study with our new partner, Amgen. There also remains the potential for us to explore other indications. So let's now move to TPX-0022, which we're partnering with Turning Point in the Phase I SHIELD-1 study in gastric and colorectal cancer. TPX-0022 is a small molecule MET inhibitor. Patients are defined by their MET alterations, which include exon 14 deletion, amplification, fusion or oncogenic kinase domain mutations. The schema for this study is shown in the upper right, as a monotherapy escalation with subsequent dose expansions in the various cohorts in either non-small cell lung cancer, which I discussed earlier, and GI cancers. We have early efficacy data in the MET-positive gastric and colorectal cancers. Four of the 7 TKI-naive patients, which include all 3 in gastric cancer and 1 out of 4 in colorectal cancer achieved a partial remission illustrated in the waterfall plot on the lower right. The compound has been generally well tolerated. Most of the treatment-emergent adverse events were grade 1 or 2 and the most common TEAE was dizziness. There were no related Grade 3 liver abnormalities, no ILD or pneumonitis of any grade. MET-amplified gastric cancer represents about 3% to 5% of gastric cancer cases. There are no approved targeted therapies for MET-amplified gastric cancer. So this is one of the largest potential market opportunities for MET inhibitors. There's encouraging preliminary Phase I data in both gastric and colorectal cancers, suggesting that TPX-0022 may be useful in MET abnormalities in a tumor-agnostic approach. We anticipate enrolling the first patient in the Phase II portion of SHIELD-1 in Greater China in the first half of 2022. Now I'd like to move to margetuximab, which we are partnering with MacroGenics. This is a novel immuno-optimized anti-HER2 monoclonal antibody. It was designed to increase its antitumor effectiveness through Fc engineering using MacroGenics proprietary optimization platform. There was increased binding to CD16A as well as decreased binding to CD32B thereby increasing the activation and decreasing any opportunity for inhibitory effects of the interaction. As a result, margetuximab inhibits tumor cell proliferation and reduces shedding in the HER2 extracellular domain. Importantly, there's also enhanced antibody-dependent cellular cytoxicity via immune cell-mediated antitumor activity and NK cell activation. We have seen encouraging data in advanced previously treated gastric cancer patients shown on this slide. In the first-line setting, you'll see the standard of care, chemotherapy plus trastuzumab; and in the second-line setting, the standard of care of ramucirumab and paclitaxel. We're going to compare those treatments to the Phase II study of margetuximab and pembrolizumab. In this study, patients were evaluated by expression of HER2 and PD-L1. And in both cases, the median overall survival time appeared comparable in the first-line setting or numerically better than standard of care in the second-line setting. In HER2-positive patients, we saw a median overall survival of 13.9 months and overall response rate of 24%. When you look at HER2 positivity plus PD-L1 expression, you see an impressive response rate of 44% and nearly a doubling of the overall survival to 20.5 months, comparing quite favorably to data seen in first-line patients who typically live longer than patients in second line. The incidence of Grade 3 adverse events is significantly lower in the combination of margetuximab and pembrolizumab predominantly due to the absence of chemotherapy in this regimen. The ongoing MAHOGANY trial in previously untreated patients, which is potentially registrational has a module A studying a combination of margetuximab and the PD-1 inhibitor, retifanlimab, a chemo-free regimen in patients who are PD-L1 positive. Module B looks at patients independent of PD-L1 status and is studying margetuximab and a checkpoint inhibitor, either PD-1 inhibitor retifanlimab or the PD-1 LAG-3 bispecific tebotelimab and chemotherapy. So it's clear that gastric cancer is an important malignancy in China. About 12% to 13% of these patients will overexpress HER2 positivity. The current standard of care is trastuzumab and chemotherapy, and margetuximab has the potential with its enhanced ADCC to provide additional clinical efficacy, which has been shown in earlier studies. We will continue to evaluate that in pivotal trials moving forward. In terms of the China time line, we've enrolled the first China patient in Module B of the global MAHOGANY study, and we also plan to submit an NDA in breast cancer toward the end of this year. I'd now like to talk about GI stromal tumors and QINLOCK or ripretinib, which we are partnering with Deciphera. It's a novel switch control kinase inhibitor that blocks the drivers of resistance in this disease. QINLOCK has a dual mechanism of action that provides broad spectrum inhibition of KIT as well as PDGFR alpha kinase signaling in vitro, including multiple primary and secondary mutations as well as some wild-type GI stromal tumors. The mechanism of action is shown with QINLOCK lock binding to the activation switch and switch pocket regardless of mutation, thus locking the kinase in the inactive state. An early Phase I study was done in multiple cohorts and revealing positive results across all lines of therapy in a pretreated patient population shown here in this table. You see the median progression-free survival of 10.7, 8.3 and 5.5 months and response rates of 19.4%, 14.3% and 7.2% in the second, third and fourth line plus, respectively, with prolonged median durations of response across the board. There's an ongoing Phase III study known as INTRIGUE, studying ripretinib versus sunitinib, the de facto standard of care in second-line GI stromal tumors post-imatinib therapy. The primary endpoint is PFS. And as there's no crossover, overall survival will be evaluated as well. The GIST market is significantly larger in China than in the U.S. and Europe with about 30,000 newly diagnosed patients annually in China. There is a clear unmet need, particularly in pretreated patients as well as the frontline setting. This is a potential best-in-class therapy for advanced GI stromal tumors that have been previously treated regardless of mutation. There are multiple types of mutations. So this could offer a broader spectrum of therapy than other agents currently available. It's the only therapy recommended in the fourth line all-comer setting by the NCCN, it's the only drug recommended with Level 1A evidence in fourth line GIST setting in the China 2020 CSCO guidelines with a recommendation in second line as well. The fourth line GIST indication has been launched in Mainland China, Hong Kong and Taiwan. The second line GIST bridging study is currently ongoing, and we anticipate the second line GIST supplemental NDA to be submitted next year. Now I'd like to discuss the Zai-sponsored Phase II pilot trial of tumor treating fields in gastric cancer. On the left, you'll see the preclinical data showing that TT fields and FOLFOX chemotherapy resulted in enhanced activity compared to chemotherapy alone. The schema of the Phase II trial is shown here. It's a single-arm study looking at this combination in 28 patients with 12 months follow-up and final data expected next year. Zai will be joining Novocure's global Phase III studies of tumor treating fields in both pancreatic and liver cancer. In pancreatic cancer, efficacy was suggested in a Phase II pilot study called PANOVA where TT fields was utilized with chemotherapy, either gemcitabine or gemcitabine plus nab-paclitaxel. The median overall survival was not reached which compared quite favorably with historical controls of 8.5 months seen with the chemotherapy combination previously studied. We anticipate that the first patient in China will be enrolled in this pivotal trial later this year. For hepatocellular carcinoma, efficacy was suggested in a Phase II pilot study called HEPANOVA with TT fields given concurrently with sorafenib, the VEGF TKI. This was a small pilot study in 21 patients. There was a 9.5% overall response rate in this very difficult-to-treat malignancy with a 76% disease control rate and PFS of 5.8 months. Notably, 11 patients who were able to complete at least 3 months of therapy had an improved overall response rate of 18% and a 91% disease control rate. A Phase III pivotal trial is currently in the planning stage, including determining the appropriate control arm and backbone therapy with TT fields. Let's now take a look at adagrasib, the KRAS G12C inhibitor that we discussed in non-small cell lung cancer. We've seen evidence of activity in previously treated patients with colorectal carcinoma, a very difficult disease to treat in patients with KRAS G12C mutations. In this slide, you see the design of KRYSTAL-1 study, including the dose escalation phase that arrived at a recommended dose of 600 milligrams twice daily and the dose expansion phase. Mirati recently presented data at ESMO for adagrasib as monotherapy or in combination with cetuximab in colorectal cancer. Let's take a look. On this slide, you can see the waterfall plot of the ESMO data for adagrasib monotherapy. Mirati reported a response rate of 22%. That is 10 out of 45 patients, including 1 unconfirmed partial response. Stable disease was also seen in 64% of patients, 29 out of 45 patients, and an overall clinical benefit in 87% of patients, 39 out of 45. Mirati also revealed evidence of a rapid onset of action and significant duration of response in the monotherapy cohort with a median time to response of 1.4 months and a median duration of response of 4.2 months with 40% of patients remaining on treatment at the time of the data readout. Now this slide shows the combo data. Here, you see a response rate of 43%, representing 12 out of 28 patients, including 2 unconfirmed partial responses. Stable disease was observed in 57% of patients, that is 16 out of 28 patients for an overall clinical benefit in 100% of patients. The combination also showed evidence of rapid onset and significant duration of response with a median time to response of 1.3 months and 71% of patients remaining on treatment at the time of the data readout. Adagrasib has the potential to be a first-in-class and best-in-class KRAS G12C inhibitor in China. As I mentioned earlier, there are a significant number of these patients in China in non-small cell lung cancer, colorectal and pancreatic cancers. And there are currently no approved therapies for these patients. Our plan is for broad development in both monotherapy and as combination in both non-small cell lung cancer and colorectal cancer that will include several registrational studies, all of which Zai will be participating in, in 2022 and beyond. In addition, Zai will also be able to run exploratory local studies, looking at combinations with some of our own pipeline assets. And now you and I deserve a break. So we will pause. And when we resume, I will talk about some of our other disease franchises outside of lung cancer and GI cancers. [Break]

