Zai Lab Stock

Hello, ladies and gentlemen. Thank you for standing by, and welcome to Zai Lab's Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] As a reminder, today's call is being recorded.

It is now my pleasure to turn the floor over to Christine Chiou, Senior Vice President of the Investor Relations. Please go ahead, ma'am.

Thank you, operator. Hello, and welcome, everyone. Today's earnings call will be led by Dr. Samantha Du, Zai Lab's Founder, CEO and Chairperson. She will be joined by Dr. Rafael Amado, President and Head of Global Research and Development; and Dr. Yajing Chen, Chief Financial Officer. Dr. Shan He, our Chief Business Officer; and Dr. Yizhe Wang, our operating partner, will also be available to answer questions during the Q&A portion of the call.

As a reminder, during today's call, we will be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We will also refer to adjusted loss from operations, which is a non-GAAP financial measure. Please refer to our earnings release furnished with the SEC on August 6, 2026, for additional information on this non-GAAP financial measure.

At this time, it is my pleasure to turn the call over to Dr. Samantha Du.

Thanks, Christine. Good morning, and good evening, everyone. Thank you for joining us today. Zai Lab has reached an important inflection point in its evolution from a regional business into a global biopharmaceutical company. We built this company by bringing first or best-in-class medicines to patients in China. Today, we are developing our own innovative medicines for patients worldwide with our first U.S. regulatory submission expected next year. The transformation reflects the R&D capabilities we have built.

We're conducting global multiple center registrational oncology trials, advancing additional clinical programs across oncology and immunology and advancing our preclinical pipeline into INDs this year. Zoci, our potential first and best-in-class DLL3 ADC demonstrates what Zai Lab is capable of. We advanced it from IND to global pivotal trials in less than 2 years, reflecting the speed and efficiency of the integrated development organization we have built. By the end of this year, we expect to have 3 registrational programs in small cell lung cancer and neuroendocrine carcinoma. We're also evaluating Zoci in combination with T cell engagers through collaborations with Amgen and Boehringer Ingelheim.

Our second major global opportunity is ZL-1503, a potential first-in-class long-acting IL-13L-31 bispecific for atopic dermatitis. We believe it has the potential to bring together multiple attributes in a single asset, robust skin clearance, rapid and durable reduction and longer dosing interval. Later this year, we'll report the program's first human data.

At the same time, we continue to strengthen our commercial business. This quarter, we sharpened our focus behind our highest priority brands. Net product revenue grew 11% versus previous quarter, and the business remained commercially profitable. We're setting a strong foundation and expect a return to meaningful year-on-year growth in 2027, followed by the potential for our first U.S. product launch in 2028. Zai Lab's evolution into a global biopharmaceutical company is well underway with a growing portfolio of globally developed differentiated medicines and a profitable commercial business. We're confident in the path ahead and the long-term value we can create for shareholders and patients.

With that, let me turn the call over to Rafael to further discuss our pipeline in greater detail. Thank you.

Thank you, Samantha. Let me walk you through the pipeline and what to expect this year. Starting with Zoci, our DLL3 targeted ADC. Small cell lung cancer is one of the most difficult diseases in oncology, and Zoci has demonstrated what we believe is a potential best-in-class ADC profile. In patients who have failed frontline multiple lines of treatment, we're seeing strong responses, including high responses and control of brain metastases. That efficacy with a favorable safety profile positions Zoci as a backbone for future combination regimens across lines of therapy. This program is moving fast.

Our global registration Phase III in second-line plus small cell lung cancer is expected to complete enrollment in the first half of 2027 with a U.S. accelerated approval submission expected to follow later that year and approval anticipated in 2028. At ESMO in October, we will present combination data evaluating Zoci plus PD-L1 with or without chemo in first-line small cell lung cancer or during maintenance.

Today's standard of care of IO plus chemo delivers a 60% to 70% response rate, median PFS of about 5 months and grade 3 or higher treatment-related adverse events around 60%. NCCN guidelines recommend 4 cycles of platinum-based chemotherapy. A chemo-sparing regimen could offer better tolerability, allow longer treatment duration compared to systemic chemotherapy and improved control of brain metastases. This is the basis of our Phase III combination strategy with immunotherapy, which we have discussed with regulators. We anticipate initiating the trial in the coming months.

And in extrapulmonary neuroendocrine carcinomas where there is no established standard of care in the second line and beyond, Zoci demonstrated a confirmed ORR of 38.2%, which is well above the roughly 18% seen with currently used regimens. We're engaging with regulators on a potential approval pathway using extended single-arm data from our ongoing second-line trial with a subsequent approval pathway in first line. So 3 registrational programs underway by year-end.

We're also collaborating with Amgen and Boehringer Ingelheim to combine Zoci with T cell engagers. A global Phase Ib study with Amgen is already enrolling, including a cohort of untreated small cell lung cancer patients on a triple combination of Zoci, IMDELLTRA and Imfinzi. And the global Phase Ib/II study with Boehringer Ingelheim in neuroendocrine carcinoma is expected to initiate in the coming months.

Beyond Zoci, our next wave of global assets is advancing quickly. ZL-1503 is a long-acting humanized IgG1 bispecific antibody targeting both interleukin-13 and interleukin-31 receptor alpha. It includes YTE amino acid modifications in the Fc region that extend serum half-life and support less frequent dosing. Through blocking both pathways at once, ZL-1503 is designed to break the itch scratch inflammation cycle with rapid durable efficacy and less frequent dosing in moderate to severe atopic dermatitis.

ZL-1503 is in the clinic now with first-in-human data in healthy volunteers to be presented in the second half of this year. This data set will include pharmacokinetic data following single dose administration and pharmacodynamic data, including inhibition of AD-related biomarkers such as pSTAT6, TARC and CCL26, a cytokine that recruits eosinophils during type 2 inflammation. We will also have an initial read on safety and immunogenicity, including assessment of antidrug antibodies. We're also currently enrolling patients with AD in the multiple ascending dose portion of the trial, and we will share this data at a major medical conference next year.

We believe ZL-1503 with a potentially differentiated profile can address unmet medical needs in one of the largest markets in immunology globally, and we are moving this program forward rapidly. Beyond its lead indication, ZL-1503 has the potential to expand into additional IL-13 and IL-31 mediated diseases, creating a broader development opportunity over time. We look forward to sharing updates as the program advances.

I would highlight just 2 more programs, ZL-6201, our internally discovered LRRC15 targeting ADC. We are actively enrolling patients in the global Phase I study and expect to complete enrollment in the dose escalation portion with initial data expected in the first half of next year. By year-end, we expect to submit an IND for ZL-1311, a next-generation T-cell engager targeting mucin 17, a promising target for gastrointestinal cancers.

In summary, we have the infrastructure and capacity to advance multiple global programs at different stages of development simultaneously at speed and efficiency and across geographies while also advancing our regional pipeline. We have significant data emerging throughout the year on our most advanced products, and I look forward to sharing it with you in the coming months.

And with that, I'll hand it over to Yajing.

Thank you, Rafael. As Samantha and Rafael described, Zai Lab is entering the next phase of its evolution. From a financial perspective, our objective is straightforward, build on our commercially profitable business while investing with discipline behind the innovation that will drive our next stage of growth. In the second quarter, net product revenue grew 11% sequentially to $105.8 million, and the business remained commercially profitable. ZEJULA was steady.

VYVGART volumes grew double digits sequentially. XACDURO demand remains strong despite supply constraints and KarXT's launch is off to an excellent start.

In the second half of the year, we expect to further stabilize product sales while laying the foundation for a return to a meaningful growth in 2027. KarXT is expected to be a key driver of that growth as the first new mechanism of action for schizophrenia in decades with efficacy across positive and negative symptoms, no boxed warning and inclusion in national treatment guidelines, we believe KarXT is well positioned to address a significant unmet need. Early physician interest and positive patient experiences are encouraging, and we are building good momentum ahead of potential NRDL inclusion in 2027.

For the VYVGART franchise, we intend to seek NRDL inclusion for VYVGART Hytrulo and are preparing for a gradual transition from IV to subcu. As a result, reported revenue in the second half may not fully reflect underlying demand due to timing of NRDL-related commercial dynamics. Looking ahead to 2027, we are confident in a return to meaningful growth, supported by new product launches, potential NRDL product inclusion and continued demand growth across our key brands. Beyond 2027, we expect our internally developed pipeline to become an increasingly important contributor to both revenue and margins.

On expenses, we remain disciplined, prioritizing our highest value programs while improving productivity through streamlining the organization and the use of AI across clinical development, regulatory, commercial and corporate functions. As a result, we expect operating expenses to remain broadly stable through the remainder of the year.

We ended the quarter with $717.5 million in cash, providing the financial flexibility to continue investing in the highest value opportunities. Pulling this together, we have a commercially profitable business, disciplined capital allocation and a global innovative pipeline that will increasingly shape the company's future growth and drive substantial value for patients and shareholders alike.

With that, I will open it up for questions.

[Operator Instructions] We will now take our first question from the line of Anupam Rama from JPMorgan.

Just looking to ESMO, can you walk us through what you're looking for in the first-line small cell study of Zoci plus IO plus or minus chemo? Like what's going to be the size and scope of that data set? And how are you defining a win scenario?

Thank you, Anupam. This is Christine. Rafael, could you take that question, please?

Sure. So at ESMO, we expect to present about 60 patients worth of data. This will include doublet and triplet, but most patients will be in the doublet with a checkpoint inhibitor at the highest dose of 1.6 milligrams per kilogram. We have been monitoring that data. We think we'll be fairly mature by the time of ESMO with a median follow-up between 8 or 9 months. So we will be able to report on a meaningful data set by then.

In terms of what to look for, I think the benchmark with the checkpoint inhibitor studies have shown responses in the 60% to 70% with chemotherapy and median follow-up -- sorry, progression-free survival of about 5 months. So there's still room for improvement in the about 80% response rate or so and a 50% increase in median PFS would be, I think, clinically meaningful. So those are sort of the parameters that we're looking for. We're obviously at the same time that we're preparing this data set moving forward with operationalizing the study. And it's going to be a chemo-sparing study, not because we saw any DLTs with the triplet, but because we think it's more convenient, and we will be able to give higher dose intensity of Zoci than chemotherapy does.

And the next question comes from Michael Yee from UBS.

This is Kyle Yang for Michael. Two for us. The first one on the higher level, the company previously guided toward profitability by end of 2025. So how should we think about that? And at what point do you think investors can start to revisit the profitability goal?

The second question is on IL-13, IL-31. The atopic dermatitis landscape is getting increasingly competitive. And we recently saw additional investor interest in the space, including a new IPO this week also has -- that also has an IL-13, IL-31. So how should we think about the differentiation of your asset versus your competitors?

Thank you, Kyle. Yajing, can you please take the one on profitability and Rafael, a question on the 1503 differentiation, please?

All right. Thanks for the question. So I'm really looking at the profitability through the lens of our capital allocation. So we already have a commercially profitable business today. Our local manufacturing is on track for XACDURO and KarXT that will continue to improve our profitability. However, at the same time, we have multiple global competitive programs that we believe have the potential to create substantially greater long-term value.

So right now, our responsibility is to invest where the returns justify it. We do maintain a very high bar for every investment decision. So in summary, we are kind of growing revenue with our potential global approval in 2028, which will improve margin and drive operating efficiencies across the organization at the same time. So we believe those factors adding together will naturally lead to the profitability over time and continue to improve the profitability over time as well.

Yes. This is Rafael. I'll just make a few comments about 1503. So the drug, as you know, is designed to have 3 highly desirable attributes. The first one was robust skin clearance. And I think this is through Th2 suppression, but by breaking the cycle of itching, scratching and inflammation that we see. I think by inhibiting the receptor, the 31 receptor, we should see brisk reduction in pruritus. We also have a molecule that is YTE modified, the extended dosing interval that's going to be tested in the current study that is ongoing, both in healthy volunteers and MADs, but we expect that it will be superior to the standards at the moment with every 1 month and dupi every 2 weeks. So we expect to go beyond that.

And there are a few agents that actually have the 3 simultaneous attributes. Some of them are preclinical. Some of them are targeting the ligand, some of them are targeting the receptor. We believe that targeting IL-13 ligand and targeting 31 receptor, the YTE modification will result in both better reported outcomes with regards to pruritus, which is really morbid in these patients, but also improvement in inflammation. And also, this is an underpenetrated market where there isn't really a winner takes all, if you will.

So I think any improvement in quality of life, dose extension and more importantly, inflammation and patient symptoms will allow for these drugs to have a role in atopic dermatitis. So we're also moving very fast with the Phase I study, and we expect to, as we've guided before, present healthy volunteers data this year and then next year, the MAD data in atopic dermatitis. So we are a bit ahead of some of the competitors.

We will now take our next question from Li Watsek from Cantor.

I have one pipeline and one commercial question. For 1503, the bispecific antibody, just wondering what is the potential dosing profile that you're looking for? And how would the SAD data later this year inform you on the drug profile? Any early trends on ADA from the MAD cohort?

And the second question is on the commercial side. Just at a high level, how do you envision the China business to evolve in the coming quarters? What are the metrics that are most important to you?

Thank you, Li. Rafael, can you take the question on the dosing profile for 1503 and how the upcoming data will inform on the profile and on ADA. And then Yizhe, if you can address the commercial question.

Yes. So in the healthy volunteers data, it's a single IV injection, and we have 6 cohorts. We're testing 4 doses. The single injections and the patients are being followed long term. This will inform us mostly on tolerability and PK, including half-life and then the biomarkers that I mentioned in the prepared remarks, including immunogenicity of antidrug antibodies. The MAD has 2 cohorts with 2 doses, also IV, and it's a larger cohort. I think to hone into the dose, we will need to do a bit more experimentation.

There's a bioequivalence study that will compare the IV to the subcu and then we will do more dose experimentation with the subcutaneous dose. We expect that there will be a short induction course followed by a longer maintenance dosing, but it's premature to speculate on the actual dose. So -- and on the question about antibody drug conjugates, obviously, we're looking at this, and we will be reporting on this suffice it to say that the study continues.

Okay. Li, and hi, everybody. This is Yizhe here, and I'm speaking with you in China right now. Can you hear me okay? Good signal?

Yes.

Very good. Great. Okay. So commercial. So first of all, I just want to say 3 months in a row, I look at commercial, it's not just a China business only, right? If you look out 3-year horizon, we have the potential to launch our first U.S. assets, our global assets, very exciting. That is Zoci. But that being said, the near term, absolutely, our focus should be focusing on our regional business, which is primarily our China business. So my view is this, we actually have a pretty sizable business, okay, but with a diverse, right, mix. Some are CSO products, some are promoted by our own sales.

So from my perspective, it's very important going forward to be very focused focus on 3 key brands. That is return ZEJULA to growth and continue growth on the volume growth, underlying demand on efgart and also launch excellence for KarXT, okay? From execution front, we must go back to the basics. We have to be very good at, I call it brilliant at the basics, really drive the metrics.

So you asked me about what are some of the potential KPIs. So it's all about underlying demand. So for example, for each of these brands, new patient start will be critically important. We like to see the signal continue. For those who flatten, we want to return to growth. And for those has been growing, we want to continue to grow or potentially accelerate. We have seen these signals, right? And that will lead to, I think, in the next couple of quarters, a consolidation or solidification of our stabilization of revenue and eventually turning to a very meaningful growth in 2027, okay? So that is where we are.

So in the second -- in the upcoming quarter, I look for is -- as you see the second quarter, we actually delivered an 11% sequential quarter-over-quarter growth. So in the upcoming quarter, we -- I see quite confidently we can solidify that. And then really -- in the meantime, really improving our underlying demand and setting ourselves up for a very good next year. And during this period, we also will focus on a couple of NRDL, right, negotiations. We want to make sure we win and we win at a good price.

Our next question comes from the line of Yigal Nochomovitz from Citi.

This is [ Caroline ] on for Yigal. We're wondering as your MUC17 T cell engager approaches the clinic, what aspects of the preclinical profile give you the greatest confidence it can overcome historical challenges associated with T cell engagers in solid tumors?

Rafael, if you can take the MUC17 T Cell.

Sure. Yes. This is MUC17 T cell engager. It's an interesting target. It's in GI tumors, more prominently in gastric, pancreas and other tumors of the GI tract. It is engineered to be biparatopic. So it targets more than one epitope. So hopefully, the avidity will be higher. But the CD3 is balanced by higher on and off rate. And we believe that, that hopefully, in the clinic will ameliorate cytokine release syndrome, which is really the Achilles heel of these products and that they need to be given in the hospital because of the emergence of CRS.

So a lot of the innovation in this field, as you probably know, is directed to increasing efficacy, but also decreasing the potential toxicity related to CRS so that eventually one day, these products can be given in the community. We can say that preclinically, as we prepare to the IND, the product looks really to have great properties compared to other potential products in this target, including competitors. So we're pretty excited about it, and we're moving forward with the goal of having this IND out by the year's end.

We would now take our next question from Daina Graybosch from Leerink Partners.

I wonder if you can talk about the combination of your DLL3 ADC with the DLL3 targeted T cell engager and sort of mechanistically and biologically why that has value or differentiation relative to combining a DLL3 T cell engager with the B7-H3 ADC?

Thank you, Daina. It's great to have you on the call. Rafael, can you address the question on the combo of DLL3 plus TCE and why it may have value and differentiation versus the B7-H3 combo?

Yes. I mean the more simplistic reason is that the mechanisms of action are orthogonal. They are very different. One is a cytotoxic that can debulk tumors, particularly small cell lung cancer that can present with a high-volume disease and then allow T cells to eliminate residual disease and maintain immune surveillance. As the ADC kills the tumor cells, it liberates other antigens that are neoantigens. And the T cells, even though they're directed to DLL3, can respond to these neoantigens, particularly when they're combined with PD-1. So this is a combination which is really targeted to bring in cytotoxicity as well as IO into the tumor.

In the case of Zoci and IMDELLTRA, for instance, the epitopes are different. So both drugs can actually bind in the same cell. And it's known that the density of receptors are required for ADCs and TCEs are different. ADCs combine even if there are lower receptors because there's also a bystander effect that can affect cells that have low DLL3 expression. So this is something, obviously, that still needs to be proven. We're doing the studies and the studies are aimed to look at tolerability. The good news is that there aren't really overlapping toxicities, except for potentially myelosuppression.

And with regards to whether DLL3 is the same -- is the best target because it's the same target, there's a B7-H3 study that Amgen was conducting. It is on pause at the moment with IMDELLTRA as well. B7-H3 is not a tumor-specific target. It's present in normal tissue, including the lung epithelium. So there's a potential for more toxicity and in small cell lung cancer patients, lung toxicity can be problematic because of the incidence of ILD with ADCs. So we think that having a safer target that is more tumor specific is probably a better option.

So we're looking forward to seeing the results of these combinations. Amgen obviously has data with B7-H3, but that hasn't been released. And we look forward to looking at the dual -- DLL3 dual mechanism approach. And hopefully, we'll have that data early next year.

[Operator Instructions] We will now take our next question from the line of Linhai Zhao from Goldman Sachs.

This is Linhai from Goldman. Just a follow-up question on the Zoci and DLL3-TCE combinations. We've seen that both Amgen and BI have initiated the Phase I/II trials, including different cohorts for both the late line and first line. And for the RP2D in first-line triplet exploration, wondering if the RP2D will still remain as 1.6 mg or there will be a dose titration to a different dose level? And for the 2 Phase I/II trials, what might be the expected time that we will see some data?

Thank you, Linhai. Rafael, could you address the question on the RP2D dose for the Zoci plus T cell engagers study?

Yes. So the 2 immunotherapies, the PD-L1 as well as the T cell engager will be used as standard doses. There may be some accommodation to be able to dose every 3 weeks just because Zoci is dosed every 3 weeks. With regards to Zoci, we're only exploring 2 doses and moving very fast. We're exploring 1.2 and 1.6 milligrams per kilogram. We don't have any reason to think that 1.6 won't be well tolerated. So we hope that, that will be the dose that we go on to expand. So that's as much as we can say. The study is ongoing. The Amgen one is ongoing and accruing well. And it's got a cohort of patients that are untreated, which I think is probably the most exciting cohort. As you know, the response rate with T cell engagers is relatively modest. It's in the 30% to 40%, whereas the response rate with ADCs is very high.

So you combine also differential response rates, differential durability of response and then a potential immune surveillance that in Phase III studies with T cell engagers, particularly with IMDELLTRA in second line has led to a 6-month difference in survival. So again, mechanistically, this makes a lot of sense. And in terms of the doses, we hope that we won't have to modify our target dose that we have chosen across the development plan for Zoci, which is 1.6 mgs per kg.

And when will we see the data readouts from the trial?

With the drug being operationalized by Amgen, so even though we obviously work very closely with them, it will be probably a joint decision, but they will take the lead as to when those results will be presented. My sense is that it will be next year, but I can't tell you exactly when it will happen. I would probably guide towards the end of the second half of the year.

I am showing no further questions. I'll now turn the conference back to Dr. Samantha Du for her closing comments.

Thank you, operator. I want to thank everyone for taking the time to join us on the call today. We appreciate your support and look forward to updating you again after the third quarter of 2026. Operator, you may now disconnect this call.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Hello, ladies and gentlemen. Thank you for standing by, and welcome to Zai Lab's First Quarter 2026 Financial Results Conference Call. [Operator Instructions] As a reminder, today's call is being recorded.

It is now my pleasure to turn the floor over to Christine Chiou, Senior Vice President of Investor Relations. Please go ahead, madam.

Thank you, operator. Hello, and welcome, everyone. Today's earnings call will be led by Dr. Samantha Du, Zai Lab's Founder, CEO and Chairperson. She will be joined by Josh Smiley, President and Chief Operating Officer; Dr. Rafael Amado, President and Head of Global Research and Development; and Dr. Yajing Chen, Chief Financial Officer. Dr. Shan He, our Chief Business Officer, will also be available to answer questions during the Q&A portion of the call.

As a reminder, during today's call, we will be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings.

We will also refer to adjusted loss from operations, which is a non-GAAP financial measure. Please refer to our earnings release furnished with the SEC on May 7, 2026, for additional information on this non-GAAP financial measure.

At this time, it is my pleasure to turn the call over to Dr. Samantha Du.

Thank you, Christine. Good morning, and good evening, everyone. Thank you for joining us today.

Zai Lab is at a pivotal moment. Since our founding, we have built a fully integrated R&D engine capable of taking assets from discovery through global registrational studies, with the ability to design and execute multiple central trials globally.

The impact of this investment is beginning to emerge. Our pipeline is expanding, our global assets are generating meaningful data, and our lead asset is in the global pivotal stage. We are also leveraging AI and data-driven approaches across the organization to enhance speed, precision and efficiency, strengthening overall execution and corporate productivity, which we expect will drive further results.

