Zai Lab Limited (ZLAB) Earnings Call Transcript & Summary

Good day and thank you for standing by. Welcome to the Zai Lab 2026 ESMO Investor Call. [Operator Instructions] Please be advised that today's conference is being recorded. I will now like to hand the conference over to your speaker today, Rafael Amado. Please go ahead.

Hello, everyone, and thank you for joining us for the presentation of the results from our Phase 1 study evaluating ZL-1310, our DLL3-targeted ADC in combination with atezolizumab with or without carboplatin in small cell lung cancer. The results we're sharing today strengthen our confidence in ZL-1310 and supports our global development strategy in frontline. Please refer to our forward-looking statements on slide 2. Here on slide 3 is our agenda. I'm very pleased to have Dr. Pedro Rocha join me today. He's a medical oncologist and clinical researcher specializing in thoracic malignancies, including small cell lung cancer, at Vaud University Hospital in Lausanne. I will start with brief comments on our global portfolio and the characteristics of ZL-1310. Dr. Rocha will then take us through the highlights from ESMO, and we will end with a question-and-answer session. Please see slide 4 for Dr. Rocha's disclosure information. Before heading into the data, here's a snapshot of our global pipeline in oncology and immunology. Our lead oncology asset is ZL-1310, and we're entering a pivotal period in ZL-1310's development with three registrational trials expected to be underway by the end of the year, namely the ongoing second-line trial in small cell lung cancer with [ DLL3 ], second-line extrapulmonary NEC, and first-line small cell lung cancer. Our focus is on strong clinical execution and generating the data needed to realize ZL-1310's full potential. In immunology, our long-acting IL-13/IL-4 receptor alpha bispecific, called ZL-1503, is approaching its first clinical data readout next month. We believe this combination of dual pathway inhibition and potentially extended dosing intervals could offer meaningful differentiation in atopic dermatitis and potential other inflammatory diseases. Turning to ZL-1310, ZL-1310 is a DLL3-targeted antibody-drug conjugate with high picomolar binding affinity, a potent topoisomerase 1 inhibitor payload, and a drug-to-antibody ratio of 8. The linker is cleavable, which means that the payload can be released not only inside the tumor cells, but also in the extracellular space surrounding the tumor microenvironment, resulting in a strong bystander effect. This design allows ZL-1310 to have potent tumor killing while maintaining a favorable safety profile, and we're seeing this translate into meaningful clinical activity. Now, we recognize that small cell lung cancer is an increasingly competitive field. But when you look at the totality of the data, we believe ZL-1310 has important clinical properties that make it an agent of choice in this disease. As a monotherapy in second-line plus small cell lung cancer, ZL-1310 has demonstrated high response rates with good durability, as well as robust intracranial activity, including in patients with untreated brain metastasis. ADCs have a narrow therapeutic window, and that is why it is important to emphasize ZL-1310's safety. We believe it has the potential for best-in-class tolerability and even among ADCs in this space, and therefore allows monotherapy and combination development approaches. This is particularly important as we move into the setting where the future of treatment will be built on new combination regimens. Tolerability will be a critical determinant of which ADC can become the backbone of choice, whether with IO or other agents, including bispecific engagers. We're already working with our partners, BI and Amgen, to realize the potential of these combinations as the standard of care in small cell lung cancer continues to evolve, thereby developing ZL-1310 as a key product that will further differentiate it from others in the class. And with that, I will hand it over to Dr. Rocha for the clinical data.