Welcome back, everyone. I will now discuss products in oncology, other than lung cancer and gastric cancer. I'll begin with odronextamab, our CD3, CD20 bispecific that may prove to be best-in-class against non-Hodgkin's lymphoma. On the left, you'll see both its molecular structure as well as its mechanism of action, binding to both CD3-activated T cells as well as to cancer cells expressing CD20. Intriguing data is shown here in relapsed and refractory follicular lymphoma with a complete response rate of 70%, notably, the strong responses we're seeing in relapsed and refractory diffuse large B-cell lymphoma in both CAR-T naive patients with a CR rate of 55% and post CAR-T patients with an overall response rate of 33%, including a 21% complete response rate. With respect to safety, there was CRS observed during the step-up dosing but with no CRS higher than grade 3 in the follicular and diffuse large B-cell lymphoma population, the majority of CRS events being mild or moderate and no discontinuations due to CRS or neurotoxicity. There is certainly a high unmet need in China, and there are limited treatment options for Chinese patients beyond rituximab, including the low feasibility of CAR-T therapy. Therapies subsequent to rituximab would include chemotherapy with rituximab and/or high-dose chemotherapy with stem cell transplant, which provide limited benefit. So this allows for an off-the-shelf cell therapy option for relapsed and refractory non-Hodgkin's lymphoma. We have seen durable and complete responses in heavily pretreated patient settings that includes some patients post CAR-T therapy. Importantly, a subcutaneous formulation is also under development. As for our time lines in China, we anticipate enrolling the first patient in China in the Phase II study, B-cell non-Hodgkin's lymphoma in the second half of this year. Tebotelimab is a potential first-in-class PD-1 LAG-3 bispecific antibody. You see the structure of the molecule in cartoon form in the upper left. It's a tetravalent bispecific DART molecule designed by our colleagues at MacroGenics. Tebotelimab blocks the binding of T cells expressing PD-L1 and LAG-3 to their ligands with that tetravalent approach, bivalent for each target structure with the IgG4 fraction. It allows for the reactivation of exhausted T cells and enhancement of immune capacity against tumors. In the graphic on the left, tebotelimab demonstrates synergistic T cell activation in vitro superior to that seen with other PD-1 and LAG-3 combinations or with PD-1 or LAG-3 inhibitors by themselves. We've shown in our ongoing Phase I study that there is evidence of monotherapy tumor activity in various advanced solid tumors. Here, we show further evidence of single-agent anti-tumor activity across multiple tumor types, including patients with previously treated triple-negative breast cancer, epithelial ovarian cancer and non-small cell lung cancer. On the bottom left, please note the activity in diffuse large B-cell lymphoma as illustrated in the swim lanes. This includes previously treated patients who are either CAR-T experienced or naive. The preliminary overall response rate was 5 out of 7 for CAR-T naive patients and 2 out of 6 CAR-T experienced patients. To date, tebotelimab has been well tolerated with a safety profile not much different from other checkpoint inhibitors. After establishing monotherapy, the next step in development is to evaluate tebotelimab in combination and this is being done in multiple solid tumors. Our China clinical development plan is shown on the left where it's being evaluated in monotherapy in second-line hepatocellular carcinoma in both checkpoint inhibitor naive and post checkpoint inhibitor cohorts. We are also utilizing our very strong and broad pipeline such as by combining it with PARP inhibitor niraparib in a basket trial across multiple malignancies shown on the bottom right, including gastric, triple-negative breast, biliary tract cancer as well as endometrial cancer. Tebotelimab is also being evaluated as monotherapy in melanoma and additional indications are being investigated as well. Retifanlimab is a high affinity, humanized anti-PD-1 monoclonal antibody that we are partnering with Incyte, who obtained the rights to the product from MacroGenics. Its structure is shown here on the left. Preclinical data reveals an affinity of bound PD-L1 that's equal to or exceeding that of other PD-1s, such as nivolumab or pembrolizumab. It also blocks PD-1 interactions with PD-L1 and PD-L2 with potency equal to nivo and pembro. This slide shows a subset of the PODIUM-101 study of retifanlimab in advanced solid tumors. Specifically, preliminary activity in patients we've previously treated and recurrent MSI-high and MMR deficient endometrial cancer is encouraging and consistent with the known treatment effect of anti-PD-1 inhibitors in these tumors. Retifanlimab was generally well tolerated and we are moving forward into additional studies in this setting. Retifanlimab remains one of our foundations in immuno-oncology. I discussed our work in endometrial cancer, where there are no approved CPIs in China. Retifanlimab will also continue to help strengthen our lung franchise and serve as an IL backbone therapy. In PODIUM-203, retifanlimab demonstrated antitumor activity in non-small cell lung cancer and selected solid tumors comparable with approved checkpoint inhibitors. We'll be looking to explore future combinations with our pipeline assets. I'd like to conclude by summarizing some key elements of our strategy in oncology. We are taking a scientific and disease-based mechanistic approach with the intent of building on the Zai's established portfolio and network. We will aim to find global best-in-class and first-in-class assets either through our own internal discovery and development program from in-licensing or from co-development through collaborations, such as those with MacroGenics and Schrödinger. We will use our expertise in areas such as cancer immunotherapy, DNA damage response and repair and oncogenic signaling. We will explore new therapies as monotherapies, but importantly, also in the combinatorial approaches such as those seen here within our robust pipeline, which includes I/O, Tumor Treating Fields and other Zai assets and we will look for supplemental indications across our pipeline. And now I would like to introduce my colleague, Dr. Harald Reinhart, Harald?

