Zai Lab Limited (ZLAB) Earnings Call Transcript & Summary

All right. Good morning, good afternoon and good evening to those listening around the world. My name is Billy Cho, CFO of Zai Lab. We're thrilled to be in New York today for our first ever Investor Day. At Zai Lab, we are at a pivotal moment poised for significant growth with multiple key value drivers coming over the near term. And this Investor Day serves to showcase our capabilities, strategy and ambitious goals that we believe will shape the future of Zai Lab and the industry. Next slide, please. Presenting today are Dr. Samantha Du, our Founder and Chief Executive Officer; Dr. Rafael Amado, our Head of Global Oncology, R&D.; Dr. Harald Reinhart, our Head of Global Development for neuroscience, autoimmune and infect diseases; Dr. William Liang, our Chief Commercial Officer; Josh Smiley, our President and Chief Operating Officer; and Jonathan Wang, our Chief Business Officer. In addition, Dr. Peter Huang, our Chief Scientific Officer, will be joining us for Q&A. We also have several important KOLs from China joining us to provide more insights into some of our key products. Next slide. Now we have a full schedule for you today with Samantha providing introductory remarks. Afterwards, Josh will cover our key business objectives, Rafael and Harald will summarize our R&D activities, William will provide an overview of key commercial opportunities, and Jonathan will end with an overview of our BD strategy. We will then open up the call for Q&A. Next slide, please. Before we begin, we will be making certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including with respect to our business plans and objectives, clinical trials, sales and revenue forecast for our product and product candidates, regulatory applications and commercial launches. Such forward-looking statements are not guarantees of future performance, and therefore, we should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties, and actual results could differ materially from what we expected from a variety of factors, including those discussed in our SEC filings. With that, I will turn it over to Dr. Samantha Du. Samantha?

Well, thanks, Billy. It's my pleasure to be here today with all of you. And our 2023 -- this is our 2023 Investor Day. And I'm happy to see that many of you who have been with us from the beginning and those of you who are looking to join us on our incredible journey to be global biopharmaceutical company. This is an exciting time for Zai Lab. We have made tremendous progress in the [indiscernible], positioning us well for significant growth over the coming years. We have built one of the most innovative and balanced portfolio in the industry with potential first-in-class and best-in-class products, many of which have blockbuster potential. Our portfolio is also derisked, and you may expect to see many great launches in the next few years. The success of our portfolio is driven by our deep scientific expertise in research and development, which enable us to deliver with industry-leading speed and quality and continue to expand our pipeline of both internal and external programs. On the commercial front, we have proven our ability to fully capture the market potential for our products in China. We will continue to bring our products to more patients. Finally, our integrated platform serves as a springboard for our transformational growth allowing us to realize our ambition on a global scale. I also want to highlight that all of these remarkable achievements have been taken place in under a decade. I found the Zai Lab with a clear vision to deliver the most innovative medicines to patients in China than around the world. The vision has remained unwavering throughout. Our journey began by addressing the [indiscernible] unmet medical needs of Chinese patients. However, from the very offset, Zai Lab was built with global vision and ambition led by a team of industry veterans with extensive global expertise. We also prioritized the establishment of robust scientific capabilities to drive not only drug hunting, but also rigorous internal research efforts. Today, you see some of the examples of our pipeline products with global rights. And you can anticipate many more in the coming years. With the strong foundation we have built, we are now more confident than ever in our ability to realize our vision of becoming a leading global biopharmaceutical company. What I'm proud most of is our team. Our leadership team has both global expertise and deep experience working in the China market. This is the foundation for us to continue to lead in China and expand our global pipeline and presence. We are a highly driven team with strong entrepreneurial spirit, dedicated to bring strong fundamentals, achieving exceptional results. Our track record speaks for itself as we have consistently delivered on our promises. We'll continue to uphold this unwavering commitment to excellence. Today, we will answer 3 key important questions about our growth trajectory. First, we will provide more insight into the key opportunities for growth over the next few years. You hear more about our incredible diverse and differentiated pipeline with first-in-class and best-in-class assets, including several potential blockbusters. You will also hear about how we will continue to win in the commercial market to bring our drugs to more patients. Second, how will we leverage our infrastructure and scale to drive profitability growth. We are expecting to become more commercially profitable by end of this year and achieve corporate profitability by the last quarter of 2025. We'll do this by maximizing synergy within the organization that allow us to scale with driving profitability. And lastly, what is our strategy to innovate and grow to pipeline -- grow our pipeline. As you know, through -- as you hear throughout the rest of the day, we are going to leverage our strong R&D expertise and unique position as a trusted partner of choice to continue to innovate and expand our portfolio. I'll now turn over to Josh to share more about our strategy to grow. Thank you all. Josh?