Last month at AACR, we presented new data for Zoci that reinforced our conviction, including strong efficacy both systemically and in the brain in patients with small cell lung cancer, alongside a best-in-class safety profile. We also announced global collaborations with Amgen and Boehringer Ingelheim to explore Zoci as a potential backbone therapy in small cell lung cancer and neuroendocrine carcinomas, two cancer types with significant unmet medical need. In late 2027, we expect to submit our first global BLA to the FDA, a defining milestone that marks our successful transformation to a global biotech company.

Beyond Zoci, we're building a growing portfolio of global clinical programs, including ZL-1503 for atopic dermatitis, now in a Phase I/Ib study. This reflects the strength of our R&D engine, which combines rigorous science with operational speed and efficiency to advance differentiated assets into global development.

Our reasonable business remains commercially profitable with a strong balance sheet. We are focused on strengthening our commercial capabilities and execution, and I'm pleased to welcome Dr. Yizhe Wang as an operating partner to work with me to drive commercial performance and readiness ahead of upcoming launches.

The recent policy developments in the region, including the State Council directive, signal meaningful government support for innovative medicines, and we believe Zai Lab is well positioned to benefit over the medium to long term, given our first- and best-in-class portfolio. We're confident in Zai's future, which will be defined by our growing global and regional pipeline of differentiated assets.

With that, I'll now turn the call over to Rafael.

Thank you, Samantha. Over the past years, we have built a globally integrated R&D engine that spans from discovery through global registrational development while also delivering on regional development across therapy areas. Our ability to design and execute high-quality global studies with speed and discipline is a core strength that positions us well for development across regulatory geographies.

We are embedding AI in R&D, including drug discovery and clinical trial design, to enhance the quality of our decisions and to more efficiently advance our pipeline. The data we presented at AACR last month highlights the output of this engine across our global pipeline that included both externally sourced and internally discovered products.

Let me start with Zoci. In extensive-stage small cell lung cancer, at the go-forward dose of 1.6 milligrams per kilogram, Zoci demonstrated a confirmed intracranial overall response rate of 62.5% and a best overall intracranial response rate approaching 69%, including four complete responses.

Grade 3 or higher treatment-related adverse events were approximately 16%. Responses of this magnitude inside the brain in one of the most treatment-resistant tumor types in oncology are meaningful signals of differentiation. The safety data reinforced what we have consistently observed. This is a best-in-class profile.

Our registrational Phase III DLLEVATE study is enrolling well and is on track to complete enrollment in the first half of 2027, positioning us for an interim analysis and potential accelerated approval submission next year. In extrapulmonary neuroendocrine carcinoma, a setting where there is no established standard of care in the second line and beyond, Zoci demonstrated a confirmed ORR of 38.2%. This compares favorably to currently used regimens, which typically show response rates of approximately 18% with limited durability.

We are actively engaging with regulators on a potential registrational path and are well underway recruiting into an extension single-arm study. Depending on the outcomes of regulatory discussions, we could initiate a registrational or confirmatory study by year-end.

Now on the collaborations with Amgen and Boehringer Ingelheim exploring Zoci in combination with T-cell engagers. The scientific rationale is straightforward. Zoci delivers rapid tumor debulking through targeted cytotoxicity, while T-cell engagers drive antigen-dependent immune-mediated killing. The mechanisms are complementary, the toxicity profiles are expected to have limited overlap, and together, they have the potential to deepen and extend responses in ways neither mechanistic approach achieves alone.

The Phase I with Amgen, which includes a cohort of untreated patients with triple combination of Zoci, IMDELLTRA and Imfinzi is already enrolling and the BI study is expected to follow in the coming months.

We're also evaluating Zoci in combination with PD-L1 with or without chemotherapy in a Phase I study in first-line small cell lung cancer with data expected later this year. The chemo-sparing approach may allow for extended treatment duration compared to chemotherapy alone, where patients typically discontinue after four cycles. This is the basis of our Phase III strategy with IO, which we are actively discussing with regulators.

Beyond Zoci, our global oncology pipeline continues to advance. ZL-6201, our LRRC15 ADC is already in the clinic. ZL-1311, our wholly owned MUC17 targeting T-cell engager is expected to enter the clinic by year-end. We will provide updates as data mature.

On the regional oncology side, we submitted a marketing authorization application for Tumor Treating Fields in locally advanced pancreatic cancer and expect an approval for this indication by year-end and for Tivdak for cervical cancer in the coming months.

Turning to immunology. We recently presented preclinical data for ZL-1503, our IL-13/IL-31 receptor alpha bispecific at Immunology 2026. The data showed rapid and durable inhibition of both IL-13-driven inflammation and IL-31-mediated pruritus across disease models in nonhuman primates with sustained effect following single dose.

We believe this data supports the potential for differentiated efficacy, less frequent dosing and broad application across multiple atopic diseases, including asthma, rhinitis and conjunctivitis. Initial Phase I data in healthy volunteers and atopic dermatitis patients are expected in the second half of this year.

Finally, in our regional immunology portfolio, our partner, Vertex, reported positive Phase III interim results from the RAINIER study of povetacicept in IgA nephropathy achieving approximately a 50% reduction in proteinuria versus placebo and meeting both the primary and all secondary endpoints.

I want to close with a broader point. The progress I've described today reflects a pipeline strategy built on biological rationale, clinical differentiation and execution and an organization that now has the infrastructure to advance multiple program simultaneously at speed and across geographies. We have significant data emerging throughout the year, and I look forward to providing those updates.

And with that, I'll hand it over to Josh.

Thank you, Rafael, and hello, everyone. Let me start with our first quarter performance, which reflected Chinese New Year seasonality as well as near-term product-specific dynamics. Starting with ZEJULA. Performance in the quarter was impacted by a shift in hospital utilization patterns following volume-based procurement for generic olaparib and some incremental competitive pressure in the PARP inhibitor class. Our first-line positioning remains intact, supported by our label advantage, and we are working hard on stabilizing and driving demand.

On VYVGART, physician confidence remains strong and our share within biologics is stable. We delivered double-digit volume growth year-on-year in the quarter, offset by a 12% price discount related to NRDL renewal. On a full year basis, we expect a similar level of volume growth as we continue to shape gMG treatment dynamics. The long-term opportunity stays significant. Biologic penetration in the gMG maintenance setting remains around 15%, suggesting a runway for growth, plus upcoming Phase III readouts in new indications such as IIM and Sjögren's add potential upside.

For XACDURO, patient demand was strong and hospital adoption continued to expand. Performance was constrained by supply, and we expect those constraints may persist through the remainder of the year. That said, the underlying demand is encouraging and local manufacturing expected in 2027 should alleviate supply pressure and support meaningful growth and margin expansion over time.

Looking ahead, we see a strong set of commercial catalysts. KarXT launches in the second quarter and represents the first novel mechanism for schizophrenia in decades, a significant moment for the approximately 8 million patients living with this disease in China. KarXT's inclusion in national treatment guidelines ahead of launch reflects strong clinical confidence in this therapy. Our focus this year is on physician education and market development, building a strong foundation for the brand.

We also anticipate potential regulatory approval for Tivdak this year and intend to leverage our existing ZEJULA infrastructure to drive commercial synergies and accelerate uptake.

More broadly, our late-stage pipeline provides multiple additional growth opportunities in the region. Recent positive Phase III readouts for povetacicept in IgAN and Elegrobart in thyroid eye disease add further depth to our long-term growth profile, and we see both as meaningful future contributors.

Lastly, we are applying AI to sharpen commercial execution from physician targeting and field force optimization to real-time competitive insights, enabling more agile and informed go-to-market decisions. 2026 is about execution, delivering on key launches, stabilizing the portfolio and building momentum.

And with that, I will now pass the call over to Yajing to take us through our financial results. Yajing?

Thank you, Josh. Our quarter 1 results reflect the near-term dynamics just described. First quarter total product revenue declined 6% year-over-year to $99.6 million, driven by lower ZEJULA sales, partially offset by continued growth from XACDURO and NUZYRA. While we expect total product revenue to improve sequentially over the next nine months as underlying demand continues to build, we anticipate near-term pressure for 2026 full year total product revenues with a return to growth in 2027.

Turning now to our expenses. Our commitment to financial discipline is reflected in continued execution against our R&D and commercial priorities, and we will expand AI utilization from process automation to agentic execution to further improve cost efficiencies.

R&D expenses for the first quarter increased 8% year-over-year, driven by increased license fees and clinical trial-related expenses, partially offset by lower personnel compensation expenses due to resource prioritization and efficiency efforts. SG&A expenses increased slightly year-over-year, mainly due to higher general selling expenses. As a result, loss from operations increased by 23% for the quarter to $69.4 million.

We ended the quarter with a cash position of $761.3 million. Our regional business is commercially profitable. Our global pipeline continues to progress steadily. Our focus this year remains on the strengthening the regional business, executing across global pipeline and deploying capital thoughtfully to support both near-term launches and long-term growth drivers. With a strong balance sheet, we are well positioned to execute against these priorities.

Operator, please open up the line for questions.

[Operator Instructions] The question comes from the line of Jonathan Chang from Leerink Partners.

First question, on the Zoci collaborations evaluating the combinations with DLL3 T cell engagers. How do these facilitate your longer-term strategy? And are there other combinations and collaborations that make sense to explore? And then second question on the commercial business in China, can you give us a sense for how to think about revenues over the course of the year?

Jonathan, it's Josh. Thank you. I'll ask Rafael to take the first one, and then Yajing can take the second.

Yes. Thanks for the questions. This combination, I spoke about the rationale of it during the prepared remarks. And the expectation is that we would get better efficacy in terms of responses, durability and eventually better survival than with each agent alone.

We're testing it in second line in tarlatamab-naive patients, tarlatamab experienced patients, but importantly, also in first line. Our first-line study will not include tarlatamab as the pivotal trial to begin with until we get more data. But if the data are positive, we may consider progressing this and developing it as a best-in-class regimen. So, it's really improving the baseline treatment of this disease with two really very active mechanisms.

Thanks, Rafael. Yajing?

Yes. Hi, Jonathan. As I mentioned before, our revenue in the next nine months, you're going to expect to see some sequential growth. But for the full year revenue, we are going to continue to experience some short-term pressure. So we are seeing the return to growth in 2027.

And the next question comes from the line of Michael Yee from UBS.

This is Kyle Yang for Michael Yee from UBS. Two for us. So the first question is, for your upcoming data readout for IL-13 and IL-31, what is the expectation for data? And how do you expect the data set in healthy volunteers to derisk the asset? And when do we expect data from moderate to severe atopic dermatitis patients?

The second question is that for your data set in frontline small cell lung cancer in the second half, what is the expectation for that? And also what's the data? How do you pick the go-forward regimen in terms of doublet versus triplet?

Thanks, Kyle. Go ahead, Rafael.

Yes. So with the first question in terms of expectations for ZL-1503, the healthy volunteers data, I think, is going to be very useful. We actually have progressed the study quickly with those cohorts. And we would be looking at safety, obviously, pharmacokinetics to evaluate dosing interval, which we expect to be prolonged dosing. Pharmacodynamics such as phospho-STAT and others and antidrug antibody. So, all of this, I think, will inform the basic parameters that will allow us to continue the development of the product.

And with regards to what to expect, obviously, it depends on how much data we have on atopic dermatitis, but we should have data on healthy volunteers by the end of the year and at least some of the cohorts with atopic dermatitis. So, our expectation is that we may publish this data before the end of the year.

And then with regards to first line we -- the question was what do we consider as go forward. Well, you know that the chemotherapy plus checkpoint inhibitor, which would be the control of our study has a PFS of about five months or so. Our response rate in second line with 1.6 milligrams per kilogram is in the order of 68%. So obviously, there's still room for improvement there. So, we will be looking for higher response rates and also longer PFS than that, that we believe is clinically significant. And we plan to present this data towards the fall or so. And by then, we should have sufficient follow-up to really be able to evaluate that. But we're currently planning to proceed with this study before the end of the year and in discussions with regulators.

Now we're going to take our next question, and it comes from the line of Anupam Rama from JPMorgan.

Just with the recent positive data for povetacicept in IgAN, what are the plans to submit in regional China? And just remind us, is there going to be any bridging work required?

Thanks, Anupam. Okay, Rafael.

Yes. We were very pleased to see the results of the RAINIER study. They're really a good advance for IgAN. The filing of our partner has taken place, and we will discuss with CDE what the regulatory requirements for filing, but we expect that we would be able to proceed because we did include patients from China in the study and the bridging study is not expected to be required. So as our partner, we would discuss with CDE our approach to an accelerated approval with this product.

Now we're going to take our next question. And the question comes from the line of Li Watsek from Cantor.

This is Vin on for Li. So a question about ZL-1503, the bispecific antibody. So it seems like data is going to come in the second half of this year. But there's a lot of bispecific antibody out there in AD. So I would like to know what's your base assumption on the market differentiation for this drug and -- also your -- strategy there. Are you planning to run a Phase II trial or are you potentially going to [form a result]?

Rafael, why don't you address that, and I can make a couple of commercial comments.

Sure. Yes, in terms of differentiation, as I mentioned, I think long-term dosing is important, and we still have to evaluate how often that would be, but we expect that, that would be the case for ZL-1503. And in terms of activity, the key activity is obviously decreasing pruritus because our product inhibits the IL-31 receptor. And so we expect using the rating scale that we would have a meaningful decrease in pruritus that's also occurring early on in the treatment because I think that's really important and differentiating from other products.

The same for skin pain, which is something that affects the quality of life of patients. And of course, the main endpoint, which tends to be EASI-75, which you know what the benchmark out there is in the 40% range. So surpassing these numbers would be together with the extended dosing is something that we would consider very positive for us to move forward with Phase II. And as of the question of whether or not we plan to do that, the answer is yes. We plan to do our Phase II study and evaluate these parameters, as I mentioned before.

Yes. And I think just to comment, it's Josh. Obviously, it's a competitive class, but there's lots of room for differentiation, still very undertreated. So I think as Rafael said, what we know about patients is dosing convenience makes a difference, relief on itch and speed of onset are all important things, things that will elucidate over the course of the clinical development program. So we're quite excited about the opportunity here.

[Operator Instructions] And now we're going to take our next question. And the question comes to line of Ziyi Chen from Goldman Sachs.

I got two questions. The first one is on Zoci. We noticed that Amgen has initiated Phase I study for tarlatamab plus Zoci with and without PD-L1 in small cell lung cancer. So could you share a bit more about your thoughts on potential dose levels you're going to explore, particularly considering for tarlatamab, FDA has -- actually has a black box in their label. And what are the potential dose levels you're going to be exploring for Zoci and also for tarlatamab? And also, have you considered to test a sequential use of those two drugs? Or instead, you're going to be more focusing on administrating those two drugs together to patients?

And my second question is regarding efgartigimod in China. Could you please comment on the evolving landscape given that now RemeGen's Telitacicept has been also enrolled into NRDL, particularly in the first quarter. Have you seen any of the change to the market dynamics? Thank you.

Rafael, do you want to start on Zoci and then I'll comment on VYVGART?

Sure. Thanks for the question. Yes, the study is actually enrolling now. In terms of the dose levels, we wanted to have a Q3 weekly regimen with both drugs. And the dose of tarlatamab will be fixed. And we will do hopefully a rapid dose escalation with Zoci up to 1.6 mg per kg, which is the go-to dosing that we have for DLLEVATE, our Phase III study in second line.

So as I mentioned before, this will be in various clinical settings, including the triplet combination with checkpoint inhibitors, as you mentioned, in frontline and treated patients. So in terms of whether it's sequential versus together -- given the mechanism of action, we want the rapid debulking to be present when the T cell engager is given. So they're given in fast sequence. We're not going to test alternating sequences or other schedules. So I hope that helps.

Thanks, Rafael. And on VYVGART, first, as we mentioned, we're seeing double-digit volume increases in Q1. That's a function of both of new patients continuing to come in and get started and extending duration of therapy. That being said, there's still only about 15% of patients that would qualify for a biologic therapy in gMG are getting it. So I think having additional competition is fine. We don't really see an impact from Teli to any measurable degree in Q1. And again, we would expect as we get through the year that continuing to emphasize getting patients with gMG on to biologic therapy and getting them the benefits of longer-term maintenance is going to help everybody. So -- that's what we're focused on.

[Operator Instructions] There are no further questions for today. I would now like to hand the conference over to your speaker, Samantha Du, for any closing remarks. Samantha? Please go ahead.

Thank you, operator. I want to thank everyone for taking the time to join us on the call today. We appreciate your support and look forward to updating you again after the second quarter of 2026. Operator, you may now disconnect this call. Thank you.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Hello, ladies and gentlemen. Thank you for standing by, and welcome to Zai Lab's 2026 AACR Investor Call. [Operator Instructions] As a reminder, today's call is being recorded.

It is now my pleasure to turn the floor over to Dr. Rafael Amado, Zai Lab's President and Head of Global Research and Development. Please go ahead, sir.

Hi, everyone. Thank you so much for joining us today. I am Rafael Amado, Zai Lab's President and Head of Global R&D. Before we begin, we will be making forward-looking statements today, and I ask you to review Slide 2 for further details.

Moving to Slide 3. I'm joined today by 2 outstanding clinical investigators. Dr. Luis Paz-Ares is a leader in lung cancer. He's Chair of the Medical Oncology Department at the Hospital Universitario 12 de Octubre and Head of the Lung Cancer Unit at National Oncology Research Center in Madrid. Dr. Rohit Thummalapalli is an Assistant Attending Physician and Gastrointestinal Medical Oncologist at Memorial Sloan Kettering Cancer Center. He specializes in GI and neuroendocrine cancers. And on the next slide, the disclosure information for both doctors.

Moving to Slide 5. Here's our agenda. Dr. Paz-Ares will present first-time intracranial data with zoci in small cell lung cancer, followed by Dr. Thummalapalli in neuroendocrine carcinomas. Both posters will be presented tomorrow at AACR. I will conclude with an overview of zoci's clinical development plan and additional AACR highlights followed by Q&A.

And with that, I will pass the call to Dr. Paz-Ares.

Hello. This is Luis Paz-Ares. I'm a medical oncologist at the 12th of October Hospital in Madrid. And over the next few minutes, I'm going to report to you on the intracranial activity of zocilurtatug pelitecan in extensive stage small cell lung cancer with metastasis. Extensive stage small cell lung cancer is a high-grade, very aggressive carcinoma characterized by early metastatic spread and a very aggressive clinical behavior and therefore, poor prognosis.

One of the characteristics is the propensity to develop brain metastases, which are actually impacting in survival, but also in quality of life. Some 20% of the patients really present brain metastases at initial diagnosis. And over the time of the disease, the natural history of disease, some 70% of the patients do develop brain metastases. And as I said, that is really a very relevant clinical condition. And so far, the treatments are not the most effective therapy for that particular issue.

At present, when a patient having symptomatic brain metastasis, we typically deliver radiotherapy, stereotactic or whole brain radiation. And the problem is that often you have to stop systemic therapy while you're giving the brain metastasis irradiation to put the patient at risk of rapid extracranial progression. For asymptomatic patients, often, we administer brain radiation as well and the risks be as well to develop into the future some cognitive deterioration.

Overall, the survival impact is very clear for those patients. The real-world data suggest that typically median OS for those patients is in the range of 8 months being particularly bad for patients that really present brain metastases treated with whole brain radiation. The rationale to use the zoci ADC into the brain is because it allows a target delivery of the payload on those tumor cells that are expressing DLL3, which is most of the cells. The payload is actually producing direct cytotoxic killing. And the good thing is that each ADC you have a good number of payload molecules of the Topo 1 inhibitor is actually having a DAR of 8 and it's having a strong metastatic effect that really enhance the activity in the brain tissues.

In the next few minutes, I'm going to provide you the data that are being presented at the AACR meeting this year. Pretty sure that you are aware of the background, what is zocilurtatug pelitecan, which is an ADC directed to DLL3 with a very efficient payload, a Topo 1 inhibitor with a DAR of 8. It has a very relevant bystander killing mediated by the payload, as I mentioned, as the drug is typically released and accumulated into the tumor micro environment, thanks to the platform, the TMALIN platform that is being used to produce this ADC.

The data from this study on brain metastases are coming from the dose escalation and expansion Phase I study ZL-1310 using the ADC as monotherapy or in combination with atezo or atezo plus carboplatin in extensive stage small cell lung cancer with the data cutoff of February 2026 and a median follow-up of some 8 months. The intracranial activity has been actually assessed with an independent radiology committee using the mRANO brain metastasis. And with this criteria, you may measure up to 5 brain lesions and they should have been studied using the contrast enhancing. And importantly, the diameter should be at least in the longest 10 millimeters and at least 5 in the perpendicular diameter.

Included patients in these trials were patients with extensive stage small cell lung cancer with asymptomatic brain metastasis and archival biopsy was collected to retrospective DLL3 testing, good PS and importantly, prior DLL3 directed therapy was allowed. You see here on Part 1 and Part 2, what was the dosing use and from 0.8 milligrams per kg to 2.8 milligrams per kg in the Part A1 and the second, the Part 2, the patients were randomized to receive 1.2 or 1.6 milligrams per kg.

As you see here, some 136 patients were included on this study and importantly, brain metastases were seen in some 49, 36%. And out of those, about 1/3, 13.2% overall didn't receive prior radiation. So that means 2/3 received prior radiation and 1/3 didn't before entering the study. As you see, 2/3 of the patients had received 1 prior line of therapy and 1/3 had received 2 or more lines of systemic treatment and more than 90% received PD-L1 therapy and about some 10% of the patients received DLL3 T-cell engagers.

The overall response rate that we have seen was 54%, 22 out of 41 patients responded and responses were particularly high on those patients treated at 1.6 milligram per kg that were 62% responses, 50% were assessed responses in cases treated with 1.2 milligrams per kg. Importantly, responses were seen in 50% of the patients treated with prior radiotherapy and in 60% of those that didn't receive radiotherapy before entering the study.

Out of the 22 responders, 21 responses were already seen at the time of the first tumor assessment. That means some 6 weeks. The other issue is important is that 14 responders, that means 2/3 of the responses are still ongoing with a median time of 9 months.

You see here 2 illustrative case. The first case on the top is a 60-year-old female treated with carbo, etoposide, durva plus tarlatamab that develop brain metastasis as you see here during the induction treatment in the first line. Patients received without prior radiation ZL-1310 at 1.6 per kg. And as you see here at the time of the initial evaluation, the patient was on complete response and still on complete response 6 months later.

The second case was another female, 65 years old that progressed while on initial therapy with carb, etoposide, atezo, developing multiple brain metastases. Importantly, the patient didn't receive before entering into the ADC study, radiotherapy. And as you see here, a clear response was already seen at the time of the week 6 that was evolving over time to a scar remaining at week 24.