Yes. Thank you, Alan. Thank you so much for giving me the opportunity to introduce the autoimmune infectious disease franchise. We have built this franchise up over the last 5 years. And we now have 4 rather unique assets that I will present to you here. All 4 are truly differentiated, innovative products. None of them is [ B2 ], they are addressing unmet patient needs. Let's talk first about the area of autoimmunity. This is certainly a major growth area in industry and many drugs have become blockbusters, especially biologicals have been the center of attention ever since a series of anti-TNF drugs were approved in the '90s. We, at Zai, recognize the immense potential of this area of research which brings new discoveries every year and often breakthroughs in our understanding of the processes underlying autoimmunity. However, it is also a somewhat tricky area because we often don't fully understand the pathways central to each autoimmune disease. We often develop drugs that act as nonspecific immunosuppressives that can expose patients to the risk of serious infectious complications. So while it is an area that holds immense promise, we also realized that there are numerous uncertainties and the risk of failure for drug developers. Therefore, in our selection of compounds, we've tried to mitigate that risk by in-licensing drugs that have already shown strong science or proof of concept and for which we also see unrecognized growth potential. How we do this will become clearer as we discuss our programs individually. So let me now introduce efgartigimod to you. We in-licensed China rights from argenx in January this year. It's a compound that reduces circulating autoantibody levels. As you know, autoantibodies are central to the pathology of many autoimmune diseases. It is for that reason, we call efgartigimod, a pipeline-in-a-product. It has great potential given its mode of action. I will get more into this later. Next, there is ZL-1102, also a highly innovative development stage product. It is a compound for which we have global rights. It is an anti-IL-17 nanobody, basically just the warhead of an IgG molecule. In recent years, we have come to know about IL-17 as a key pro-inflammatory cytokine in various autoimmune diseases, including psoriasis. Several biologicals targeting IL-17 are already blockbuster drugs. Hence, proof-of-concept is fully established for ZL-1102. However, we see great untapped opportunities here for this small-sized nanobody. Whatever we do, we always look for differentiation. Let me start out by saying that efgartigimod fits that bill. It's a drug ahead of the competition and will be the first-in-class FcRn inhibitor once approved. As an FcRn inhibitor and receptor inhibitor, many potential indications could be studied. Actually, the list is longer than what is shown here on the right-hand side of this slide. Indeed, any and all autoimmune diseases associated with autoantibodies or which benefit from IG IV treatment or plasma exchange or which respond to rituximab, would seem to fall within the scope of efgartigimod. Our partner argenx is conducting a large multipronged program. And Zai will support those indications by contributing Chinese patients. As you may know, argenx already submitted a BLA for generalized myasthenia gravis. This dossier is currently under review with the FDA and with a PDUFA date in December 2021. Efgartigimod has already established proof of concept in various diseases. It's already shown efficacy in myasthenia gravis, pemphigus and immune thrombocytopene purpura or ITP. It's a drug that is differentiated in many ways from other FcRn inhibitors currently in development by chemistry, formulation, target engagement, efficacy, safety, tolerability and convenience. Efgartigimod is not a full-size monoclonal antibody, but it's not Fc fragment construct with high receptor avidity. It is the most advanced FcRn inhibitor in development with both an IV and the subcu formulation. Critically important, efgartigimod is a very safe drug. Unlike some other FcRn inhibitors, it does not interfere with the recycling of albumin by the FcRn receptor and does not affect serum albumin levels. It also has no effect on serum cholesterol or serum LDL levels. Now I would like to briefly talk about efgartigimod's mode of action shown in these cartoons. Physiologically, serum IgG is taken up by cells and carried inside endosomes for lysosomal degradation just like other proteins. However, IgG is rescued from being broken down by the neonatal Fc receptor in the endosome and shuttled back into the bloodstream. However, as shown on the right, efgartigimod blocks IgG from binding to the FcRn receptor. And as a consequence, IgG is no longer recycled, but instead broken down. Serum levels of IgG decrease and levels of pathologic auto antibodies go down in parallel. This finding was confirmed in many clinical trials of FcRn inhibitors conducted at argenx and elsewhere. Of note, this mechanism selectively affects IgGs, not other immunoglobulins. And as already mentioned, efgartigimod does not block the recycling of albumin as the FcRn receptor. We do believe that there is a significant market opportunity for efgartigimod in China. While rare individually, autoimmune disease is taken together represent a very large patient pool. In China, myasthenia gravis, ITP, CIDP and PV, pemphigus vulgaris, are seen with similar frequency as in other parts of the world. With this large population, China is a huge market opportunity for efgartigimod. It's important to understand that patients with these autoimmune conditions often remain symptomatic despite current standard of care therapy. Many patients can only function when receiving systemic steroids for prolonged periods. Even then, steroids do not fully control the disease, other immune suppressive drugs are added, carrying their own toxicity. At the same time, we know that these patients periodically experience exacerbations. In myasthenia gravis, such crisis can be dangerous presenting with life-threatening episodes of muscle weakness that may then require hospitalization and more aggressive interventions like plasma exchange or a high dose IVIG. Such rescue therapies are costly and not always available. Several newer expensive drugs are not approved in China or just not available. So we believe that efgartigimod will address an unmet medical need for many of these patients. Here is an overview of the efgartigimod studies initiated by our partner, argenx. As already mentioned, the myasthenia gravis indication is currently under review at FDA. In all the other indications, Zai will participate by contributing patients from China. This way, we want to ensure faster study completion and set the stage for China regulatory approval. While this list comprise of 6 different disease indications, Zai plans to investigate other autoimmune diseases in China that even go beyond this list. The next slide will provide snapshots highlighting the activity of efgartigimod in various diseases. Let's start with the results from the myasthenia gravis Phase III study. Please note that most patients entering the ADAPT trial were symptomatic despite being on steroids and other immunosuppressive drugs. Efgartigimod was administered in addition to standard of care. Efgartigimod resulted in major symptomatic improvement, minimal symptom expression was achieved in 40%. And in contrast, only in about 11% on placebo by the criteria listed here. Looking at the pyramid on the right-hand side, the degree of improvement for patients on efgartigimod is obvious. The average patient started with an average MG ADL myasthenia gravis activities of daily living score of 9 and improved to different degrees over time, but much more so with efgartigimod. Quite a similar picture when looking at the quantitative MG score like the MG-ADL is a validated tool and both tools showed a highly significant benefit with efgartigimod therapy. The outcome is pretty much the same for patients with ITP, immune thrombocytopenic purpura, shown in a Phase II study. Here, auto antibodies against platelet surface proteins are causing the disease. We saw significant improvement with efgartigimod depending on dose and duration. So in the open-label extension, we see a 67% improvement compared to a response rate of only 25% in the control group. ITP patients are at risk of bleeding events that can be dangerous. Therefore, bringing those platelet counts up with efgartigimod to more than 50,000 is important. As you would expect, efgartigimod prevented bleeding episodes by decreasing autoantibodies and raising platelet counts. Zai just held an investigator meeting in China to help with recruitment for a Phase III trial. Third, I would like to briefly introduce the efgartigimod pemphigus data. Pemphigus vulgaris is one of the most dreaded diseases encountered in dermatology. These patients are like burn patients with blisters all over and open reaping, sloughing skin lesions. The autoimmune attack on the skin is so pronounced that high doses of steroids are needed for survival. In this Phase II trial, efgartigimod provided significantly improved symptoms, reduced anti-desmoglein autoantibody levels and allowed more rapid tapering of steroids. Zai Lab is ready to participate in the Phase III study for which we just had an investigator meeting in Shanghai earlier this month. So key points for efgartigimod are: first, it is a drug that will prove useful in multiple diseases, individually rare, but quite sizable in the aggregate; second, safe and effective treatments are just not available currently for many autoimmune conditions that can be addressed by efgartigimod. IVIG and plasma exchange are only treatments of last resort and both eculizumab and rituximab have problematic safety profiles. I cannot stress safety enough. In the argenx trial program, which comprises more than 600 patients treated with efgartigimod, we did not observe the dark side of immunosuppression such as an increase in bacterial viral infections. As we learned earlier this year, some FcRn inhibitors reduce albumin and increase serum LDL levels, but not efgartigimod. All this adds up to a well-differentiated and much-needed product. Preparations for our China studies are well underway, as is our submission planning. We obtained CTA approvals for 5 studies in the last 6 months and will start enrolling patients in China soon. Our second development project is quite unique as well. ZL-1102 is an anti IL-17 nanobody derived from [indiscernible] IgG, but further modified. It's a construct that we believe is very well suited for the topical treatment of psoriasis. IL-17 is a validated target in psoriasis and several IL-17 monoclonal antibodies have already been approved in this indication. So what makes our compound different. All currently approved biologicals are full-size monoclonal antibodies for systemic administration. They are reserved from moderate to severe disease only. Given the immunosuppressive tendencies these agents all have in common. However, we see a great market opportunity for a small nanobody that can be applied to the skin directly and avoid systemic toxicity. ZL-1102 has some very specific features: First, it has very high avidity for the target; second, as a small size molecule penetration into tissues is much better; and third, because of their small size, nano bodies can interact with epitopes not accessible to full-size monoclonals. Furthermore, nano bodies are very stable compounds. In vitro skin models and animal models of psoriasis suggest that skin penetration of macro molecules, the size of ZL-1102 is feasible. We are about to finish our Phase I proof-of-concept first in man study shortly. Here's a list of IL-17 monoclonal antibodies currently on the market. Secukinumab was the first one approved, and is still the standard against which most other drugs are compared. The last approved drug was bimekizumab, which is a bispecific and a slight variation on the theme is brodalumab, which is a receptor antagonist. Nonetheless, from an efficacy perspective, these drugs all work beautifully, and they have really changed the treatment paradigm for psoriasis. But when you look at their labels, you will see that these drugs are only approved for moderate to severe disease and that some of them have black box warnings because they are immunosuppressive and therefore, they must be monitored carefully. Consequently, 70% to 80% of patients are currently not eligible for systemic IL-17 antibody treatment. This is the market segment we would like to go after with ZL-1102 because we believe that topical treatment can be at least as efficacious and much safer. To sum it up, ZL-1102 is differentiated because it is a nanobody. We see topical application as the best way to treat mild-to-moderate plaque psoriasis because it works directly on the lesion without much systemic exposure and toxicity. Our study in patients with chronic plaque psoriasis will provide our first data on skin penetration and clinical benefit. Our Phase I proof-of-concept trial is a well-controlled, double-blinded PK safety and efficacy study. We will assess biomarkers and the transcriptome in skin biopsies from psoriatic skin in response to ZL-1102 topical treatment. The study is just finished and rolling. And hopefully, we will have favorable data to share with you later this year. Now let me move on to our other therapeutic area, infectious diseases. It is important to recognize that antibiotics represent a very large segment of the pharma market in China, larger than any other therapeutic category as you see on this slide. This is a growth area, and it is underserved. It's also important to recognize that a few new antibiotics have entered the China market in the last 10 years. And those that have entered are mostly old class antibiotics. With the documented high prevalence of resistance in many pathogens, we believe that infection is an area of unmet medical need and great commercial potential in China. These market forces are quite different from the U.S. or the EU. The left-hand graph shows the various therapeutic areas, led by traditional Chinese medicine TCM, which still commands a big chunk of the China medical market, but next comes anti-infectives. This is not the same distribution that you would see anywhere else and definitely not in the U.S., where oncology and autoimmune are much larger markets. In China, the frequency of multidrug-resistant organisms needs to be addressed rather urgently. There is a considerable mortality associated with these infections for which doctors have run or are running out of treatment options. When you no longer have antibiotics for those resistant infections, you're really back in the last century, the pre-antibiotic era, and that is a fairly scary proposition. Chinese regulators are acutely aware of the situation and are beginning to address it in the 14th 5-year plan, which caused for special attention to the development of new drugs that control infections caused by multidrug-resistant organisms. These patients do not die slowly as in cancer after 2 or 3 years. They die rapidly within 14 days. So bringing more potent antibiotics to China is a matter of medical need and also a political priority. Let me now talk about multidrug-resistant Acinetobacter, which is probably one of the largest biological threats you will ever find in a hospital. It's such a threat that it has made the CDC list of the top 5 organisms that need attention. It is one of the biggest killers in the hospital with mortality anywhere from 40% to 80%. It is an hospital organism that has become not only MDR, multidrug-resistant, but XDR, extremely drug resistant. And unfortunately, China has a very large number of patients infected with Acinetobacter in its ICUs. Various numbers can be find in surveys, but the latest estimates speak of approximately 230,000 cases per year. All these Acinetobacters can be pursued multidrug resistant. Worse, the majority have become carbapenem-resistant too, giving them the acronym CRAB, which stands for carbapenem-resistant Acinetobacter baumannii. CRAB are also quite prevalent in some other Asian and a few European countries. So this is a regional phenomenon with China as the epicenter. Therefore, we believe that our drug, Sulbactam durlobactam or SUL-DUR is very important for China. This drug has the potential to make a big difference in patients' lives and for the management of these cases. Why is the situation so scary? Well, until recently, we could still treat these organisms with a carbapenem antibiotic, which is both effective and safe. With CRAB, this drug class no longer works. This CRAB patients are now given Colistin or tigecycline, drugs that show efficacy in vitro only. However, in real life, they don't work due to issues with pharmacology, toxicology, toxicity, dosing and prolong penetration. As shown in the table, Colistin does not work at label doses and tigecycline and Colistin have always been inferior drugs in pneumonia, the most common site of Acinetobacter infection. What is most scary is that Colistin has predictable nephrotoxicity and 5 days into treatment, these patients show signs of renal toxicity. So what do we do here? We need a new drug that's efficacious and nontoxic. Therefore, Zai was excited to co-develop durlobactam with our partner Entasis and bring it to China. Durlobactam in combination with sulbactam can overcome the resistance mechanisms found in most Acinetobacter, including the CRAB variety so prevalent in China. This is a more technical slide, but I want to point out to you that the combination of sulbactam and durlobactam, just where the red arrow is brings multidrug-resistant Acinetobacter down to a susceptible MIC range. Furthermore, in the graph on the right side, you can see how durlobactam moves the microbial kill curves to the left and into the susceptible range. A triple combination of SUL-DUR with imipenem is exceptionally active against these multidrug-resistant organisms, the light blue line on top. No other antibiotic regimen even comes close. In summary, right now, we are in a situation where treatments are not available, either in China or elsewhere for the worst variety of these organisms. They happen to be fairly frequent in China. And that's why Zai is engaged in this particular area. This is truly a high medical need, which Entasis and Zai are trying to address together. Where do we stand in the development of SUL-DUR. The ATTACK study is a Phase III registrational study. It is the largest well conducted, well-controlled study ever conducted in MDR, CRAB, Acinetobacter infections, pneumonia and bacteremia. The trial just finished enrollment, and we expect to learn the results by the end of this year. This effort was significantly supported by Zai, and we contributed roughly 25% of all patients to that study. Here are key takeaways for SUL-DUR. This is a drug that addresses an unmet need, particularly felt in China. These are severely ill patients infected with a super resistant organism for which we have run out of good treatment options the world over. What we can offer currently is way too toxic and/or does not work. By contrast, SUL-DUR is a much safer drug, as we already know from our Phase I and II studies. Clinical efficacy data will be available soon, and we have good reason to believe that results will be favorable. We also believe that the narrow spectrum activity of SUL-DUR will be welcome as it prevents the collateral damage associated with broad-spectrum antibiotics. Now let's switch to our other antibiotic, omadacycline. Omadacycline belongs to the tetracycline class and is one of the latest broad spectrum and well-differentiated antibiotics that have been developed. Our partner, Paratek, conducted a large clinical program with FDA input and guidance. And the potency and safety of omadacycline was tested in 2 indications for adults, community-acquired bacterial pneumonia and acute bacterial skin-skin structure infections. It has excellent tissue and lung penetration, including a favorable PK profile with low protein binding and much higher free drug levels than any other tetracycline. Similar exposures obtained following 300-milligram oral and 100-milligram IV dosing which allows step-down therapy from an IV to an oral formulation of the same antibiotic. Patients can be started on IV omadacycline in a hospital and once stable, switch to PO, making early discharge possible. It is a very unique and differentiated tetracycline. The next 2 slides present the results, all published of the Phase III program. Here, we show that omadacycline, which is now approved in the United States under the name of NUZYRA is as potent as best standard of care antibiotics in CAP, community-acquired pneumonia. As you know, for CAP, moxifloxacin has become the gold standard antibiotic all over the world, including China. And omadacycline has convincingly shown similar efficacy. These are exceptionally good results because the bar for this is so high. Regarding its adverse event profile, omadacycline was safe and well tolerated with lower rates of adverse events overall, including GI-related effects. This slide shows you a similar panel of graphs for 1 of the 2 Phase III ABSSSI studies, also conducted by Paratek. Here, the comparator is linezolid, the world's standard for treatment of these kinds of infections, one of the best drugs available for staphylococcal or streptococcal skin infections. Sequential IVPO omadacycline was as potent as sequential IVP-only linezolid, the undisputed standard of care for this indication. As in the CABP trial, safety and tolerability was favorable between comparators. Consistent with studies of tetracyclines, GI-related adverse events were the most common events reported. So efficacy-wise and safety-wise, we have a drug here that is as good as the standard of care, fine achievement. I don't know of any other antibiotic that has done equally well in a similar set of studies in recent years. There are currently 3 newer generation tetracyclines in the market. Tigecycline was approved some time ago and is a well-known and safe drug. It is available in China, where it is used predominantly for mild to moderate skin-skin structure infections. There is some hesitation to use it in respiratory tract infections as efficacy was subpar in some clinical trials, it's not approved for CABP in the EU. Then there's eravacycline, which was just recently introduced in China. However, that drug is only available in an IV formulation. It is not indicated for pneumonia only for intraabdominal infections. Quite surprisingly, it failed in 2 large UTI trials. So in this side-by-side comparison, omadacycline is truly a standout: first, because of the 2 indications for which it has already been approved in the U.S. The same 2 indications, we also pursued in our China bridging program; second, omadacycline has a favorable safety tolerability profile overall, particularly regarding GI side effects, which can be bothersome with some tetracyclines; third and most importantly, we have the option of IV to PO step-down therapy. I want to stress that no other tetracycline has both formulations. China CDE, granted priority review for omadacycline last year. Omadacycline, it's not only a best in the tetracycline class of antibiotics, it also has an excellent differentiated profile when compared to other classes of commonly used antibiotics for CABP and ABSSSI that are already in use in China and abroad. As shown here, it has a broad antimicrobial spectrum, including gram positives, remedies and atypical pathogens like legionella, plus several multidrug-resistant organisms not covered by other antibiotics. Despite being a broad spectrum antibiotic, there were no reports of clostridium difficile infections during the omadacycline clinical program. The convenience of once daily dosing with oral tablets is an important attribute as it fastest compliance. These are features that few other antibiotics can match individually or in combination, CABP is a big market anywhere, and it's a big market in China as well. As already mentioned, no new antibiotics have been introduced in China for this indication in many years. Acute bacterial skin-skin structure infections can also be managed effectively with this drug. Clearly, omadacycline fits that bill. It's a category 1 drug in China, which is important here for caregivers in Chinese hospitals. We expect approval for omadacycline by the end of this year, and look very much forward to working with [indiscernible], our sales and marketing partner to bring omadacycline to Chinese patients. And now I will turn the presentation back over to my colleague, Dr. Sandler. Alan?