Thanks, Samantha, and it's great to see everybody here today. I see a lot of familiar faces in the crowd, and welcome to everybody who's joining online. I joined Zai just about a year ago, and I've said this to many of you, there were 3 attractions to me to Zai when I was looking for a job. First was Samantha. I've respected and followed Samantha's career for more than 20 years, going back to the -- really helping to be a pioneer in founding the innovative biotech industry in China. And certainly, as she moved on to create Zai Lab, I was very interested in that vision and having a chance to work with her and the team that she built and the vision that she built. The second thing was the portfolio and looking at the portfolio that Zai has today and a year ago, some of the most exciting assets in the world -- around the world across biotech and a chance to work on those programs and bring the benefits that these drugs will have for patients to such a large population in China was super exciting. And then the third piece was the access to innovation around the world. Certainly, Zai through the portfolio that's been built to date has done a great job and really looks at the world in terms of where is the best innovation, and how can we partner on it. But I also have been increasingly excited given my -- a lot of my prior experience in venture investing in China, that a lot of the innovative drugs in the next 10 years are going to come out of China, and there's no better partner, I think, for Chinese biotechs than a company like Zai Lab as they think about going global. So as I think about the last year, we've made tremendous progress in those 3 dimensions and puts us in a position, I think, today, to want to bring everybody together and talk about what the next wave of growth looks like. In terms of the people and leadership, we've enhanced our -- build on a great team to date, enhanced our leadership team with people like Rafael and Peter, who you'll hear from today. On the portfolio in the last year. We've had a significant number of milestones, including great data readouts on products like KarXT, continued regulatory progress on products like efgartigimod. So I think we're in a great position to talk about what those products can look like in the next 5 years. And then on the innovation side, I know many of you were at ASCO, and I think looking at the number of Chinese biotechs and investigators and thought leaders who are talking about innovative drugs, I think we are at a tipping point in China where there are some great opportunities to globalize innovation and for Zai to play a role there, whether it's through our own research and development efforts or in partnership with Chinese biotechs, and we announced a deal earlier this year around DLL3, and we'll talk a little bit about that later today. So really significant progress, puts us in a great position to talk today about what those things can look like in a more tangible manner for the next 5 and 10 years. Next slide, please, or I'm going to do it, I guess, sorry. So first, here is really how we're thinking about the next 5 years. These are our goals. And I think if you look today, starting up right up at the top of the slide on commercial stage products, we've got 4. By 2028, we expect to have greater than 15 products, and these are -- I mean we'll go through them. These are high probability launches, products that are in Phase III studies or close to launch in China. And then on -- that's going to be the wave of growth and opportunity right in front of us. But of course, we want to think about the long term. And today, from a global rights perspective, we have 3 assets in clinical stages of development. We expect to replenish and grow that over time and have at least 8 in development by 2028. And probably better dispersed across Phase I, Phase II and Phase III by 2028. On the revenue side, we're not giving specific guidance for 2023 today. But consensus is somewhere between $300 million and $320 million when we look at the various models. We're comfortable with that kind of outlook. So if we project that forward for 5 years, we expect a compound annual growth rate of greater than 50% between 2023 and 2028. Many of us on the Zai team now have worked at multinational pharmaceutical companies, and we'd love to have just the first part of that, 5% or 6% types of compound annual growth. So if you're looking for growth in a high probability fashion, I think Zai is the place to be. And I think based on what we know, and we'll talk about this today, we feel confident with greater than 50% growth rate between now and 2028. And that won't just be top line growth, it's going to be profitability as well. We've already said in 2023, we'll be commercially profitable. That's when you look at all of the expenses across our efforts in China to support the 4 products. This includes royalties, manufacturing costs, sales and marketing costs. We've also said by 2025, Q4 of 2025, those profits will be sufficient to drive overall corporate profitability. So in Q4 2025, that's a recommitment today. We've said that already. But more broadly, then as we come out of 2025 and continue to scale the products that we'll spend some time on today, we see those margins expanding. So we'll be profitable for the full year in 2026 and then profit expansion thereafter certainly through 2028. I think you should look at these numbers. These are not aspirations, their commitments. So we're developing our strategies, our resource allocation against these commitments, and you should expect us to report our progress against them in every subsequent investor meeting and interaction that we have. So the question is, how do we do that? And there are really 4 key components. I'll talk about these briefly, and then our speakers throughout the day will dive more deeply. Let's starts with the portfolio. And that's why today, we're talking about some specifics in terms of revenue goals and otherwise. We've got a great portfolio of deep and differentiated first-in-class, best-in-class products, many of which are significantly derisked either. We've already have the Phase III data on a global basis or we've got very good Phase II data that's being replicated in Phase III trials. And in some cases, we're even farther along than that in the regulatory process with efgartigimod, for example. And I think when you look at the size of the opportunities for these products in China, and we'll go through some details here, to get to the kind of growth rates that I'm talking about, we don't have to assume extraordinary types of things. We have to assume that we can bring the benefits of these products to patients in China that need them and will benefit from them, but we can do that within the context of the environment that we see today with the teams we have today with incremental investment. And that starts on the commercial side. So the second bubble here. I think if you look at our performance to date and William will spend some time talking about our performance today, we feel really good about our commercial performance and our commercial model. We've proven with ZEJULA and Optune and QINLOCK and NUZYRA. We can launch well, we can outcompete good competitors, and we can navigate the complexities of the pricing environment and regulatory environment in China. As we look at the next wave of launches, we can build on the success in these areas. And in many cases, we've got direct synergies as we think about things like women's cancer and as we build a lung cancer portfolio just as examples. On the R&D side, we got to this point today by having a great R&D team that can look around the world, find great assets and bring them into Zai. We're going to use that same expertise to continue to do that from external innovation perspective, but to increasingly bring forward our own innovation on a targeted and efficient basis. And then finally, and I think this is really important. We have the platform. So you go from $300 million of sales to 50% growth over a 5-year period, you guys can do the math on what that means. But as we do that, we're not going to be, for example, building the plane while we fly it. We've invested in and built a strong foundation for the company. We already have a proven commercial model. We have a worldwide compliance organization. We have data infrastructure. So as we launch the next wave of products and grow, we're going to do that on a solid foundation that's set up for success. So each new thing we do, whether it's a efgartigimod launch or opportunities to be in other markets, those will be incremental and built on a strong foundation. So I think that's important as you think about both the probability of success and the kind of things we're talking about, but also the profitability that will come with that success because we've made the investments to be ready to scale. So let's talk just for a minute about the portfolio. And we're going to go into more depth on the key programs with Harald, with Rafael and with William, but just to give you an example, an idea of why we're so excited and why we think 50% type growth is very reasonable to plan for and to assume. If you look at our products today and the success we've had, if you look over at the chart, ZEJULA, for example, is addressing about 55,000 patients in China with ovarian cancer, Optune 45,000 and QINLOCK 6,000 in cancer. NUZYRA, it's a big population, but that's a little bit different comparing given the more acute nature of the product. But if you look at the products that we now have in development, they're addressing significantly bigger patient populations, in many cases with data that's just as compelling or more compelling, for example than ZEJULA and also in cases where there may be less competitive density. So more unmet need from a starting point. So just a couple of examples if you look in. Even in women's cancer, ZEJULA is 55,000 patients. We have TIVDAK. We announced that deal last year, sort of double the number of patients have cervical cancer in China. So that's one example. If you look in lung cancer and just add up some of the targeted therapies that we expect to launch over the next few years. You get to 3x the number that we have for Optune. And then you begin to consider more broad lung cancer opportunities like with “TTFields”, which we'll talk about today, you get to significantly higher numbers. GI cancer, you can see the opportunities here, starting with bemarituzumab. And then, of course, we get into some of our newer therapeutic areas, neuroscience, 8 million patients with schizophrenia. And then looking at efgartigimod, and we'll spend a little bit more time on this with William. You start to stack up the indications. It's pretty significant numbers. But just starting with myasthenia gravis, you're already at a rate that's 3 or 4x what we see with ZEJULA. So we're really excited about the impact that we can have on patients and certainly the size of the opportunity for the products that we will be launching over the next few years. And I think when we start to look at that, we have a lot, right? We've said 8 launches in the next 3 years, something like 16 products on the market in 2028. We're not going to go through all of those today, but there are a couple that have really meaningful opportunities. And again, it's driven by the data that we have, the data we're generating and the patient sizes in China. So if you look at our 2 bigger long-term products today, ZEJULA and NUZYRA, we both -- see both of those products is having somewhere between $200 million and $400 million of potential. If you look, though, going forward, we've got 5 products that we're going to talk about today, potential products that have over $500 million of potential and 4 of those have $1 billion potential. Now Again, you don't have to assume a lot of extraordinary performance or otherwise. What you have to assume is we get approval for the indications we're pursuing, and we do a reasonable job of getting those therapies to patients who need them. You start to add that up. And certainly, with VYVGART, for example, our efgartigimod, which is right in front of us, there's $1 billion potential starting with the launch of myasthenia gravis in 2023. You can see for TTFields and KarXT and bemarituzumab, we also see with the indications that are in front of us, either lead indications or those that are in development, we certainly see $1 billion of potential. And I think one of the ones that is probably underappreciated is SUL-DUR, and I think if you look both in China and the rights that we have on a broader Asia basis, we certainly see somewhere between $500 million and $1 billion -- $500 million or $1 billion of potential here. So just examples. Again, we have other products that will complement this portfolio, but we're quite excited about the blockbuster potential of many of these. And again, I would say they are relatively derisked opportunities. To talk about the commercial performance and why you should be excited about our ability to realize that kind of potential. I certainly would point you to our biggest and most established product today in China, and that's ZEJULA. I think if you look at ZEJULA's performance against a formidable competitor in AstraZeneca, I think you can feel good about our ability to launch well and execute with a good product and ZEJULA is certainly a good product that provides lots of benefit to patients. But I think if you look at market share in China, we're at about 41%, you compare that to the EU and the U.S., and you can see we're significantly outperforming other markets. And again, I think this comes down to William and the team, the medical strategies that we have to support the product. And again, I think those capabilities are certainly portable across not just tumor types as we think about the next wave of launches in oncology but also across therapeutic areas, and we'll show and demonstrate that with immunology with the launch later this year. I think if you move outside of ZEJULA and then look at Optune, for example, and of course, this is relevant for 2 reasons. It's relevant because it's a market that currently isn't covered through NRDL. So it shows our ability to navigate various payers situations in China, but also it's relevant as we think about broader opportunities for TTFields, which we'll address later. We're quite proud of the benefits that we're bringing to patients in China with glioblastoma. And if you compare this to Japan, for example, which should be the second largest market in the world for Optune. You can see that on a 2022 basis, we are significantly outperforming in terms of sales, the Japanese market, again, gives us lots of confidence that when we have a good product, we can do a really good job in China. And if you assume this kind of a performance for the next wave of products, you are going to get confident and comfortable with the kind of projections we're making. And on profitability, and I know many investors have had questions about. I don't think they have questions about the utility of the products in the portfolio or our ability to get them across the finish line, but I think there is a question about profitability. And I just want to reinforce to the people today, we have a profitable business model in China, and we say that with great confidence because we're profitable today with our biggest product, ZEJULA. I think if you just look at the dynamics here, ZEJULA with a revenue potential of somewhere between $200 million and $500 million. You look at the underlying then cost structure, we have the ability and we have manufactured locally in China for ZEJULA. We have that ability to do it with our next wave of products. We have a royalty that tends to be in the low double digits. It certainly is for ZEJULA, and that will be the case for the next wave of products. And then we have strong investment against a great competitor like AstraZeneca. So a lot of head-to-head competition here. But we have a reasonable sales and marketing expense against this product. And I say reasonable, I say that from my own experience of having managed groups around the world, the sales and marketing expenses in China aren't for the kind of products we're marketing dissimilar to the U.S. or other major markets. You put all that together, we're profitable today and over the next couple of years should have 40% operating margins for ZEJULA. Take that experience and move it on to the next wave of products. And remember the bubble charts from before using efgartigimod, for example, even with myasthenia gravis, we're looking at a patient population that's 3x ovarian cancer. We have the ability to drive cost of goods strategies, similar kinds of royalties to what we pay on ZEJULA in terms of percentages. And then from a sales and marketing perspective and William will talk about this, even more concentrated opportunities for efgartigimod. So we can launch that with fewer sales reps. And of course, then as we launch the next group of products, whether it be new indications for efgartigimod or TIVDAK and others, we're going to get a lot of synergies here across the sales and marketing investments. So we're quite confident in the profitability profile of the business as we move forward. The biggest driver there will be launching well, getting these products to patients, and we can do that in a measured way from an investment perspective because of the synergies we have in the portfolio and the size of the opportunity. And just to give you an idea, again, these -- the products we're going to talk about today are largely derisked. Of course, we still have to finish trials, finish the regulatory process, but we're far enough along that we can do real planning in terms of number of sales reps, number of physicians and accounts that we're going to cover. I think if you start at the right -- at the far end of the chart here and look at products, again, we're going to quadruple our marketed portfolio between now and 2028. If you come down to the bottom, again, I know you all can do the math, you're looking at 10x the sales from where we ended 2022, if you play that out over 5 years. So 10x the sales and sales force commercial team just a little bit more than doubling. So that gives you a sense of the power of the synergies and the size of the launches we have in front of us, and how we will get to profitability in 2025 and expanding margins thereafter. I think one of the things that will be important to look at here and for Williams to spend some time on is the synergies we see across the portfolio. So these aren't just individual launches. There are launches that are going to fit together well in terms of a lung cancer profile and portfolio women's cancer. And I think then as you look at things like efgartigimod, lots of different indications, but lots of overlap in terms of prescribing physicians and thought leaders. And this just gives you a visual, of course, all of these programs are in various stages of regulatory review or clinical development. But in general, this is the kind of sequence we're looking at for the bigger products over the time period between now and 2028, efgartigimod is right in front of us, and we're excited about a launch in 2023. We've got sales reps ready to go. We've done the pre -- everything we can do from a premarket perspective. Thought leaders are excited for this product. We're learning from the launches around the world. And then that will be followed with a series of these big $1 billion or $500 million to $1 billion opportunities between now and 2028. Of course, we have a lot of other products, and they don't mean to diminish their importance. We just have a lot. So we have to focus on those that are most important in the near term, and you're going to hear a lot more about the products on the upper part of this chart. We picked 2028 for a period to talk about in terms of growth goals and otherwise. And a lot of that has to do with the fact that these are products that are all launched before 2028. I think from an investor perspective, you can look out for 5 years, and that's a reasonable time window. But really, if we look at these products and think about them, many of the second and third indications will just be kicking in, in the later part of this 5-year period. So if you get excited about growth opportunities between now and 2028, you should be really excited about what comes after that because a lot of these products will still be actually in there in their growth mode, particularly given the fact that most of these have multiple indications underway. The next piece we talked about is our R&D expertise. Again, our R&D expertise got us to the point where we can talk about the next 5 years with a lot of confidence, but of course, we're in this for the long term, and as Samantha talked about the vision, it's to be a leading company, not just in China, but around the world. And so as we think about the next generation of products, it's going to be based on the R&D expertise that we have today. That's both the ability to look and understand innovation, pick winners, whether that's from our own pipeline or from others, and then execute really well around those programs. And I would say, first, from a China perspective, we're not going to spend a lot of time in Rafael and Harald's discussion about our operational capability. So I'm going to brag about them for a minute while I'm up here. But as we look at clinical development in China, we do everything ourselves. So we don't use CROs that has a lot of benefits for us, starting with the relationships that we have with investigators, with sites, our ability to move quickly. Everything we work on is a priority for us. So we're not negotiating with CROs around priorities. We can move quickly from decision to execution. And we can certainly manage then the cost and efficiency across the broad portfolio that we have. As we think about opportunities in other markets like the U.S. to develop global assets, we will rely more on CROs to run trials, but we have the leadership in all of the functions from a global perspective that allows us to do that in an efficient, and what I would say is probably state-of-the-art manner today, which is more functional type of CRO relationships with still the strategy and the execution led by experts who have done clinical development around the world and across multiple companies. And just 2 quick examples on operational excellence, and this is around speed of clinical development. And I think -- just to use 2 examples, I think most of you sort of intuitively understand this. Our partners understand it and get really excited when they see the results using a non-small cell lung cancer example and comparing our enrollment rates, these are real numbers and real data in enrollment versus a global cohort. You can see that between 6x and 9x faster enrollment in China. So I think as we all think about challenges from a macro perspective around China and the U.S. -- from a worldwide development perspective, you have to leverage China. There are so many patients and so many opportunities. So to do real drug development in oncology, you have to be able to work and navigate China, and we're a great partner and a great deliverer there. I think similarly, if you look at a CRC example over here, you can see that once we get involved in trials, we can significantly drive patient accruals and that ultimately leads to better probabilities of success and certainly faster trials. We don't see anything in the future that's going to change this dynamic. And then ultimately, none of that matters if you are not able to bring products forward and get them approved. We're really proud of our historical success and you look at the 4 products on the market. I think all of those, we were able to deliver good approvals and leverage special designations, whether that's accelerated approvals or green channel or innovative medical device designation. So again, I think examples of what we've been able to do historically. There's no guarantee of future success, right? But I think the capabilities that we have here put us in a great position to have confidence about when we have great data in clinical trials, we're going to feel confident about our ability to navigate the regulatory process. And of course, that's right in front of us now with efgartigimod as our next example. So you put all those things together, the portfolio, our commercial expertise and certainly our abilities to execute from a clinical perspective, we're really excited about our opportunities in the next 5 years. As I mentioned, we're not just focused on the next 5 years, we're focused on the next 100 years, right? And we'll need to continue to replenish the portfolio. I would certainly think about if somebody was up here, Billy or Samantha, Jonathan, up here 5 years ago, talking about the portfolio. Most of the things we're talking about yet, we're not yet in the company. So the things that we'll be able to do to lead to the next generation of growth are critically important. We've got the right team and certainly the right track record. We're going to focus in 2 areas. Certainly, our internal capabilities, and we're going to be thoughtful, disciplined and efficient about internal R&D, but we are excited about the opportunities that we have there, and we'll continue to focus business development on where's innovation around the world, and how do we bring it successfully into the company. And again, I think certainly very excited about the next wave of opportunities in front of us, and Jonathan will talk a little bit about that at the end. So if we put all that back together, I think same slide. Just remember, we quadrupled the portfolio with high probability launches, continue to build out our global assets in a thoughtful and measured way. If we execute like we have done historically, achieving a 50% compound annual growth rate over the next 5 years, is certainly a reasonable perspective, and I say, take that as a commitment, not an aspiration, and with that will come profitability. And I would say, again, our priority as it relates to these launches in front of us is to launch them well to invest in success to get the benefits of these products to patients in China, but doing that well will lead to profitability. You should also expect and we are, that we'll be very disciplined about resource allocation. We understand the capital environment. We understand your commitment to us, and we're going to turn that investment into profits and expanding profit margins in the second half of this decade. So exciting time. We're going to spend some more time now getting into the details here, starting with Dr. Rafael Amado, talking about oncology, and I'll turn it over to Rafael now.