Safety-wise, the drug was reasonably well tolerated. And the typical side effect we have seen related to the drug were typically seen consistent with the Topo 1 inhibition mechanisms of the drug. You see here some about 1/3 of the patients at all dose levels had some Grade 3 or 4 treatment-emergent side effect, but you restrict to those related to the treatment, you see that the doses that 1.1, 1.6 only about 16% or 2% of the patients really had treatment-emergent adverse events related to the drug. Typical side effects, particularly as you see here are mainly immunosuppression. Others include, of course, nausea, fatigue, asthenia, so typically on the grade 1 or 2.

So as a conclusion, let me tell you, the drugs, ZL-1310 have demonstrated a quite relevant high intracranial response rate in patients with extensive stage small cell lung cancer with brain metastases at baseline. As you remember, the overall response rate was in the range of 54%, including complete responses in 17% of the cases. Responses were observed in patients without prior radiation, 60%, but also on those with prior radiation, 50%. And the higher response rate was observed at the 1.6 milligram per kg dose level. At this dose, the treatment was pretty well tolerated. Remember, side effects, grade 3 or more were in the range of 15%, and we didn't identify new signals of safety, including no hemorrhages at the intracranial level.

So this study is still ongoing, enrolling now patients that had received DLL3 targeted therapy before study entry. And in addition, there is an ongoing Phase III study, the DLLEVATE study in second plus lines of extensive stage small cell lung cancer, where patients that had prior to platinum-based chemo with or without tarlatamab are to be randomized to zoci versus the investigator's choice of therapy, topotecan, lurbi or amrubicin.

So this is very much what I have to say today. So thank you very much for your attention.

So thank you, Dr. Paz-Ares. I'm here -- I'm excited to be here to present the updated data for ZL-1310 or zoci in extrapulmonary neuroendocrine carcinomas and other DLL3 expressing tumors. So extrapulmonary NECs are highly aggressive malignancies with very poor outcomes. 5-year survival in patients with metastatic disease is less than 15% and median overall survival in these patients is only 5 to 8 months. extrapulmonary NECs share key biological features of small cell lung cancer, including frequent expression of DLL3. However, treatment options remain very limited, particularly after progression on platinum-based chemotherapy.

So while initial responses following frontline etoposide and platinum-based chemotherapy can be observed, durability is limited compared to small cell lung cancer. And most notably, in the second-line setting, there is no established standard of care. Physicians can use different single-agent or combination chemotherapies with response rates of around 20%, but short median progression-free survival.

In addition, different from small cell lung cancer, there is no established role for DLL3 targeted T cell engagers in extrapulmonary NECs and no established role for new checkpoint inhibitors. And so hence, there really is an urgent medical need for more treatment options for these rare and aggressive cancers.

So this is a global Phase Ib Phase II study of zoci in patients with extrapulmonary NECs and other DLL3 expressing solid tumors who have progressed on or after platinum-based chemotherapy. The study included 2 cohorts, one in gastroenteropancreatic or GEP-NECs and the other in other extrapulmonary NECs, including large neuroendocrine carcinoma of the lung, genitourinary or gynecologic NECs, Merkel cell carcinoma and other DLL3 expressing solid tumors.

For extrapulmonary NEC patients, DLL3 expression was evaluated retrospectively by immunohistochemistry, but was not required for eligibility. Initial cohorts of 10 patients were enrolled with expansion triggered by observed responses and the Phase II part is a single-arm study, which is currently enrolling. The study enrolled evenly in the U.S. and China.

As you can see, the majority of patients had advanced stage disease at enrollment. These tumors are highly proliferative as reflected by the majority of patients having high Ki-67 levels. At baseline, nearly all patients had received prior platinum-based chemotherapy. About 1/4 of patients had prior immunotherapy, of course, although the role for checkpoint inhibitors in extrapulmonary NEC is still debated. Five patients received prior irinotecan. These were all in Cohort 1, consistent with the common practice of using FOLFIRI or FOLFIRINOX in GI neuroendocrine cancers in the second line. So overall, we feel the study population represents a typical extra-pulmonary NEC population that we see in clinic.

In terms of efficacy, we saw encouraging antitumor activity with zoci. Among response evaluable patients, the overall response rate to date is 38% with a disease control rate of approximately 56%. We feel these responses are clinically meaningful in these aggressive tumor types with few treatment options after platinum-based chemotherapy. Tumor reductions were observed across multiple extrapulmonary NEC subtypes. The response rate in Cohort 1 enrolling gastroenteropancreatic or GEP-NECs was 33% and in Cohort 2, which enrolled extrapulmonary NECs other than GEP primaries, the response rate was 44%.

As shown in the waterfall plot, we saw substantial target tumor shrinkage in patients both in Cohort 1 and Cohort 2, although we did observe more patients in Cohort 1 with primary progression.

When we break down the data in more detail, we see responses were observed across a spectrum of extrapulmonary NECs. Interestingly, in the 5 patients who received prior irinotecan, which is another Topo 1 inhibitor, no patients showed a response. All these 5 patients had gastroenteropancreatic NECs or GEP-NECs, whereas a patient with NEC of the cervix who received prior topotecan, which is another TOP1 inhibitor, did achieve a partial response with zoci. More data is being generated to understand factors that impact response to zoci.

We are also seeing early signs of durability with multiple cases of durable responses across different origins of NEC. These data are still immature, but taken together, these data suggest clinically meaningful efficacy with zoci. Similar to what we saw in small cell lung cancer, we have not yet observed a clear relationship between DLL3 expression and response. Importantly, responses have been observed in DLL3 negative patients, and we have seen activity across a broad range of DLL3 expression levels. While preliminary, this data does not support excluding patients from zoci treatment in the case of negative DLL3 expression.

Taking a look at safety and tolerability. Overall, zoci demonstrated good safety and tolerability in extrapulmonary NEC, consistent with the safety profile of small cell lung cancer. Most events were low grade. The most common events were hematologic and gastrointestinal, including anemia, leukopenia and nausea. There was only one case of grade 2 ILD among these 46 patients treated to date. We have limited data so far, but the ILD rate in patient extrapulmonary NEC seems to be lower than the small cell lung cancer, and this may be related to difference in tumor burden in the lung and lower frequency of prior radiation of the chest. So in summary, we believe ZL-1310 or zoci is well tolerated compared to other treatment options in extrapulmonary NEC.

To bring this to life, I'll walk through a representative patient case. This is a 52-year-old patient with small cell neuroendocrine carcinoma of unknown origin. He exhibited primary progression on first-line platinum-based chemotherapy and then initiated ZL-1310 and achieved a partial response within 6 weeks. We saw a large tumor reduction at week 6 with one of the target lesions nearly disappearing. The tumor shrinkage deepened nearly 75% by week 18, and the patient is still benefiting at time of data cutoff with a very encouraging durability of response of more than 6 months.

In summary, zoci is demonstrating clinically meaningful activity in a very difficult to treat population. We're seeing responses across multiple extrapulmonary NEC tumor types and primary origins. And while cross-trial comparisons must be interpreted with caution, these response rates to date appear favorable relative to historical chemotherapy outcomes. The safety profile is consistent with what we observed in small cell lung cancer, and the study is ongoing with expansion to Phase II and continued follow-up in the Phase Ib ongoing to better characterize efficacy.

And with that, I'll turn it back to Rafael.

Thank you, Dr. Thummalapalli. This next slide outlines our broad and comprehensive development strategy for zoci across both small cell lung cancer and extrapulmonary neuroendocrine carcinomas. Starting with small cell lung cancer, we are advancing across multiple lines of therapy. In the second-line and third-line setting, our global Phase III DLLEVATE study is ongoing. We expect to complete enrollment in the first half of 2027, followed by an interim analysis positioning zoci monotherapy for potential accelerated approval in 2028.

At the same time, we are expanding into first line. Here, we have multiple ongoing combination strategies. First, we're evaluating zoci in combination with a PD-L1 inhibitor plus or minus chemotherapy. We expect to present combination data, including first-line data in a conference later this year and expect to initiate a pivotal trial by end of the year with the selective combination. Additionally, we also recently announced a collaboration with Amgen as well as Boehringer Ingelheim, which I will discuss in an upcoming slide.

Turning to epNEC. We are advancing zoci monotherapy in the second-line setting where there is significant unmet need. The ongoing study is generating registration-enabling data. In parallel, we're exploring combination strategies, including obrixtamig through our collaboration with Boehringer Ingelheim to further expand the opportunity in this population. Overall, this strategy reflects our goal to position zoci as a backbone therapy across both small cell lung cancer and epNEC, spanning monotherapy and combination approaches and across multiple lines of therapy.

I wanted to briefly touch on the recently announced collaboration with Amgen and BI to pursue combination strategies in small cell lung cancer and neuroendocrine carcinomas. The rationale is grounded in complementary mechanisms. Zoci delivers rapid cytotoxic tumor debulking, while T cell engagers activate immune-mediated killing to drive durability. Together, this approach has the potential to both deepen and extend responses. Importantly, these agents are expected to have minimal overlapping toxicities.

Combined with zoci's favorable safety profile and compelling systemic and intracranial activity, we believe it is well positioned as a backbone for combination therapy. We've initiated a global Phase Ib study with Amgen evaluating zoci in combination with tarlatamab. The study includes dose exploration and dose expansion in both tarlatamab-naive and tarlatamab exposed patients. We plan to also evaluate a triplet in the first-line setting.

We also plan to initiate a global Phase Ib/II study with BI evaluating zoci in combination with obrixtamig in neuroendocrine carcinomas as well as a triplet combination with atezolizumab in first-line small cell lung cancer and depending on emerging data in first-line epNEC as well. Amgen and BI will sponsor and lead their respective global studies. Overall, we see zoci emerging as a differentiated DLL3 ADC with the potential to become a new standard of care across small cell lung cancer and extrapulmonary neuroendocrine carcinomas as monotherapy in previously treated population and as a backbone in the frontline combinations.

With that, let me turn to the broader pipeline we're advancing at AACR. ZL-1222 is our IL-12 PD-1 immunocytokine. It is designed to overcome the key limitations of current immune checkpoint blockade, which has had limited activity in cold tumors and systemic IL-12, which could result in significant toxicity. It combines PD-1 targeting for tumor localization, a silence Fc for half-life extension and a potency reduced IL-12 to improve tolerability. This enables localized activation of IL-12 signaling in the tumor microenvironment, reprogramming the TME and activating T cells to drive durable antitumor immunity.

We see clear antitumor activity. ZL-1222 inhibits tumor growth in the ICB resistant model, EMT6 with good tolerability and shows dose-dependent efficacy that tracks closely with exposure in CT26 model. Together, this data show that ZL-1222 can drive meaningful antitumor responses in a biologically predictive profile. Our pilot toxicology study in nonhuman primates showed tolerability up to 10 milligrams per kilogram. We are currently conducting a dose range finding study and are preparing GLP toxicology study to establish its safety profile. We're now advancing towards IND-enabling studies in 2026.

Turning now to ZL-6201, our LRRC15 targeting ADC. ZL-6201 combines a humanized anti-LRRC15 antibody with a protease cleavable linker and a camptothecin-based Topo 1 payload. Mechanistically, this enables efficient internalization and payload release in targeted cells, leading to DNA damage and tumor cell death. Importantly, LRRC15 is broadly expressed across sarcomas and in cancer-associated fibroblasts within the stroma of many epithelial solid tumors with limited expression in normal tissues, making it a highly attractive ADC target. Collectively, these findings highlight the potential for ZL-6201 to address significant unmet need across both mesenchymal and epithelial malignancies.

Looking at the efficacy data, ZL-6201 demonstrated dose-dependent tumor growth inhibition across multiple LRRC15 positive sarcoma patient-derived xenograft models. We also observed robust antitumor activity in non-sarcoma CDX models where LRRC15 is expressed on cancer-associated fibroblasts rather than in tumor cells. In these models, CAFs facilitate the release of C24 payload to deplete neighboring antigen negative tumor cells, demonstrating potent efficacy driven by a strong bystander effect.

Together, these data support the dual mechanism of action involving both direct tumor cell killing and stromal targeting. Based on this profile, a global Phase I study is now underway with enrollment acceleration planned in 2026. And with this, I will end the highlights from AACR.

Now please join me, Dr. Paz-Ares and Dr. Thummalapalli for questions and answers.

[Operator Instructions] We will now take our first question from the line of Jonathan Chang from Leerink Partners.

Dr. Ares, how should we be thinking about the intracranial activity of zoci relative to standard of care and development stage treatment options in small cell lung cancer? And how should we be thinking about the impact of this intracranial activity on overall survival?

Well, I mean, of course, those are -- I mean, today it is still early days because we haven't got, let's say, very robust data in terms of Phase III trials. The only thing I can tell you is that the response rate we have seen, you remember, 54% overall intracranial response rate being 62% on those patients that actually were treated at a 1.6 milligrams dose. I think this is quite impressive in this setting as compared to standard of care drugs, which are more on the 20% to 30%.

So that is at least encouraging data thinking into the future about the possibility of impacting survival. At the same time, you're able to really get responses in the brain very likely, I would assume that you have good possibilities of getting better or improvement in quality of life. I mean having brain metastases, particularly symptomatic brain metastases are really impacting very much on what you're able to do and your quality of life.

So I would say the early data are really encouraging, but still, of course, it's going to be needed randomized Phase III trial. I'm pretty sure the trial we just described in the pretreated setting is going to give us a more robust data, but early data are very encouraging.

We will now take our next question from Michael Yee from UBS.

We had 2 questions. One was just thinking about the enthusiasm about this data in intracranial tumors and how that would drive a robust response in the Phase III frontline small cell study, where obviously, it's much better to treat earlier. So could you talk a little bit about what type of results you would expect to then see in the first-line study and how that would compare versus, say, tarlatamab, which has a first-line label?

And the second question then is, I guess, you're going to combine the 2. So how would that be envisioned if the 2 of them are combined?

Okay. So related to the first question, I could say, I mean, typically, at diagnosis about 20% of the patients are having brain metastasis. But it's not only important to treat those 20% of the patients, but also to prevent brain metastasis to happen in the future. That is a very frequent site of disease progression. So having a drug which is very effective into the brain likely is going to prevent brain metastasis to happen or at least delay that progression to happen.

Of course, I mean, tarlatamab is an amazing therapy with a clear impact on survival and in other endpoints, the idea here would be to be able to combine those drugs. I think this is -- my anticipation would be that there are a couple of trials in the first-line setting, induction and maintenance. I would assume in the near future, the result of those trials are going to be positive and tarlatamab is likely to be part of the standard of care.

So the way I envision this ADC against DLL3 in the first-line setting will be in combination with tarlatamab. And hopefully, that could have at least there are good rationale to really have a synergistic effect between both of them. And I think, I mean, it's been commented by Rafael that combination data are going to be produced. And I suppose frontline will be a quite urgent strategy into the future.

We will now take next question from the line of Anupam Rama from JPMorgan.

Congrats on the update. One for the company. So in the Phase III DLLEVATE study in second-line plus small cell lung cancer, can you walk us through the rationale to stratify based on having brain mets or not? Isn't the activity that you're seeing today here at AACR ultimately, within brain mets, that's going to be key for PFS, right, in the overall population as derisking?

Yes, that's a very good question. Thanks for asking. generally, these studies are stratified by brain metastasis because they pertain a poor prognosis as was remarked upon at the beginning by Dr. Paz-Ares. The difference in second line survival may be between 5 months to 9 months for those that don't and those that do have brain metastases. So stratification ensures that the number of patients with brain metastases is equal in both arms.

Now the point that you're making, I think, is that if brain metastasis patients do appear to do equally well as those that don't when they're treated with zoci, why stratify? Well, in the control arm that will not be the case, and we wouldn't want to be an unevenness in the control arm whereby what preponderance of patients with or without brain metastasis occurs and then the comparison wouldn't be apples-to-apples comparison. So I think in spite of the good data that you've heard today because it's a randomized trial against chemotherapy, the stratification is necessary.

Do you have any follow-up question Anupam? Our next question comes from the line of Yigal Nochomovitz from Citigroup.

Okay. I thought I heard my name. So one for Dr. Paz-Ares, one for Dr. Thummalapalli and one for Rafael. So Dr. Paz-Ares, I'm wondering with the 10 patients that had responses intracranial, could you describe whether they also responded systemically? What was the concordance? As I recall with tarlatamab in their intracranial data, I believe the concordance was quite high.

Okay. So again, here, the concordance is pretty high. I mean those data have been already reported I think in prior trials and the response rate is over 50% as well. So the important thing would be what -- because there are a number of drugs that induce a reasonable response rate systemically, but they fail to produce the same type of activity in the brain. And the reason for this presentation here at AACR is specifically to highlight that the responses you're seeing in the brain are similar. So there is no problem to access into the brain and to induce responses here. That is very much the reason.

Okay. And for Dr. Thummalapalli, I'm just curious, do you have any theories as to why you're not seeing a differential response with respect to DLL3 expression?

Yes, it's a great question. I mean I think we've limited data so far. I think there could be a number of reasons. In extrapulmonary NECs, DLL3 expression is not as universal as it is or at least as prevalent in small cell lung cancer. There also could be some heterogeneity. There also could be other factors that are DLL3 independent that could be associated. Of course, the drug also kind of invokes a bystander effect as well. And so you may not necessarily need kind of high level homogeneous DLL3 expression, you could potentially respond to the drug even with lower levels. So I think a lot of different possible reasons. But I think the data will bear out with time.

Okay. And for Rafael, quickly, you have the interim coming up next year, as you mentioned. What more can you tell us today about that interim? The sorts of questions we want to know would be the percent of PFS maturity, what you can say about the bar, meaning the critical hazard ratio. How much can you tell us today about what would be necessary for that study to report a positive interim next year?

Yes. The critical endpoint for conditional approval or accelerated approval is response. It's not PFS. And FDA will be looking at duration of response and the analysis will be done when patients have been able to -- had an opportunity to be followed for at least 6 months after the first scan. And the agency will be looking at the durability of that response as well. So it won't be based on PFS or survival, but rather on differential response rate and the durability of that response.

And in terms of the type of difference that needs to be seen, this is not something that we've commented in the past. And I think it will be probably something that FDA will deem clinically relevant. And I can tell you that we are tracking very well for that endpoint. We plan to have it -- to have approval by the end of the next quarter and shortly after, we will be able to do the analysis. So fingers crossed and stay tuned.

We will now take our next question from Li Watsek from Cantor.

This is [indiscernible] on for Li. Question about the next zoci update. So it seems like the next update is going to be in the second half of '26, and that's going to be the combination of chemo and PD-L1. Can you guys set the expectation there? What kind of data we should expect to see?

I think you're asking about the frontline data with chemotherapy and PD-1. We treated a number of patients with both PD-1 in second line as well as in first line and then in first line with carboplatin as well. All that data is maturing. The majority of patients are with PD-1. I can tell you that the toxicity does not seem to be overlapping and where we've been able to advance the doses as expected. We obviously are observing data that is very encouraging to us, but we need more time to see what the durability of that data is going to be.

Our hope is that with good data sparing chemotherapy, we would be able to treat longer than with chemotherapy alone. The majority of patients with chemotherapy alone tend to stop after about 4 cycles or so. And given the tolerability that you've seen with zoci and the one that we're seeing with zoci plus PD-1 that the treatment to progression or toxicity will be longer with zoci. So that -- I think that is the underpinning of that Phase III study. We're in discussions with regulators at the moment as to the actual details of the design. But as I said in the prior remarks, we plan to present the data in the second half of this year, sometime in one of the meetings in the fall.

[Operator Instructions] We will now take our next question from Linhai Zhao of Goldman Sachs.

This is Linhai. Very exciting results. Congrats. I have 2 questions. The first question is, how do you think about the potential confounding effect from the prolonged intracranial efficacy from the previous radiotherapy? What is the time gap between the last radiotherapy to the first dose of zoci? That's the first question.

And second question, I would appreciate some clarification as I see in the Page 9 of the deck, it was showing that zoci was able to penetrate the blood-brain barrier and enter within the brain tissue that was somehow the reason that it can generate the high intracranial efficacy. Just want to clarify if it -- is my understanding correct?

So. Yes. I was just going to say that the protocol require at least a 7-day washout for radiotherapy. But Dr. Paz-Ares, please go on.

Yes. So I mean, for sure, a washout were required. So the only thing I can say with this limited data is that among those patients that didn't receive radiotherapy before, the response rate was 60%, 9 out of 15 patients, and it was very similar, I would say, 50% response rate in patients that have been treated with prior radiotherapy, 13 out of 26. Then the number of patients are too small to really dissect on the time elapsing since last radiotherapy, always knowing, as Rafael mentioned, that anyway, it's going to be at least 2 weeks from last radiotherapy dose.

So you need to have a controlled image before starting baseline post radiotherapy. So that means the effect you're observing is not due to the radiotherapy, but it's due to the drug. But anyway, I mean, that is the maximum we can say about those data, I have to say.

Follow-up question, Linhai?

Yes. Just on the second question is the ability of zoci to enter the -- to penetrate the blood-brain barrier.

So I mean, the -- let's say, the idea here being that the way the drug is working, I mean, is brain metastasis, of course, because small cell lung cancer express quite uniformly DLL3 in the surface of the cell and that facilitates the entry into the tumor and into the microenvironment, the drug is actually delivered with a high number of molecules of the payload per cell. Of course, we know that when brain metastases are there, there is a disruption of the brain barrier. And actually, the fact that we have observed such a high response rate somehow validate that concept, I would say.

I don't know, Rafael, if you like to add on something based on the preclinical data?

No, nothing else. I think the disruption of the blood-brain barrier is an excellent point. And also, this is a very avid antibody with very, very low nanomolar affinity. So binding to DLL3 is with very high affinity. So perhaps that is one differentiating factor that makes it possible to have such high activity.

[Operator Instructions] Showing no further questions. Thank you all very much for your questions. I'd now like to turn the conference back to Dr. Rafael Amado for his closing comments.

Thank you so much, Dr. Thummalapalli and Dr. Paz-Ares. We believe that the data presented today reinforces the potential of zoci as a differentiating agent in DLL3 positive tumors and supports our strategy to advance it into multiple lines of therapies and in combination settings for both small cell lung cancer as well as neuroendocrine carcinoma. So we are executing against a comprehensive global development plan, as I outlined, including the current ongoing Phase III study, and we look forward to sharing additional data with you as the program progresses.

We appreciate your time and interest today, and we look forward to keeping you updated. Thank you so much. Have a great day. And operator, you may now disconnect.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Hello, ladies and gentlemen. Thank you for standing by, and welcome to Zai Lab's Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, today's call is being recorded.

It's now my pleasure to turn the floor over to Christine Chiou, Senior Vice President of Investor Relations. Thank you. Please go ahead.

Thank you, operator. Hello, and welcome, everyone. Today's earnings call will be led by Dr. Samantha Du, Zai Lab's Founder, CEO and Chairperson. She will be joined by Josh Smiley, President and Chief Operating Officer; Dr. Rafael Amado, President and Head of Global Research and Development; and Dr. Yajing Chen, Chief Financial Officer. Dr. Shan He, our Chief Business Officer, will also be available to answer questions during the Q&A portion of the call.