Hello, again. It's good to be back to tell you about our research strategy and our exciting pipeline of internal products. I'd like to begin by discussing our process. Our methodology for establishing a balanced portfolio is to use an open innovation model. That is, we established a pipeline of proprietary assets against prioritized targets in areas of extensive internal expertise and modalities of strength based on the available science to date that described that unmet need. You can see the open innovation model schematically on the left, showing the integration of our portfolio with that of our targets, pathways and prioritized disease areas. Our focus in internal discovery includes immuno-oncology, DNA damage response and synthetic lethality and autoimmunity. Our disease areas in oncology include women's cancer, lung and CNS cancer, GI and GU cancer, hematology and cancer immunotherapy which works very closely with our autoimmune disorder approach and also infectious diseases. Of course, Harald is our Chief Medical Officer, heading up our immunology and infectious diseases therapeutic areas. We have invested to build our internal drug discovery capabilities. The result is a proven world-class biologics drug discovery team, led by Peter Brams, who has spent his entire career building monoclonal antibody discovery platforms at such companies as Medarex and Bristol-Myers Squibb, discovering some of the most commercially successful antibodies in oncology today. His group has capabilities to perform end-to-end discovery, engineering and optimization of monoclonal antibodies. This has resulted in 2 INDs and 1 preclinical candidate of therapeutic monoclonal antibodies for Zai's global development portfolio. We have also recently entered into several collaborations to synergistically enhance our internal capabilities. We partnered with RubrYc to access technology to enhance our antibody discovery platform and our diversity of antibodies. We also partnered with MacroGenics to use their DART platform to jointly discover and develop bispecific T-cell engagers precise proprietary tumor targets. Zai's internal small molecule drug discovery has also been focusing on leveraging preferred CROs to advance compounds such as ZL-2201 and ZL-2103 or molecules that will result from the recent Schrödinger partnership in DNA damage response. In order to support the future small molecule portfolio, Zai has made the decision to invest in and build fully integrated small molecule drug discovery capabilities. We will report back to you in future presentations as these capabilities deliver de novo first-in-class global small molecules in our strategic areas of focus. Our internal discovery engine has proven that it can take small molecule or biologic drug discovery programs from target validation through to IND filing fully integrated internal capabilities throughout the discovery value chain. Our world-class biology and translational sciences groups work seamlessly with the preclinical groups to validate mechanisms of action and develop key biological assays and pharmacology models to support moving the programs forward to IND and generating translatable clinical hypothesis. I'd now like to share with you our internal R&D pipeline. We have 13 internally discovered assets, 11 of which have global rights. They are listed here. Harald has already discussed our IL-17 nanobody. Our CD47 and CDC7 compounds are already in Phase I and Claudin 18.2 will be in the clinic shortly. We have multiple other preclinical compounds, including a DNA-dependent protein kinase. We are collaborating with MacroGenics on up to 4 CD3 or CD47-based bispecific molecules and with Schrödinger on a compound targeting DNA damage response. Let me go into a few of our molecules in more depth. Simurosertib's mechanism of action is shown here schematically where it works in DNA damage response by blocking CDC7, a protein kinase with key roles in DNA replication elongation and in bypassing DNA damage response. This compound has the potential to be the first-in-class oral selective inhibitor of CDC7. It's shown encouraging preclinical activity, including synergy with PARP inhibitors. In solid tumors, it has shown activity in Phase I and II trials as monotherapy and we are also looking into combinatorial approaches. ZL-2201 is an IND-ready wholly-owned potent selective DNA-PK inhibitor developed with our in-house discovery capabilities. DNA-PK is a critical kinase activated by double-strand DNA breaks induced by radiation or chemotherapy and drives a cascade of events program to repair the damage to the DNA. Inhibition of DNA-PK has been shown to sensitize cells to killing by DNA damage inducing cancer therapies. This leads to synergistic and antitumor activity. We aim to translate these encouraging preclinical data to patients undergoing treatment with DNA damage inducing radiation or chemotherapy. We expect to file an IND in the first half of 2022. ZL-1201 as an inhibitor of CD47, which is a macrophage immune checkpoint. ZL-1201 is a humanized IgG4 monoclonal antibody that binds and blocks the function of CD47 expressed on tumor cells, thus activating macrophage-induced phagocytosis. It also may bind to red blood cells, although in this preclinical setting, hemagglutination was not observed. Preclinical data in HL-60 tumor cell xenograft models shown on the left demonstrates considerable activity in combination with 5-Azacytidine. Preclinical data also support combination with chemotherapy, ADC enhanced antibodies and T cell checkpoint inhibitors. ZL-1218 is designed to block ligand binding and to induce ADCC mediated Treg depletion selectively in tumors and not in other tissues. The compound was discovered on Zai's internal antibody discovery platform and optimized using in-house in vitro and in vivo assays. Nonclinical development is led by Zai's internal capabilities and our in-house sell and process development groups. The team is preparing for GLP tox studies and is in the process of characterizing Tregs from human tumor isolates to develop translational hypothesis. This slide refers back to the topic I mentioned earlier, our partnerships with both MacroGenics and Schrödinger. Our MacroGenics collaboration includes 4 compounds. The first program covers a lead research molecule that incorporates MacroGenics' DART platform and buying CD3 in an undisclosed target that is expressed in multiple solid tumors. This next-generation CD3 component of the DART bispecific molecule has been designed to minimize cytokine release syndrome while maintaining anti-tumor cytolytic activity. Zai receives commercial rights in Greater China, Japan and Korea with an option for 50-50 global development. The second collaboration program also binds to CD3 and will cover a target in solid tumors to be designated by MacroGenics. Zai receives commercial rights in Greater China, Japan and Korea. Zai lab also obtains exclusive global licenses from MacroGenics to develop, manufacture and commercialize 2 additional molecules. In the Schrödinger collaboration, we will tap their best-in-class physics and AI-based drug discovery platform to identify compounds involved in DNA damage response, which is an active area of research for us. The discovery work will be conducted jointly. Zai will then be responsible for the global development, manufacturing and commercialization. The collaboration provides opportunities for combinatorial approaches utilizing molecules within our pipeline as well. To review, our strategy for our internal research and development program is to prioritize those programs that are synergistic with our portfolio. We will do so by embracing an open innovation model, encompassing both internal and external collaborations. We will continue to leverage and invest in our global footprint, further strengthening our R&D capabilities in both China and the U.S. This multipronged internal R&D strategy will aim to generate at least one global IND per year. And now I'd like to introduce my colleague, Jonathan Wang. Jonathan?