Thank you, Josh, and good morning, everyone. I'm really excited today to be with you and to have the opportunity to share Zai's oncology R&D strategy. Well, I've been at Zai only for 6 months. I have had the privilege of being involved in the development of multiple drugs over the past 20 years. And one of the key reasons why I came to Zai was the realization of the breadth and the depth of the pipeline, which is one of the best in the industry. The company also has a proven track record of delivering medicine in the Greater China region. And I also had the opportunity with this job to build a global organization that can discover and develop transformational therapies for patients, both in China, but also around the world. And as you are aware in a period of transformation with multiple new first-in-class and best-in-class product launches being planned and significant revenue growth, we currently have more than 50 ongoing clinical trials in China, U.S. and Europe. And in the next 3 years, we will have 8 product launches, and I'm thrilled to be a part of Zai during this pivotal time of transition. Our oncology strategy is focused on 3 main areas. First, we will continue to make sure that we execute efficiently on our current pipeline and maximize opportunities for existing assets. Second, we will grow and expand our global pipeline, and this includes extending it with new access that are best or first-in-class and we will do this through our own internal discovery and through collaborations. And with our third pillar, we are discovering and developing new potential medicines and leveraging new technologies. Internally, we will focus on areas of expertise across small molecules and biologics as we continue to build our own product pipeline through collaborations or through our own. Regarding the first point of our strategy, we have assembled one of the best oncology pipelines in the industry with assets across numerous cancer indications. Many of these products have sufficient data to have a high probability of technical and regulatory success in areas of high unmet need. This pipeline includes assets where our partners have obtained regulatory approvals in 7 indications in the U.S., and together, we are achieving 4 approved indications in China. We have over 50 ongoing trials, as I said, around the world, with 14 of those in the pivotal stage and 5 in the proof-of-concept stage. And additionally, we have disclosed 3 global assets, both internally discovered or in license. So how will we grow our global pipeline. If you can advance to the next slide, please. So shown here on the left is Hanahan and Weinberg wheel of hallmark of cancer. Many of you are familiar with this. Over my career, I have seen this iconic image grow to get more comprehensive and this knowledge has resulted in the emergence of new anticancer products. But cancer biology continues to grow beyond the circle, and we have chosen to work on areas where we have internal expertise and where we believe there's the greatest potential for innovation, probability of success and the greatest impact for patients. So hence, we're expanding the number of global assets in our pipeline through internal and external innovation. Internally, we have a focused effort in areas where we can leverage our scientific experience and knowledge. And this include, as you see there, precision medicine to address resistance to existing drugs, patient selection with companion diagnostics and combinations with standard of care regimens. Pathways of focus include oncogenic driver mutations, DNA damage response and synthetic lethality among others. So with discipline, we have prioritized areas of biology that we wish to work in. And how will we use this discipline to grow our pipeline. Next slide, please. We will continue to leverage our open innovation model, fostering relationships and creating new ones with innovative companies around the world. Our efforts will be focused on global products, while we continue to prosecute regional assets as we seek to broaden our reach to more patients. We will continue to follow our rigorous scientific assessment for programs, looking at assets that fall within new areas of biology or our fast followers with significant improvement in benefit risk, where the opportunities for differentiation are high. We have built a reputation as a partner of choice, operating with speed, efficiency and quality, and we can capitalize on those competencies for access to global assets, while we continue to operate in areas that lead to transformational changes, including molecularly segmented diseases as well as orphan indications. An example of growing our pipeline in an area of high unmet need is our franchise in lung cancer, which is formidable. This is the #1 cause of cancer-related deaths in China, and each year 650,000 patients die of non-small cell lung cancer in China. Our comprehensive development pipeline is shown here and is aimed at developing products that will lead to longer survival in segmented populations. Over half of the patients with lung cancer in China have EGFR mutations or other mutations and resistance to first-generation agents always occurs. We are developing highly active agents with companion diagnostics in specific either wild-type mutations or resistant mutations across the spectrum of the disease. And with tumor treating fields, we can address non-small cell lung cancer broadly, and we will dedicate some time today to review how this modality can evolve the care of patients in second line and beyond. Thirdly, how will we build up and accelerate discovery. This is the third pillar of our oncology R&D strategy. We have a global footprint with several innovation hubs in the United States and China. Our focus is geared towards developing assets that have differentiated potential to have monotherapy activity as a proof point of activity or fall within the synthetic lethality spectrum. We will work in discovery independently as we build our capabilities and with a variety of partners, and you see the examples of to capitalize on external expertise and enhance speed and productivity. And some examples of agents emerging from this internal discovery pipeline include Claudin18.2, CCR8 antagonist and the IL-17 nanobody in non-oncology that you will hear more from Harald later on. There are other discovery programs initiating in advanced stage, which are now led by Peter Huang, who joined us as our Chief Scientific Officer. Peter has over 16 years of industry experience, including extensive scientific background and strong leadership experience. And nothing gets done without excellent people, and I am sure that with Peter on board, our discovery efforts are really in good hands. Next slide, please. I would now like to spotlight 3 programs that are ongoing in our R&D organization in oncology. At Zai Lab, we are nimble, and we seek products that deliver important treatment effects. Our drugs are highly targeted and active, and this enables us to develop products efficiently with smaller trials. Today, we're spotlighting 3 programs in oncology. The first is tumor treating fields, a first-in-class device with significant potential across solid tumors and lines of therapy. Bemarituzumab, a potential first-in-class therapy for gastric and other cancers that overexpress fibroblast growth factor receptor IIb and TIVDAK, the first and only antibody-drug conjugate approved in the United States for the treatment of adult patients with recurrent or metastatic cervical cancer after chemotherapy. Our first spotlight program is tumor treating fields or TTFields, and I am really excited about this modality because it has the potential to be a treatment partner for a variety of regimens and enhanced survival across tumor types with good tolerability. TTFields therapy is a noninvasive innovative wearable anticancer treatment modality. The electric fields are generated by a portable medical device and delivered to the tumors through arrays that are applied to the skin for local regional delivery. Currently, TTFields therapies approved in multiple countries in North America, Europe and Asia for the treatment of glioblastoma as well as mesothelioma. TTFields work by exerting physical forces on electrically charged intracellular molecules, and these charge molecules disrupt mitosis as is shown in this graphic, leading to aneuploidy and induction of ER stress, which leads to aberrant protein folding. And some of the downstream effects include immunogenic cell death, potentially triggering systemic autoimmune response. TTFields have other effects on cancer cells and in vitro and in vivo. There are some that are discovered and have been depicted in this slide, such as innovation of some migration, disruption of the blood brain barrier, increasing cancer cell permeability and the induction of DNA damage. So because of this pleiotropic mechanism of actions, TTFields can work as a backbone partner of many therapies, notably immunotherapies and DNA damaging agents, which are areas of focus of tumor biology for us. Evidence of the impact of TTFields on cancer treatment is the LUNAR study recently presented at ASCO. And now to provide perspectives in the treatment of non-small cell lung cancer and also to summarize [indiscernible] it's my pleasure to introduce Dr. Yuanyuan, who was one of the leading investigators involved in LUNAR study in China. She will put the results of LUNAR in context of treatment patterns in China given the differences that exist in the molecular epidemiology between the United States, Europe and the China region. Dr. Zhao Yuanyuan is the Deputy Chief Physician at Sun Yat-Sen University Center and it's one of the earliest oncology tertiary care centers in China. So please roll the video.

Good morning, and good evening, everyone. My name is Zhao Yuanyuan. I'm Deputy Chief Physician at Sun Yat-Sen University Cancer Center, 1 of the 4 earliest oncology hospitals in China. Today, I will be sharing my experience treating patients with non-small cell lung cancer in China. I will also talk about my experience with tumor treating fields, which I believe is a potential paradigm shift in new treatment modality. I will share my stories today as one of the key investigators involved in LUNAR study in China. First, I would like to provide an overview an overview and significant unmet needs of non-small cell and cancer patients in China. Lung cancer is the most common cancer type and the leading cause of cancer deaths in China. For context, over 740,000 new cases are diagnosed each year, which is 4x higher than that in the U.S. and the incidence rate is increasing. The modality rate is also 5x higher in China versus the U.S. With around half of patients diagnosed at an advanced stage, there is a large patient population that urgently needs better prognosis. For these patients, treatment options that [indiscernible] are limited post of platinum filler in the front line. Looking at the current treatment landscape for non-small cell lung cancer, 45% of advanced or metastatic non-small cell lung cancer patients don't have driver mutations. For first-line treatment across China, some patients without driver mutations are still yielding platinum-based chemotherapy only, where the adoption of PD-1 or PD-L1 inhibitors is increasing. Only a small proportion of patients use PD-1 or PD-1 inhibitor monotherapy in first line. After disease progression, there is no such standard for the second-line patients, which is a difficult-to-treat population. For patients treated with a checkpoint inhibitor or ICI in frontline, TTFields therapy in combination with docetaxel could be a choice with a median OS that is comparable and [indiscernible] call it better without add toxicities compared to docetaxel monotherapy. ICI rechallenge could also be considered as a strategy in some patients, despite the benefit being less pronounced as first-line ICI usage. So there is a perfect opportunity to draft a new modality on to the checkpoint inhibitor. Now adding TTFields therapy on ICI for ICI-naive and ICI rechallenged patients when they experienced platinum failure could be a new treatment option. Another 55% of advanced metastatic non-small cell lung cancer patients have driver mutations. For this group, targeted therapies or TKIs are mostly used as first-line treatment. After disease progression, we only consider a platinum-based chemotherapy with or without [indiscernible] inhibitor or ICI. For this patient segment, TTFields could potentially be a later line option in combination with docetaxel or ICI depending on the first-line treatment. To summarize, there is no standard of care and limited therapy options for second-line treatment and beyond in China. TTFields therapy is well positioned to be considered part of the standard of care for metastatic non-small cell lung cancer following progression after platinum-based therapy. Next, I'd like to highlight the current challenges and unmet needs in non-small cell lung cancer, a second line and beyond. Unmet need remains high for new well tolerated and effective options. For current monotherapy in second line and beyond, for example, nivolumab or docetaxel alone, the efficacy is not satisfactory. For current combination attempts, the common problem is the increase in the adjunct toxicity and the lack of verified benefits. So we are glad that TTFields emerged as a novel treatment option. It is a non-invasive modality with synergistic effect with ICI. In preclinical study, it shows that TTFields may augment systemic anticancer immune response and exert an add-on effect with docetaxel. The positive results of the LUNAR strategy is encouraging that we believe TTFields may provide immune treatment option for these patients. Next, I will go over the study in more detail. The LUNAR study as already mentioned is Phase III GLOBAL study in patients with metastatic non-small cell lung cancer with progression or after platinum-based chemotherapy. The study met its primary endpoint of overall survival in a total of 276 patients. TTFields combined with standard of care provided a statistically significant and clinically meaningful 3 months' improvement in median overall survival versus standard of care. Surprisingly, the overall survival in the ICI combination group was particularly prominent with an 8 months' increase in median overall survival. And there was a 2.4 months difference in median overall survival with TTFields in combination with docetaxel. In terms of safety, there were no added systemic toxicities. As I mentioned earlier, I'm glad to participate in the Chinese portion of the GLOBAL LUNAR study. Zai Lab enrolled 33 patients in trial sites from Greater China. The enrollment was ravaged with around 85% of total patients enrolled in just 1.5 months. TTFields are delivered to the deep location of disease directly by a wearable medical device and 2 pairs of [indiscernible]. As an investigator, I enrolled more than 10 Chinese patients in this study. Based on my own experience working with these patients and feedback from my peers, this novel treatment modality is well accepted among Chinese patients. First, there is a treatment option, the skin-related AEs are manageable, and there are no added systemic toxicities compared to other treatment options. And as a wearable device, there is minimal effect on patients' daily lives. Based on the LUNAR results, I believe TTFields have the potential to be part of the standard of care. It can also be explored for different combinations. For example, in combination with ICI in the ICI rechallenged setting and in different treatment lines. In closing, I would like to share my thoughts on how TTFields fires can be placed in clinical practice. First, given the high incidence in non-small cell lung cancer, there is a significant patient pool in China for second-line treatment and beyond. The majority of Chinese patients without driver mutations have platinum-based chemotherapy in first line with increasing adoption of ICIs. However, there is no set standards for second line and treatment option that extends the [indiscernible] platinum failure are limited. The unmet need remains high for new well tolerated and effective options in China. I see significant potential for TTFields in future application in treating non-small cell lung cancer. TTFields is a novel non-invasive treatment option without added systemic toxicity. This could represent a potential paradigm shifting new treatment modality. Based on the results we've seen, TTFields therapy should be considered part of the standard of care for metastatic non-small cell lung cancer, following progression on or after platinum-based therapy. I also believe TTFields therapy has the potential to move to first-line treatment, given the performance of TTFields together with immunotherapy seen in the LUNAR study. Thank you very much for your time.

So as you can see, there's excitement in China by the investigator on KOL community about the LUNAR results. And in fact, Dr. Yuanyuan's remarks are consistent with what we've been hearing from Chinese investigators and KOLs as they interpret their results in the study population that is treated in China, particularly the EGFR positive population. So with this promising data, TTFields, if approved in China, will fulfill a significant unmet need, not only in lung cancer, but also in many other cancers in China, including gastric, liver and pancreatic cancer, among others. And we are pursuing some of these tumors and NovoCure is expecting pivotal trial for 3 more programs by the end of 2024 which will be followed by submissions globally and eventually in China. I'd like now to turn to bemarituzumab, our next Spotlight program. Bemarituzumab is a product being developed globally, including China in partnership with Amgen, and it's a potential first-in-class therapy for gastric and GE junction cancers that is designed to block the activity of fibroblast growth factor receptor 2b. It is specifically engineered to enhance tumor cell killing by blocking ligand binding and therefore, signaling as well as by antibody-dependent cell cytotoxicity or ADCC. Next slide, please. This is an example of the innovative products that we can identify and develop at Zai Lab. So what is FGFR2b and bemarituzumab. Fibroblast growth factor receptor 2 is 1 of 4 FGFR family members. An expression of these receptors and ligands contribute to tumor progression and amplification of these genes also tend to pertain a poor prognosis. 2b is the 3b splice isoform of FGFR. What that means is that it is splice-variant. And bemarituzumab was discovered at UCSF by Louis Williams, the founder of a company called FivePrime from which Zai Lab will license the product. Louis is a world-renowned expert in the biology and pathogenesis of FGF pathway and identify the expression of this splice variant in the stomach based on expression during embryogenesis. Bemarituzumab represents an example of Zai's capabilities to access targeted therapeutics that interdict novel pathogenic targets. In a Phase II study termed FIGHT, bemarituzumab showed promising clinical efficacy with good tolerability and Dr. Jin will walk us through those data. We have joined the Phase III FORTITUDE-101 trial evaluating bemarituzumab plus chemotherapy versus placebo plus chemotherapy, which is modified FOLFOX6 as first-line therapy in adult patients with newly diagnosed gastric cancer with FGFR2b overexpression. And in late '23 and early next year, Zai Lab will join the global Phase III FORTITUDE-102, which is evaluating bema plus chemotherapy plus nivolumab versus chemotherapy and nivolumab as first-line therapy for FGFR2b overexpressed advanced cancer of the stomach and GE junction. And now I have the pleasure to introduce Dr. Li Jin who will be discussing the impact of gastric cancer in China, the treatment landscape and the potential for bemarituzumab. He's the Head of the Department of Oncology at the East Hospital in Shanghai, which is affiliated with Tongji University. He led our study for TTF as well in gastric cancer, and he was the President of the China Society of Clinical Oncology or CSCO and is currently the President of the CSCO Foundation and Chairman of the Gastric Cancer Expert Committee of CSCO. So please roll the video.