As a reminder, during today's call, we will be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We will also refer to adjusted loss from operations, which is a non-GAAP financial measure. Please refer to our earnings release furnished with the SEC on February 26, 2026, for additional information on this non-GAAP financial measure.

At this time, it is my pleasure to turn the call over to Dr. Samantha Du.

Thanks, Christine. Good morning, and good evening, everyone. Thank you for joining us today. Zai Lab is at an important point in our evolution. We are building a company increasingly defined by global innovation, resting on a foundation supported by a commercially profitable China business and R&D infrastructure.

Today, our global oncology, immunology pipeline is reaching a scale and maturity that fundamentally changes the profile of this company. We have multiple global programs advancing rapidly through the clinic and with zoci in pivotal stage. We see a clear path toward our first potential U.S. approval by 2028.

Importantly, we advanced zoci from IND to global Phase III in less than 2 years, an industry-leading pace that reflects the strength of our integrated U.S. and China development model. This capability enables faster, more capital-efficient execution, is now being applied across our broader pipeline.

Our China business continues to provide stability and leverage for our global R&D efforts. Despite a challenging macro and operating environment, full year revenue grew 15% year-on-year, and our commercial profitability continues to improve.

Looking ahead to 2026, our priorities are very clear. This is a year focused on execution and preparation. We expect several meaningful pipeline catalysts, including clinical data for zoci in brain metastasis, neuroendocrine carcinoma and first-line small cell lung cancer as well as first-in-human data from our IL-13/IL-31 receptor bispecific program in atopic dermatitis.

On the regional side, we have important pivotal data readouts for large opportunities such as povetacicept in IgAN and elegrobart in thyroid eye disease, both of which enhance the durability of our China growth engine. Business development remains an important lever for us.

Our presence and capabilities in China provides access to one of the world's most important fast-evolving innovation ecosystems, creating opportunities that can meaningfully strengthen and prioritize both our global and regional pipeline. Ultimately, our objective is to build a company that can make a lasting difference for patients while creating substantial value for shareholders.

With that, I'll now hand the call over to Rafael, who will walk you through the progress of our R&D pipeline. Rafael?

Thank you, Samantha. 2025 was a year of significant progress for our R&D organization as we continue to build globally competitive pipeline. Over the course of the year, we initiated a pivotal trial in oncology, advanced one additional oncology program into the clinic and moved our lead immunology asset into clinical development.

With that, I'd like to walk you through our progress, starting with zoci, our potential first and best-in-class DLL3-targeting ADC and a cornerstone of Zai Lab's global oncology portfolio. In second-line and third-line small cell lung cancer, we have initiated a global registrational Phase III study, which will enroll approximately 480 patients across second-line post-platinum and third-line post-tarlatamab settings with a control arm reflecting real-world global practice, including topotecan, lurbinectedin or amrubicin. Importantly, zoci has advanced at a rapid pace, significantly faster than is typically observed for programs in this space.

Based on current time lines, we anticipate a potential accelerated approval submission in 2027 and our first global approval in 2028. Clinically, zoci has demonstrated encouraging efficacy in heavily pretreated extensive-stage small cell lung cancer, including an 80% objective response rate in 10 patients with untreated brain metastases. The ability to treat both intracranial and extracranial disease without treatment interruptions represent a meaningful potential advantage for patients, and we look forward to presenting this data in the coming months.

Equally important, zoci continues to stand out for its favorable safety profile with low rates of severe treatment-related adverse events. We believe this profile supports zoci's potential role as a backbone ADC in first-line combination regimens, including those that reduce chemotherapy burden. We plan to initiate a first-line pivotal trial in small cell lung cancer and to advance zoci into additional novel combination regimens before year-end.

Beyond small cell lung cancer, we see a compelling opportunity for zoci in neuroendocrine carcinomas or NECs, a large underserved population with no approved DLL3-targeted therapies. Enrollment in our global Phase Ib/II is progressing very well, and we plan to present initial data this year with the goal of initiating a registration-enabling study by the year-end.

Taken together, we believe zoci's differentiated efficacy and safety profiles, including activity in brain metastases, positions it to address a significant unmet need across small cell lung cancer and neuroendocrine carcinomas where the total addressable global market is estimated to exceed $9 billion. Beyond zoci, our next wave of innovative global assets continues to advance rapidly.

ZL-6201, our internally discovered LRRC15-targeting ADC, received U.S. IND clearance and the global Phase I study was quickly initiated thereafter. ZL-1222, our PD-1/IL-12 immunocytokine is progressing through IND-enabling studies and ZL-1311, a next-generation T-cell engager or TCE targeting MUC17, represents our first globally owned TCE with an IND planned by year-end.

In immunology, ZL-1503 is our internally discovered IL-13/IL-31 receptor alpha bispecific antibody for atopic dermatitis and is designed to address both itch and inflammation with the potential for enhanced and faster onset of efficacy associated with less frequent dosing than current biologics. The global Phase I/Ib study is enrolling well, and we expect first-in-human data later this year.

Now turning briefly to our key late-stage regional programs, starting with our immunology portfolio. Efgartigimod continues to expand across multiple autoimmune indications with ongoing development across a broad clinical program. Recent late-stage results support further label expansion and additional Phase III readouts are expected this year and next with China being a valuable contributor to global enrollment.

Povetacicept remains on track with an interim analysis for the global RAINIER Phase III study for IgAN planned for the first half of 2026, and enrollment is ongoing in the global pivotal OLYMPUS Phase II/III study for primary membranous nephropathy. Lastly, for elegrobart, our partner, Viridian expects to report top line data for the global registrational REVEAL-1 study in active TED. This will be in the first quarter of 2026, followed by top line results from the global registrational REVEAL-2 study in chronic TED in the second quarter of 2026. Elegrobart has the potential to become the first subcutaneous IGF-1R therapy approved for TED in China.

Turning to our local oncology portfolio. For TIVDAK, we expect approval in China in the first half of 2026, which will build naturally on our established ZEJULA commercial platform, further deepening our leadership in women's cancers. Finally, for Tumor Treating Fields, the FDA approval for Optune Pax in locally advanced pancreatic cancer earlier this month represents an important milestone in this disease, and we will work closely with China's NMPA under the innovative medical device pathway to support an expedited review. Together, these achievements reflect the depth and quality of our pipeline, one that is advancing with speed and efficiency.

And with that, I'll hand it over to Josh.

Thank you, Rafael, and hello, everyone. Before getting into quarterly performance by product, I want to briefly frame how the business progressed more broadly in 2025. During the year, we made important progress across market access, portfolio optimization and business development.

We successfully completed NRDL renewals for key products and achieved guideline updates supporting VYVGART in generalized myasthenia gravis and KarXT in schizophrenia, both of which strengthen the durability of our commercial portfolio over the long term. At the same time, we sharpened our focus by divesting noncore assets and regions, allowing us to reallocate resources toward higher priority growth opportunities and to improve operational efficiency.

From a business development perspective, we maintained a highly selective and strategic approach. During the year, we entered targeted collaborations to explore novel combination strategies in first-line small cell lung cancer and strengthen our oncology platform with the addition of a MUC17/CD3 T-cell engager. Together, these actions reflect our disciplined approach to external innovation, complementing our internal pipeline while preserving financial flexibility.

With that broader context, I'll now turn to our quarterly commercial performance. Fourth quarter revenues increased 17% year-over-year to $127 million, and full year revenues grew 15% to $460 million, reflecting steady progress across our commercial portfolio.

Starting with VYVGART. Physician confidence remains strong and patient demand has been stable. Fourth quarter revenues, however, reflected channel dynamics related to NRDL renewal and hospital purchasing patterns. In 2026, we expect a more measured near-term growth profile influenced by pricing dynamics and evolving competition. The long-term trajectory of the franchise remains intact, supported by clinical guideline expansion, affordability initiatives and additional indications and formulations.

Turning briefly to ZEJULA. We delivered a strong fourth quarter driven by first-line BRCA-positive new patient starts. While some variability is expected early in the year due to volume-based procurement dynamics for olaparib and seasonality, ZEJULA remains well positioned in the first-line setting.

Looking ahead, KarXT represents a significant near-term growth opportunity. We expect to initiate the commercial launch in the second quarter of 2026 with a clear focus on disciplined execution, building disease awareness, establishing clinical confidence and laying the groundwork for broader adoption. Recent inclusion in a national expert consensus on negative symptom management builds on last year's inclusion in national treatment guidelines and reinforces growing recognition of KarXT's profile.

In summary, 2026 is a year focused on maintaining the strength and stability of our existing business while preparing for multiple growth opportunities ahead. That includes continuing to build the VYVGART franchise, executing a high-quality launch for KarXT in schizophrenia and advancing key late-stage assets such as povetacicept in IgAN, elegrobart in TED and TTFields in pancreatic cancer. The investments we are making across commercial and R&D today are designed to support a multiyear growth trajectory extending well beyond 2026.

And with that, I will now pass the call over to Yajing to take us through our financial results. Yajing?

Thank you, Josh. Now I will discuss highlights from our fourth quarter and full year 2025 financial results compared to the prior year period. Fourth quarter total revenue grew 17% year-over-year to $127.6 million, driven by strong contributions from XACDURO and NUZYRA. XACDURO performance reflected strong patient demand and expanding hospital adoption, though supply constraints during the year limited the full realization of underlying demand. NUZYRA continued to benefit from broader market coverage and increased penetration. Total revenues for the full year were $460.2 million, representing 15% year-over-year growth.

Turning now to our expenses. Our commitment to financial discipline is reflected in improved operating leverage with both R&D and SG&A declining as a percentage of revenue year-over-year. R&D expenses for the full year declined 6%, driven by lower personnel compensation costs and increased in the fourth quarter due to fast progression of global clinical trials.

SG&A expenses decreased 12% and 7% year-over-year for the fourth quarter and full year, mainly due to the reduction in general and administrative expenses because of strategic resource optimization. As a result, loss from operations improved 19% for the full year to $229.4 million and improved 25% when adjusted to exclude noncash expenses, including depreciation, amortization and share-based compensation. We maintain a strong cash position, ending the quarter with $790 million.

Looking to 2026, our focus remains on strengthening the foundation of our regional business, executing across our global pipeline and thoughtful capital deployment to support both near-term launches and the long-term growth drivers. With a strong balance sheet, we are well positioned to execute against these priorities.

And with that, I would now like to turn the call back over to the operator to open up lines for questions. Operator?

[Operator Instructions] Our first question comes from the line of Jonathan Chang of Leerink Partners.

First question, can you provide any color on how we should be thinking about revenues and expenses for 2026? And then second question on the global pipeline for zoci, can you remind us of the implications of the intracranial activity in patients with brain mets? And how does this impact the opportunity and positioning of the drug?

Thanks, Jonathan. It's Josh. I'll start with 2026, ask Yajing to make a comment, and then we'll hand it over to Rafael to talk about zoci. I think as we think about 2026, as we mentioned on the upfront comments, we see good growth opportunities for VYVGART. We're seeing good volume gains throughout the second half of the year. We expect that to continue in 2026.

We're pleased with how we're -- how we ended the year with ZEJULA. And while we're facing a generic market now for Lynparza, we expect to continue to hold our position and in some cases, hopefully grow. XACDURO should be a good driver for us this year. And of course, then we've got a couple of important launches coming.

COBENFY in the second quarter, we will begin our commercial launch and then TIVDAK later this year. So I think when you think about those things together, certainly, we're looking for good commercial performance and good growth on the top line for the year. For expenses, I think we're in good shape on SG&A, very modest investments required to support launches.

Obviously, we're going to put the field sales force in place to launch COBENFY, and that will drive some incremental costs. But I think otherwise, we're in good shape as it relates to synergies and efficiencies across our SG&A. R&D should be relatively in line with what we've seen in the last few years. Obviously, big focus and resource allocation to our global portfolio.

But as some of our late-phase opportunities start to -- in China start to come offline, we've got capacity there. So I think sort of flat to very modest growth in R&D. So this year, pretty straightforward thinking. Obviously, we've got some pushes and pulls as it relates to when things are approved and when we get them into the market and otherwise.

I think then as we think about '27 and on, we'll start to get the benefits of these launches like COBENFY and TIVDAK and some of the assets that Rafael talked about in his upfront comments. Yajing, I don't know if you want to add anything to that?

Maybe just to add a little bit more dynamics in 2026. I mean 2026 is a transition year. I think underlying demand growth, as Josh talked about, is very true. Also, we want to be mindful of other dynamics, moving pieces, including the IV -- the VYVGART IV price adjustment and maybe later on the rebate dynamics in the fourth quarter for VYVGART, the Hytrulo. So -- and then we are sort of like looking at the hospital budgeting purchasing behavior as well.

So this is part of the reason that we want -- we are probably not going to provide the full year guidance at this time, but those are the moving pieces. When we get more clarity, we can share more specifics later in the year.

Thanks, Yajing. Rafael, do you want to talk about zoci, please?

Yes, absolutely. So brain metastases, obviously, in this disease is a big problem. About 70% of patients develop brain metastases. And I think the speed with which patients' experience responses with zoci is well appreciated among investigators and it's actually one of the key properties of the molecule. So we've reported up to 80% response rates in patients with untreated metastases.

So there are 2 situations. If a patient comes in with brain metastases, oftentimes, they have to have brachytherapy or some local regional therapy, which delays systemic therapy, whereas if it's an uncomplicated untreated met, patients can go into zoci directly. And we see, again, pretty high activity in the brain.

The other is there are some drugs that may have activity, but then there is a high rate of relapse in the brain where the brain is a sanctuary site. So using zoci prevents recurrences in the brain, which is really important. So we've reported in RECIST criteria before, and we're planning to report now in the first half of the year using RANO criteria, which is a response assessment that is used in neuro-oncology is a much more stringent one where it's bidimensional and uses 50% instead of 30%. So it really characterizes the responses in the brain, and we look forward to presenting that in the first half of this year.

[Operator Instructions] Our next question comes from the line of Li Watsek from Cantor.

I guess my first question is more about sort of the U.S.-China development model that you alluded to in the opening. So I just wonder, can you elaborate a little bit more other than maybe sourcing assets from the region? I guess, how much clinical derisking or time line acceleration can you achieve by leveraging some of the resources in the region?

Thanks, Li. It's Josh. Rafael, why don't you talk a little bit about this point to Li's question?

Sure. So our model obviously has been speedy development in China based on pretty efficient development structure as well as regulatory and other functions in China, and that's led to the success of registrations local regionally. And now we're applying that speed, relationship with investigators and sites to add China to global trials or to be the sole site when we want go/no-go decisions with products.

So we now have all our global trials really, including China participation, and that really has allowed us to move with speed and quality. So, that will be also the case for Phase III studies. We expect that China will participate and enroll about 1/3 of the patients, at least that's our expectation, for instance, on our current pivotal trial in second-line with zoci.

So I think all in all, this efficiency that we have built over the course of the past 10 years in China is serving us well as we are now expanding our pipeline towards global assets. And we are seeing the fruits of that by, for instance, zoci moving within 2 years to Phase III from IND as an example.

Okay. And then my second question is on zoci. And obviously, you guys are going to present data in neuroendocrine. So just wanted to get a little color in terms of expectations, what sort of data you guys going to present, what's good data? And in terms of regulatory pathways, can you maybe just conduct a single-arm study to get approval, maybe expand a little on that as well?

Yes. NEC is a complex group of diseases and first-line is treated with chemotherapy. There is the gastroenteropancreatic subgroup and then other neuroendocrine carcinomas that exclude lung because lung tends to have a different prognosis. And when you look across the board in second-line, chemotherapy really has dismal activity in terms of response rate and PFS.

So our study has started in second-line and is looking at GEP, neuroendocrine carcinoma, non-GEP neuroendocrine carcinomas or extrapulmonary. And then there's a group that is looking at neuroendocrine tumors, which are less aggressive. So an initial data set will be presented in second-line. We are pleased with what we're seeing thus far.

We will have, I think, sufficient patients to make an assessment in terms of the response. The durability may be limited, but we think that there's enough information there to present in the first half of this year. And there may be about 60-plus patients that will be included in this analysis.

Like you said, we are sort of ourselves seeking a regulatory path for NEC in second-line. And this is actually the subject of regulatory discussions that we're initiating now in terms of whether a single-arm would be sufficient or whether a randomized trial would be required. It's unclear what the control arm would be in the second option, but it's still a possibility.

So those discussions are beginning now as we uncover the data. And we're also thinking about what to do in frontline as well. As you know, some T-cell engagers are getting into this space, and we would probably consider something in first-line in combination, but that is standalone in the future. We want to sort of see what we can do to help patients in second-line where options are just scarce.

[Operator Instructions] Our next question comes from Michael Yee of UBS.

We have 2 questions. First, just wanted to understand, given all the thoughts and comments you have talked about regarding steady revenue growth and pushes and pulls as it relates to financials this year. Does the company believe that they could achieve breakeven or profitability by the end of the year? Do you think that's something that is achievable given what we had expectations for last year?

And then the second question is, obviously, zoci and DLL3 are critically important. What is the expectation for completion of enrollment and the timing of reading out the primary endpoint on response rate in order to file?

Great. Thanks, Mike. How about Yajing, you talk about the cash flow, and then we'll hand it over to Rafael.

Yes. So our corporate profitability, I mean the cash flow breakeven is definitely continue to be a very clear objective for Zai Lab. We will manage the business accordingly. Our business right now is commercially profitable today. That provides a stable foundation for the company. At the corporate level, I think the timing of the profitability is really driven by the 2 primary factors.

One is the top line growth, the rate of the growth and the other one is the level of investment that we choose to make in the high-value global programs. So I think at this time, we remain efficient, disciplined in our spending. We do expect the corporate profitability to emerge. I won't be able to share the guidance for 2026, where we're going to be, but that's definitely the goal for us to continue to drive.

And also, I want to mention that we are focused on progressing towards the goal, but also focus on continue to expand our global pipeline. So we do want to preserve the flexibility to invest when we see the strong value.

Thanks, Yajing. Go ahead, Rafael.

Thanks, Josh, and thanks, Michael, for the question. So the study started in December. It's a global trial. It started in the U.S. first, and China is coming online imminently as Europe will and North America and other countries in Asia as well, Asia Pacific. Our plan is to have about 75% of the patients enrolled by the end of the year. We have to have everybody enrolled before we do the interim analysis for response.

And we think that we will finish enrollment at the end of the first quarter of next year and do the analysis and subsequently file. So we're hoping for an approval in 2028. And the study, as you know, is a combination of second-line as well as post-tarlatamab patients, and we're balancing the accrual of each one of those subgroups in the study. So 2027 end of accrual and filing and 2028, hopefully, accelerated approval.

[Operator Instructions] Our next question comes from Yigal Nochomovitz from Citigroup.

This is Caroline on for Yigal. Could you talk about your strategy to grow VYVGART, specifically how to increase cycles per patient?

Thanks, Caroline. VYVGART, we are focused on moving the cycles per patient to the minimum of 3, which is what's embedded in the national myasthenia gravis guidelines in China that were updated in July of last year. Of course, in the clinical data, getting out to 5 or more over a 12-month period demonstrates really significant benefits.

But our focus right now is on 3. We're making reasonable progress, and we made reasonable progress in 2025. We -- if you just look at average cycles closing out the year in 2025, we improved versus 2024 by more than 50%. So we're on the way, but we're not yet on average at 3. So I think we've got a couple of key initiatives to help drive that focus.

I mean the first is to leverage the guidelines, and that's through our medical professionals and our sales professionals. And I think that's really important, and we're seeing the benefit of that. We know guidelines make a big difference in China. They make a big difference in most markets.

And this has been just -- it's been a build the market approach with VYVGART. So I think we're making good progress there and certainly have the clinical data and now the national guidelines to support that. We are also working on affordability initiatives, while NRDL listing is clear for VYVGART, patients do pay co-pay and pay out of pocket. So we've got in place an online support program that helps patients navigate things like appointments and resources and otherwise to help on the logistics and the co-pay.

We have a targeted co-pay assistance program that helps, and it really is focused on the national guidelines and focused on ensuring we can get patients out to 3 cycles without -- with as minimum economic burden as possible. We are seeing the benefits of those focus points. And I do expect during the year that we'll continue to see good expansion in duration of therapy and get the majority of our -- certainly patients who are in the acute phase of the disease, the majority of those patients, I think this year are going to get to 3 and more cycles.

We also, this year, though, are expanding, really focusing on patients who are in the non-acute phase. They, of course, also benefit from long-term therapy and getting 3 or more cycles, but that's probably going to be a little bit longer climb to get there. So I think as we look at the data throughout the year, we've got great patient expansion opportunities by leveraging our strength in acute patients, moving to non-acute. Those acute patients, I think the initiatives are underway and having results that will get us out to those on average, 3 or more cycles.

And then the non-acute patients will start to pick up and add certainly good volume growth throughout the year. So I think that's -- we're quite excited about the opportunities with VYVGART this year, the opportunities to get to many more patients and for them to get the full benefits of the drug through persistence and duration.

[Operator Instructions] Our next question comes from Anupam Rama from JPMorgan.

On the global second, third-line DLL3 study, which is enrolling patients, you kind of talked about this, but can you remind us what the ultimate regional breakdown of sites is going to be given this is a global effort? And is there a breakdown of patients that need to be ex China, for U.S. and more global approvals?

Thanks, Anupam. I'll start, but Rafael can talk about the enrollment and how we're thinking about that. But I think first, if we look at small cell lung cancer and focus first on the U.S., I think in the second-line and later settings, we see about 15,000 patients available. First-line is probably 25,000.

If we sort of look at that on a major market, Western market sort of look, that's probably 100,000 patients total in small cell lung cancer that are eligible for treatment in first or later-line settings. So it's a big opportunity. And of course, when we sort of size that and you guys have done this as well, it's approaching $10 billion probably in terms of total opportunity, and we think zoci can fit really well in that space.

I think when we look at neuroendocrine, we're probably in the U.S., it's somewhere in that [ 5,000 to 10,000 ] sort of range, maybe similarly in other markets. We have more to learn here, I think, as we continue to work through the trial. But it's not insignificant, I guess, is what I would say. Rafael, maybe you can talk about enrollment.

Sure. The distribution, I think, of the countries and patients coming from China and other regions is really designed to make sure that we have enough patients post-tarlatamab that reflect real-world usage in the United States. That may be up to 30% of patients or so coming from the United States. About 30% of patients will come from China. This is a reasonable number.

I don't think it's ever been questioned that a percent of patients of that magnitude can jeopardize approval in a positive study. The rest of the patients will come from Europe. in terms of post-tarlatamab patients, obviously, we count on Japan as well. We count on the U.K., some countries where a lot of studies have been done with tarlatamab. And obviously, the United States where tarlatamab is gaining market share. So I think that's probably the distribution that you should expect on the study.