Thank you, Alan. Our standard has always been to develop and market globally first and/or best-in-class assets. Over the last 7 years, Zai has demonstrated that we are the parter of choice for helping Western companies launch such first-in-class and best-in-class products in China. On this slide, you can see that every year, we have been very consistent in partnering or licensing assets of that standard quality. For us, it's not actually the numbers. It's really the quality of these assets that we're most proud of. We, more than any other company, have consistently been partnering for the best assets with the best companies like Regeneron, argenx, NovoCure, Turning Point, et cetera. Many of whom have openly said that if it wasn't for Zai, they probably will not work with any other Chinese company in this region. If we look at 2021, over the last 9 months, we have executed a number of deals shown here. And each of them has its own unique strategic and business rationale. In January, we did a deal with argenx and broadening a very promising asset in efgartigimod. That collaboration essentially extended our therapeutic focus with an anchor asset in severe autoimmune diseases, an area where we have always been looking for great assets. Efgar has significant potential. It is really a pipeline-in-a-product opportunity across many rare diseases. Actually, many of them not so rare in China. Together, the patient prevalence in Efgar's targeted patient population is 700,000 patients just in the 6 indications in its current or planned clinical development plan. The lead indication, gMG, has a prevalence of more than 200,000 patients in China. In January, we also did a deal with Turning Point for TPX-022 (sic) [ TPX-0022 ], further strengthening our lung and GI cancer franchises. Our existing partnership was working very well, and both partners clearly were quite happy with it. So we decided to broaden it. And similarly, from a deal we did with MacroGenics in June, we expanded upon the original deal for 3 clinical assets with China rights with an additional 4 preclinical assets with global rights in our latest deal. And our interest in building our early-stage pipeline also led to the deal with Schrödinger. We very much have an open innovation model as we think about early-stage products with global rights. We tap into the best platform, the best technologies, working with different partners. And obviously, it doesn't have to be all in-house. We're really glad to work with MacroGenics in what we think is world-class bispecific platform and with Schrödinger using their cutting-edge technology to come with best-in-class small molecules. And in June, we announced a partnership with Mirati, again, strengthening our lung and GI cancer franchise with one of the hottest assets in the world today. We certainly think we have an opportunity to make this first and/or best-in-class in China, and we'll definitely work hard towards that goal. This is a great asset to further solidify Zai's reputation of being the partner of choice. So as you can see, each one of these collaborations has a different strategic rationale or objective for the company's growth. We'll continue to execute to achieve these different dimensions that you see at the bottom of the slide from a licensing perspective. Many people ask us how we find our assets, how we evaluate them, what portion of them are inbound versus outbound? Our BD strategy has been an evolution. Initially, it was much more outbound. From the early days, we really have to educate people about China and of the Chinese market. I think today, a lot more interest has been inbound, including some of those that you saw on the previous slide. Our partners came to us. They wanted to find a Chinese partner, and they thought that Zai will be their ideal partner. Of course, we have a very systematic approach to scouting and searching for products across different modalities and TAs. We also look for assets that can complement what we already have and can address significant unmet needs. Between inbound interest and systematic searches, we look at hundreds of opportunities every year. We have a very robust process to evaluate them, a well-oiled machine. We're very lucky as Zai in that because of our prior collaborations, we've built a strong in-house team across the full breadth of drug development, commercialization and manufacturing to evaluate every opportunity that comes in. We also have built a very strong network of KOLs and external advisers to help us evaluate and complement our in-house expertise. As you know, many of our opportunities were actually controversial at the time of licensing. However, as soon as the deal was struck, those assets had data presentations that proved we were right. One example I can give will be Five Prime. When we licensed bema, nobody really valued that asset highly. When we licensed that asset, it was really a Phase I product. We did a deal with $5 million upfront back in 2017. And by early this year, Amgen had bought Five Prime and bema with the China rights already partnered to Zai for USD 1.9 billion. So we're really proud of our extended team, and it's really because of our development and commercialization colleagues and their expertise in effectively evaluating products and then after the deal, moving the products ahead quickly that we're able to continuously execute in BD. So I think this competitive edge, this position of the partner of choice is fully cemented and will continue going forward, especially today, across our key therapeutic areas where we have great products. And some of these great products can also have combination potential with other assets that we're looking to bring in. One example will be the KRAS, where we're going to look at monotherapy and also combination opportunities potentially with our other lung and gastric cancer franchise products in-house. I explained earlier the concept of our BD strategy, starting from being the partner of choice, leveraging the Chinese market, already the second largest in the world. And today, we're very proud to have built leadership positions in certain areas, for example, in lung and in gastric cancer, 2 of our largest oncology disease areas in China, where China has the largest patient population in the world. We have also built a very enviable pipeline where these assets cover a large portion of the patient population from a mutation perspective. Many of these can be useful not only as monotherapy but also in combination with each other, not only for Chinese patients but eventually for global patients. And that is one of the key reasons our partners come to Zai, because they want to leverage Zai's expertise in drug development, working with innovative assets to help accelerate our partner's global time line and bring these products to China and to the world. The long-term ambition of Zai is really to build a global biopharmaceutical company with a significant presence in China and in the U.S. I think we are well on that path. BD is going to play a very significant role together with in-house discovery to achieve that ambition. So we're really looking forward to further expanding the pipeline through licensing, looking at globally first and/or best-in-class assets for either regional and/or global rights and working with different modalities as well. Thank you. And now Billy will conclude our presentation. Billy?