Good morning and good evening, everyone. It's my pleasure to speak with you today on the field of gastric cancer. This is an area in which I'm deeply passionated about. I've been an practicing oncologist for over 30 years in China, mainly focusing on GI cancers. In the past 30 years, I participated more than 300 clinical studies and acted as a leading investigator in more than 100 clinical trials. I'm also very happy to be involved with bemarituzumab investigation. In the past, locally advanced or metastatic gastric cancer was regarded as uncontrollable disease. Chemotherapy was considered as the only available standard treatment option for the majority of patients. Over the past decade, we have significantly involved our understanding of gastric cancer with the emergence of novel therapies such as the immunotherapy and targeted agents for patients at various stage of disease. To tell the truth, this is an exciting time in the field of gastric cancer. We are -- there are multiple new developments such as VEGFR-TKI, TROP2, FGFR2b and c-MET. Two of them are part of the lab current gastric cancer portfolio. I'd like to take a couple of minutes now to look at FGFR2b. FGFR2b is an isoform of FGF receptor and is responsible for driving multiple cellular functions, including cell proliferation, migration and angiogenesis. For gastric cancer, FGFR2b is considered to be one of the poor prognostic factors. In fact, approximately 30% of HER2-negative gastric cancer patients are FGFR2b positive, which makes it a promising therapeutic target and more than half of them are detected over 10% of expression. Bemarituzumab is a first-in-class IgG1 antibody that is specific to FGFR2b. And it is specifically engineered to enhance tumor cell killing via ADCC. In addition, with regard to safety, the selectivity of bemarituzumab appears to avoid the off-target effects of nonspecific tyrosine kinase inhibitor. Turning now to the FIGHT study, which is a Phase II study in evaluating bemarituzumab in combination with modified FOLFOX6 versus chemo alone in patients with FGFR2b positive metastatic gastric cancer. This study was conducted by 5 Prime Therapeutics, which was later acquired by Amgen. Zai Lab participated in this global study of around 155 patients and contributed approximately 15% of total patients from Greater China area. This slide shows the PFS and OS results in the ITT population from that study. Bemarituzumab in combo with modified FOLFOX6 numerically improved median progress-free survival to 9.5 months from 7.4 months and improved median overall survival to 19.2 months from 13.5 months when compared to patients who treated with modified FOLFOX6 alone. The bemarituzumab demonstrated a tolerable safety profile with manageable ocular adverse events. In those patients who had gastric cancer with FGFR2b expression over 10%, bemarituzumab in combination with modified FOLFOX6 demonstrated an even greater benefit versus chemo alone, with the prolongation of PFS from 7.3 months to 14.1 months and an OS of 25.4 months -- it's 25.4 months from 11.1 months. This striking data led to a breakthrough therapy designation being granted to bemarituzumab in patients with FGFR2b-positive expression by both the FDA and NMPA of China. In summary, gastric cancer represents a significant burden in China, driven by its high incidence and mortality rate. In China, there were around 500,000 new patients diagnosed with gastric cancer, and the majority of them were HER2 negative patients. Approximately 30% of those HER2-negative gastric cancer patients are FGFR2b positive. So the bemarituzumab is a first-in-class FGFR2b antibody with promising efficacy and a tolerable safety profile, which lends itself to having the potential to become the standard of care as a first-line treatment of FGFR2b positive gastric cancer. So bemarituzumab is currently being evaluated in 2 Phase III studies in combination with chemotherapy and with chemotherapy plus nivolumab in gastric cancer. We are eagerly looking forward to the results of those 2 studies. Thank you for your time today. As an oncologist, I'm hoping for new therapies in development that could provide meaningful improvements to help our patients in the future. Thank you again for your attention.

So as you can see, much like other malignancies, gastric cancer is really becoming a molecularly segmented disease, and we're really excited to participate in the development of bemarituzumab and its companion diagnostic to treat about 1/3 of the most common lethal cancer types in China. Disease segmentation expands the field of cancer and leads to greater treatment effects for smaller subgroups. But at the same time, it increases the prevalence of these patients as they live longer. In addition to gastric cancer, FGFR2b over expressing has been detected in other cancers, including pancreatic, uterine, cervical, lung, colorectal and biliary tract cancers. And Amgen is conducting a signal-seeking basket trial to evaluate bema monotherapy for patients with FGFR2b over expression which may identify other potential tumor targets for this antibody. So the next spotlight on last that I will show is TIVDAK. So TIVDAK is a tissue factor directed monoclonal antibody called tisotumab, which is conjugated via protease-cleavable linker to the microtubule disrupting agent MMAE. TIVDAK is being codeveloped by Seagen, Genmab and Zai in the Greater China region, and it is the first and only U.S. approved ADC for recurrent or metastatic cervical cancer with disease progression after chemotherapy. In spite of the advent of HPV vaccination, the annual incidence of cervical cancer in China is about 110,000 new cases per year with limited treatment options for patients in this setting. TIVDAK's strong clinical data led to its approval in the United States and it is syndicated for recurring or metastatic cervical cancer with disease progression on or after chemotherapy, and we received accelerated approval in second line and beyond. The objective response rate was 24%, and the complete response rate was 7%, with a response duration of 8.3 months. The development program is ongoing in other indications and the activity so far has been very encouraging in combination with KEYTRUDA or carboplatin in the first-line setting of relapsed metastatic cervical cancer. The safety profile of the combination were manageable and tolerable and in line with the safety profile seen with other agents in the combination. TIVDAK has also demonstrated preliminary but promising antitumor activity in squamous cell head and neck cancer with a response rate of 40%, which was recently presented and a median progression-free survival of 4.4 months in heavily pretreated patients. And a global trial in this indication is planned as these early dataset grows and continues to mature. And this is an example of the potential of a specific target and pathway that gets in license and then results in indication expansion. Our line here is the clinical development of TIVDAK globally. China has joined the global Phase III confirmatory trial of TIVDAK, which was towards the tail end of accrual, and this is specialists' decisions choice of chemotherapy in second and third line recurrent or metastatic cervical cancer, and we also intend to join the global development of TIVDAK in head and neck cancer in 2024. So I'd like to end with a summary of how we are going to deliver our goals in R&D oncology. First, we have a diverse best and first-in-class portfolio in development in China, and we intend to successfully prosecute these development programs. We already are a partner of choice in the Greater China region, and we will continue to excel in developing these drugs and expand globally, both discovery and development capabilities and enhanced efficiency and importantly remain relentless in making timely decisions in early development and prioritizing decision across the portfolio. In our quest to develop global programs, we will advance discovery, and we will focus on specific areas of cancer biology by pursuing novel and validated targets, remaining modality independent, moving to earlier lines of therapies, such as in the examples that I highlighted today and pursuing combinations to add to the standard of care or to evolve it with better clinical outcomes. We will demonstrate execution by achieving these key milestones in oncology and these are here depicted for this year and next year. We have recently filed in China for repotrectinib and this is for ROS1 mutant non-small cell lung cancer. This is a very active drug in frontline and in second line disease, for which we have breakthrough designation. We expect to file the LUNAR trial in China for innovative medical device soon, and that will be followed by a product submission in the first half of next year. We are participating in the confirmatory trials of adagrasib in advanced G12C KRAS mutant lung and CRC and expect to file next year for advanced disease, while we continue to accrue in the frontline lung trial. Our accrual pace is simply excellent in this space. We are in discussions with our partner, NovoCure regarding the development plan in frontline and locally advanced non-small cell lung cancer as well as in new indications, some of which we have already completed accrual. And readouts next year include METIS in the beginning of 2024 in non-small cell lung cancer brain metastases and potentially PANOVA-3 in locally advanced pancreatic cancer towards the end of the year. We have joined the first-line pivotal trial in gastric cancer with bemarituzumab, as we just said, and initiated our required PK study in China using a companion diagnostic for FGFR2b expression. We have great expertise in the use of diagnostics and HGR or human genetic resources approval in China, which is a barrier to some companies. Our global pipeline is promising and includes the initiation of studies with a CCR8 antibody that depletes T-reg cells in tumors and a next-generation ADC for small cell lung cancer, targeting DLL3, which is a target that has been validated by bispecific products and some of this data was shown recently at ASCO. In addition, we will continue to seek internal and external innovation and add to our regional and global pipelines, while we prosecute our existing pipelines of novel compounds. So Zai is at a turning point with multiple assets and milestones and a growth trajectory of globalization. I'm extremely proud to work with the best professionals in the field in China and to continue to build a state-of-the-art research and development organization globally with the goal to be one of the best oncology companies in the world. There has never been a better time to capitalize on the science emerging in oncology, and I am very proud to work every day with my colleagues at Zai, a company capable of bringing a disease set of therapies which is so diverse that can change medical practice and has the potential to have a far and broad patient reach to a large number of patients in cancer across the world. I thank you for your attention, and I will now turn floor over to Harald to discuss our pipeline in other therapy areas.