[Operator Instructions] Our next question comes from the line of Cui Cui of Jefferies.

So I have 3 questions for the management team. The first one is as a follow-up to the JPMorgan question. So could you please share some more details on zoci? So because for this time, we are also very excited to see the clinical trial design for the first-line small cell lung cancer, including the [ combo regimen ] and also for the strategy of NEC. Will it also be advanced to the first-line treatment in the future?

And my second question is regarding the KarXT. So what should we expect from KarXT in 2026 and 2027? And how will you build your commercialization team going onward? And my last question is also -- because for the past 1 year, we also saw some deals regarding the autoimmune bispecific. So can we talk about some [Technical Difficulty]...

Thanks, Cui Cui. Rafael, why don't you start and then I'll come back in with the next 2.

Yes. Maybe I'll focus on the first-line opportunity. I mean just the overarching sort of desire for zoci to be the centerpiece ADC for different lines of therapies and combinations. And that is because of its low incidence of grade 3 toxicity, activity in the brain and high response rate really and durability. So on first-line, we've seen in the first study, the Phase I/II study 001, we've been enrolling patients in first-line for some time.

We started with a doublet with atezolizumab and then a triplet adding carboplatin. And we hope to present mature data towards the second half of this year. We have -- just to give you a sense, we've treated about 60 patients or so, and we continue to follow these patients. I think once we have an idea of the activity, we will then make a decision of what the design of the frontline study should be.

Our desire is for it to be one that spares chemotherapy. But also, we have our eyes on how the frontline set of landscape is going to change with the entrance of IMDELLTRA potentially in frontline and other TCEs in frontline. And if we continue to see this high level of activity, we will be testing with other agents as well to see whether this combination offers even more activity for patients in first-line.

So I think stay tuned to the data, but our final design will be when we actually see the entire durability and activity in first-line with the data that we've been able to elicit from the Phase I/II study.

Thanks, Rafael. I'll talk about KarXT for a minute. Cui Cui, we're really excited about this opportunity, was approved without only -- product approved without a black box in this setting, first new mechanism in more than 70 years. So there's a really exciting introduction here. We'll launch the product commercially in the second quarter. So we're going through all the process now of getting product in and labeled and inspected and otherwise.

So second quarter, we'll be out with the product in the market. Of course, we don't have NRDL listing this year, just given the timing, but we do expect that in 2027. So this year's focus will be on getting physicians' experience using the drug, getting a commercial team up and running. I think prescribing here is really concentrated in China. So while there were, I think, in 2024, over 2 billion days of atypical antipsychotic prescription use.

We -- when we look at how that's prescribed and how it's managed, it's probably 800 institutions, give or take, that make up a vast majority of that volume, at least from a sort of initial prescribing and monitoring perspective. So we'll focus on those institutions at launch. That generates something in the range of 100 plus or minus sort of commercial team.

So very focused this year, and we'll expand as necessary, but we do see this as a relatively efficient big opportunity. And again, for this year, I think in terms of financials, I wouldn't expect significant sales. Again, this is going to be a non-NRDL product for patients who otherwise aren't going to have things like commercial insurance or other access to payment mechanisms.

But for 2027, I think if you look at NRDL and how to think about this, if you look at the branded olanzapine, for example, it's in the range, I think, of about $5 a day on NRDL, paliperidone, similar. So there's, I think, a pretty straightforward reference here. Final comment I'll make on KarXT is I do think this is a relatively straightforward opportunity. Atypical antipsychotics are monotherapy, is like 90-plus percent of the standard of care today.

This is a drug that brings great additional benefits in terms of safety and negative symptoms, and we'll be educating physicians on those points this year in preparation for what I think will be an exciting unlock in terms of financial value beginning in 2027.

On business development, we've got Shan on the phone and Rafael, we're spending a lot of time around the world looking at opportunities. But certainly, as you mentioned, I think if you look at the innovation happening in China, particularly in areas that we're interested in oncology and immunology modalities like ADCs and T-cell engagers, there's a lot of good opportunities to pick from, and you should expect us to continue to do that.

We announced recently a deal on the MUC17, which I mentioned earlier. And I think that's kind of our typical kind of deals you should think about from us would be late preclinical targets that are -- have some biological precedence and where we can move fast, leverage the clinical development expertise that Rafael talked about earlier and have a chance to introduce first and best-in-class products in oncology and immunology to the world, and we're really excited about that.

We will now take the last question from Linhai Zhao from Goldman Sachs.

My question is around zoci. The first one is regarding the Phase III trial for the second-line small cell lung cancer. Understood that the current clinical protocol does not take tarlatamab as a control arm, but it was allowed to be available both as a prior treatment option and the post-progression treatment options. So on that end, I want to collect your thoughts on the potential risk of having an elongated OS for the control arm given that you're allowing tarlatamab both before and after the second-line treatment? That's the first question.

And the second question is about first-line. Understood that you're going to share the Phase I trial data for both doublet and triplet in the second half. And just want to collect your detailed plans about when do you want to make a decision on what to choose from doublet versus triplet in first-line?

Go ahead, Rafael.

Thanks for the question. Maybe let's start from the second one. In terms of first-line, we would like to start the first-line study, Phase III study this year. So in spite of the fact that it may take some time for us to see durability, we may just use a landmark in terms of patients without progression at a given number of months and then make a decision. And again, our strong desire is to spare chemotherapy because that's really what leads to most of the morbidity.

And most patients can only get about 4 cycles of carbo/etoposide and a checkpoint inhibitor because they progress, actually, the majority of them, some of them are intolerant. So if we're able to give more therapy with ZL-1310 plus a checkpoint inhibitor with the kinds of responses that we see in second-line, we should be better in first-line, and we think we stand a good chance of actually having a positive trial. So that's for first-line. I expect that we will launch a study by the end of the year.

And then with regards to your question about tarlatamab, I mean, the patients will be post-tarlatamab in both arms, but they can only come in if they have progressed on tarlatamab. So they -- some may have responded and progressed, some may have been de novo resistant patients, but they will be equally in each arm and the study is stratified for post-tarlatamab versus no tarlatamab.

So in that regard, I think each arm will perform equally. With regards to post-progression therapies, the same things apply. We obviously cannot control post-progression therapy. Some patients may get tarlatamab, some may get lurbi, some may get something else. But they should, because it's a sufficiently large study, get those therapies equally in each arm. So whatever advantage tarlatamab may afford in terms of survival, it should be the same in each one of the arms.

So we're not really concerned about bias here, particularly in the post-tarlatamab patients that entered the study because they're stratified, and again, they can only come in if they have progressed. So I hope this answers your question.

Just to quickly clarify that you're saying that you're not really concerned about bias between the 2 arms. Can you share a bit more because I would say if the patients use zoci in the second-line, would the physicians still wish to use tarlatamab after zoci?

The physician may use tarlatamab after zoci, but so could they after topotecan, for instance, or lurbinectedin. So I guess what I was saying is that tarlatamab is a post-progression therapy, which, again, in survival studies, in any study, we cannot control, but they should be used equally frequently in both arms, because once they progress, it's up to the investigator to decide what therapy to use.

We have come to the end of the question-and-answer session. With that, I would like to hand the call back to Samantha Du for closing remarks.

Thank you, operator. Thanks, everyone, for taking the time to join us on the call. We appreciate all your support and look forward to updating you again after the first quarter of 2026. Operator, you may now disconnect this call.

Thank you. That concludes today's conference call. Thank you all for participating. You may now disconnect your lines.

All right. Okay. Great. Thank you. I'm Yigal Nochomovitz, biotech analyst here at Citi in New York. This is the second day of our Virtual Oncology Summit. It's my pleasure to have with me from Zai Lab, Rafael Amado, who is the Head of Research and Development at the company. So welcome, Rafael. Thank you for doing this. For those listening, if you have questions for the company, just e-mail me and then I can relay those over to Rafael.

So maybe just to start out, if you could kind of just give a bit of a high-level overview of the Zai Lab and how you're transitioning from a local China business to more of a global enterprise as you build out your pipeline.

Yes. Thank you for the opportunity to chat with you. The company was founded in 2014 to bring medicines to patients in China, and that engine continues and is commercially profitable. But more and more, we are focused on bringing in global products, and we have our own engine to discover either protein therapeutics, translational medicine and everything that's required to do drug discovery as well as business development.

And in the recent past, we've actually moved the global pipeline together with the local regional very effectively. Our lead product is Zoci, which is a DLL3 ADC, which we can talk about, is in Phase III right now. And we've had INDs that have moved really fast to the clinic like ZL-1503 in atopic dermatitis; LRRC15, which is an ADC, which is in Phase I; immunocytokines, PD-1, IL-12; T-cell engagers.

And so what we're doing is take advantage a bit of our global capabilities that we have had to build, but on the back of a very efficient engine in China that was delivering products for the local regional approvals, and they are now a strong component of a way for us to screen these global products. And also if we see that there's activity for China to participate and gives us access to patients.

The local regional business continues and VYVGART is a long-term opportunity with multiple indications. We're launching COBENFY this year, TIVDAK as well, and we are filing TTF or Tumor Treating Fields in pancreatic cancer. So it is really a dual engine. The last one has been built more recently, but it's progressing quite fast. And much of it is at the expense of having formed a really strong team and also having the China capabilities for access to patients.

Okay. Well, let's start with the lead asset, Zoci, the DLL3 ADC, which is getting a lot of attention, as you know. So maybe if you could just kind of characterize the activity that you've seen with this asset so far. What is -- what are the areas that you'd like to comment on in terms of where it's got the most potential, in small cell lung cancer and perhaps in some other settings as well where DLL3 is widely expressed.

Yes. So DLL3 antibody drug conjugate utilizes a cleavable linker. And of course, we started in the tumor -- in the neuroendocrine tumor where DLL3 is most expressed, which is small cell lung cancer. And we have a very ambitious program there. We started our Phase III study, and that was on the heels of a very large Phase I/II study that now has over 150 patients that showed us that the response rate at the dose that we chose for development is in the order of 68% with durability across all the doses and including doses above 2 milligrams per kilogram of over 6 months. So this was in multiple lines of therapy, second, third line, et cetera.

We then -- we did a lot of careful dose finding under Project Optimus, comparing various doses, and we landed on 1.6 because it was the best balance of efficacy and safety. So it's probably one of the safest ADCs. There's about 13% grade 3 toxicity. There's no drug discontinuation.

And then some of the properties to highlight is that it's incredibly active in the brain. We are looking at this very carefully, but patients tend to respond after the first or second dose at an 80% rate, which is a big problem, brain metastasis in small cell lung cancer. So in addition to that, because of this, we want to move the molecule to first-line in neuroendocrine carcinoma, where we're seeing encouraging data as well and also to combine it with other products like T-cell engagers in addition to checkpoint inhibitors.

So those are some of the properties of this product, and we're already enrolling in second line after platinum and after tarlatamab, and we plan to start the frontline studies and the NEC study this year.

Okay. So the first study would be for an accelerated approval. Is that in the second line? Is that how you're thinking about it?

The way it's designed is it's an overall survival study with an interim analysis for response which could lead to an accelerated approval. So all patients need to be accrued before we do that analysis, and we think that they will be accrued by March or so, about a year from now. And then we will do the response comparison. It's not just response, it's also durability. And then if the accelerated approval occurs, then it will continue on for overall survival for confirmation.

So the interim analysis is positive. We'll file in 2027 with the PDUFA time line somewhere in 2028.

This would be -- you said you got about a 68% overall response rate in the data you've seen so far. So this would be an accelerated approval based on an ORR response rate. Is that how you're thinking about it?

That's correct. So it would be based on an ORR response rate compared to the standards that are available worldwide. This is a global study, just like our initial Phase I study was a global study. And we will include chemotherapy amrubicin because that's something that's used in Japan, lurbinectedin and topotecan.

And we're including, again, patients that have failed tarlatamab. So that's why we're not including tarlatamab in the control arm. So it's a comparison to second line and the patients -- I'm sorry, to chemotherapy and the patients could be second line or may have received tarlatamab as well.

What would you be expecting for the control arm, blending all the topotecan and lurbinectedin and amrubicin, what would be expected there from response...

So response rate in the mid-20s or so.

Okay. So it sounds like you have a pretty good delta already built in if you reproduce what you've seen in the dose escalation part.

Yes. As a matter of fact, we wouldn't need that many patients. It's just that we have to have all the patients accrued. Otherwise, there will be no [indiscernible] after the approval to continue the study. And also, we need to build a sufficiently large database to be able to file. So the study is, as you allude to, overpower.

Okay. And then assuming you get the accelerated approval, then you would -- then it would be fully approved on OS?

Yes, the study will continue blinded and we will follow patients for overall survival. Of course, we don't control post-progression therapy. So patients that have not received tarlatamab would receive tarlatamab or lurbinectedin or any other therapy. But we think that it would be distributed randomly. The only thing we're doing is stratifying for tarlatamab or no tarlatamab in the patients that are enrolled so that we have an even number in both arms.

Okay. And are there other considerations, for example, to have another endpoint that would look at just the brain mets because you mentioned that the response there was also very, very high. Is that something that you would -- has that been built into the study?

Yes. It's been built into the study. It's not a specific endpoint because the response rate in the brain is difficult to categorize as a regulatory endpoint. But I must say that it's something that investigators really have -- really capitalized on because unlike other studies, we decided to enroll patients that have brain metastases that were untreated because a lot of these patients present with very bulky disease and they progress very fast.

So, say, if they have to stop for brachytherapy or some other -- Gamma Knife or something else, their systemic disease would just move quite fast and the patient would be debilitated to receive chemotherapy. So we actually have higher response rates in patients that have untreated brain mets. Now we will look at that in the statistical analysis plan, and we will report on that. And there is a lot of interest in this, but it won't be an "approvable" endpoint. The endpoint will be overall response by RECIST.

Okay. And then you mentioned -- so then the frontline study, how would that work? You're going to go up against like tarlatamab? Or how would you do that? What would be the plan?

Yes. So tarlatamab has some studies in first line in combination with chemotherapy, also study in so-called maintenance. There are some examples of ADCs that combined with checkpoint inhibitors have been able to supplant chemotherapy. And we hope that this is one of those examples.

So to that end, in the Phase I/II study that we started and we've added several cohorts. One of the cohorts that we added was first-line patients treated with 1310 plus atezolizumab or that doublet plus carboplatin. And then we yet need to analyze that data for durability and then make a decision as to what the regimen will be.

The control will be very obvious. It will be the current standard, which is platinum etoposide and a checkpoint inhibitor. We don't think that by the time that we start this field -- this study, the field would have changed so dramatically. So at the moment, our goal is to see enough durability and high enough response rate to be able to supplant chemotherapy in the front line.

Okay. So that you said you would combine with like -- did you say atezolizumab, a PD-1?

A PD-1. It will probably be the durvalumab or atezolizumab. They are both used at the preference of the investigators.

Okay. And when could you foresee that once -- that first-line study starting?

So thankfully, we don't have good durability yet because patients are staying on study. So that data is going to come sometime -- mature data is going to come sometime in the second half of the year. So we plan to present other data along the year, but this will come later on. But we obviously will know what the data tells us in the beginning of the second half and then make a decision then as to whether to proceed.

There are other possibilities, which is combinations with T-cell engagers and so on, but there is insufficient data to really be able to launch a Phase III study at the moment. So if we do more than one, our first one would be chemo-sparing starting in the second half of the year.

Okay. And these studies, the second-line study as well as the contemplated first-line trial, these are global studies, right? Where are they enrolling, in which geographies?

Yes. So we decided to do global studies even from the inception because we think that, that represents real-world data. I mean we've seen other products do trials in China. And we know by experience that there are differences between regions. So the study will take place in Japan, in Korea, in China, in Europe and obviously, in the United States, in Turkey and some other countries. So it will be a truly global trial.

Okay. That makes sense. Okay. And in terms of the competitive landscape because there are a few other DLL3 ADCs out there, as you know, and there are some that are not ADCs, but they're different like T-cell engagers. How do you see your asset in this competitive landscape? You mentioned you have a good dose. You picked the 1.6, which we felt was a good mix of balance, safety and tolerability with efficacy.

Yes, exactly. I mean we've seen other payload linkers that are similar to this one that we are employing. And the doses are slightly higher. Of course, it has to do also with the affinity of the antibody, whether it is internalized or not, depending on the target, the half-life, et cetera. But 1.6 is a relatively modest dose as opposed to 2, 2.4, et cetera. So as a consequence, we don't have a lot of myelosuppression. We don't have grade 3 or above ILD and the combinability should be easier.

I don't see these products competing with T-cell engagers. T-cell engagers tend to require higher target expression, and the ADCs tend to work really well in bulky disease in spite of low expression because the payload and the linker gets cleaved in the tumor microenvironment. So even cells that are bystander can be killed by the payload, which in our case, is a TOPO1 inhibitor. Doing that will expose immunogenic death and new epitopes that having been attracted the T cells to the tumor bed, they could potentially react to. So we view this as orthogonal mechanisms of action.

With regards to other ADCs, there are some that are more advanced, perhaps the [ IL-1 ] is the most advanced one, but we have at least a year ahead of them. And so far, their data comes from China is -- the follow-up is slightly lower. And we'll just have to see how all these drugs play in the treatment of small cell lung cancer, a lot of it is going to have to do with how they're developed, how they're combined and how they're positioned, what line of therapy. And so we are very focused on our product and moving it as fast as possible.

Okay. So let me see. So there are a few other assets that are worth discussing. I'm not sure which one you want to mention next, but sticking with the ADCs, you have the LRRC15 ADC. This is the 6201. What -- tell us more about that target and what -- where you would go with that molecule?

Yes. So this is a Leucine-containing molecule that is expressed in tumors that have mesenchymal origin, namely sarcomas, some neuroblastomas, some melanomas and it's highly expressed in osteosarcoma as well. But it so happened that it's also expressed in fibrous tumors that contain fibroblasts. And we have preclinical data with several models that have no expression of the target in the tumor cells, but it's expressed in the so-called CAFs or cancer-associated fibroblast. And because the payload and linker get cleaved -- that tumor microenvironment, there can be influx and efflux of the payload into cancer cells that don't have the target.

So in PDX models, we see activity not only in tumor -- marker-positive tumor, but also in marker-negative tumors. And of those breast cancer, pancreatic cancer, head and neck, lung cancer, those are the ones that tend to have the highest expression in fibroblast. So our study is dividing the cohorts into patients that are tumor negative but positive and also a group of sarcoma patients.

So I think it's a pretty exciting drug. I mean this target has already been used. There was another company that developed -- that discovered an ADC and there were -- there was some activity, but it was just too toxic and the development of it was abandoned. So there is a chance that it may work on doxorubicin failures in sarcoma and ifosfamide. And if it works in tumor negative, I think it will prove a very sort of pioneering event in the field of ADC, which is that you don't actually need to have the target in the tumor for these drugs to actually have activity.

Okay. And that one, I understand that just started or is starting this quarter.

It just started. Yes, we got in January, the May Proceed letter from FDA, and we are opening sites and recruiting patients. And we filed in China, the CTA. And once we get sites open there, we obviously limit the number of patients, but we start getting accrual relatively fast. I must say there's been a great interest in the sarcoma community, both from Europe and the United States on this asset. So I'm looking forward to seeing the results.

Okay. And then the other oncology assets that are coming up that are going to enter the clinic this year are the ZL-1222, this is the PD-1, IL-12 and then the ZL-1311, which is the MUC17, CD3. What can you -- which one of those would you like to highlight as you're most excited about?

Yes. So in oncology, we're working on ADCs and innovation of ADCs. So we will proceed with dual payloads, biparatopics and some other modalities. We also want to enrich for tumor -- for T-cell engagers as well. And so we started with MUC17. That's a pretty exciting molecule, at least preclinically. It targets two epitopes. It also has silencing of -- not complete silencing, but attenuation of the CD3 moiety so that perhaps CRS is not as pronounced as it can be with the typical bispecifics. So this is for gastric and gastroesophageal junction and other GI tumors. So that will be an IND this year.

And then we have this immunocytokines like PD-1, IL-12. This has been a long time coming being able to give IL-12. IL-12 is a very potent CD8 cell stimulant. And we have data that PD-1-resistant tumors actually can recover sensitivity when exposed to IL-12.

So what we did is we have dual chain PD-1 in the N-terminals and then we constructed IL-12 [ mutant, ] which is obviously alter the amino acids to signal in an attenuated way. And so it doesn't signal in the periphery and doesn't cause all the toxicity of IL-12. It only signals in the tumor microenvironment in CD8 cells. And we have done some elegant studies where tumors regress, but if we actually deplete a CD8, the tumors grow and it seems to be mediated by CD8 as well as NK cells.

So it will be a product that we'll probably test in PD-1 failures. And then from there, it could move into other tumors where checkpoint inhibitors are the mainstay of therapy and see whether they're better, just like the whole field of PD-1, VEGF.

Okay. And this one has -- for both 1222 and 1311, you decided to do the Fc silencing. Is that right?

Yes. So this is -- we mutated Fc to increase the half-life in this product, yes.

Okay. And I'm not familiar with other assets that have these combos like the PD-1, IL-12 and the MUC17, CD3. Are these unique as far as you know, in the landscape?

At least they have innovative properties. I mean the other changes that are being done to bispecifics is introducing costimulatory molecules. They may stimulate CD8s with more potency and perhaps derive a more juvenile kind of population because T-cell exhaustion is one of the mechanisms of resistance to bispecifics. We perhaps may get into this area with either 4-1BB or CD28.

And there is a lot of innovation in this space. And we can access companies, not just in the U.S., but also in China, where there's a lot of know-how -- technical know-how in both small molecules and protein sciences. So the same thing with ADCs where now dual payloads are coming into play biparatopics, more than one epitope and then payloads that are small molecules that are not even chemotherapy that can be targeted to specific tumors. So these are some of the innovation in this field that we would like to be a part of and at least be able to test them and see whether we have go, no-go decisions in patients potentially in Asia where we have much more access than in the U.S.

I just remembered, though, there is another PD-1, IL-12 from Innovent, right? How is yours different? Or is it different?

Yes, it's a larger molecule. As far as we have been able to tell, the IL-12 signaling is really, really attenuated. There's hardly any IL-12 stimulation. Time will tell in terms of how it behaves in the clinic. But dialing this requires very careful mutation of amino acids because you don't want it to be too promiscuous, but at the same time, it has to simulate the CD8 cell. So our impression is that the IL-12 simulation of our product is more adequate than the Innovent one, but we will have to prove this in the clinic.

Okay. And then moving away from oncology, you have the IL-13, IL-31 receptor bispecific for atopic derm. And I think you're going to have some data in the healthy volunteers coming up this year. So what do you need to see on that readout to move forward and prepare for a Phase II?

Yes. We're very excited about this product. In preclinical nonhuman primates, we see inhibition of pruritus immediately and it tracks with a single dose, it tracks with the half-life. The same with phospho STAT, it gets abrogated for the duration of the PK of the product.