Thank you, Jonathan. I hope you've been impressed with the breadth, depth and quality of our product portfolio and pipeline, with the organization and operational infrastructure that we have built and with our strategy for robust growth and value creation for years to come. Over our 7-year history, we have raised $2.6 billion and deployed about $860 million of it to create Zai Lab as you see it today, quite a return on investment. Our future growth will come from continued execution with Zai's speed and quality, enabled by our culture of high performance and relentless focus. We will continue to bring transformative medicines to patients in need, build our product portfolio and pipeline, including our internal pipeline, and synergistically scale up our global operations. We are already the partner of choice to develop and commercialize products in China with 16 assets in global co-development, which truly showcased our status as a global strategic partner of choice. We will continue to expand our product portfolio with new partnerships for first-in-class and best-in-class medicines, including products with global rights. And we expect to continue to set the industry benchmark for innovation and extend our track record of execution excellence. Of course, we cannot and will not do this alone. Our future growth will depend on continuing support from you, our investors across the U.S., Europe and Asia. We thank you for your support, and we look forward to working with you to achieve our vision of Zai Lab benefiting far more patients in China and around the world. We have no doubt that we will accomplish great things together and unlock significant potential value in Zai. [Break]

Hello, everyone. Thank you for sitting in through our R&D Day. Thank you for your continued interest and support in our story. And we've had quite an update since the last time we did this over 2.5 years ago. So this format was really a way to provide -- really the only way to provide a comprehensive review. And again, the recording will be available after this. So we encourage you to refer back to it. On the call, you have all the speakers for this Q&A portion: Samantha Du, Tao Fu, William Liang, Alan Sandler, Harald Reinhart, Jonathan Wang and myself, Billy Cho. And so before we open it up to Q&A, please queue up your questions as we do it in our earnings Q&A. There has been some recent activity at ESMO and others. So we want to highlight some exciting results from several of our programs and partners that was recently announced. So without further ado, I'll turn it over to Alan for some commentary, and then we'll proceed to our Q&A. Alan?

Great. Thanks, Billy, and good morning and -- or good evening to everyone. As I've already mentioned in my presentation, from the data from our partner, Mirati, for the colorectal cancer cohorts in the KRYSTAL-1 study, there also were some updated results on Monday, where Mirati had presented results from the Phase II portion of KRYSTAL-1 and evaluated adagrasib in patients with advanced non-small cell lung cancer harboring the KRAS G12C mutation following prior therapy. And then in the intent-to-treat population as of June 15, 2021, adagrasib demonstrated an objective response rate of 43%, disease control rate of 80%, with the safety and tolerability profile that was again consistent with the previously reported findings for adagrasib in these similar patients. So these lung cancer results, in addition to the new data at ESMO relating to colorectal cancer, again, very encouraging and reinforce our view that adagrasib has that potential to be a best-in-class compound for patients with KRAS G12C mutation. I'd also like to mention our partner, MacroGenics, announcing the results of MAHOGANY cohort A at ESMO, evaluating the combination of margetuximab plus retifanlimab to patients with GE junction cancer. With the data cutoff here of July 19, 2021, tumor shrinkage was observed in 32 of 41 patients. This included 21 of 40 response evaluable patients for a response rate of 53%, with 4 confirmed complete responses. The median duration of response was 10.3 months. Safety analysis of all 43 patients treated with margetuximab plus retifanlimab as of August suggests that the combination was well tolerated with only 9 Grade 3 TRAEs recorded, representing 8 patients, for a total of 19% of patients seen. No Grade 4 TRAEs were observed. This safety profile compares quite favorably with other chemotherapy-based therapies. And lastly, our partner, Deciphera, presented a long-term update from the Phase III INVICTUS study of QINLOCK, which continues to show clinically meaningful median overall survival of 18.2 months as compared to 6.3 months with placebo. Progression-free survival remained unchanged at 6.3 months with QINLOCK compared to only 1 month with placebo. Safety findings again were consistent with the original primary analysis results. We and our partner, Deciphera, look forward to the Phase III INTRIGUE readout later this year in patients with second-line GIST. Thank you.

Operator, those are some opening remarks that we want to make live before passing it over to Q&A. But I also -- can you also double check that there are no issues with this audio portion? I believe it should be working now, right? operator, are you online? You can go ahead and proceed to open the line for questions.

[Operator Instructions] The first question comes from the line of Mike Yee from Jefferies.

I appreciate the comprehensive review today. Can you hear me?

Yes, we can.

Okay. Perfect. Great. I know that there's a lot of technical things going on, and we've got everyone connected around the world. Two questions. One is that there is obviously a lot of uncertainty and a lot of market nervousness around the regulatory developments in China, whether that's in technology or purportedly potential for health care. And obviously, that's got a lot of investors nervous. Is there anything you can say as to your insights with regulators and with the government that can give some comfort to people that the biotech and drug pricing area is something that you think will not be impacted at all and there's not going to be any changes there? Talk to that topic, number one. And the second question is a more strategic broad question. You could appreciate that in inflammation. It's quite an area that you sound like you want to in-license more. That's a huge area. gMG and psoriasis are totally different sales forces. What generally would you like to do in inflammation? And how can we be assured you will be focused?

Yes. Thank you, Michael. Thanks for the -- yes, please, Samantha.