Everybody, it's a pleasure to be here with you today. I lead our neuroscience, autoimmune and infectious diseases pipeline. I'd like to give you our key assets in these therapeutic areas and our plans for contributing to grow in these areas. I've been working in Global Drug Development for 30 years by now and in charge of teams and projects in various therapeutic areas, primarily in infectious diseases immunology. I am also international clinical project manager of ciprofloxacin and acarbose at Bayer and Global Head of [ TA ] infectious diseases [indiscernible] immunology at Novartis. I'm also an adjunct clinical professor of infectious diseases at Yale School of Medicine. I joined Zai because of the unique opportunity to build a new department. It's an opportunity and assignment one rarely gets offered in industry. The pipeline we are presenting today was built from scratch, all products were brought in and developed organically at Zai in the last 7 years. I'm very proud of our progress and achievements. We achieved this by focusing on truly differentiated and innovative products. Rather than work on me-too products, our goal is to develop and deliver therapies that address significant unmet patient needs across these areas. Currently, we have 4 unique assets, all of which truly fit our strategic focus. Starting with efgartigimod. It is the first and only approved FcRn blocker in the United States, Europe and Japan. It has pipeline new product potential targeting numerous IgG-mediated autoimmune diseases. It is an effective new treatment option, and it has a very differentiated safety profile too. Then there is ZL-1102. It targets mild-to-moderate psoriasis, where there are currently limited effective treatment options other than steroids. This IL-17 humor body is an internally developed asset that already established proof of concept. In the Phase I study, we were able to demonstrate penetration through psoriatic skin leading to a clinical response. And for infectious diseases, we codeveloped SUL-DUR. The FDA approved sulbactam-durlobactam just last month for the treatment of hospital-acquired and related associated pneumonias caused by Acetobacter. It's a novel antibiotic with unsurpassed efficacy against multidrug-resistant strains and has a favorable safety profile. For our neuroscience therapeutic area, we have KarXT, a novel muscarinic agonist. It has demonstrated robust reduction of psychotic symptoms across 3 registration trials in schizophrenia. Additionally, we believe there is a significant opportunity to address psychiatric symptoms of Alzheimer's disease patients with this asset. Turning now to efgartigimod. Efgartigimod is a differentiated FcRn antagonist with pipeline in a product potential. It is currently working out in 4 indications at registration stage. And these indications under late-stage development alone represent nearly 700,000 patients in China. Phase III study showed that the safety profile is very favorable. There's no reduction in albumin levels and no increase in lipid levels, unlike what we have seen with other FcRn antagonists, and this differentiated profile is holding up in our ever-expanding safety database. And efgar is offered in both an IV and subcu formulation, providing flexibility to patients and caregivers. In China, we have efgartigimod in various phases of development across various indications. For gMG, myasthenia gravis, we expect NMPA approval this year for the IV formulation, and we are on track for a BLA submission for the subcutaneous formulation this year as well. Looking at other indications, we have joined global Phase III registrational studies for immune thrombocytopenic purpura, ITP, for pemphigus vulgaris, PV, for chronic inflammatory demyelinating polyneuropathy, or CIDP, and most recently, for bullous pemphigoid or BP. We initiated 2 China-only proof-of-concept studies in lupus nephritis in membranous nephropathy in the first quarter of 2023. There are several other indications under consideration for efgartigimod, including thyroid eye disease, myositis, ANCA vasculitis and more. We believe efgartigimod simplifies our strategic goal of developing and delivering innovative products that address significant unmet patient needs. To start, it's important to understand that patients with these autoimmune conditions often remain symptomatic despite available standard of care therapy. In fact, many patients require systemic steroids for prolonged therapeutic periods. Even then steroids may not fully control the disease. Other immunosuppressive therapies are often added which also adds further toxicity. Nonetheless, these patients periodically experience exacerbations in myasthenia gravis such crisis present as life-threatening episodes of muscle weakness. Which then require hospitalization and often high-dose IVG or even plasma exchange. Such rescue therapies are costly and not always available and everywhere available. Efgartigimod is not associated with significant immunosuppression at label doses. In contrast, eculizumab C5a complement inhibitor that was recently approved in China for refractory gMG lists many warnings and precautions. Therefore, it comes as no surprise that China's labeling is quite restrictive. For all these reasons, we believe efgartigimod will address a significant unmet medical need in China and be a valuable treatment option for many of these gMG patients. Efgartigimod is also positioned to be an excellent partner drug in combination with standard of care treatments as there are no drug-drug interactions with available treatments. Take the 4 late-stage indications as examples. For gMG, efgartigimod could partner with current treatments such as pilocarpine or other acetylcholinesterase inhibitors, steroids or immunosuppressants. For ITP, efgartigimod has potential to be used as monotherapy or in combination with steroids, immunosuppressants or oral thrombopoietin. For PV. efgartigimod could be used in combination with steroids. And for CIDP, efgartigimod could potentially replace the usage of IVIg all together. I'm turning now to ZL-1102. This IL-17 Humabody is a highly innovative development stage project that targets mild-to-moderate chronic plaque psoriasis. We have global rights to ZL-1102, and we see great untapped opportunities for this nanobody biological. Psoriasis, as you know, it affects approximately 125 million people worldwide with 80% to 90% of patients suffering from plaque psoriasis and 70% to 80% of those have mild-to-moderate disease. However, most agents including recently approved orals and injectables are prescribed for moderate-to-severe psoriasis only. All of them are absorbed systemically and associated with some systemic side effects. So we see a high unmet need for topical treatments that work directly on the lesion and avoid systemic exposure. ZL-1102 is a small molecular weight anti-IL-17 antibody, nanobody biological or more correctly a Humabody with unique features. Given its small size in special formulation, it is capable of penetrating skin as shown in vitro models and in animal models of psoriasis. Our Phase I proof-of-concept study prove just that in patients. It was the first-ever study that demonstrated penetration of a protein biological into psoriatic skin, producing a clinical response without systemic exposure. We are now preparing a global Phase IIb study for dose selection and for safety and efficacy testing with prolonged treatment. Topical treatments for psoriasis currently on the market can lead to adverse events due to sustainable exposure as mentioned. For example, the recently approved topical treatments, tapinarof and roflumilast can lead to side effects such as folliculitis and diarrhea. 1102 is a humanized VH fragment designed for higher IL-17 binding affinity and potency. As mentioned, we see really 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. ZL-1102 is the only drug that harnesses the unsurpassed power of IL-17 inhibitors in a topical preparation. In addition, ZL-1102 has great potential to improve safety and tolerability in this class of immunologicals. Turning now to infectious diseases and SUL-DUR. SUL-DUR is the first pathogen targeted therapy addressing Acinetobacter baumannii, including the multidrug-resistant carbapenemase-producing strains. This is a daily pathogen. It's important to recognize that antibiotics represent a very large segment of the pharma market in China, ranking among the top 5 largest therapeutic categories. It is an underserved area, with old classes of antibiotics predominating. Multidrug-resistant pathogens are probably one of the worst biologic threats one can find in a hospital setting. MDR pathogens are among the biggest killers with an estimated more than 1 million premature deaths assumed by 2050 a year. Among multidrug-resistant pathogens, Acinetobacter baumannii posses a particularly serious threat to public health. It is listed by WHO as the #1 problem pathogen because of its unique pan antibiotic resistance profile. Given its high prevalence in China, the Chinese government has made it a priority to combat multidrug resistant Acinetobacter. Various incidence figures can be found in surveillance studies. And the latest estimates speak of over 240,000 cases a year from around 1,400 Chinese hospitals. Acinetobacter baumannii causes all kinds of infections. But bloodstream infections and pneumonia and ICU patients are associated with the highest mortality. In China, the majority of Acinetobacter strains have become carbapenem-resistant, and the resistance rates keep up rising. With limited treatment options for these patients, the mortality rate is around 43% even with the best available therapy and care. ICU physicians are well aware of the fact that available antibiotics have poor efficacy and low tolerability. Currently, patients with carbapenem-resistant Acinetobacter infections are given colistin or tigecycline, which are drugs that show efficacy in vitro only. However, in practice, they don't work. This is due to issues with pharmacology, dose-limiting toxicity and just prolong penetration. Colistin doesn't work well 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 a predictable nephrotoxicity side effect profile. And 5 days into treatment, patients usually start developing renal toxicity. So what's there to do? We just need a new drug that's efficacious and nontoxic. So SUL-DUR is a novel treatment option for these patients. It is the first FDA-approved pathogen targeted therapeutic for the treatment of hospitalized patients with hospital-acquired ventilator-associated pneumonia caused by MDI Acinetobacter. This ATTACK Phase III study conducted by Entasis and Zai made its primary endpoint for 28-day all-cause mortality with a treatment difference of 13.2% in favor of SUL-DUR treatment group. Likewise, the difference in clinical cure rates were substantial reaching statistical significance. Besides outstanding efficacy, SUL-DUR treatment has a favorable side effect profile with significantly lower rates of renal toxicity. We at Zai Lab contributed roughly 25% of all patients to that study. And the NNPA accepted the China NDA submission in February of this year. We are very excited to bring this important antibiotic to patients in China. Turning out to KarXT. This is a new treatment for schizophrenia. It is the first-in-class antipsychotic. The combination of a centrally acting muscarinic agonist called xanomeline with a peripheral antagonist called trospium, hence XT. 8 million people in China are living with schizophrenia and half of these patients are not under professional care and receive treatment. Even for those that do receive treatment, there's often a residual burden of disease due to poor symptom control or from unacceptable side effects like weight gain or movement disorders. KarXT is a drug with a very different profile from other antipsychotics. It has an automotive action with early and sustained reduction of positive and negative symptoms of schizophrenia. It does not share the AE, adverse event profile of currently available antipsychotics at all. So it can be considered for use as mono, but also for combination therapy. Our partner Karuna has completed the clinical Phase III development program and plans to submit an NDA in the near future. The Zai team has started a CDE accepted clinical bridging program in China. And here's the data. The emergent I, II and III trials demonstrate the robust antipsychotic effect of KarXT in schizophrenia. The change from baseline in PANSS total score versus placebo at week 5 was statistically significant in all 3 trials. The Cohen's d effect size is an indicator of clinical relevance compares favorably with other trials of antipsychotics for which the Cohen's d effect is usually anywhere between 0.35 and 0.58. KarXT leads to an improvement in both positive and negative symptoms of schizophrenia with clinically meaningful reductions on key secondary endpoints as well. Regarding safety and tolerability, KarXT has a profile characterized by mild muscarinic effects. These are nonoverlapping with the problematic AE profile of atypical antipsychotics and well manageable with dose adjustment if needed. There is a high potential for KarXT in yet another indication. The treatment and prevention of psychosis in Alzheimer's disease patients or ADP. There is an aging population in China as elsewhere to. Approximately 7.9 million people have Alzheimer's disease in China. And approximately 45% of these suffer periodically from psychotic symptoms that become more prevalent as the disease progresses. Currently, there are no approved treatments for such psychotic episodes. They are often managed off-label with antipsychotics despite boxed warnings for increased mortality in this elderly population. We believe that many of these patients might benefit from KarXT treatment given this different mode of action. Karuna's ADEPT program is designed to study KarXT's potential in acute treatment and for the prevention of psychotic episodes in ADP patients. These studies will also collect data on additional prominent symptom domains such as agitation integration to inform future development efforts. In summary, we are working closely with Karuna to develop KarXT in acute schizophrenia and for the treatment and prevention of psychosis in Alzheimer's patients. For schizophrenia, we have initiated our China bridging study, which is similarly in design to the EMERGENT-2 trial, but just smaller in size. For ADP, Karuna plans to initiate its ADEPT program later this year. And we plan to join their efforts in China. KarXT has clear differentiation from atypical antipsychotics, as mentioned by its mode of action. It is a proof in efficacy as shown in a series of schizophrenia trials. It has benign safety profile. In China, the registration bridging program is currently underway. With a high prevalence and under diagnosis of mental health disorders in China, there is increasing awareness of the disease, along with improved regulatory and government support to address this significant patient need. As the first muscarinic agonist, we believe KarXT has a sizable and represents a sizable market opportunity. KarXT has the potential to change the standard of care for schizophrenia in China and globally. In the near term, we are fully focused on executional excellence. Our main goal is to deliver ahead of schedule and ahead of the competition to develop our current pipeline optimally and to bring our drugs to all patients that qualify and to maximize commercial potential. In the mid to longer range, we will continue to expand our pipeline to further enhance our portfolio with novel well-differentiated compounds with best-in-class potential. We will look for regional and global growth opportunities first and foremost. There are several key milestones we are working towards in 2023 and 2024. For efgartigimod, we expect potential BLA approval for gMG myasthenia gravis for the IV formulation in China this year. Our team is currently preparing the BLA submission for the CS, the subcutaneous formulation as well. Additionally, we expect top line results from registration studies in CIDP, PV and ITP in the second half of this year. Zai participated in all these global Phase III programs. And for ZL-1102, we will initiate the global Phase II study in chronic plaque psoriasis early next year. For SUL-DUR, we expect NDA approval next year. And regarding KarXT, we have started the China bridging study program. In the U.S., our partner Karuna expects potential FDA approval and launch in acute schizophrenia for the second half of 2024 and to initiate Phase III trials in ADP in the second half of this year. Now I would like to let you hear from 2 clinicians, who will speak on these programs. Professor Zhao Chongbo will speak about his experience with efgartigimod. And Professor Wang Gang will speak on his experience with KarXT. Thank you for your attention.

Hello, everyone. It's my great pleasure today to speak with you. My name is Chongbo Zhao, and I am a neurologist. I'm also the Deputy Director of the Department of Neurology at Huashan Hospital in Shanghai, which is affiliated with Fudan University. Today, I will share my experience treating patients with neurological disorders, including myasthenia gravis or MG. Specifically, I will be talking about the treatment options for patients with MG in China and the significant gaps in care we hope to solve for in the near future. I will also share my thoughts on efgartigimod, which is a differentiated neonatal Fc receptor antagonist that may have the potential to transform the current MG treatment paradigm. Let's start by taking a look at MG and CIDP in China, both are neurological diseases with a high prevalence in China and both are lacking in treatment options. There are about 200,000 people in China living with MG, which is 3x higher than in the United States. It is really a rare autoimmune disease that destroys the communication between nerves and muscles, leading to a weak skeletal system. This disease has a huge impact on a person's quality of life. The current available treatments for MG have limited efficacy and are related to significant side effects. With CIDP there are about 50,000 people living with the disease in China. This is also 3x higher than the prevalence in the United States. CIDP is a rare chronic and progressive autoimmune disorder that impacts motor or sensory nerves. Current treatment is unsatisfactory with long infusion times with IVIg or plasma exchange, poor responses and its adverse effects with long-term steroid therapy. With the high prevalence of this disease, coupled with the current unsatisfactory treatment options, patients are in urgent need for novel treatments that can improve their quality of life by reducing symptoms and providing long-term safety and convenience. In China, MG is related to a short life span and increased mortality rates. The left-hand side of this slide indicates the lifespan of patients with MG is significantly lower than that of the general population about by 16 years. Exactly more than anything else, MG is the underlying cause of death for those patients of MG-related death. And over time, we also see the MG-related mortality rate is increasing. If we look at the current treatment landscape for MG. The lack of novel treatment options means many of the patients who are receiving treatment continue to experience symptoms and have a diminished quality of life. First, we see the long-term use of steroids and other immunosuppressants can lead to various intolerable and persistent side effects for patients. Second, rescue therapies, such as IVIg or plasma exchange are limited in supply and often require patients to go to a special medical facility. And the third, Current treatment options may fail to address refractory generalized MG or those likely to progress with life-threatening conditions such as crisis. Taking all of this into account, there is an urgent need for a novel, safe and effective therapy to improve the treatment outcome and the quality of life for these patients. Looking at a retrospective analysis of patients who received tacrolimus indicates as an example. It shows that the disease is often not well controlled with current treatment such as tacrolimus. After one month of treatment, only 6.7% of patients reached minimum manifestation status. Only after one year of treatment, nearly 70% of patients achieved minimum manifestation status and pharmacological remission. In addition to physical symptoms, MG significantly impacts the daily life of these patients and their families. In a survey conducted for Chinese MG patients, unfortunately, 90% of unemployment of MG patients are caused by the disease that are not under control. And about 50% of them are unable to take care of themselves. There is a great opportunity to improve the treatment for these patients and provide them with a safe and effective treatment option that can control symptoms faster. As we look to improving the lives of MG patients in China by progressing novel treatment options, let's now look at efgartigimod. Efgartigimod is a differentiated IgG1 antibody Fc-fragment approved in the United States for gMG treatment. With a unique molecular design of efgartigimod, providing clinical benefits, it has the potential to be the best-in-class FcRn antagonist. Let's discuss in more details. First of all, efgartigimod is an Fc-fragment instead of a full-sized monoclonal antibody. Secondly, it binds to FcRn in an identical way as IgGs, thereby blocking FcRn in the most natural way unlike [indiscernible] FcRn antagonist. As a result, compared to the common side effects usually seen on other FcRn antagonists, efgartigimod has a differentiated a safety profile. Efgartigimod shows no reduction of albumin, no increase in LDL cholesterol and does not cause severe headaches. Let's take a look at data from 2 global Phase III studies that demonstrate the efficacy and the safety profile of efgartigimod. The Phase III ADAPT data showed fast, deep and durable responses as measured by 40% of patients achieving minimal symptom expression with treatment compared to 11% treated with placebo. The clinical benefit of efgartigimod treatment is durable with a maximum duration of responses in 25 weeks. Efgartigimod also demonstrated a significant magnitude of benefit by the MG-ADL score and also as well as the QMG score when compared to patients treated with placebo. As indicated here, the Phase III ADAPT Plus study allowed consistent and reproducible improvement in both the ADL score and the QMG scores over multiple treatment cycles. Now let's take a look at the safety profile of efgartigimod. In both ADAPT study and the ADAPT plus study, the albumin and LDL cholesterol levels remain stable without any clinically meaningful change under the treatment of efgartigimod. The safety profile demonstrates efgartigimod could be a meaningful therapy for many MG patients in China. In closing, I hope my presentation today gives you a better understanding of the significant disease burden and the current treatment landscape of generalized MG for patients in China today. There continues to be a great need for safe, effective, convenient and novel treatment options in China. Efgartigimod has the potential to be used at all stages of the disease, including combination with existing treatments. I'm very excited that efgartigimod could improve the lives of many generalized MG patients and their families providing them with the best-in-class efficacy and the safety profile treatment option. While I focused on gMG study, I believe this is just the beginning for efgartigimod as it can be expanded to other IgG related autoimmune neurological disorders, such as CIDP, Guillain-Barre syndrome, autoimmune encephalitis, idiopathic inflammatory myositis, NMOSD and Lembert-Eaton syndrome, so on and so forth. Thank you so much for your time. Thank you for your attention. Thank you.