So we are testing now the same thing in the PK and PD in healthy volunteers in single doses. We launched that IND last year, and we've already accrued two of the cohorts of the healthy volunteers. And then we're moving into multiple ascending doses in patients with atopic dermatitis.

In terms of what we need to see is abrogation of scratching, which may lead to a faster healing of the lesions mediated by IL-13 because of mechanical damage of the skin, and also a half-life that allows extended dosing by patients. And of course, if we can get lack of conjunctivitis or some of the side effects that are seen with Dupi, that would obviously be a plus.

We continue to generate preclinical data in other Th2-mediated diseases like asthma, rhinitis, prurigo nodularis and eosinophilic esophagitis, et cetera. We will be publishing those data, but we're starting in atopic derm and the patient cohort, the multiple ascending dose, we should have actually efficacy data in addition to PK/PD in the second half of this year.

Okay. And then just, I guess, more generally, as you think about the global development pipeline across oncology, the assets we talked about and then the autoimmune, what is Zai Lab's plans as far as development and maybe even commercialization? You're going to do this as an independent organization? Or would you maybe think that you need partners in other territories to help market the products? Or how do you think about that?

Yes, that's an excellent question. Obviously, for Zoci, we want to have a very broad development plan, and we are pursuing this, as I described before. Obviously, it will depend on what kind of activity we see with the other products. And we will file at least one IND every year and perhaps bring one product from business development.

I think in oncology, we can prosecute these programs. In non-oncology, it may be a little bit harder for us to do it alone. And we will be open to collaborate with companies that have been in this space and have done multiple indications in the past. But we think that before doing that, even though we do have conversations, we ought to characterize the product better, not only just in terms of getting INDs, but also getting subcutaneous formulations that are going to allow for self-injection and as well as good PK, good PD and efficacy.

So I think we will probably take this to Phase IIb, 1503 and then take it from there. But yes, we see ourselves as strong R&D engine that has a commercial branch in China. And eventually, we'll launch products in the United States and we will be a global company with multiple assets, mostly in oncology and immunology.

So if you launch -- I mean, we're talking far in the future here, I guess, maybe not so far in the future. But if you launch DLL3 and you launch the PD-1, IL-2 (sic) [ IL-12 ] and the MUC17, if those all launch in the United States, get the atopic derm product to the market, would you still -- you'd have them in Europe and the United States. Would they be in China, too, or you wouldn't launch them in China, or you don't know. It depends?

I mean it would be logical to retain rights in China, but I think every product will be treated on its own merits and depending on the resources that we have. I mean, they are finite, both in terms of people and personnel and our ability to fund all these programs. But at the moment, every product that we are developing, we have a development plan for China and now Japan as well. So there's a group in China that is taking care of Asia Pacific. But if a product gets out-licensed, then those would be discussions to be had, whether this is global rights or whether anything gets carved out. I mean I think that will be done on a one-to-one basis.

You mentioned -- I just wanted to ask one specific question. On Optune, you said you're going to be filing for the Tumor Treating Fields in pancreatic, yes?

That's correct. Yes. I mean the file is ready. We obtain Innovative Medical Device, which allows us to have a 9-month review. And as you know, Novocure obtained FDA approval. So we have the dossier ready and we expect approval to be happening this year.

And then -- but you still are selling it for GBM, right?

Yes. Yes, we are selling it for GBM. That's correct.

And -- but as far as I understand, for non-small cell lung cancer, you decided to not pursue that, correct? Is that right?

Yes, that's correct. I think for non-small cell lung cancer, there was insufficient interest from the technical perspective, business perspective and opportunity costs that we didn't launch LUNAR-2. Lung cancer is a difficult -- more difficult indication and pancreatic cancer is a stronger unmet medical need. We also have constraints commercially and we -- and development-wise. So we decided to wait for PANOVA and likely, it was a positive trial. So we're pretty excited about this.

We didn't talk about an important asset with in kidney disease. So let's -- in the last few minutes, few minutes, I guess, pove, povetacicept. So that's an important product. Can you briefly just describe the market for IgAN there in China? And how could that asset be sold in China?

Yes. So povetacicept is a BAFF-APRIL targeting agent. So it essentially inhibits the secretion of antibodies including IgA. The data -- the Phase II data is actually quite impressive. The market is pretty large. It's over 3 million patients with IgAN. They get treated normally with blood pressure medication like renin-angiotensin-aldosterone system sort of inhibitors, diuretics. And the problem is when they become nephrotic and eventually 20% to 30 or so patients with time develop a decrease in renal function to the point that they can end up in dialysis.

So it is an important medical problem. And our partner has moved pretty fast to try to get approval based on an interim analysis, and we are having discussions with CDE to do likewise and then continue to follow the patients for a longer time for a full approval. So the endpoints are proteinuria and maintenance of renal function. And those discussions are taking place now with our partner, Vertex and FDA and us and CDE.

Okay. Well, thanks, Rafael. Appreciate it. A lot of interesting assets, a lot of novel biology, and we're looking forward to seeing how it all shakes out. So thank you.

Thank you so much, Yigal.

Appreciate it.

Take care.

All right. Let's go ahead and get started. Welcome, everyone, to the 44th Annual J.P. Morgan Healthcare Conference. My name is Anupam Rama. I am one of the senior biotech analysts here at JPMorgan. I'm joined by my Squad, [ Rati Pinge, Joey Zhao ] and Priyanka Grover. Our next presenting company is Zai Lab and presenting on behalf of the company is COO, Josh Smiley.

Thanks, Anupam, and hello, everybody. Our Founder and CEO, Samantha Du, had some unexpected travel challenges. I know she'd like to be here, but she sends her regards, and I know she'll be following along online. We've all been here now for a couple of days. And one of the questions I've been getting from investors for Zai is what's more important, the China business or the global portfolio. And our answer is it's both, and it's by design.

We were founded 11 years ago with the idea of having a dual engine, a commercial business and a commercial opportunity in China where we could be a partner for global biotechs who otherwise didn't have capabilities in China and then a global portfolio engine to focus on our own innovation and to increasingly expose China innovation to the globe. So we're at an important point in the company where the commercial engine by design was moving faster.

We now have 8 products approved in China and headed towards somewhere around $460 million in sales. And that business is profitable. It's growing. It provides a financial foundation for the company. And we're at a really important inflection point for the global pipeline, where we now have our first global Phase III trial up and running. This is for our DLL3 focused ADC, a potential first and best-in-class approach for small cell lung cancer.

We've started a Phase III study that's got an opportunity for an accelerated approval as early as 2028 in the U.S. So we're really excited about that part of our business. It leverages the skill set and capabilities that we've developed and built in China over the last 11 years. And I think what's something that's unique about our model is the efficiency that we can gain from the team and the expertise that we have in China.

That's both for the opportunities we have to develop the drugs from commercial partners for China, but also increasingly to point those capabilities at global innovation. When you couple all of that with our strong balance sheet, I think we're in a really good position now to be able to invest in the portfolio in the pipeline and take advantage of the opportunities that we see either from our own internal discovery efforts or increasingly from business development and oftentimes from partners that we have just somewhere around the road or down the road in China.

If we think about our R&D strategy, it's really focused on a couple of things. We try to balance focus, speed and risk. And we're -- this is now for the global part of our business. We're focused in 2 areas: immunology and oncology with an emphasis then on advanced modalities like ADCs, bispecifics and T-cell engagers. Of course, in this part of the business, we're leveraging the 11 years of experience we have in partnering with global [ NMNCs ] among some of the best and most exciting immunology and oncology drugs in the world.

We're able to leverage our China capabilities on a global basis to drive faster time lines. I think we've seen that with our DLL3 ADC, where we've been able to move very quickly from preclinical to a Phase III study, taking advantage of the capabilities and expertise that we have in China. And I think if you think about the 11 years' experience we have in most of the trials and work that we do in China, we're working as part of a global Phase III program with some of the best drug developers and companies in the world.

We're able to take that experience and apply it to our own innovation or to the partnered innovation that we're bringing forward now, couple that experience with the team that we have today that prior to coming to Zai has got many years of experience in bringing drugs forward on a global basis and getting them registered. So we're quite excited about where we are. I think one of the really unique aspects of Zai is that we are a dual gateway partner of choice.

So again, we were founded with the idea of serving as an entree point for Western biotechs into China. And of course, that part of the business has moved and progressed really well. Increasingly, though, we're able to go the other way and to serve as a gateway or bridge for China biotechs who otherwise don't have global capabilities for their innovation to move to approvals and regulatory paths in the U.S. and China.

And I think if you look at 1310, I think that's a really good example. We partnered with a company in China. We in-licensed an asset that was in preclinical development and within 2 years, have been able to move into a Phase III study, which we'll talk a little bit more about in a moment. I think if we think about 2025, we're quite proud of the execution and the progress we made, particularly around the pipeline.

We stand here now today with a program in Phase III, clear visibility to an approval as early as 2028. in the U.S. This is in small cell lung cancer. And then with the opportunities as we move into this year to present data not only in a later-line setting in small cell lung cancer, but also in a first-line setting with the opportunity to start a global Phase III first-line study, and we're also exploring the drug in neuroendocrine tumors.

That's coupled then with our second global program. This is in immunology. This is our IL-13 and 31 where last year, we started a Phase I study in atopic dermatitis, starting with healthy patient volunteers, transitioning into patients this year, and we expect to have data on this, I think, really exciting program by the end of next year, followed by 3 other, I think, near-term potential clinical starts in oncology.

You can see the LRRC15, it's an ADC that will start a Phase I study this year in solid tumors. ZL-1222, which is a PD-1/IL-12, where we'll generate, I think, some interesting preclinical data this year. And then we recently in-licensed MUC17/CD3 T-cell engager approach here, which we're quite excited about. In the China part of the business, I think 2 big pipeline progress pieces we made as we acquired the rights to both Pove and [ Ele. ] These are 2 immunology opportunities in China with Pove looking forward to a data readout in the first half of this year in IgAN, which is an extremely important disease and opportunity in China.

On the commercial side, we continue to drive growth in a launch of VYVGART for MG. We -- in 2025, we were able to get VYVGART listed as a preferred agent for treating gMG in China and a focus on maintenance therapy, and we're excited about that. And I think that's really important for patients. Similarly, and I think most recently had an approval for COBENFY in China. This is for schizophrenia, first new mechanism approved in 70 years, only drug in China approved without a black box for treatment of schizophrenia.

We'll launch that in the first half of this year with an eye towards NRDL listing in 2027. I mentioned before, a strong cash position of $817 million, profitable business in China that will continue to strengthen the balance sheet over time. Maybe just to spend a few minutes on the pipeline itself. First, looking at the pipeline overall, you can see, I think I've touched on many of these assets overall. These are all the products on the left-hand side of the chart here, I guess, my left, that are -- we have global rights to.

This is a mix of programs that we've discovered and developed from our own labs with programs that we've in-licensed from partners. I think if you think about this portfolio over the next 3 years or so with Zoci, the ADC targeted DLL3, as I mentioned, we have a potential approval in 2028. We expect to start a Phase III first-line study in combination later this year. In 1503, which is for atopic dermatitis, we expect to have data in both healthy volunteers and patients with atopic dermatitis later this year, which will help to inform a Phase II and Phase III decision and program, and we're quite excited about that opportunity.

And then I think -- if you think about over time, again, we'll have some other Phase I starts this year. I think we're sized from a discovery perspective to start 1 to 2 new programs per year directly from our own discovery efforts, supplemented then by a few good business development opportunities. Our sweet spot really is sort of late preclinical to early clinical assets in immunology and oncology, looking at precedented targets where we think there's a lot of room to improve upon current therapies.

So just a couple of points on Zoci, which is our lead asset. First, I think if we do see this as having best-in-class potential, I think many investors and stakeholders are increasingly seeing the opportunity in small cell lung cancer as new therapies are developed and new data is generated. We quite like what we have with Zoci in the Phase I data that we've seen. We see a 68% ORR in second-line small cell lung cancer, a 6-month duration, which is, I think, quite meaningful in this setting.

I think one of the things that's a clear differentiation that we see so far relative to other mechanisms and other ADCs is 80% systemic ORR in patients with brain mets that haven't been treated with radiation. As many of you may know, this tends to be one of the things in patients with small cell lung cancer that leads to treatment interruptions and ultimately to morbidity. So we're quite excited about this data and the differentiation here.

I think really importantly, as we think about this space over time is the safety. You can see a Grade 3 or greater TRAEs of only 13% in our Phase I studies, no drug discontinuation or death. So we think this makes this an optimal partner for first-line and combination therapy. And of course, we're exploring that in a combination setting now, and we do expect to also initiate other Phase I novel, novel combinations. I think the goal here, given the safety and efficacy profile is for this drug to be the partner of choice in small cell lung cancer for combinations.

We're really proud of the speed that we've been able to demonstrate from an efficacy and execution perspective. We've been able to move from a preclinical to first-in-human time in less than 2 years. I think industry average, again, is somewhere probably in the 3 to 4 years. Again, this leverages our China expertise, access to investigator sites and patient populations. We initiated the Phase III program in second and third-line patients in Q4 of last year.

We have patients being screened and sites being open now. And we see this as about a 480-patient trial, 2 arms, of course, one with monotherapy for 1310 in patients either who have progressed from first-line standard of care, which is a PD-1 and chemo or patients who have progressed also on tarlatamab in a second-line setting. So we think this is very representative of real-world setting, and I think positions us really well for a good, fast trial and an opportunity for an approval in 2028.

As I mentioned, I think the safety profile really positions this drug well in a first-line setting. And I think, of course, that's what many investors are focused on in terms of the opportunity. We will -- we're in the process of developing data in both a doublet combination with a PD-1 as well as the triplet with chemo. We'll generate enough data by the second half of this year to make a decision around dosing and combination for a first-line Phase III trial to be initiated by the end of the year.

Again, I think the safety profile here, combined with what we see in terms of the overall response rate in the monotherapy setting, I think, makes us quite excited about the opportunity. I think, as I mentioned, I think investors are increasingly seeing the opportunity in small cell lung cancer. Of course, that way is paved a little bit by tarlatamab or IMDELLTRA. But I think when you look at small cell lung cancer and other neuroendocrine tumors that overexpress DLL3, I think the addressable market is somewhere in the range of $9 billion.

And I think we're well positioned to capture some significant portion of that beginning in 2028 with an accelerated approval. I move on briefly to our other clinical asset today. That's our IL-13, IL-31 receptor program focused. Again, the idea here is to improve upon the profile of dupi in atopic dermatitis. And of course, this is one of the bigger markets in the world, but there's still a lot of opportunity for improvement. And I think what we see here, of course, it's validated biology. We're going after 2 precedented targets.

And I think the combination, the idea is based on the preclinical data that we're seeing is an opportunity for rapid relief on itch, maybe longer-term duration than what you see with the current IL-4/IL-13s and an opportunity for faster onset. So I think all of those data will have an opportunity to explore and to present by the second half of this year as a function of the Phase I trial that we're running. So we're quite excited about this opportunity.

And again, I don't like to spend much time on how big the market is for atopic dermatitis. It's about $15 billion now on a global basis, projected to grow to at least $30 billion by 2030. So some real differentiation in this space can present a pretty compelling opportunity. And this is a drug that we discovered and developed from our own labs at Zai. We have other programs in development, as I showed you on a couple of slides ago. Here are 3 that I would note, all pointed at oncology targets today.

Most notable in terms of timing is the LRRC15 ADC. We'll initiate a Phase I study in patients with solid tumors focused on sarcomas later this year. I think this is a first-in-class and hopefully best-in-class kind of opportunity that we're quite excited about. As I mentioned, we recently acquired MUC17, a targeted program T-cell engager approach here. So all 3 of these, I think, are quite exciting, best-in-class kind of opportunities in line with the R&D strategy I mentioned.

I'll spend just a minute or 2 on our regional business. As I mentioned, we have 8 commercial products that are approved and marketed in China. The biggest is ZEJULA, and that's a function of how long it's been on the market. It's the market share leader for ovarian cancer in China. The most notable recent launch is VYVGART for gMG. This is with our partner, argenx, and we partner with argenx on all of the Phase III indications. We've got the rights to them in China. So we see this as a long growing and durable franchise.

I mentioned that we recently got approval for COBENFY, which represents a significant opportunity in China. So I think when we think about the next number of years in China, we already are profitable today with the commercial business. We'll be layering in lots of interesting new opportunities, COBENFY followed by other immunology products like Pove and the TED asset from Viridian. And I think there are a lot of things, day-to-day challenges in China from a commercial perspective are real, and many of you know and understand those.

I think though from a long-term perspective, we continue to see good signs of optimism in China, whether it be the growth in commercial insurance, the emphasis on the commercial insurance drug list, transparency around NRDL and of course, the size of the population in China, these are all things that are really attractive. So we see the business in China as continuing to grow and be robust and I think quite exciting as we get through the remainder of the decade.

I'll just spend a moment on our next big launch in China, and that is COBENFY. This is a product we partnered with Karuna on for schizophrenia. Karuna, of course, then was acquired by Bristol Myers. We got an approval a few weeks ago, really good label, no black box. The size of the opportunity here in China is quite significant. 8 million patients with schizophrenia, I think somewhere over 2 billion days of antipsychotic prescription use in 2024.

Monotherapy is 90-plus percent of the standard of care. So what we're introducing here is the first new mechanism in 70 years. But we're not asking physicians to change how they think about treating patients with schizophrenia. We really are still going to continue to monitor and try to manage positive symptoms, negative symptoms and safety. And I think COBENFY clearly has some benefits around the negative symptom and safety side.

So we're quite excited to get this product up and running. In 2026, the goal will be to get physicians experienced using this drug with patients with schizophrenia. It won't be on NRDL this year. 2027 is the landing point for NRDL. But I think we'll be in a really good position in 2027 to see a really strong commercial sales and launch. And I think when you put all of that together, it does lead to really strong financial strength for the business.

If you look at our cash position, we ended September with $817 million on the balance sheet. We're quite disciplined in how we manage the business. So we're making the investments that make sense for long-term value in the R&D pipeline. But I think in the rest of the business, we're really looking at managing tightly our sales and marketing expenses and our other corporate expenses, which is leading to a clear path to profitability.

If you just follow the chart -- these are half year kind of numbers. We've gone from $148 million loss in the first half of 2022 to cut that in half to about $70 million in the first half of 2025. We continue to see progression there. So very modest cash burn today, path to profitability, strong balance sheet gives us the opportunity to invest in the pipeline and the opportunities that we see today. I'm going to try to close quickly here with the catalysts that we see for 2026. I think you'll hear a lot from us from an external perspective about the pipeline in 2026.

The regional business is going to perform well. We'll talk more about that as we get into our year-end calls and things like that. But really, for 2026, we see a really exciting catalyst-rich year around the pipeline. Rafael will come up with me in a moment and talk about some of that, I'm sure, in response to questions. And then I think if we just step back and put that in perspective for the business overall, we're really excited about where we are, again, continuing to grow, scale and deliver financial results in the commercial business in China.

But now we are at a point with the global pipeline where you can see in a real way the opportunities to launch and deliver value for patients outside of China and certainly for shareholders as a function of being able to get approved and sell drugs in the U.S., Europe and Japan. So I think with that, Anupam, I'll ask Rafael to come up. Rafael leads our R&D organization and take questions.

Sure. Thanks, Josh. As always, I'll ask the first couple of questions, but to the extent that you have a question when prompted, just I can call on you. I just want to start out with a broader strategic question here. We've heard from so many biotechs already this week what makes Zai Lab different in terms of -- in particular, you're rolling out your internal global strategy more and more now, right? So what makes your R&D engine different? And why should we be paying attention to it?

I'll start, and of course, Rafael will jump in with lots of discussion about the pipeline. I think we are unique in that -- certainly, many of the companies you talk to here have either a really strong 1 or 2 assets from a biotech perspective that you're looking at and sort of betting on and/or have a commercial business that's modest growth. I think we have a little bit of both. We have a portfolio of drugs that you can easily sort of look at and make your assessment around where we are, probabilities of success and opportunities.

But we couple that with a strong commercial engine in China that will grow at certainly double-digit kind of rates through the end of the decade and help to fund the R&D opportunities that we see. I think finally, I would then couple that with the role we play bridging China and the West. Again, a lot of success in bringing great drugs into China.

But I think as we all see the opportunities in China for innovative programs to really proliferate, we serve as a partner of choice, I think, for Chinese companies that want to innovate and get their drugs approved in markets outside of China. So I think if you like the innovation story in China, Zai is an interesting company to understand if you like small cell lung cancer, if you like atopic dermatitis, I think we've had a little bit there to focus on as well.

Yes. In addition to that, I think in the global side, we've built capabilities for global development, but still capitalizing on really the capabilities that we have in China. So we have the ability to move drugs to go/no-go decisions very fast because of the relationships and as well as the capabilities and resources that we have there and make decisions as to which products to move forward.

And meanwhile, we've been building an internal pipeline. Some of the products, the majority of them are actually internally discovered, which are relatively unknown, but they have really good pharmaceutical properties. And so we are actually pretty excited about the fact that even though they're early, we can move them very fast. And the other 3 was actually acquired pre-IND within 2 years, we're in Phase III. So I think this is something that without our China engine, we wouldn't have been able to do.

Are we at a point now in the company's evolution where we should be thinking about more of a focus on the internal pipeline and less of a focus on BD because your commercial franchise has largely been the opposite, right, bringing U.S. products into China.

I think it's a balance of both, and Rafael will talk about the strategy. I think -- we think about what are the targets to go after from an innovative perspective and then where is the best way to -- what's the best way to prosecute that target. In some cases, it's going to be our internal team. And as Rafael mentioned, if you look at our portfolio, we have a lot of examples of bringing forward a potentially first or best-in-class asset.

But in many cases, we'll look around and see something better from a partner that we can acquire. So I think we're agnostic as to the source. We want the best innovation possible that we can move fast.

Yes. I mean I think the main criteria is this novel mechanism, can it make a big difference in the natural history of the disease? Or is it really a truly differentiated product that actually drives clinical benefit. So we're very focused on that rather than incremental benefit. And we are very used to doing that in China. So we're applying that in the global business as well.

And then with this focus on sort of your internal pipeline and bringing it forward, how do we think about R&D expenses over the next couple of years as well as now you have the COBENFY launch to -- so maybe on SG&A as well for the next couple of years?

I think on expenses overall, first, as we think about R&D, we're going to make the investments that Rafael and the team see as compelling and opportunities to bring these assets forward fast and in many cases, in parallel indications. But I think given where we are, it's probably fair to think that the growth in R&D for the next year or so is probably modest relative to where we've been.