Thank you, Rafael. And now I will be presenting results from the Phase 1 study, evaluating ZL-1310 in combination with atezo, with or without carboplatin, what we call a doublet or triplet cohort. So on this slide, we can see our study design, which includes dose escalation and backfill and expansion cohorts for the doublet combination with atezo. And as you can see, also here, we will focus on this what we have in the red squares on the backfill expansion for the doublet, and we also present some results on the triplet. On the next slide, we can see the baseline characteristics for the population included. About three-quarters had stage IV disease at initial diagnosis. Most were ECOG 1, and this perhaps reflects that usually these patients are symptomatic, needing a treatment that can reduce the tumor burden. And also highly important will be the presence of brain metastasis that, as a reminder, this study includes the patients with untreated brain metastasis. The doublet population was predominantly Asian, while the triplet was more balanced, and this was related perhaps with the initial study that includes a lot of patients from Asia. It is true that if we take into account the study and also the efficacy on second and plus lines, from ZL-1310, we have not observed a difference in efficacy or safety between Asian and non-Asian patients. And also here highlighting that for the first 15 patients treated with 1.6 mg/kg doublet, the median follow-up was 10 months. At the 1.2 mg/kg dose level, the median follow-up was 12.6 months. And with that context, the next slide, we can see the waterfall plot for the doublet first-line combination. And as you can see here, these slides show the efficacy from ZL-1310 plus atezolizumab as first line. Overall, the confirmed objective response rate was 81.4%, and nearly all patients had a response of stable disease. In particular, among the 33 patients treated with ZL-1310 at 1.6 mg/kg in combination with atezo, 27 patients achieved a confirmed response and an objective response rate of 81.8%. And taking into account the standard of care, chemo plus immunotherapy, this compares favorably with, for the standard of care, we can think about a 60% to 68% of response rate. On the next slide, we can also see a spider plot where we are seeing those responses occur early. This is also something that is clinically relevant. Of 35 responders, 34 achieved their response at the first post-baseline tumor assessment. So, what we are seeing is a very rapid onset of response with this combination. And importantly, as you can see with some arrows, that those responses are still ongoing. And if we put it again in context of the standard of care that we have currently, usually the patients with small cell cancer, disease progress quickly within the first five months. So this is something that is very positive from this combination. So the 10 patients treated with 1.2 mg/kg, the duration of response was 8.3 months. And for the first 15 patients at 1.6 mg/kg with a median follow-up of 10 months, the median duration of response was not reached. So this is very, very encouraging results. The progression-free survival of all 33 patients at 1.6 mg/kg cohort, the six-month progression-free survival was 81.9%, which is a very promising result. For the first 15 patients with longer follow-up, median progression-free survival has not yet been reached and two-thirds of those patients have not progressed as of data cutoff. The 18 additional patients in the expansion cohort demonstrated encouraging early progression-free survival consistent with the initial 15 patients. For reference, the six-month progression-free survival with chemoimmunotherapy in the IMpower133 was around 30%. And clearly, these results could change how we think about the first-line small cell lung cancer treatment. On the next slide, we also evaluate the ZL-1310 as a triplet in combination with atezo plus carboplatin. And despite the small sample size, we can see a very, very notable anti-tumor activity with a confirmed objective response rate of 92.3%. And as you can see, important tumor reduction, right, with patients achieving almost a complete response. And this is again, as in the doublet, this tumor reduction is quite important in our patients that most of the times are very symptomatic at diagnosis. Again, if we look at the durability of this tumor reduction with a triplet, we can also see this is observed within the first tumor assessment, so very rapid, deep, and again with a sustained tumor reduction with a triplet. On the next slide, also important is the safety. It's a doublet as a first-line therapy. So, the favorable tolerability we have observed with monotherapy previously in patients with second-line plus therapies has continued to be encouraging in this first-line doublet. There are no dose-limiting toxicities observed during dose escalation. And at 1.6 mg/kg in 33 patients, only 9.1% of patients experience grade 3 or higher adverse events attributed to ZL-1310. We only observed one case of grade 1 ILD, and this is relevant in the context of other ADCs in the field in small cell lung cancer that we are seeing higher rates of ILD. And there were no ZL-1310-related treatment discontinuations or treatment-related deaths reported in this cohort. And this is something that deserves to be highlighted compared with other drugs currently being explored in small cell. Although it's also true that these data are still maturing, but I believe that the ZL-1310 safety profile will be consistent with what we have seen in ZL-1310 monotherapy, where we have a longer follow-up. So the conclusion in the doublet part seems that adding atezolizumab does not seem to change the safety profile of ZL-1310. On the next slide, we have the safety of the triplet as first-line therapy. And in comparison, while the triplet demonstrated higher antitumor activity as we've seen before, it also resulted in substantially more toxicity than the doublet. Serious drug-related adverse events, and grade 3 or 4 toxicities were more common with the triplet than with the doublet. So, we acknowledge that the addition of carboplatin is bringing more toxicity to our patients. And we also saw more frequent treatment interruptions, primarily in the context of increased hematological toxicity. This is something that we expect with carboplatin, we think in normal current clinical practice. And the next slide, I guess, with this tornado plot clearly shows the difference between the adverse events on the safety profile from the doublet and the triplet. And as you can see, the most common treatment-related events with the doublet were anemia, nausea, although mainly grade 1, 2. And with the addition of carboplatin, we saw greater hematological toxicity, particularly neutropenia and thrombocytopenia. Which is consistent, as I was saying before, consistent with what we would expect from adding a platinum-based chemotherapy and it's very similar to what we are seeing in clinical practice. Again, the numbers are small and longer follow-up remains important, but the low severity of the events observed with the doublet thus far is encouraging. And this is my last slide as a conclusion. In summary, our data demonstrated ZL-1310 at 1.6 mg/kg in combination with atezolizumab has shown high response rates, rapid onset of this response, and encouraging durability in the first-line treatment of extensive-stage small cell lung cancer. Overall, these findings provide a strong clinical rationale for further evaluating ZL-1310 plus immunotherapy as a potential first-line treatment option for patients with extensive-stage small cell lung cancer. And I guess with that, I would like to pass it back over to Rafael.