Yes. Thank you, Michael. For your first question, let me just give you some of my personal thinking. I had several discussions with the CDE, especially after July 2, the guidance for industry for oncology drug. And I think that perhaps started the concerns about what does it really mean. Actually, from my own interpretation and also from my own communication, I thought that's a very positive sign because what the whole guidance for inventory on 2nd -- July 2 issue is actually -- it's about reaching the bar for innovation in drug development, which is good for Zai Lab and companies like Zai Lab with very differentiated product pipeline. And we think this guideline signs a very strong signal from the regulatory authority to guide the industry to shift to need first or invest better to meet unmet medical needs. And you know how many PD-1s we're having right now. And I think also given Zai Lab has only focused on best-in-class and first-class assets to address unmet medical needs, we really feel like we'll benefit from this guidance. And of course, you won't see that today, but in the long run, we're truly well positioned in China. But overall and on all the other interactions, we just recently had a pre-BLA meeting. And we thought the meeting went well, very positive. And our other applications, INDs keep going according to the plan. And also from the 14th health care planning, even though it's still in the planning stage, all the things I've heard have been very positive, especially on innovative health care industry.

And Mike, as to your second question, I'll pass it along to Jonathan Wang, our BD Head. And Jonathan perhaps can comment a little bit about even leveraging our BD platform, brand network effect to not only look at oncology but other areas of inflammation, et cetera.

Yes. Thanks, Mike, for the question. So autoimmune has always been an area that we've been looking for products. And if you look at the asset that we got in efgart, it's mainly focused on severe autoimmune diseases. So in many ways, it's actually like our other oncology products. So the commercial capabilities will be very focused, targeting large hospitals, very concentrated in terms of the KOLs and where patients go seek for care. And there are many of these severe autoimmune diseases. I mean if you look at just efgart in itself, it addresses several different indications, 6 already announced, addressing something like 850,000 patients currently in China, where there's very large unmet medical need. So we'll continually look for other assets in the anti-inflammation area, where there are large unmet medical need like this and where we can adopt a very focused, concentrated commercial efforts when those products get closer to the market. I hope that answers your question.

The next question comes from the line of Yigal Nochomovitz from Citigroup.

Great. Can you hear me?

Yes, we can.

Good. Okay. Congrats on the continued positive momentum for both the partner pipeline as well as the internally developed pipeline. I had 2 questions. First, on your high-level strategy to build the portfolio, curious what other therapeutic areas would you like to gain exposure to beyond the current solid footprint in oncology, autoimmune and anti-infectives. Or should we expect additional partnering deals to fall within 1 of these 3 buckets? And a second more technical question on ZL-1102. I'm just wondering how you're thinking about the dosing frequency for topical ZL-1102. Is it expected that this will be a daily? Or will the half-life of the molecule of the nanobody potentially allow for less frequent than daily dosing?

Great. So thanks for your question, Yigal. Your first question on therapeutic areas. As you know, since inception, we've been very much focused on the 3 that you're aware of: oncology, autoimmune, infectious disease. And your question is, are we looking to expand beyond that? And if so, what would it be? Perhaps I'm going to turn it over to Tao, if you want to take the question.

Sure. Yigal, it's a very good question. I think certainly, from a business development perspective, we have really mentioned before, we're really trying to expand our business both vertically and potentially horizontally. When we say vertically, we mean within our existing area, we're really looking for synergistic assets that's really added to our existing franchise and build our disease stronghold. So I think that makes a lot of sense. But we have also been looking at areas horizontally to see whether we can find any anchor asset in new disease area where there's big unmet medical need, where we can really build a sustainable business. I think Jonathan alluded to what we have done with efgartigimod in severe autoimmune disease as a very good example of how we would consider expanding horizontally. So we're certainly open to those opportunities, but I think we will apply it to the criteria I outlined in terms of really whether this opportunity can significantly turbocharge our growth in the future. I hope I answered your question.

And Yigal, for your #2 question, we'll send it on to Harald Reinhart.

Yes. Thank you for the question about 1102 dosing. The current proof-of-concept trial used BID dosing. And as you know, this is just proof of concept. The true dose and frequency, duration and concentration of the product, all these are variables that will have to be determined with a Phase II study that we hope to conduct after we've shown significant penetration into the skin and hopefully also clinical efficacy.

The next question comes from the line of Anupam Rama from JPM.

Maybe just a quick question from us. Sort of with the breadth of the pipeline review today and product entering or in the launch phase here, how are you thinking about the balance sheet and the cash needs going forward?

Anupam, thanks for your question. So as you guys all saw from the presentation, we have a pretty extensive portfolio of 25 assets. Half of them are in late stage. 11 of them with global rights are advancing nicely. We have commercial expansion plan, more launched products, a robust launch schedule, and we've already had a pretty comprehensive business. But we're able to, I think, with the strategy, become a pretty large significant company with a lot of efficiency built in already. And therefore, we do have a lot of control of how we commit our resources. And we can commit to you that we'll constantly prioritize these resources, whether it's our capital or time, which are precious to us and you as well. But the bottom line here is that you saw from our second quarter earnings, as of July 30, 2021, we had USD 1.77 billion. So it gives full flexibility, and we have no need for any opportunistic fundraising given our very strong balance sheet.

The next question comes from the line of Jonathan Chang from SVB Leerink.

A couple of questions. First one, on the evolving gastric cancer landscape, how does the introduction of I/O and triple combinations and first-line gastric impact your development strategy here across the different programs you have?

Jonathan, thanks for your question. I think that one's for Alan Sandler.

Yes. Again, thanks for the question. I think the important aspect first is that with the advent of checkpoint inhibition, it's great news, of course, for cancer patients. And I think that what we have shown is we have evidence that our own pipeline, there are several agents that have activity across various aspects of patients -- a patient population, some of which may overlap with those agents, PD-1 expressers, and some may not. So I think it helps to broaden our opportunities. And there are still areas where we can combine with potentially checkpoint inhibitors and also potentially work toward those patients who may not be benefited by those who don't overexpress PD-L1, for example. Have I addressed your question?

Understood. Yes, that was helpful. And second question, in terms of different treatment modalities, I'm curious to get your thoughts on other areas like ADCs, cell therapies, et cetera, either outside the existing modalities that you're evaluating, both in terms of potential business development and internal discovery efforts.

Yes. So...

Thank you.

Go ahead. Go ahead. Go ahead.

Yes, Samantha, please, please.

Sorry about the interruption. Actually, Jonathan, you raised a very good question. And very happy to hear your voice. And as you know, internally, we focus on precision medicine, small molecule but also large molecule. But we also have, through collaborations, very early stage and our technology platforms. And whether it's ADC, whether it's cell therapy, whether it's [ mRNA ], we will see. Whatever -- to us, this all means to the end. And if they can drive the unmet medical needs for patients, they can bring symmetry with our current portfolio, then we will definitely look into it. But never say...

Yes. Jonathan, I would also -- that was great. But I would also refer you back to the presentation, the discussion, [ as you may have thought ], on sort of the latest internal research capabilities and strategy. And Alan covered some discovery platforms that we have internal, where we expect to have future expansion, some partner platforms and then also another session on sort of the core expertise, specifically on oncology and immunology across specific modalities, overlapping as well. So we'll refer you back to the presentation. You can let us know if you have any other questions.

The next question comes from the line of Seamus Fernandez from Guggenheim Securities.

So just a question [ for Alan and Jonathan ]. so I was wondering how you're thinking about the opportunity to really initiate global clinical studies kind of in the time line and if there would be potential assets that your team would consider to start building a commercial presence globally sooner rather than later. I guess that's sort of a blended question for Alan and Jonathan. And Samantha, I'd just love to know maybe a little bit more your specific thoughts and insights into maybe differentiated approval time lines, perhaps even seeing earlier approvals in China than we might see in the United States or aligned time line in that regard over time. I -- particularly poignant for a product like bemarituzumab where we've seen some pretty impressive Phase II survival data.

Seamus, thanks for those questions. I think you directed one to Samantha, the second one. Your first question, maybe I can just address it. As you -- going -- referring back to the R&D Day, Samantha mapped out a blueprint for our aspirations from now until the next few years, really from start to '25. And the baseline expectation is that we expect to have internally developed assets near commercial stage by then. But to your point, there could be opportunity to accelerate and develop key leadership -- commercial key leadership in both China and U.S. before then. So right now, we're expecting to grow our U.S. presence as we advance our global pipeline and that have full optionality to really unlock the true value for our platform and, of course, for our shareholders. Of course, at the end of the day, it's all about accelerating and having maximum impact for patients. But I'll stop there for that question and turn it over to Samantha for the second -- for your second question.