We're transitioning a lot of our spend from finalizing and finishing the Phase III studies in China for the regional portfolio. We can now redirect a lot of that to the global portfolio. Hopefully, over time, that number gets bigger and bigger as we have the opportunities with the portfolio that we see. But I think for the near term, relatively modest growth in R&D is fair. On the SG&A side, I think we'll manage that very closely. We've built the business in China such that as we bring new things forward as they're approved, mostly they're going to be incremental. And I think certainly, as we think about profitability or percentage of sales for SG&A, that's going to improve for the foreseeable future as we continue to scale.

Questions from the audience?

I'm very, very impressed by the clinical data that ZL-1310 has generated. Question, do you see complications coming from the fact that tarlatamab as well as lurbinectedin, sorry, are going to be used more frequently, at least in Western patients. With regards to lurbinectedin, cross-resistance -- topoisomerase or cross resistance. And in the case of tarlatamab, possible downregulation of the DLL3 surface target?

Yes. Thanks for the question. I mean, clearly, tarlatamab has been a great advance in the treatment of small cell lung cancer. We have tested 1310 in patients that have failed tarlatamab. The first thing that we wanted to do is to make sure that the target was still there. And indeed, repeatedly, we see the same level of expression pre and post tarlatamab. So the target is not lost.

So there may be a different reason for resistance to IMDELLTRA. And we've treated right now over a dozen patients with tarlatamab, and we see responses in the 50% range or so. So that cross resistance really doesn't exist to the point that, that's prompted us to actually consider combinations with T-cell engagers as a potential -- potentially positioning 1310 as a centerpiece of these kinds of combinations, whereby you can induce immunogenic cell death and then attract T cells to the tumor bed to try to enhance cell killing.

So with regards to lurbi, lurbi is one of the drugs in our Phase III studies that is available for use. We have a lot of patients that have been treated with lurbinectedin, and we actually don't see any cross resistance.

Questions from the audience? Maybe following up on the last question, just maybe a broader question about Zoci. Like there's a lot of DLL3s kind of preclinical, some in the clinic. Like how is your strategy and the product different than the competitive landscape?

Well, I think it starts with the product. The product is highly active. We've done a lot of work to try to hone into the dose. The therapeutic window of ADCs remains narrow in spite of all the renaissance of these products. And so even 0.5 mg per kg can make a difference. So we've done actually very careful work. 1.6 mg per kg is actually the best dose in terms of efficacy, efficacy in the brain and toxicity.

And the same dose is actually effective in neuroendocrine carcinoma. All that data will be presented in the first half of this year. And so we also have been doing this for about 2 years before we got into the first study. So we have about a year plus advantage over the competition. There's really one DLL3 that is really advanced and comparable perhaps. The rest of them are B7H3 and other targets. Those targets tend to be present in normal tissues, so the toxicity tends to be higher.

And actually, 13% Grade 3 allows us to combine it with other drugs and position it in first line or even do chemosparing regimens, which is, I think, what physicians really would like to do, have a chemosparing regimen with immunotherapy, which has been shown to be successful with other ADCs. So I think all these characteristics plus the way in which it's developed, that is first line, second line, post tarlatamab and then in neuroendocrine carcinomas and potentially other DLL3 expressing tumors and then in combination with things like bispecifics could make this product with broad projection across a number of tumor types.

And then you mentioned one of your partner pipeline programs, Pove, that's going to have some proteinuria data here pretty soon. I think the partner Vertex talked about 1Q. If that data is positive and how would you define positive, what would be the next steps in China?

Yes. We have finished the study -- the portion of the study in China already. And the data is supposed to be available in the first half of the year, perhaps even as early as the first quarter. And the plan is to file for accelerated approval. We plan to follow the same strategy as Vertex. The drug has shown is a BAFF/APRIL binder and it's a very potent, very avid for the receptors.

It [ abrogates ] proteinuria, particularly the [indiscernible] hematuria and stabilizes renal function. So I think the discussions with FDA have been positive. The discussions with CDE continue to see whether we can attain accelerated approval just like Vertex is seeking in the United States and Europe. So stay tuned to see how those discussions go, but the data should be available soon.

Questions from the audience?

Yes. Very nice work, and congratulations on your really rapid and fast progress. The question I have is for your LRRC15, I noticed sarcoma. But as you well know, sarcoma is not one disease. It's undifferentiated pleomorphic osteo. How are you going to tease that out? And then the second one is, do you think that there's an optimal DAR for these payloads as you're kind of building out your ADC portfolio?

Yes. Two separate questions, very good ones, and LRRC15 is a very exciting drug, I think, because if it works in tumors in which the target is not expressed, but it's expressed in the CAF in the cancer-associated fibroblasts, then it will prove the concept that the target is actually a flag for these products. And if you actually have a bystander effect, which we've proven in animals as well as in vitro in multiple models that the tumors actually don't express LRRC15, but the fibroblasts do and they melt away with this ADC.

So if that was the case, then it becomes a broad-spectrum ADC and the tumors that have fibroblasts that express the most LRRC15 are head and neck, breast, pancreatic, which is a very fibroblastic tumor, as you know, and lung. And so we have designed the study in a way where sarcomas is one cohort and these other epithelial tumors is another. Now with regards to the differentiation of different sarcomas, the sarcoma that expresses the highest is osteo, but many soft tissue sarcomas do as well because they are of mesenchymal origin.

With regards to the DAR question, this is debated in the field backwards and forwards. My view is that the DAR is offset by the dose. And there are some that are using DARs 4, DARs 6 and they're able to get away with higher doses. When you use DAR 8, then the doses have to be more restricted. Obviously, it also depends on the epitope, antibody and other characteristics.

But I think DAR 8 tends to hit the tumor, I think, higher and prevent the emergence of early resistance, particularly tumors that have been heavily pretreated before. So physicians that we deal with and investigators, they prefer DAR 8 to lower drug to antibody concentration.

[ Tinashe from Nandi Life Sciences, a family office, interesting cancer. ] Help us to think through lessons learned from Stemcentrx and AbbVie. What's particularly strong about this program as we enter the late stages. We know there were pitfalls with that.

And just thinking -- the U.S. market rewards efficacy above everything else, how are you thinking about radiopharmaceuticals targeting DLL3? Obviously, expensive to scale up. But tell us more than scale-up advantages, right? Capital is there. We're doing data centers. We can scale up radioisotope supply. So just talk us through raw efficacy and how you see that impacting commercial sales and competitiveness of your Zoci.

Yes. I mean I think in particular, in small cell lung cancer, it's been a dreadful -- it is a dreadful disease. I mean it is one of the worst non-small cell lung cancer diagnosis and one of the metastatic solid tumors that have the worst prognosis. So I think, first and foremost, the advent of more drugs is actually a benefit for the field. So we are actually happy that there are more and more companies interested in this.

I think the field itself will sort itself out with regards to how these drugs are going to be cycle and combined. Just like we saw in prostate, for instance, with the entrance of the radioligands, it's mostly still in castrate-sensitive disease, but there's obviously a progression towards castrate resistance. It will take some time to actually figure out where these indications will happen.

But I think for the foreseeable future, it's going to be the evolution of tarlatamab in second line and beyond, the entrance of the most potent ADCs and then how the first line is going to shape up with the entrance of -- there are 3 studies with tarlatamab, as you know. And then how the ADCs will position in frontline. So I think there will be room for other agents. Many of these patients cannot get to second line of therapy right now, like half the patients drop after the first. So if we have more drugs that are able to get patients through and become more of a chronic disease, then I think it will be best for all patients.

Just a final quick question from me. Just on the commercial franchise as we look to 2026, what do you see as some of the key top line drivers of growth?

Yes. I think number one will be VYVGART and continuing to drive. I think we see good volume growth in the second half of the year. We expect that to sustain through 2026, Anupam. So I think that's number one. As I mentioned, preparing COBENFY while we'll see modest, I think, commercial sales in 2026, the opportunity to educate physicians and have them ready for NRDL listing, I think, is probably the most important thing for the long term for us.

We have a portfolio outside of those of, I think, good growth opportunities, including XACDURO, which is our hospital-based antibiotic, which we launched really last year and faced some supply constraints. We've worked through those. So I think that's one that's probably underappreciated that we should see some good growth. And again, I think for 2026, we expect good, stable business in China on the commercial side, good growth and hopefully can focus a lot on the data that's going to emerge from the global pipeline in 2026.

All right. We're up on time. Thank you, Josh and Rafael.

Thank you.

Thank you.

Hello, ladies and gentlemen. Thank you for standing by, and welcome to Zai Lab's Third Quarter 2025 Financial Results Conference Call. [Operator Instructions]. As a reminder, today's call is being recorded.

It is now my pleasure to turn the floor over to Christine Chiou, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator. Hello, and welcome, everyone. Today's earnings call will be led by Dr. Samantha Du, Zai Lab's Founder, CEO and Chairperson. She will be joined by Josh Smiley, President and Chief Operating Officer; Dr. Rafael Amado, President and Head of Global Research and Development; and Dr. Yajing Chen, Chief Financial Officer.

As a reminder, during today's call, we will be making certain forward-looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings. We also refer to adjusted loss from operations, which is a non-GAAP financial measure.

Please refer to our earnings release furnished with the SEC on November 6, 2025, for additional information on this non-GAAP financial measure. At this time, it is my pleasure to turn the call over to Dr. Samantha Du.

Thank you, Christine. Good morning, and good evening, everyone. Thank you for joining us today. Before we discuss the quarter, I want to take a moment to reflect on who we are, where we are headed.

Zai Lab was built on a clear vision to bring the best global innovation to patients in China and to discover and develop new innovations that can compete on the world stage. That vision remains unchanged. Today, our global pipeline is stepping to the forefront, becoming the next key chapter in Zai's growth story. Zoci or ZL-1310 has now entered the pivotal stage less than 2 years from Phase 1/1b, an extraordinary pace at any standard in our industry. And we're on the path for our first global approval by 2027 or early 2028.

Beyond Zoci, we're expanding our global portfolio with other highly differentiated programs, including our IL-13xIL-31R bispecific atopic dermatitis, IL-12 PD-1 bispecific and LRRC15 ADC for solid tumors. More importantly, we have built a global R&D organization that combines speed, scientific rigor and quality expected of a global biopharma.

On our commercial business in China, we are commercially profitable today and on a steady, profitable growth path. However, the pace has been slower than we expected. The environment is complex and dynamic. But at the same time, there are encouraging signs of progress. Regulatory reviews are faster and NRDL negotiations are more transparent. We have one of the strongest commercial teams in the industry, backed by a portfolio of differentiated, high potential assets, and we remain confident in the long-term potential of this business.

This next chapter will take focus and persistence, but we have the right science, the right team and the right vision. Together, we are building a company that will make a lasting difference for patients and create long-term value for our shareholders.

With that, I'll now hand the call over to Rafael, who will walk you through the progress of our R&D pipeline. Rafael?

Thank you, Samantha. I will begin with a few highlights from our global pipeline, starting with ZL-1310 or Zoci. Two weeks ago, at the triple meeting conference, we presented updated Phase I data in previously treated extensive stage small cell lung cancer. This global study enrolled 115 patients across the U.S., Europe and China.

At baseline, 90% of patients had received a PD-1 or PD-L1 therapy, nearly 1/3 had brain metastases and several had progressed on a prior DLL3 targeted therapy, including tarlatamab, making this a very difficult to treat heavily pretreated patient population. At the 1.6 milligrams per kilogram dose, we observed an overall response rate of 68% and a disease control rate of 94%, among the strongest efficacy signals reported in the second line setting.

Importantly, we also saw robust activity in patients with brain metastases, including an 80% overall response rate in lesions, which had received no prior treatment of any kind, suggesting that Zoci may offer a new way to control both systemic as well as intracranial disease without interrupting therapy, a potential game changer in terms of speed to treatment for these patients whose tumors tend to be growing very fast.

Across all doses and lines, the median duration of response was 6.1 months, and the median progression-free survival was 5.4 months, which is highly encouraging for a monotherapy in this refractory population across doses and lines of therapy.

Data from the 1.2 and 1.6 milligrams per kilogram cohort continue to mature as enrollment continues and patients remain on treatment. Zoci also continues to demonstrate a best-in-class safety profile. At the 1.6 milligrams per kilogram dose, grade 3 or higher treatment-related adverse events were observed in only 13% of patients, far below the 35% to 50% rate seen with other ADCs in this setting. There were no drug-related discontinuations or deaths and only 2 Grade 1 interstitial lung disease cases across both expansion doses of 1.2 and 1.6 milligrams per kilogram.

This combination of deep efficacy and favorable tolerability positions Zoci as an ideal candidate for the first-line combination where safety is paramount. We've now begun enrollment in our registrational Phase III trial in extensive stage small cell lung cancer with the potential for an accelerated approval submission. We're also advancing our first-line strategy with plans to initiate a Phase III study next year following results of our ongoing combination study evaluating Zoci plus PD-L1 with and without chemotherapy.

In addition, we see significant opportunity for Zoci as a backbone therapy in novel mechanism combinations. We plan to initiate studies with agents with ethanol and complementary mechanisms of action, and we will share details once the studies are posted on clinicaltrials.gov.

Beyond small cell lung cancer, Zoci is being evaluated in Neuroendocrine Carcinomas or NAC, which have poor prognosis and no targeted therapy despite high DLL3 expression. Early data with ZL-1310 are encouraging, and we plan to present results in the first half of next year and to move into a registrational study thereafter.

Beyond Zoci, our next wave of innovative global assets continue to advance rapidly. ZL-1503, our internally discovered IL-13/IL-31 bispecific antibody for atopic dermatitis recently entered Phase I. Its dual mechanism targets both itch and inflammation and its extended half-life offers potential for less frequent dosing. A subcutaneous formulation is being developed. Preclinical results support its use in other inflammatory diseases. First-in-human data are expected in 2026. ZL-6201 is an internally discovered LRRC15 targeted antibody with a next-generation payload linker. It remains on track for a U.S. IND submission by year-end and a global Phase I study initiation early next year for patients with cancer that have tumor cell or tumor stroma expressing this target.

ZL-1222 is another internally discovered asset. It is a next-generation PD-1 IL-12 immunocytokine designed to deliver cytokine signaling directly into the tumor microenvironment while preserving PD-1 checkpoint blockade. IND-enabling work is underway, and we expect to move quickly towards an IND once data are available.

Now turning to our key late-stage regional programs in immunology and neuroscience. The Efgartigimod continues to expand across multiple autoimmune indications. The ADAPT SERON study in seronegative gMG was positive, the first global Phase III trial to show clinically meaningful improvements across all 3 gMG subtypes, MuSK+, LRP4+, and triple seronegative.

Three additional Phase III readouts in Ocular myasthenia gravis, Myositis and Thyroid eye disease are expected next year with China contributing to global enrollment. For Povetacicept, our partner, Vertex recently received FDA breakthrough therapy designation for IgAN. Enrollment of the global RAINIER Phase 3 is complete with an interim analysis planned for the first half of 2026, where patients from China are included and potentially supporting an accelerated approval submission next year. The global pivotal Phase II/III study in primary membranous nephropathy was initiated in October, and we're on track to enroll patients in China this quarter.

Together, these achievements reflect the depth and quality of our pipeline, one that is advancing with speed and efficiency and with a clear focus on novel mechanisms and clinical differentiation. In summary, over the next 12 months, we expect to reach several important milestones across our global portfolio.

For Zoci, we expect a catalyst-rich year with updated intracranial data, first-line small cell lung cancer combination data and results in neuroendocrine carcinoma in the first half. In parallel, we plan to initiate registrational studies in first-line small cell lung cancer and other neuroendocrine carcinomas as well as starting studies with novel combinations across line of therapy.

Beyond Zoci, we expect first-in-human data for ZL-1503 or IL-1331 and to advance ZL-6201 or LRRC15 into global Phase I development. We're also progressing ZL-1222 or anti-PD-1/ IL-12 agonist and look forward to sharing additional data in the coming year.

And with that, I'll hand it over to Josh.

Thank you, Rafael, and hello, everyone. Before we turn to our third quarter results, I'd like to start by welcoming Dr. Yajing Chen, he as our new Chief Business Officer. Chen brings both deep scientific expertise and investment experience and will play a central role in expanding our portfolio and unlocking value through partnerships and out-licensing.

I'd also like to sincerely thank Jonathan Wang for his many contributions over the past decade in helping build the strong foundation that now supports our next phase of growth. Now turning to our commercial performance.

Total revenues were $116 million, representing 14% growth year-over-year. VYVGART and VYVGART Hytrulo contributed $27.7 million, which includes a $2.4 million reduction following a voluntary price adjustment on Hytrulo to align with NRDL guidelines ahead of national pricing negotiations. While this adjustment affected reported sales, the underlying fundamentals of the launch remain very strong. VYVGART continues to be one of the most successful immunology launches ever in China, ranking as the #1 innovative drug by sales among all new launches in the past 2 years.

More importantly, the trends beneath the headline numbers point to durable long-term growth. There are 2 key growth drivers underpinning the trajectory of VYVGART in gMG, patient demand and treatment duration, the latter of which is particularly important given the chronic nature of the disease.

First, on demand. We continue to see steady new patient additions each month with nearly 21,000 patients treated to date. VYVGART penetration in gMG remains only around 12%, meaning we are still in the early stages of market development with significant room for expansion.

Second, on treatment duration. The updated MG guidelines published in July have been a meaningful catalyst to emphasize both the importance of rapid symptom control, where VYVGART has demonstrated strong efficacy and a minimum of 3 treatment cycles to reduce the risk of relapse and maintain durable disease control. Since publication, we have seen clear signs of positive impact in real-world practice.

Physicians are becoming receptive to maintaining patients on therapy even after achieving symptom control, signaling a shift from episodic to maintenance use. As a result of our efforts, the average vials per patient have increased over 30% year-to-date versus last year, with a notable acceleration in Q3.

And VYVGART volumes have grown sequentially in the mid-teens. We see this level of growth as realistic and sustainable as we head into 2026. Now admittedly, the pace of market build for this first-in-class therapy for chronic disease has been more measured than we initially anticipated.

With VYVGART, we are shaping this new market thoughtfully, focusing not only on driving adoption, but also on redefining how gMG is managed over the long term. Through physician education and real-world experience, we aim to change long-standing treatment patterns.

While the ramp is slower than expected, the long-term potential of VYVGART in gMG is substantial. Beyond gMG, we're making progress in CIDP, expanding access across both supplemental and commercial health insurance plans. We will continue to add new layers of growth with new indications and formulations with the most immediate being seronegative gMG and the prefilled syringe.

Looking ahead, our next major launch opportunity is KarXT, currently under regulatory review. KarXT has the potential to redefine schizophrenia treatment in China, introducing the first new mechanism of action in more than 70 years. Notably, it has already been included in the China Schizophrenia Prevention and Treatment Guidelines 2025 Edition, the first national guideline globally to do so, underscoring its strong differentiation and anticipated clinical impact.

Across the company, we remain disciplined in our operations, scaling efficiently while investing strategically in commercial execution and pipeline innovation.

And with that, I will now pass the call over to Yajing to take us through our financial results. Yajing?

Thank you, Josh. Now I will review highlights from our third quarter 2025 financial results compared to the prior year period. Total revenue grew 14% year-over-year to $116.1 million in the third quarter, primarily driven by higher sales of NUZYRA supported by increasing market coverage and penetration.

Demand for XACDURO remains robust, and we aim to normalize supply by year-end. ZEJULA grew sequentially but declined year-over-year amid evolving competitive dynamics within the PARP class.

Given this trend as well as VYVGART dynamics discussed earlier, we are updating our full year total revenue guidance to at least $460 million. Our continued focus on financial discipline and efficiency was evident in our cost structure with both R&D and SG&A as a percentage of revenue declining significantly year-over-year.

R&D expenses for the third quarter decreased 27% year-over-year, mainly due to a decrease in licensing fees in connection with upfront and milestone payments.

SG&A expenses for the third quarter increased 4% year-over-year, mainly due to higher general selling expenses to support the growth of NUZYRA and VYVGART, partially offset by lower selling expenses for ZEJULA.

As a result, loss from operations improved 28% in the third quarter to $48.8 million and adjusted loss from operations, which excludes certain noncash items, depreciation, amortization and share-based compensation, was $28 million in the third quarter, a 42% improvement from the prior year.

While we expect meaningful quarter-over-quarter improvement in adjusted operating loss, we now expect profitability to shift beyond the fourth quarter, reflecting the lower revenue base this year. Importantly, our fundamentals remain strong. Our China business is already commercially profitable and growing, and we are executing strong financial discipline and investing strategically in R&D.

We are on a path to profitability, and we'll provide updated 2026 financial guidance when we report our full year 2025 earnings. Zai Lab is at a major value inflection point with a rapidly advancing global pipeline, a commercially profitable China business and a path to profitability. We also maintain a strong financial foundation, ending the quarter with $817 million in cash, which provides us with the flexibility to invest in both innovation and disciplined execution. And with that, I would now like to turn the call back over to the operator to open up the line for questions. Operator?

[Operator Instructions] We will now take our first question from the line of Jonathan Chang from Leerink Partners.

First question, on the revised revenue guidance, how should we be thinking about the key drivers for growth and the path to profitability? And then second question on ZL-1503. Can you help set expectations for the initial data readout expected in 2026? And how are you guys seeing the opportunity in atopic dermatitis?

Thanks, Jonathan. It's Josh Smiley. Thanks for the questions. I'll take the first one on revenue drivers, and then Rafael will talk about 1503. I think as we think about revenue headed into the fourth quarter here, drivers will continue to be VYVGART, we expect continued good sequential growth driven by new patient additions and continued growth and durability in terms of the number of doses patients get.

We are seeing, as I mentioned in the opening remarks, we're seeing good progress as a result of the national guidelines that were issued in July, which focus on getting patients into at least 3 courses of therapy. So, we'll see, we expect to see continued growth there.

ZEJULA, we are seeing a return to growth. As we've mentioned throughout the year, the quarterly numbers, I think, will be a little bit choppy because of the generic entries for Lynparza, but we do expect VBP to kick in, in the fourth quarter here, and that gives us a chance to gain share in this class, and we're confident we will. So, we'd expect to see some growth there. rest of the portfolio continues to do well.

We are excited about the progress we're seeing with XACDURO, but still face supply constraints. So, we'll be somewhat limited as we come into the fourth quarter here or there. But overall, good momentum in the portfolio and good growth drivers. We'll give more specific guidance for 2026 as we get into next year.

But obviously, we're looking forward to the launch of KarXT, the potential approval of TIVDAK and continued growth in these, in the core part of the portfolio. As it relates to profitability, again, our profitability will be driven by growth in the business in China. The China business, of course, is profitable today. And as we continue to drive top line growth, that profitability will be enough to cover the R&D and corporate costs that we have. So, we're still on that path. It's just, we just need the growth to continue in the portfolio. With that, I'll turn it to Rafael to talk about 1503.