Thank you. Thank you, Dr. Rocha. Now let me put these results into the context of how first-line small cell lung cancer treatment is evolving. Today's standard of care is platinum etoposide chemotherapy plus immunotherapy with early maintenance approved, but not very commonly used. The emergence of tarlatamab maintenance introduces another important advancement, but we believe there is an opportunity to go further. Rather than treating patients with chemotherapy and IO induction and give maintenance for those who haven't progressed, what if we could bring the most active modalities together and replace chemotherapy to deliver higher efficacy and better tolerability from the beginning to all these patients, not just the ones not progressing, with a longer duration of therapy. Our vision is to replace chemotherapy with ZL-1310 as the ADC backbone in combination with IO and potentially a TCE. This could allow us to treat patients earlier, remove the attrition between induction and maintenance, and deliver a continuous frontline treatment. And we're already testing that vision with global partners. We believe these mechanisms are highly complementary. ZL-1310 delivers direct cytotoxicity activity independent of T-cell fitness, while tarlatamab recruits T-cells to attack DLL3-expressing tumor cells. This creates the potential for deeper and more durable disease control while replacing the conventional chemo backbone. Turning to our global development, a global Phase 3 in second-line plus small cell lung cancer is ongoing, and our potential registrational study in extrapulmonary NEC is fully enrolled, but we are extending beyond that. We're also exploring opportunities in other DLL3-expressing cancers, including intermediate-stage small cell lung cancer, large cell neuroendocrine carcinoma, and brain tumors where DLL3 is expressed. In closing, we're very excited by what is to come. Over the next 12 to 18 months, we are expecting multiple important data readouts for our key programs, as well as our first potential U.S. BLA submission next year. And with that, I'm happy to take your questions.

[Operator Instructions] We will now take our first question from the line of Michael Yee from UBS. Please go ahead.