Good morning and good evening, everyone. It's my pleasure to speak with you today. I'm Dr. Wang Gang, and I'm the President of Beijing Anding Hospital. It's a university hospital of Capital Medical University. I'm happy to share with you today about my experience as a mental health provider. Specifically, I'll be focused on the treatment landscape for schizophrenia and unmet medical needs for these serious psychiatric disorders in China. I will also mention KarXT, a new treatment option under [indiscernible] that may have the potential to transform the treatment paradigm for schizophrenia. For my presentation today, there are 3 points I'd like to be focus on. First, I'll give you an overview of mental disorders in China and current unmet medical needs in treating schizophrenia [indiscernible]. Then I'll talk about KarXT and its potential to change the way we treat schizophrenia today. And's lastly, I'll share with you the briefing start in China in schizophrenia. When talking about the burden of medical disorders in China, we should first see that we have high prevalence of mental disorders in China. And what is more challenging is that there might be more remain undiagnosed. In fact, almost 1 in 6 adults in China may suffer from mental disorders in their lifetime. Among them, anxiety disorders are the most common ones, roughly the prevalence at 7.6%. When we take a closer look at schizophrenia, 0.7% prevalence in lifetime, which means more than 8 million people in China are suffering with this complex disorder. Furthermore, around half of the schizophrenia patients are now seeking comprehensive medical help as they are not registered in the national medical system in China. With the high prevalence and under diagnosis of mental disorders in China, we are now using different ways to increase awareness of mental health and more regulatory and government support are being significantly addressed in this area. There is a continuous effort to improve access to effective psychiatry treatments and healthcare providers. The Healthy China Action Plan 2030, outlines the plan to increasing the number of psychiatrists to 4.5 per 100,000 population. Building more specialized hospitals and improving medical coverage of metal healthcare. Furthermore, we are creating more activities for people to learn more about the importance of mental health, such as having mental health days, providing consultations and holding community disease education program. With all these efforts and dedication, we believe that people with mental disorders will receive vital support for their health needs. Now I would like to talk about schizophrenia and specifically situations in China. Schizophrenia is a disorder characterized by physical and cognitive symptoms. With more than 8 million people in China, as I mentioned before, with half of them are now registered in the national medical system. It is highly possible that they are now seeing professional care. We believe this is related to strong stigma and low awareness. There are additional challenges as patients are having even after the diagnosed with schizophrenia. Patient compliance with current standard of care treatment is very low due to poor safety profile of current treatments as around 74% of patients discontinue their treatment in the first 18 months. When we take a look at the current treatment landscape for schizophrenia, most patients are diagnosed in the psychiatry hospital or psychiatry department of General Hospital. The treatment approach differs in big cities compared to rural areas. In major cities, the first-line treatment is generally second generation antipsychotics. Well, in small cities or rural areas, patients are more likely to be prescribed first generation antipsychotics. If a patient does not respond to the first-line treatment, doctors will usually switch to another antipsychotic treatment. If needed, patients will also be treated with adjunctive medications, which is considered last resort for more serious disease episodes or conditions. The current treatment options of antipsychotics that have been used since 1950s targeting the dopamine and serotonin pathway which have limited efficacy and problematic side effects such as extrapyramidal symptoms, tardive dyskinesia, hyperprolactinemia. These serious side effects result in poor patient compliance and frequent relapses of symptoms. There is a significant need for new antipsychotics with live serious side effects that may lead to better compliance, and to better address negative and cognitive symptoms of schizophrenia underlying this need for new antipsychototists. Now I'd like to share with you about the next-generation agent KarXT. KarXT may have the potential to change current treatment paradigm of schizophrenia. As an M1/M4 receptor agonist KarXT is unique and differentiated the cause of current antipsychotics. It does not have a derived effect on dopamine receptors. KarXT has already been demonstrated in 3 positive registrational trials as a potential monotherapy for schizophrenia. These studies have shown that KarXT is generally well tolerated and does not have the common problematic side effects of current approved therapies. KarXT also had no overlapping safety profile. Hence, it has the potential to be combined with other antipsychotics to treat resistant schizophrenia, a very serious condition in which patients face very limited options. With this effect that the China registrational bridging study have been initiated in China for schizophrenia. This study is a Phase III, randomized, 5-week, double-blind, placebo-controlled, multicenter study. The primary endpoint will be measured in changes from baseline to PANSS total score at week 5. I'm the leading PI for the study, and we recently kicked off the investigator meeting and we have already enrolled our first patient in May. We are looking forward to the further development of KarXT as a potential new treatment for schizophrenia in China. In closing, I hope my presentation today gives you a better understanding of the significant disease burden of schizophrenia in China. And we are facing some challenges with current treatment paradigm and disease stigma. But with continuous improvements in the mental healthcare system and new treatments under [ development ], including KarXT, we will keep on working to help our patients who suffer from schizophrenia to have vital treatment outcomes and experience. Thank you so much for your time.

Hello, everyone. We're right on schedule, which means that we're pretty much at the end of third quarter and we'll be wrapping up soon with commercial, business development and Q&A. So with that, we'll see everyone back in 10 minutes. [Break]

Good morning, everyone. Great pleasure to speak with you today in New York. It's my first time back to this great city since 2019. Like in the U.S., in China, 1 billion on the sales product is called blockbuster. With my 25 years working experience in pharma market. Prior to that, I have launched and built 9 products to be blockbusters, 6 from Roche, 3 from AstraZeneca. Last year, this number becomes 10 because the Zejula's outperforming launch. And I believe this number will continue to grow and [indiscernible] shows Zai is well positioned for commercial success for future. Today, I'm going to share with you the key success factors, our winning strategy and our bold ambition to redefine blockbuster in China market, from RMB to dollars. First, I'm so proud of our commercial success in the past 3 years. We doubled our business growth every year despite COVID challenge. We delivered our commitment we made in Europe in 2019. I still remember the date in May, and to launch the Zejula, the goal is we launched Zejula as a market leader for ovarian cancer, to build an Optune as a standard of care for GBM treatment. Looking back, when we set these goals in New York, we didn't expect we will make it within 3 years, COVID challenge. By end of this year, by end of last year, the Zejula's market share reached 41%, as George mentioned, which include all indications. You know that our competitors that they have much more indication than us. But we continue to gain share to sustain our leadership in ovarian cancer. We grow Optune in the China past Japan as a #3 -- top 3 market for [indiscernible]. During COVID, we launched another 2 products. it's very tough, but we make it the QINLOCK and NUZYRA and both products, including NRDL. So through NRDL landing, we're more than happy through this landing to have more patients in China, and you will see a robust growth in very near future. Beyond the business success, I want to highlight the COVID is the best pressure test for teams, reliance and execution. So Zai team passed this test and make this happen. COVID is bad. But through it, we harvest our best team. The worst has gone and the best is yet to come. As George mentioned, we plan to launch products with blockbuster potential in the next few years. And our team are so excited and ready to deliver. Next slide. This slide is very important. I want to highlight that bring the change in China market. The China's regulatory environment continued to force a healthy ecosystem for innovation products. We see a more transparent and value-driven NRDL negotiation. [indiscernible] prepared a strong value pack with solid HOR evidence. We have a dedicated team, very high-quality team to focus on this. This has lead to reasonable pricing, which reflects the value of our wonderful products. The best example is our newly include [indiscernible] products, QINLOCK and NUZYRA. The price is very reasonable, I think. In terms of the contract renewal, the new process is simplified. And if you add new indications, no price or very little reasonable price job, this policy will benefit our future blockbuster efgar, because efgar with multi indications. So this is good for us. For non-NRDL products, we see a growing support from supplemental insurance plan to supplement NRDL across cities and province. More importantly, Zai team has great experience and the capability for NRDL listing, and we are the leader to capture the opportunities from supplemental insurance. I will show you the details in further slides. I know some of you may not be familiar with the supplemental insurance in China, which is the regional customized commercial health insurance plan guided by local governments, some by city, some by province. It's now playing more important role in China payer landscape. Increasing the SIP coverage is 1 of our key success factors to boost our sales revenue growth for non-NRDL products. Per Mackenzie and IQVIA report, by 2025, there will be between 200 million to 350 million populations will purchase SIP with significant growth from last year. So in terms of the current population, if it's reached 200 million, which means double of the Japan market. And if this number reached to 300 million, more than 300 million, it will be equal to the size of the U.S. market. You can imagine how big potential in the future. Another good news for patients is that many cities increased payout ratios from the SIP, the payout ratio from 40% to 80%, so which improved a lot for the affordabilities. So in short, these good changes of payer landscape continue to shape a better China fund market for this industry, including us, particularly for innovative-driven companies like Zai Lab. Next slide. So it's never been a better time for Zai to be the winner for the future because we have the right strategy, right product, right business model and the right team. Our right strategic definition is we're following our real innovation. Not me too, not a fast follow. We built our science-driven organization. We're never competing by the size of the sales force, but we compete with our value, with our evidence. And more importantly, we have a multiline market access strategy evolving together with the changing landscape from the payer. To succeed in China, right products not only means best-in-class or first-in-class, but also fit to China market situations and reflect the dynamics. In our deal listing, we'll continue to drive significant growth in patient volumes. And for us, I think we can benefit more from this because in the future, we will launch large indication products like Africa, KarXT. So the volume uptake will still drive the meaningful profit. So in terms of the business model, we have the expertise how to grow the business with or without NRDL. We are the leader. On the other hand, given all products are special care products, this market is highly concentrated. So we use -- we are very disciplined and finance cautious. We use 80-20 rule to deploy our field force to focus on core markets to best balance P&L. Meanwhile, we are leveraging the synergy in the same therapeutical areas to make sure productivity like Zejula and the Tivdak. So right strategy, right products, right business model doesn't mean anything without the right team to make things happen. So as I said, Zai commercial team already demonstrated their capability, resilience and more importantly, result-driven culture. [indiscernible] is team's slogan. Let's go to our products. As Joshua has mentioned, Zejula is a great case study, showing Zai model and the Zejula already made profit from last year. So first, on top of a best-in-class product, in terms of share of voice, we differentiated Zejula not only with strong sales team, but to gain significant leadership in China market. You may ask why? We have 4 parts largely in China. The wing is from AstraZeneca, 1.5 years ahead of us. Another tool from the largest big local company, 1 year later than us. So we're lying in the middle. So how do we differentiate? So our strategic approach is science-driven differentiation. One hand, we leverage global data to differentiate with the local ones. On the other hand, we generated more local data, Chinese data, to differentiate with MMC. So we do the local data studies, a very high-quality study. The Chinese, Nora and the PRIME studies use the individualized dosing by body weight and demonstrate the greater efficacy and safety for Chinese patients. The data published at a top-level medical journal. Our studies provide a strong evidence support for our all-comer label and even help our partner to help them to keep it all-comer label out of U.S. So Qinlock is another good example. China, GIST guideline, treatment guideline, recommended that Qinlock as a treatment option even for second line GIST because of the very high-quality China local studies and generated a very positive data. So seeing is believing is not enough. Doing is believing for China's KOLs is super critical. So this is our winning secret. Our second key success factor is our market excellence. On top of NRDL listing, the team did a great job to get hospital listing to support NRDL lending. So in China, the NRDL listing is the first step. The next crucial step is hospital listing. So we are the -- through strong hospital listing, this provides us solid foundations for further penetration. Based on our research, we are 4x better than industry benchmark. Our performance is similar like AstraZeneca's, but our team is much, much smaller. The small team with big success. At the last -- I think this is also a very important thing. So we update the business model for our medical reps. So from product-driven to build our patient-centric ecosystems. We are very different from other companies, while engaging all stakeholders to support the physician and the patients. We partner with a digital company, data company, NGO, et cetera, et cetera. Together, we provide the best solutions to our customers, not just product. So as a result, we outperformed our partner in terms of market share globally. The same key success factor also led to the outstanding performance for Optune, despite it's not an NRDL product. First is still our science-driven approach. We generate and leverage local data to gain guideline support. HTP recommendation rate, from the very beginning when we launched, is less than 20%. But since last year, this number reached to 81%. Which means most of the oncologists really recommend the TTFields as a standard of care for GBM. So if LUNAR get approved, we will create a big success for lung cancer patients. Second, we maximize the opportunity from supplemental insurance. We are trying to help patients, as many as possible. So the last 1 is patients-oriented business model, as I mentioned before. In March of this year, Optune has been listed in 96 supplemental insurance plan. This plan have covered 75 million people. So we are so excited to see Optune as the #2 reimbursement product from this supplemental insurance nationalwide. And then you can see here, so in most of the advanced cities, biggest cities, Shanghai and Beijing, we are the #1. We're even bigger than [indiscernible], can you believe it? So our internal analysis showed the adoption rate in supplemental insurance-covered cities is 5x than the cities without SIP. So this is the very important business driver for the future. So with team efforts, we'll help more patients, along with more cities, they draw out SIP. And we're also so excited about the potential for the TTFields. As mentioned by Rafael, more larger indications are underway. GBM is not a big indication. But we believe the market potential for TTFields portfolio is tremendous. Indications in development cover over 1.8 million new patients every year in China, so which is 40x larger than GBM. So you can imagine how big business potential. So still, doing is believing. I repeat this message again and again, doing is believing. For example, with breast cancer, as mentioned by Rafael, the professor Li Jin, he just presented bema. He is also the PI for the breast cancer front for TTFields in China. Through this study, doing is believing, now he is a believer for TTFields. He is very, very positive for the future use for the gastric cancer. So our LUNAR, we -- still, we have many positive feedback from Chinese KOLs right off the ASCO. I joined the ASCO. I'm also listening to this. After the meeting, I have many, many calls from China's KOL. They are very, very positive. They think TTFields should be a great partner with current standard of care for lung cancer patients. They love to have a new weapon to fight lung cancer. The TTFields is a very unique, not to replace current standard of care, but a partner with current standard of care. This is very important. So the Optune launch for GBM already launched a very solid foundation and developed the expertise for us to promote TTFields. And please don't forget my background. Zai team and myself, we have tremendous lung cancer expertise. I launched many blockbuster for lung cancer. And once LUNAR gets approved, we have the full confidence to deliver its potential in China. We are also confident we will replicate the success for so many more in the large indications for China market. Now moving to efgar. MG is a rare disease, but the market size is not small. 117,000 patients are suffer from this severe disease. And around -- every year, around 10,000 patients, new patients diagnosed in China. So we are going to repeat its success in China. We are very humble. We learn a lot from our Agenus teams, particularly their U.S. teams. We may launch this product with or without NRDL, but for both scenarios, my team are 100% ready to launch. Last month in Boston, Zai team and myself, we have a very good discussion with Agenus teams face to face, a very deep dive discussions. We have fully aligned our strategy and they are very satisfied with our approach. And we are going to build efgar as a new standard of care for gMG patients. Still, follow the science and the shape of the market is the key. Doing is believing. After approval, our medical team will provide support to China Medical Association to update the MG treatment guideline. The local data from Hainan name patient program will support this update. On the other hand, we will work with China National Neurology Center to build 5 gMG treatment centers as a Center of Excellence in top 5 cities. These centers not only give guideline CME to educate the physicians, but also they will share clinical practice: seeing is believing and doing is believing to educate the physicians. In terms of the field force side, given MG market, as Josh mentioned, is highly penetrated, we plan to build our dedicated teams to touch top hospitals which reflect over 80% of market share. The gMG is not -- it's just a beginning. You can see there's a steady cadence of the indication expansion for our life cycle extension, as Harald mentioned. So we believe efgartigimod will be a $1 billion market opportunity, just based on the indication showed here. The total prevent patients listed here is around 1.7 million, nearly 10x bigger against the gMG. So moving to the 2025, we expect 3 additional launch in autoimmune disease, CIDP, PV and ITP. So with dedicated team by department, we can focus on top-tier hospitals. And beyond that, and several more indications we like to focus, including the TED, it's the largest indication. We expect we can leverage the synergies from these indications, given overlapping calling points. Move to KarXT is so exciting. The patient pull, as our PI said, schizophrenia is super huge. Even with low diagnostic and treatment rate in China nowadays, millions of patients suffer from disease. So the strategy is very clear. We -- when we launched, we shaped the market first and increased diagnostic and treatment rate. With this launch, as our peer mentioned, government also -- they have government policy called the China Healthy action plan. This plan target very clear, increase the diagnosis and treatment rate from now reached to the more than 85%. You know the execution from China government. So this is very good for patients. In terms of market asset strategy, KarXT is a very unique product with great novel MOA and a great clinical value for our patients. We will do the NRDL listings after launch to help more patients. Our plan to also rebuild our dedicated teams, targeted specialists. So the size of the team will be reasonable because the patients for the mental disorder patients, they are even more concentrated. They are treated by the mental disease centers in China. So the sales force team side will be renewable. So this is my last slide. I want to echo Josh's slides as my ending. So we start from small indications, but with big success despite the COVID challenge. From this year to 2028, next 5 years, we will launch blockbuster product every year. That's amazing. Everything is ready. The President, Xi Jinping already met [indiscernible]. So let's work together to have millions of patients in China and globally [indiscernible].