Yes. Thanks for the question. And I think, first, there are possibilities based on the filing strategy. It's also based on the -- where are the majority of patients being recruited, right? We did see several cases where people take the opportunity of FDA's project audit, and the data came directly from China. And so we -- based on the different programs, different patient populations, based on partner agreement, we'll be -- even on our whole own pipeline, we'll be really thinking all of those -- with all those things in mind, what is most efficient and high quality, timely to get to patients. So that's very important, how to design the Phase III [ trials ], where to get approval first. And that's really what we will be considering over the next few years. Thank you.

The next question comes from the line of Ziyi Chen from Goldman Sachs.

Can you hear me?

Yes, we can.

Okay. Great. Yes. So for the first question, I'm really interested to the in-house strategy -- in-house discovery strategy because we have seen some of the targets, for example, CD47 and Claudin 18.2 or the interleukin-17. And those targets are relatively crowded. So compared to our -- highly differentiated in terms of the MoAs, so I'm trying to understand a bit more about the rationale to hit those targets, which are relatively crowded. And also, we're trying to understand, given the Zai Lab's extensive licensing experience and expertise on that, so how are you guys going to leverage your licensing expertise and BD capability to accelerate the in-house development?

Ziyi, thanks for your question. So for your first one, we'll break it up to 2 responders. I think for the CD47 and Claudin 18.2, Alan can provide some commentary. And anti-interleukin antibody, Harald, I'm sure, will have some thoughts as well in terms of the scientific differentiation and rationale with our programs. So Alan?

Yes. Thanks, Billy, and thanks again for the question. So for both CD47 and the Claudin programs, we're, of course, designing these with a best-in-class potential. And we benchmark them against our competitor molecules throughout this process and attempting to build a differentiated profile for those to attempt to overcome some of the liabilities that may have been seen in some of the other molecules in the field. For CD47 preclinically, there was a lack of hemagglutination that was seen and no significant adverse hematologic changes seen in monkeys when tested. So the potential there for CD47 was a potential lack of red blood cell phagocytosis in these preclinical studies, which we're looking to see how that translates into the clinic. For our Claudin program, again, based on preclinical data, and it was an [ AIRC ] poster conclusion, we can efficiently target the Claudin 18.2 lower expressing tumors with the enhanced ADCC activity. And this potentially will broaden the number of patients who may benefit from this therapy. So I think those are the 2 ways that we were looking at -- or at least one way each of how we were attempting to differentiate these agents. Thank you for the question again.

Let me just add a little bit here, if I may, is -- so we know these are targeted. These are very crowded fields. However, this is still very early stage, and very few compounds has reached later stage, Phase III stage. So therefore, we say that the road -- the run -- the race is still on. However, if we didn't see the clinical correlation was transitional without preclinical, we'll stop the program because we have many more innovative programs in-house. And also, as we mentioned earlier, we have many discovery programs. They are innovative. They are more first in class. But as a company, we always need to consider good balance of first-in-class and best-in-class combination and [ consider ] whatever -- address unmet medical needs. That's what's our end goal.

And Harald, did you want to add anything for the IL-17? It's a known target, but our approach is unique.

Yes. Yes. Thank you for the question, and thanks for the opportunity to talk about 1102 as a differentiated product. You're correct. We are targeting IL-17 just as the other drugs which are already on the market but which are all systemic drugs with a systemic approach with the issues of adverse events that come along with a nonspecific target hitting. We believe in contrast that if one could use an established target like IL-17, a pro-inflammatory cytokine, if you could block that directly in the skin where the disease is after all with psoriasis, it would be a direct way of addressing the pathology and at the same time, avoid the systemic side effect. Now you know that the other drugs are all full-sized monoclonals. They cannot be used in topical use for psoriasis. And here comes the other differentiating feature for 1102. It's an antibody much, much smaller and possibly able to penetrate into those abnormal skin tissues that represent psoriasis. So we believe that there will be very little systemic absorption. There will be very little of the side effects that you see in the package inserts of all the other IL-17 inhibitors. And most importantly, these other IL-17 inhibitors are only indicated for moderate to severe psoriasis, which is about 20% of the market. However, we are targeting the mild to moderate psoriasis population, which represents close to 70% of the market. And again, so we believe there is a great differentiation and possibility for differentiation. Thank you.

And the -- as to your second question about how to leverage our partnership, leadership, expertise, capability to accelerate our global sort of pipeline effort and how to augment our existing drug and expand [ Zai Lab's ] BD platform, I'll pass that to Jonathan Wang.

Yes. Thanks for the question, Ziyi. Look, I think we are certainly very proud of our scientific team and our commercial team. I think we have built a very significant scale actually across all of the different functions, from drug development, manufacturing to commercial. And I think through all of the different teams' combined efforts, we certainly demonstrated track record in how to identify good assets, how to evaluate them and then how to most efficiently and quickly bring them to patients. And so as we do these, during that process -- and it's really a very well-oiled machine from a business development point of view, but during all of these processes, as we go from getting the right product to taking it to the patients and across so many different programs today, we have built very strong capabilities across different technology platforms, different modalities. And also, we really understand certain diseases and markets, know where the unmet medical needs are, for example, in gastric cancer, in lung cancer, where we have built disease strongholds. I think we can quite proudly say, in some of these areas, we probably have one of the most enviable pipeline of products for those diseases. And in certain areas like target therapy in I/O, we have a very enviable pipeline of complementary assets as well. So all of these enable us to have strong capabilities, to have know-how and so to help us when we come to in-house efforts discovery. We know where to go for. We know where the unmet need is, and we know how to select the right technology for the right disease. So I think it's certainly very complementary in-house together with BD licensing. They go hand in hand. And I think you hopefully will see more of our in-house programs coming to the clinic very soon. Hopefully, that answers your question.

The next question comes from the line of Yang Huang from Credit Suisse.

I just have a quick question. Trying to understand -- better understand your long-term commercial strategy in China and outside China. So outside China, you mentioned [ in 2025 ], you are going to be at on your global commercial stage. So do you mean you are going to build a commercial team, say, in the U.S. or other parts of the world? And then for -- in China, in the long term, I think that you are going to build a very large commercial team since now we already have 800 people in the commercial team, and we only have 3 products. In total, currently, we have 25 in the pipeline. I see that we're going to have a lot more. Is that the case, that we intend to build, let's say, a few thousand commercial team comparable to the commercial team that exists in China, large pharma companies?

Yang, thanks for your question. So yes, this was partly asked previously, but we'll add more color to it. And it's kind of both of your questions are somewhat integrated from our view, the way we take it obviously. So yes, it is correct that by 2025, if everything goes to plan, just with what we have right now, we expect to be at or near global commercial launch. For us, we want full flexibility on how to do that organically or inorganically or whatever it is. But it requires scale to have full capability and optionality at our disposal so that we can make the best decision on, again, really creating and unlocking value. And that is tied to the scaling up visibility we have in China today. So you saw again from the presentation and all of our prior discussions just with what we have right now in our pipeline portfolio, relatively speaking, we have excellent visibility on how we're going to scale because we have a launch -- estimated launch schedule on all of these programs. So over the next 3 to 4 years, you saw Samantha's opening remarks, we expect to have about 15 plus, again, if everything goes according to plan, 15-plus new products. Now you've been talking about indications in the marketplace. That's one of the most intense commercial launch schedules in the next 3, 4 years within the landscape at this level of global innovation that we're talking about. So again, from a risk/reward point of view, we have an unusual level of visibility on how we can scale through China and then get to that relevant level where, again, we can contribute more significantly to the global medical community. Now I'll also refer you to go back to what William has presented during the R&D Day, where we have a pretty unique way to build our commercial infrastructure. And he was, let's say, focused on China for this presentation, but there's a whole section where we've built -- because of all the things that we just talked about, the launch schedules and the size of our portfolio, late-stage innovate -- built a commercial organization based on therapeutic areas, based on disease areas. And that's right leadership of how we shape the market and also operating synergies, whether they're in the clinical development process or even during commercial execution. So it allows us to have strong execution and productivity at the same time, and it's built so that the more products you actually built add into this system, add into this therapeutic area focused of organization, the more operating leverage you can actually realize. So I think those are the key points that we ought to make on your questions. So Yang, thanks for your type of question.

Thank you. I'm showing no further questions at this time. I will turn the call back over to Zai Lab's CEO, Samantha Du, for closing remarks. Please go ahead. Thank you.

Yes. Good morning to everyone. And just I know it's a long-winded, 2.5 hours presentation. And I really appreciate your time and your interest in Zai Lab. And together, we think we are building a great company through your support. Thank you.

Ladies and gentlemen, that concludes Zai Lab's R&D Day. Thank you for your participation. You may all now disconnect. Thank you.