Thank you. Two questions from us. Congratulations on the data. Very exciting as you get through second line and then first line. So, maybe just with second line, can you just confirm the timelines for the enrollment, the data timeline readouts and then your ability to file in second line to get this drug on the market and your ability to file just on the interim analysis later next year? And as it relates to today's data, maybe you could just clarify for us, is the goal to replace chemo and be the dominant standard first-line regimen to replace chemo or also the idea to be in combination with a TCE with Amgen and you would attempt to run also a maintenance study combination? Maybe just clarify how you're thinking about the competitive position in first line, or maybe you're going to try and do both. Thank you.

Thanks, Michael. To your first question, the second-line study is ongoing. It's going well. We still intend to have accrual next year, analysis of the data and file next year. We are enrolling patients both in second line and also making more efforts to enroll patients post-tarlatamab as well. But so far, the timelines have not changed. With regards to the goals of first line in light of this data, we plan to start a doublet study with ZL-1310 plus checkpoint inhibitor against chemotherapy plus IO. Potentially lurbinectedin will be allowed as well. There is the potential of combination with a TCE in the future. It was mentioned in the prepared remarks. And we'll just have to see how the ongoing studies with our partners shape up. Perhaps I will ask Dr. Rocha to tell us a little bit more about how he sees the future of small cell lung cancer.

Sure. Hi Michael, thank you for your question. So I guess if you asked me this question a couple years ago, I would say it's crazy to remove chemotherapy from frontline because we need to have deep response and quick response nowadays, and in light of results of different ADCs where you can see that the response rates are there, they are quick. So the question will be more, I guess, which ADC you will choose for frontline. And I guess we will remove chemotherapy from frontline, definitely. So if you need to choose an ADC, I guess you probably go for the one that you can tolerate for longer time, perhaps. And here, most likely, safety, toxicity, quality of life from our patients will take an important role in our decision. And that's my vision. And I guess the goal should be replace chemotherapy frontline.

Big goal. Thank you. Congrats.

We will now take the next question from the line of Yigal Nokomovitz from Citi. Please go ahead.

Hi, this is Caroline on for Yigal. Thanks for taking our question. Where do you think ZL-1310's largest opportunity for differentiation lies? Is it durability, CNS activity, tolerability, or the ability to support future combos? Thank you.

Well, in general, we've shown all those aspects that you just mentioned. Clearly the response rates both in monotherapy, second line and beyond are high. Second line is 68% with durability of six months. And now you've seen our data in frontline with 82% response rate and, you know, good durability with a six-month PFS of 82% of patients. So clearly activity is paramount and I think ZL-1310 is showing results that are, you know, pretty much state-of-the-art. It's also combinable because of, as Dr. Rocha just said, the safety is among the best of ADCs. And also, I think, you know, intracranial activity is important for many physicians, patients present with intracranial disease, they may need to suspend treatment initially for locoregional therapy and as ZL-1310 can address intracranial disease as we've shown before in over 60% of patients with dedicated analysis of brain metastases. So I think it's a mixture of single-agent activity and safety which will allow combinability and that positions us really well to have the drug in both second line as well as first line.

Maybe if I can add something here, and thank you for your question. So, and here from my perspective, right, that I'm working in a university hospital where we have different clinical trials. So from last year, just to give you a background from where I'm talking about, right, because we include more than 100 patients with extensive-stage small cell cancer in different clinical trials. So that means that we also have a clear vision on other drugs that are being developed, and I will not talk about that. But again, I do think that clinically, this is an important part that can you achieve a brain response? 80% of our patients will present brain mets during the evolution of their disease. This is clearly important. Can we maintain that treatment for longer? This is also something important and maintaining the quality of our patients. And that is also related with toxicity. And that's something that I think is crucial. Quite important and to differentiate how we choose our first line at least.

We will now take our next question from the line of Anupam Rama from JP Morgan. Please go ahead.

Hello, this is Brooke in for Anupam. Thank you so much for taking our question. What are the gating factors to initiating the global first-line ES-SCLC study by year-end '26, and have you met with regulators on the design of the study?