Thank you, William, and good afternoon, everyone. It's a pleasure to be here. I'm very excited to talk about Zai's business development strategy. Since the inception of the company, BD has been a very important component to build and shape our pipeline. And since the inception, we have also been positioning ourselves as a partner of choice and will continue to be so. But as the company grows, as the company strengthens its capabilities in China, in global, our BD strategy will also continue to evolve. But regardless, business development will continue to be a very important source of innovation to build and shape our pipeline. So with the next slide, I'm going to sort of very quickly go through the key elements of our business development strategy. There are really 3 key strategic levers. The first one is very simply, to keep on doing what we have been best known to do, to keep on doing those good things, i.e., to bring the late stage assets that are derisked, sometimes commercial stage assets with large potential commercial opportunities in China. We have been very good at that. We have had a very good track record because of our scientific team, because of our commercial team. If you can sell the jeweler to be about more than 25% of global revenues, if you can bring products like Bemar, and the turning point assets and shave many months of the global clinical development time line, we will be second to none in our market to bring these assets to find partnerships, and we're going to continue to do that. The second element of our business development strategy is as we grow that regional pipeline, we want to also grow our global pipeline. We have global ambitions. But admittedly, in that part of our strategy, we're going to go a bit more earlier stage. Because of the capabilities, because of the scientific expertise, we have accumulated -- by our team, as well as by the portfolio that we have built over the last couple of years, in certain areas -- certain modalities in certain mechanisms, class of drugs, I think we are in a unique position with a unique advantage to develop these programs for the world. And we'll talk a bit about that. And the last bucket is more a creative bucket. It's more a transformative bucket, perhaps. And there are many ideas today that we're exploring in that bucket. And I think some of these will come in fruition in the near-to-medium horizon, and we'll talk about that. So maybe if you go to the next slide, please. First of all, I want to sort of show what our BD process is. I want to emphasize that this BD process, as I -- is a very rigorous process. It's also a very efficient process. It's rigorous because we -- it's really a whole company effort when we evaluate opportunities. And we also involve different KOLs, different external advisers for different types of opportunities. But along different steps, different teams come in -- it's a very -- always very efficient. It's a very well-oiled machine because we've done so many deals over the last 8 to 9 years. We also have a very strong but nimble governance process to approve these deals because of the way we've done so many. So if you look at this chart, typically, we will look at 200 or 300 opportunities every year. But we very quickly filter. We want to prioritize those that will give the largest growth and value creation for the company. You want to pinpoint those, on average, 3 or so deals. Every year is different. In 2021, we did maybe 7 deals. Last year, we only did 1. What's most important is quality. We want to aspire to bringing global-first and best-in-class assets. Quality is the most important. With quality, we also want to aspire for quantity. Next slide, please. So now coming to the 3 strategic levers. The first one, again, these are late-stage China regional assets. Here, really, the key is it's past or the scientific milestones, right? It's close to get to the market or maybe it's already commercialized assets in the Western world. Ideally, these should be synergistic with our existing pipeline. I mean, the perfect example is the deal we did with Tivdak with Seattle Genetics, in that this is a cervical cancer with its lead indication, very complementary with niraparib. But sometimes, we can go outside of our immediate disease areas. Sometimes, when that product is large enough on its own, when that product has multiple indications, our pipeline and product opportunities such as efgartigimod and KarXT, then we can go adjacent to or a bit beyond our immediate franchise. But regardless, capital efficiency is the important thing here. As we continue to strengthen that platform, as we create the snowball effect, we're going to be very nimble. We don't need large sales teams for all of these products. And as we build more product, they will be even more capital efficient. Next slide, please. Now again, with our global pipeline. Here, what you see is we are focusing on areas that we have already assets in our portfolio, areas which we have expertise such as ADCs, such as synthetic lethality. The best example is we did a deal recently in the ADC space on piggybacking off the deal, which we did at the end of last year with Seattle Genetics. For Tivdak, we recently bought an asset for DL3 ADC. DL3 is something in lung cancer or small cell lung cancer, very highly overexpressed, so it's very synergistic to our lung portfolio. And also it's very synergistic to our aspirations in the ADC field. So you can expect us to continue to look for assets like that, whether in China or globally. Next slide, please. And then beyond the regional or global 1 asset deals, we also are constantly looking for ideas. We're very open-minded. This is not -- I won't go through the entire list here because there could be other ideas beyond this list, but what we're looking to do here is whether it's to work potentially with larger companies for a portfolio of assets, taking advantage of our development and commercialization platform in China and globally, or it could be to acquire or bring other Chinese innovations to the world or in China, we constantly want to look for ideas that can have transformative impact on the company's long-term growth strategy. So in summary, we have a very strong backlog in business development today across each 1 of these strategic levers. What's most important is quality of assets. Quality, scientific rigor, and then with that, quantity. And also with that, we want to ensure capital efficiency, and we want to ensure every deal we do have a good return on investment. Thank you. And with that, I think that concludes the formal section of today's presentations. We'll go to the Q&A section, and Josh is going to -- I'll hand the mic over back to Josh to be the emcee.

Thank you, Jonathan. And thanks to all of our speakers. We're going to spend the next 20 to 25 minutes on Q&A. I'll host that and direct the questions to the group. Before we do that, before everybody leaves, I did want to just take a chance to thank our Investor Relations group who helped to pull all this together. As you all know, there's a lot of work that goes into this. They've been working tirelessly to try to make us look good and to the extent that we have, and it's not their fault, it's ours. So Lina Zhang, who you -- many of you know from China. Her team, Ella Leo and Sian Leo, and then Christine Chiou, who just joined us here in the U.S. So I want to thank all of them for the work to prepare us for this. So for that, thank you all, and let's jump into questions. I'll start with Michael here.

Michael Yee from Jefferies. Maybe 2 strategic questions. One is around, I think, this idea that Wall Street views internal R&D and innovation models perhaps at a higher valuation multiple or a higher premium than in-license-focused models. And I was wondering how you think about urgency or desire to more quickly bring in innovation and wholly owned internal R&D capabilities beyond just the Item 17. It's question one, how do you think about that in time gains? And then number 2 is pricing. That's another concern. And when you talk about all these numbers that argenx is going to do and all these patient numbers, Wall Street thinks that as the numbers get bigger, their price gets cut each time. So maybe talk us through that and maybe an example of why you don't think that that's the case and we can have more visibility on your model.

Sure. Thanks, Michael. We'll start on your question on contrast between business development and internal R&D. And of course, all of us work on that, as Jonathan highlighted, but maybe I'll ask Rafael to make a comment on sort of how you're thinking about it from an oncology perspective, given that we have both internal and external efforts underway.

Yes. I think internal discovery, it's...

Should have one, yes, maybe just..

So yes, I was saying internally, the discovery, in particular, is, I think, paramount. And I view it as an important pillar of our oncology strategy and also in other therapeutic areas. And it's not because we haven't been successful in BD, as you've seen. Our pipeline is very rich, thanks to the efforts in BD, but also because we can control the areas where we can work. We can enhance the expertise in the company so that we can also do BD more efficiently. And also importantly, because the products that we develop have a global footprint, as opposed to some of the deals that sometimes when they are very advanced, they are regional as opposed to global. So there is a deliberate effort to continue this. It's been going on in the company. So it's not new. There's been products that have been in Phase I and then have it treated, and now we have 3, and we will continue to do more. So we've opened laboratories in San Diego. We will continue to expand, and I think discovery is going to be a big part of this company in ensuing years.

[indiscernible] and the NRDL question, how we should be [indiscernible].

Yes. I'll ask William to comment -- I'll just make a brief comment that, as William highlighted and probably will continue to, the starting point, I think, is having great data. And having differentiated data puts us in a good position to set and negotiate a good price. Certainly, on a relative basis, we know the prices are going to be considerably less than what you see in the U.S. But I think for the size of the patient population and otherwise, we're pretty comfortable using examples like Zejula, on the trends. I think the big move in the last 12 to 24 months has been the simplified renewal, where we know how that works in other markets like Japan. And I think that gives some transparency and predictability to a price. So if it's for NRDL, it starts with setting a good price at the first negotiation. And then from there, I think having some predictability around how pricing will evolve is a huge improvement and change from where we've been. But William, if you have any other comments you'd like to add to that?

Yes. I think the overall, the China regulatory environment has become much better than before. So as I said, the government, the respect, the evidence-driven HUR studies. It's what -- from the price driven to the value driven. So we must be able to credit to government. So we have a very strong team to -- along with the launch, we will prepare the value pack with very strong HUR studies published with very high-quality medical channels. So this is a very strong evidence support for [indiscernible] pricing negotiations. And on top of that, because our product is -- our pricing strategy before the NRDL, do you know the value-driven pricing models, because efgar and KarXT is a wonderful product with huge clinical values. So we appreciate these changes, and we will leverage this, I believe, for the future, the NRDL will be much better for us.

Yigal?

Yigal Nochomovitz from Citi. So Josh and Billy and team, you talked a lot about the -- some of the metrics in terms of the CAGR, the 50% CAGR, I think you specifically mentioned both on the top line and the bottom line. So if you could drill into that a little bit more in terms of the top line of some of the bigger products, KarXT, efgar, Bema. How much of that is going to be driven not only by NRDL, but also the supplemental insurance plan that William talked about, if you could spend a little time on that? And then on the bottom line, just in terms of the profitability model. You didn't spend too much time talking about the OpEx line. So can you just give a little color as to how that will scale, how much it will scale as you scale the business.

Sure. First, the 50% CAGR is based on the 8 launches that we'll have over the next 2 to 3 years. I think those are collectively high probability launches. And I think for most of the products does assume that eventually, we get a good price for NRDL. We think these are the type of innovation we're bringing to the market, I think, are worthy of NRDL listing, ultimately. But of course, as you know, that's -- there's some period of time for all of these products from launch to when you're on NRDL. So there's not sort of 1 specific time line for each. I think we have shown that we can navigate the non-NRDL environment very well. So I think most of these products should end up in good pricing situations in NRDL. But there's not a has to happen in a certain amount of time. In terms of the magnitude, though, of the opportunity, I think, hopefully, we've given you some context today for how that plays out. But I think the one that, of course, is right in front of us is efgartigimod, myasthenia gravis. You heard from Harald, you heard from William and you heard from our thought leaders, there's a huge and compelling need here and a very large patient base waiting for better treatment. So I think in terms of indicators to get us towards that 50% goal launch and success and uptake in myasthenia gravis is something to look at very, very closely. Again, I think you should be -- should take that if we're going to give a guidance like a 50% CAGR, we have multiple ways to get there. It's not just dependent on 1 product. It's not just dependent on 1 milestone. Collectively, we see that kind of -- that power. And of course, as with William and the team, of course, we're going to be aiming to do any better than that. So take this as a commitment in that regard. I think as it relates to profitability, of course, profitability will grow more than 50% because we're not profitable today, right? But I think what you should expect to see is relatively limited OpEx growth over the next 5 years for the reasons that we talked about. We're certainly going to be adding sales reps to launch products, but they're going to be in relatively small increments, much smaller than the size of the sales force that -- I think the sales impact that we would see, I think our R&D, of course, we're going to follow the opportunities. But for the most part, we're launching 8 products. So as we launch those, of course, those studies and the R&D expense that goes into them rolls off. So I think within the envelope of R&D that we have today on -- putting aside the upfronts, which we record in R&D. But if on an operating basis, I think we're pretty comfortable with relatively modest growth in R&D over the next 5 years. That gives us sufficient capacity to bring the next generation of indications on for the big products we're talking about today to bring in the next suite of new products, either from our own pipeline or things that Jonathan and the team will bring in. So modest R&D growth, sales and marketing growth that is well below the sales growth. I think our infrastructure costs, as I talked about upfront, we've made those investments. We feel good about the global capability, framework and other things we have. So you should expect the G&A component of SG&A to be pretty flat over the next 5 years as well. So you take that sales base and put on the 10x growth we're going to see in sales, and that's where you're going to see operating margins that, again, I think there's no reason that as the products continue to scale, that we shouldn't be at the kind of margins you see and expect from global biopharma leaders. Seamus?

Seamus Fernandez, Guggenheim. So just a couple of questions. Can you help us understand how you're thinking about the opportunity for efgar as it relates to CIDP in particular? I think that would be helpful to understand, we have that catalyst coming up very soon. And then incremental to that, as we think about the pace of the rollout of KarXT, can you just help us understand once that product is on market, pace of rollout, timing for inclusion in the NRDL as well, I think, would be just helpful as we think through our modeling as well.

Great. I'll ask Harald to talk about CIDP and then William to talk about how we're thinking and getting excited about KarXT rollout.

For the question #1, it's an exciting thing in pretty much every 1 of those indications we are currently pursuing, but CIDP stands out. It's a therapeutic area for which treatment is just pretty dismal. It's also a disease which has not gotten as lot of attention in past years as it probably should. It's clearly autoimmune-related, autoantibody-related. And as such, we feel comfortable that if efgartigimod has a very good chance of making a big, big difference here for those patients. The way we see that is it's a dynamic process, but a neurologic disease that goes along with muscle weakness going on over 2 or 3 months is pretty scary. And the prospect of only having IVIG at the end of this course is also not terribly comforting, I'd say. So there is a very unique situation being created now by having efgar come in as a new very differentiated treatment. The other question you had was about KarXT, and I'd like to hand it over because it's more ramp-up related in China to maybe William?

Yes. Great. Thank you.

Yes. 2 important things for KarXT's launch. Most important, ahead of the launch, you need to shape the market. So as I said, this market, that the diagnosis rate and treatment rate is low. But the good news is from our China government. So they have the plan to increase the treatment from now to increase to 85%. This is a tremendous progress. So we will work with government, work with our KOLs to pave the way and build this infrastructure to make sure the diagnose rate and treatment rate increase. On the other hand, because these patients are highly concentrated. So we will set up a dedicated team for these indications. So in China, we'll have the specific hospitals, they're called disease, mental disease hospitals. These kind of patients need to go to these hospitals. So the team is very, very concentrated together with the patients and the physicians. So the team size will not be very big. So focus on the specialists. And on top of that, the shape of the market is critical. And our medical team are already working on this, we will repeat the Zejula's successful stories. We will generate local data. We are very happy. Last month, we already recruited the first patients for our regional studies in China. So the doing is believing. When they -- these KOLs, PIs do the studies, their own studies in China in their centers, they will feel this product. So -- and together with this effort, with this launch, we'll update or support the medical association to update China, [indiscernible] treatment guidelines with this launch. So this will be the overwhelming launch campaign. Hopefully, you can join us. I do want to invite you if you -- if possible, you can join us to China to witness our wonderful launch in China. So this is an amazing thing.

Thank you, William. Lina, I know you're monitoring some of the online questions. Do we have any from our group virtually? Okay.

Okay. Malcolm Kuno from JPMorgan, in for Anupam Rama.

Hey, Malcolm.

Thanks for the very detailed 5-year plan. When you look ahead, how do you see the payer mix between public and private shaping up over that time span?

Yes. And I know you guys have done a lot of work on this, too, which is good. And William can comment. But I think first, as we think about the private pay market, we see somewhere, I think, very similar to how you guys have projected this, somewhere in the range of 100 million to 150 million patients today covered by some form of supplemental insurance. I mean, we see that growing to about 300 million over the next 3 to 5 years. And again, for us, what -- I mean that -- obviously, that provides access to a broader group of patients, but also as we're launching new products, gives us an even bigger sort of initial pool for patients and physicians to get experience with the drugs before we move on to NRDL. But William, if you have any additional comments you'd like to make there?

Yes. NRDL cannot cover everything. So the China government encourage the local government to roll out the supplemental insurance program for the patients. So -- and we can see the SIP coverage is increasing. So from the license, it's less than 10%, but we forecast by 2025, this coverage will be increased to more than 30%. So very likely -- I used to manage the Hong Kong business. The Hong Kong private insurance coverage is more than 30%. China is going towards this direction, I think. This is very good. For patients, yes.

And then do you see margin flowing down at similar rates to the profit line?

Well, again, I think for us, I mean, there's a trade-off, right? I mean if we're in the private insurance market, we will generally have a higher price than on NRDL, but less volume. So I think, again, we're going to make an individual decision on pricing each time. But our margin dynamics are driven by top-line sales. I think if you look at the cost -- the unit cost of products sold, that's not going to be a big driver in margin. So I mean, price is obviously always helpful. But I think the volume opportunities that we see in China are going to be important. So our margin expansion plans contemplate a range of scenarios that include heavy NRDL listing and some private pay, and I think can accommodate sort of subtle shifts in mix there. So we're not -- I don't think we're overly dependent on the growth in private insurance or supplemental insurance to achieve the kind of margins we're talking about. At the same time, it's -- I think it's critical for patients and certainly to get off to a strong start in our launches.

Yes. no price drop for the supplemental insurance. Yes. Thank you.

Thanks. Are there any other questions?

First one, over here.

Oh, there we go.

This [indiscernible] on for Jonathan for SB Securities. Just wanted to ask -- so for TTF and the LUNAR indication, do you have a sense for like what proportion of your eligible patient population in that indication is covered today by supplemental insurance? And also, I know you showed some of the information on the treatment patterns, do you have a sense for the patients who are on supplemental insurance? Do the treatment patterns look any different in that population, especially with respect to things like upfront use of checkpoint inhibitors?

Maybe, William, you can take this, I guess, building on the Optune. Of course, we have good data and experience with Optune. I suspect our general view is that's a pretty good proxy for LUNAR, for lack of anything better at this point. So it's probably somewhere in the range of, I guess, 10% to 20% of the patient population is going to have access. A combination of some kind of supplemental insurance and economic wherewithal to afford a LUNAR treatment if and when that's the case. So again, I think the way we've thought about it is you can look at the Optune experience, number of absolute patients in that 40,000 to 50,000 range and extrapolate up, if that's the scenario we're in based on the number of lung cancer patients. So I don't think we see that there's much change in the dynamics, I think, at this point. It's -- I'm sure there's going to be a little bit, but it's not meaningful at this point, I think.

So at the very beginning, when we launched the GBM, the perception challenge, it's true. But now it's not the most -- our physicians, they believe this product. It's a standard of care. Now is the affordability challenges, but the supplemental insurance helps a lot. You can see that in the most advanced cities, Beijing, Shanghai, with this SIP coverage, that we are already the #1 reimbursement product from this SIP. You can imagine if we have the bigger indications, how big of potential we will have?

Great. And then just 1 follow-up then, William, to your comments. Could you just discuss some of the commercial implications for marketing the LUNAR indication? And kind of to what extent that would require like increased investment on the field force side and things like that?

Yes. As I said, if this approval, we will leverage the experience from the GBM launch. And as I said, we -- I launched many blockbusters for lung cancers. So our team not only have the GBM experience, but also for the lung cancer experience. So we can -- we know how to build a blockbuster in China market.

Yes. We'll have surety from long-term [indiscernible]

Yes. Yes, the grab pull [indiscernible] -- many kinds of product.

Okay.

Just one more.

One more. Okay. Great. I think it's online.

This is [ Ling Hai ] from Goldman Sachs team. And I'm just curious to know more about our internal R&D strategies, because there's pretty much no doubt about the asset taking in terms of the licensing. But in terms of our internal discovery pipeline, there has not yet seen huge successes. And I believe that in the slides, you just mentioned that there are potential launches from our internal assets in 2028. If you might provide more colors on that? And how would we do differently for the internal discovery? And maybe I would like to hear more from Peter on that, perhaps.

Great. No, thank you for the question. So the question was about internal discovery and how to think about that in the context of the strategy. And I'd like to ask Peter Huang, our Chief Scientific Officer, to address this. Peter, maybe since you didn't talk this morning, you could also give a brief introduction on you and your experience.

Okay. Great. Thanks, Josh. For those who don't know me, my name is Peter Huang. I'm Zai's CSO, I've been with Zai for about 8 months. I previously worked at big pharma like Pfizer and smart biotech companies like Xantares. Actually, I helped build Xantares' discovery pipeline. So I joined Zai to help build Zai's discovery engine and help Zai become a leading global innovation company. So after [indiscernible] and I joined Zai, we actually prioritized our current program, in each had a new project on the part and targets of interest. We also allocated resources, importantly make sure we could deliver. Most importantly, we build a [indiscernible] team with expertise on areas that we're currently working on. We believe target selection is super important. So we're going to continue to build our strong internal biology team, especially in the target selection, target validation. From a target perspective, we're going to work on both clinical value target with the proper solving and the novel target. For oncology, our internal discovery will focus on oncogenital target, DDR in diabetic pathway and the transcription factor. Also, we're going to continue to expand our ADC pipeline. For non-oncology, we're going to focus on immunology, in particular, nanobody for the treatment of atopic dermatitis. I think so the teams are very super excited on our current ongoing program. Our goal is 1 submission per year. One thing I learned from experience is importance of solving clinical relevant problem. It's not enough to just make a molecule. It's super important that molecule or candidate we discover needs to solve the clinical relevant problems and address unmet medical need. So with our commitment and our experience, we're confident in our internal discovery could deliver. And a couple of years later, I think the industry recognized that Zai has a strong and productive discovery engine internally. In terms of 2028, our 5-years view on discovery, I think, I believe 5 years later, I think we probably have at least 8 to 10 assets in our development pipeline. And at that time, I hope the industry recognize that Zai as both a very successful licensing company, but also a truly leading global innovation company.

Thank you, Peter. Thanks. And I want to thank everybody for their time today, your interest in the company. Hopefully, we've given you some details on how we're thinking about the next 5 years and beyond. And look forward to continued discussions and interactions with all of you. There is lunch. Please eat. If you don't have time and need to get back, I think there's some boxed lunches as well. So we paid for it, so please eat. Thank you all.