Thanks, Josh. Thanks, Jonathan. So, 1503, we're really excited about this molecule. As you know, it's both dual IL-13/31 inhibitors. It traps IL-13, and we know that, that is a proven pathway. And 31 is a very potent pathway in initiating pruritus. So, we think the combination plus the long half-life is going to translate into a really brisk effect, which is very fast and sustained.

We have initiated the IND already. We plan to do a multi-country study. And obviously, it's a first-in-human study. We will do single ascending dose in normal volunteers and then multiple doses in patients with atopic dermatitis. In the lab, we've been looking at other models of TH2 diseases, and we are very encouraged with what we're seeing on asthma, rhinitis and other disorders that affect [TH2].

So, in addition to this, we're going to be looking at efficacy endpoints given the half-life that is long, we think that we will be able to see effects on EASI scores as well as IgA/ID [Audio Gap] and so this is going to be measured very frequently. We hope to have the data available by the middle of next year, but it will obviously accumulate throughout next year, and we will present when we have sufficient data. It's a placebo-controlled trial.

So, we'll be able to have comparisons. And obviously, we know what the landmarks are here with other products. So again, a very large opportunity. This is a very common disease, even a fraction percentage of capturing in AD would be a large opportunity. And also, the possibility of expanding into other TH2 diseases, I think make this a very promising product.

We will now take our next question from the line of Anupam Rama from JPMorgan.

This is Joyce on for Anupam. The press release today really led with progress on your own internal global development programs. Is this a shift in how you're thinking about the resource allocation in terms of your prior focus on external BD versus now the internal pipeline?

Thanks. It's Josh. I'll start. First, we are very excited about the pipeline that we have today with the global emphasis. And of course, that will be a priority to invest in and Rafael outlined our near-term focus in terms of 1310 and getting the registration trial up and running and expanding into first line and into neuroendocrine tumors. So that's going to be a focus.

We've got a really exciting global portfolio behind that. We think we have the capacity here to fully invest in those programs. We have a strong balance sheet with plenty of cash to continue to pursue on a targeted basis, the right kind of external opportunities to bring in, both on a global and regional basis. And we have the capacity within the income statement on the R&D side to, I think, fully invest behind these exciting opportunities and still manage, I think, an R&D budget that's within the range of what we've seen the last few years. So, priorities are advance the pipeline, continue to build the pipeline and continue to drive the commercial business in China, which is profitable today and will be increasingly profitable over time.

We will now take our next question from the line of Yigal Nochomovitz from Citi.

This is Caroline on for Yigal. We were wondering where you're seeing the greatest opportunity and greatest likelihood for success for your internal global pipeline among LRRC and PD-1, IL-2 and others. I have a second question, if okay.

Rafael, jump in on this one, please.

Sure. Obviously, the most immediate one is 1310. I mean, it clearly is quite active. It is well tolerated, very few related grade 3 and above treatment effects. treatment side effects, strong brisk effect on brain metastases in untreated brain metastases. And again, very high percent of patients responding. We are starting up the Phase III study for second line. We've had recent discussions with FDA, and we're sharpening the design to the point that it's already started. We will continue to do some work on the dose, but I think that is going to finish pretty quickly. With regards to the rest of the products, obviously, 1503, I mean, these are proven pathways.

So, the bar for activity is pretty low. And also, the characteristics of the product with FC modification for long half-life makes it very ideal for patients with these chronic diseases. And then with regards to some of the other ones, LRRC15 is particularly interesting because it will be the first time where a tumor is being targeted where the target is not necessarily in the tumor. So, there will be these 2 groups of patients like sarcoma patients where the tumor does express LRRC15, but others in which the tumor only expresses the target in fibroblasts.

And if that is the case, if we can actually abrogate tumors where the tumor is negative, but the tumor microenvironment is positive, then it opens a whole host of tumor types. So pretty excited about this. And I think we are with others leading in ADC, which is one of our focus in oncology.

And then I'll finish with PD-1 IL-12. It's been very hard to target IL-12 because it's toxic. So, we've been able to engineer an IL-12 stimulated moiety, which actually is attenuated. So, it doesn't really cause side effects of T cell activation. And at the same time, with full blockade of PD-1. So, in animal models, we can see that we can actually restore PD-1 resistant tumors, which would be pretty exciting to see. And we are seeing, as you know, more enhancements on PD-1 as a checkpoint with other molecules.

And we think that an IL-12 would be one of them. So, I'll just finish by saying that we can move these things pretty quickly. We'll have 2 INDs this year. One of them will enroll this year. The other one will start enrolling in January. And PD-1 IL-12 is a candidate that will have an IND next year and hopefully, the first patient as well in the second half.

So yes, we're excited about all of them. But obviously, our strongest focus right now is making sure that we cover the lives on 1310.

Got it. And on my second question, we're wondering what you're doing to set yourself up for a strong KarXT launch? And what more have you learned about the schizophrenia market in China to best position KarXT in the marketplace?

It's Josh. Yes, we're quite excited about the opportunity with KarXT. Regulatory reviews are going well. So, we are hopeful for an approval sometime in the near term here. First, I think if you look in China, there's a huge opportunity. Of course, there haven't been any new mechanisms approved in severe melan illness or schizophrenia in more than 70 years.

So, the opportunity for a mechanism like KarXT that provides both efficacy on positive symptoms, negative symptoms and cognition is, I think, well anticipated and thought leaders are anxious for this drug to come. So, we'll launch with a targeted sales force. I think the difference in China versus what we see in some of the Western markets, certainly in the U.S. is it's a more concentrated approach. Patients tend to be in bigger institutions.

So, with a relatively targeted sales force and education program, we should be able to touch a significant portion of the market at launch. And again, just to remind people that the opportunity here is quite significant with millions of patients today suffering from schizophrenia. Obviously, it's a lifelong disease. So, we're anxious to get the approval first to get up and running in 2026 and then move toward NRDL listing in 2027.

Our next question comes from the line of Li Watsek from Cantor Fitzgerald.

I have one commercial, one pipeline question. I guess just given some of the complex commercial dynamics in China and your revised guidance, can you provide your updated views on the $2 billion revenue target by 2028? And then second is for ZL1310, sounds like you're expanding to neuroendocrine tumors next year. I wonder if you can just talk a little bit about the pathway to approval and what would be the bar?

Thanks, Li. It's Josh. I think first on the $2 billion 2028 goal, we will look at all the moves that we had in the portfolio, and we'll provide a more fulsome update next year, maybe starting at JPMorgan. But to comment, we feel really good about the portfolio we have today.

As Samantha mentioned upfront, I think the most exciting piece is the opportunity for sales outside of China in 2028. We mentioned that 1310, we see a path for an approval as early as late 2027. So, to have some significant sales in 2028 coming from the U.S. in small cell lung cancer, I think, quite exciting and certainly represents a new inflection point and phase of growth for us. The portfolio in China continues to grow. And we've talked about the dynamics with VYVGART, which we expect over the course of the next number of years to continue to grow at a good and steady rate, supplemented by additional indications. since we have talked about that revenue goal, we've added Pove and Veli, both of which can launch in the 2028-time frame.

So, we're quite excited about the long-term growth potential of the portfolio and most excited this year about the progress on 1310 and what it means for sales, not just in China, but outside of China within this time frame.

Yes, Rafael, if you can jump in, please.

Yes. Thanks, Caroline. So, I'll talk a bit about NEC. So, the study that we have has 2 cohorts of carcinoma. So, these are highly proliferative tumors that have a poor prognosis. One is gastroenteropancreatic tumors or GEP, and the others are other NECs that can arise from other sites, other organs. We are seeing responses in both groups. It's still early days, obviously, and we're accumulating more and more evidence of activity. These are patients that have had more than one line of therapy, which tends to be platinum-based therapy. And there really isn't any standard for these patients.

The tumors tend to grow fast and actually mortality is quite high. So, in terms of how we want to proceed with this, the idea would be to sort of circumscribe the tumors that have similar natural history like GEP, large cell non-small cell lung cancer and also tumors of a non-primary and do a study, a single-arm trial and try to characterize the response rate.

I think anything above 30% to 40% would be of great interest because there really isn't any therapy. Many of these patients go to clinical trials with reasonable durability. So, we would plan to have discussions with regulatory authorities to see whether given the unmet need single-arm trial with these kinds of results could result in an accelerated approval. The alternative is to do a physician choice comparator, which also we will be prepared to launch.

And given the activity that we are seeing, if it continues, it wouldn't be a very large study, particularly given the large unmet need and the fact that this is an orphan indication. So pretty excited about what the agency will see and opine once we have sufficient follow-up and sufficient patients to characterize the activity.

Our next question comes from the line of Lai Chen from Goldman Sachs.

Two questions. The first one is regarding the guidance. We try to understand a bit more about compared to the expectations set in any guidance previously, in which areas has the company encountered deeper than anticipated challenges in China environment, particularly for VYVGART and ZEJULA. Could you elaborate a bit more? And also, I think beginning of the year, in terms of the guidance, not only about the top line, but also you mentioned about fourth quarter cash breakeven target. Is that still intact? That's my first one.

Second is regarding the R&D because Zai Lab is really pivoting towards a global R&D company. So, in terms of the pipeline buildup, particularly for the early-stage pipeline buildup, now we got oncology ADCs, we have 2 different ADCs. We have PD-1, IL-12, and we also have immunology. So we're trying to understand a bit more about the strategy, the portfolio strategy when you're deciding what to go after and what not to do. So, could you provide a bit more color on that?

Sure. Thanks. First, on the performance this year, I would say, relative to our initial expectations, VYVGART, while growing well, and we're pleased with the underlying dynamics, as we've mentioned throughout the call, it's just taking longer to get to the rate that we, of treatment that we see in the U.S. market, for example. So, we're focused now on getting patients up to at least 3 cycles of treatment, and we're seeing progress there. It's just slow. So, I would say that's our sort of on the VYVGART piece, that's the piece that has been the slowest relative to our expectations.

Again, I think this is what we're realizing is it's a long-term build the market opportunity. We have the long term with this product, and we're seeing good response to things like the national guidelines and our continued promotional and educational efforts. So just a slower ramp to get to the kind of treatment duration that we see in the Western markets.

On ZEJULA, we expect to gain share as a function of Lynparza going generic, and we saw some delays there in terms of, relative to our initial expectations relative to VBP. Again, we expect that to kick in beginning in the fourth quarter and set us up well for next year. Certainly, again, there are dynamics related to affordability and hospital purchasing and otherwise that may make that a bit choppy. But I think the underlying opportunity for ZEJULA is to gain share from what had been Lynparza as it goes to generic.

The third piece for us is then just we've talked about this through the year. It's a great product and our partner, Pfizer, is seeing really great response and demand in the hospital setting for this drug. And we've had more supply constraints than we anticipated at the beginning of the year. We're working through those, and we're hopeful that as we come into 2026, those will be resolved, and we'll be able to fully meet the demand that we're seeing in the marketplace.

Those things together, of course, will help and drive profitability. I think if you look at our path to profitability and focus on the noncash, I mean, on the cash sort of earnings, which is our non-GAAP number, you see continued good progress in that regard. And that progress should continue. We'll give you an update for 2026. But really, it's just going to be a function of continued growth on the top line. And I think at the numbers that we're suggesting here for the fourth quarter, we probably won't quite get there, but we'll still show good improvement, and we'll be on that path as we head into 2026.

Rafael, if you can talk about how we think about the portfolio and the next opportunities.

Sure. So, the portfolio will continue to grow as a blend of both internal as well as external opportunities. I'm really proud of the fact that many of the products that are now in development came from our protein science laboratories, which have been very productive. But in terms of strategy in oncology, we will continue with antibody drug conjugates, and we will continue to innovate there.

There are other antibodies that we haven't mentioned that are in the pipeline at the moment, and we spend a lot of time trying to characterize the antibody vis-a-vis the target. and then use the right payload linker. So that's going to continue to grow.

We also have an interest in immunocytokines, which I mentioned before. We have other immunocytokines that will come after the PD-1 IL-12. And then T cell engagers, we've made an effort in T cell engagers, and we will be reporting with time some of these candidates entering the clinic.

Outside of oncology, you are right. I mean, we have been focusing on autoimmunity, neuroscience and immunology. In autoimmunity, we are focusing on cytokines, both antibodies or bispecifics perhaps cell depletion as well and then signal transduction of some of these cytokine pathways, which involve small molecules as well.

And so overall, we will remain opportunistic, obviously, for either regional or global opportunities that have novel mechanisms of action, have differentiation and really make a big difference for patients. But the guardrails, if you will, are the ones that I just described to you. So, thanks for the question.

Yes. I think, Joe, just like Rafael was saying, we, even though our pipeline in China, regional pipeline has oncology, autoimmune and neuro and anti-infectious. But for our global pipeline, we are focusing on oncology and autoimmune and anti-inflammatory specifically that Rafael was saying. So internally for global development pipelines, we are only focused on those 2 areas.

Our last question today comes from the line of Clara Dong from Jefferies.

This is Jenna on for Clara. We have 2 questions, if we may. First, on VYVGART. I think previously, we were under the impression that sales will be back half loaded. So, I was just curious what kind of visibility or leading indicators you may have for Q4 and 2026? And more specifically, can you comment on, for example, pace, number of cycles on average patients are getting today? What does the pace look like over the next few years to reach the 3 average doses? And then our second question is on Bema in the context of the Amgen announcement. I was just curious if it's still possible to have a path forward for just China based on the trials you're running or the data you have in hand?

I'll start with VYVGART and then Rafael can talk about Bema. I think on VYVGART, what we're seeing is good underlying growth in terms of duration or number of vials or cycles patients get. I think as we started the year, on average, we were probably close to 1 cycle per year or per patient per year, and that represented the fact that at launch, we were getting lots of the acute patients and VYVGART, of course, works really well in an acute setting, but to get the full benefit for patients with gMG that allows them to work and live their lives fully, you need to get the maintenance benefits, which kick in at least 3 cycles.

Through this year, we're seeing progress towards an average of 2 cycles per year. And as you mentioned in your question, the goal is to get to at least 3 and over time, aspirations toward 5, where we see the full benefits in clinical trial and real-world setting, so I think as we look into next year, we'd expect the underlying growth to continue probably at this, what we're seeing in terms of volume, so sort of number of vials in total is sequential quarterly growth in the sort of low teens.

And I think that's reasonable to expect as we head into next year and continue to sort of climb towards that on average, 3 cycles of use; again, supplemented by, or accelerated by the national guidelines that were issued in July and our efforts to educate physicians in that regard. So, we're looking forward to the continued underlying growth here, and I think expect that to continue on a good basis as we head into 2026.

Rafael, do you want to talk about Bema?

Sure. So, we're still digesting the data. You saw the data at ESMO that was presented with the primary analysis of 096 and then the final analysis with this attenuated treatment effect. And then Amgen announced that 098 was a negative study in terms of not meeting statistical significance. So, we're looking at with Amgen and our partner at translational markers and subgroups, and we will be doing this in the upcoming weeks and make a decision. But our opinion is that it will be very challenging to get an approval in China with this data set.

So as such, we're thinking about how to deploy these resources to the rich pipeline that we've been discussing today and try to capitalize on the fact that we will have this opportunity of time, people, resources and effort to advance the current pipeline.

Thank you, we have come to the end of the question-and-answer session. Thank you all very much for your questions. I'll now turn the conference back to Dr. Samantha Du for her closing comments.

Thank you, operator. I want to thank everyone for taking the time to join us on the call today. We appreciate your support and look forward to updating you again after the fourth quarter of 2025. Operator, you may now disconnect this call.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Good day, and thank you for standing by. Welcome to the Zai Lab 2025 Triple Meeting Investor Call. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Rafael Amado, President and Head of Global Research and Development. Please go ahead.

Hi, everyone. Thank you so much for joining us today. I'm Rafael Amado, Zai Lab's President and Head of Global R&D. Before we begin, we will be making forward-looking statements today, and I ask you to review Slide 2 for further detail.

Moving to Slide 3. Here's our agenda. I'll begin with an overview of our global asset portfolio, followed by a detailed presentation of the updated monotherapy Phase I dose escalation and dose expansion clinical data for Zoci that were presented earlier today in a plenary session at the ENA Symposium here in Boston. Then I'll share what these results mean for the program and our next steps before opening up the lines for your questions.

Slide 4 highlights the momentum of Zai Lab's growing global innovation pipeline, which today spans both oncology and immunology, our 2 core focus areas for global development. Starting with oncology. At the top left, you can see Zoci, our potential first and best-in-class DLL3 targeted ADC. We have now initiated a global Phase III trial in second-line small cell lung cancer and are rapidly expanding development into first-line small cell lung cancer as well as other neuroendocrine carcinoma.

Beyond Zoci, our pipeline includes several highly differentiated potential first or best-in-class assets in oncology and immunology diseases. For example, ZL-1503, our internally discovered IL-13/IL-31 bispecific antibody is a next-generation therapeutic for atopic dermatitis. Preclinical data suggests it could achieve broader disease control by targeting both itch and inflammation, potentially leading to faster onset, deeper skin clearance and rapid release of pruritus. We have initiated a Phase I study and expect to initiate data readout next year.

In oncology, we have ZL-6201, our LRRC15 ADC, which is being developed for sarcoma and potentially other LRRC15-positive solid tumors, including breast and head and neck cancers. This compound has demonstrated strong binding affinity potent by standard killing and a favorable safety profile in preclinical studies and is expected to enter the clinic next year. We are also advancing ZL-1222, our PD-1/IL-12 immunocytokine designed to deliver cytokine signaling directly into the tumor microenvironment while preserving PD-1 checkpoint blockade. We look forward to sharing more data in the coming year.

Zai's unique advantage is a seamless integration of speed, quality and scientific rigor across every stage of drug development. This is powered by our integrated R&D centers in the U.S. and China with a world-class team of scientists, clinicians and operational leaders with extensive drug development expertise. This integration enables us to execute large complex global trials with agility and excellence. We expect to deliver at least 1 to 2 new INDs per year, ensuring a continuous pipeline of innovative therapies for patients.

Now turning to Slide 5. Zoci is a great example of how our global R&D model allows us to move with exceptional speed, advancing from Phase I IND to pivotal stage in less than 2 years. This speed is matched by the compelling nature of the data we are generating. In a notably difficult-to-treat patient population, Zoci has delivered deep and durable responses, achieving a 68% ORR in second-line patients with 1.6 milligrams per kilogram. We also observed an impressive 80% ORR among patients with untreated brain metastases as well as a median duration of response of 6.1 months across all lines and all doses.

We're equally encouraged by the remarkably well-tolerated safety profile, which demonstrated a low rate of Grade 3 treatment-related adverse events, and absence of Grade 2 or higher interstitial lung disease and 0 discontinuations in the 1.6 milligrams per kilogram cohort. With this data, Zoci is emerging as a potential best-in-class treatment for small cell lung cancer.

Today's announcement marks an important milestone for Zai Lab as we begin patient enrollment in a global pivotal trial. We are not stopping here. Next year, we plan to initiate our first-line small cell lung cancer registrational trial as well as a registrational study in neuroendocrine carcinoma, further extending Zoci's potential across DLL3 expressing tumors. And with that, I will turn our attention to the key data that were presented at ENA today.

On Slide 7, let me begin by highlighting a few key features of small cell lung cancer because they illustrate why there is such an urgency for new therapies. Small cell accounts for about 15% of all lung cancer, and this translates to more than 370,000 new cases each year worldwide, including over 100,000 in the U.S. and Europe. This is a cancer with a very aggressive biology, growing rapidly.

And as a result, about 2/3 of patients are diagnosed at the extensive stage when the disease has spread throughout the lungs and beyond. For these patients, outcomes are dismal with a median survival time of only about a year. Small cell lung cancer also has one of the highest rates of brain metastases of any cancer. Up to 70% of patients ultimately develop brain metastases, which drives significant morbidity and reduces median survival to just about 5 months.

Moving to Slide 8. The typical patient journey in small cell lung cancer begins with platinum doublet chemotherapy plus an anti-PD-L1 or PD-1 followed by maintenance. While this treatment has shown high response rates of 60% to 70%, it is accompanied by considerable toxicity. More than 60% of patients experienced Grade 3 or higher treatment-emergent adverse events. The median duration of response is only about 5 months, owing to the fast replicative potential of this tumor. Once patients progress, treatment options are very limited.

Topotecan or other chemotherapies may be used, but they provide limited benefit and come with high morbidity. Imdelltra or tarlatamab represents an important step forward and is a significant improvement over existing standard of care. However, challenges remain with a serious adverse event rate of 51%, the need for dose titration and the management of CRS and ICANS, all of which complicates its use in practice. So the reality is that despite incremental progress, this remains a disease with poor long-term outcomes. There is pressing need for new therapies that can improve outcomes across all treatment settings, whether that is an efficacy, safety or accessibility.

Next slide. Delta like Ligand 3 is one of the most promising targets in small cell lung cancer. It's known to be a driver of neuroendocrine tumors, and it is apparently expressed in over 85% of small cell lung cancers and is minimally expressing healthy tissue, which makes it an ideal target.

Zocilurtatug pelitecan or Zoci, as I'll refer to going forward, is our DLL3 targeted antibody drug conjugate. It was purposefully engineered with several unique characteristics that may portend potential best-in-class treatment for recurrent small cell lung cancer. This includes a high-affinity antibody with a relatively long half-life, which allows for durable and targeted tumor engagement and Activable LINker with a drug-to-antibody ratio of 8, which enables a potent bystander effect. Together, these characteristics give Zoci the ability to drive deep and consistent responses across a broad range of DLL3 expression levels, as you will see.

Turning to the next slide. This Phase I study is designed to evaluate the safety and efficacy of Zoci monotherapy in patients with recurrent extensive stage small cell lung cancer following at least 1 platinum-containing regimen. We included patients with asymptomatic brain metastases, both treated and untreated and also allowed patients who failed prior DLL3 targeted therapy. This is a very difficult-to-treat population. The highest dose tested was 2.8 milligrams per kilogram and the maximum tolerated dose was not reached.

Considering the totality of the data, expansion cohorts of 1.2, 1.6 and 2 milligrams per kilogram were open to optimize dose selection for pivotal studies. We highlight the 1.6 milligram per kilogram dose to draw your attention as this is the cohort with the largest sample size to characterize the efficacy and safety of Zoci in slides going forward.

Next slide. Here are the baseline and disease characteristics. This is a global study with patients enrolled across the world, including the U.S., Europe and China. Multicenter and geography trials obviate the inherent biases of trials involving single countries with a small number of institutions.

As of September 15, 115 patients were enrolled across the 6 dose cohorts. The majority of patients were heavily pretreated with 56% receiving study drug at second line and the remaining 44% of patients at third or fourth line, which is known to confer poor prognosis. Over 90% of patients received prior anti-PD-L1 or PD-1 therapy, and we also enrolled patients who have failed on other DLL3 targeted therapies, including tarlatamab.

Nearly 1/3 of patients also have brain metastases, including 13 who had never received prior brain radiotherapy. This challenging patient population makes the results all the more compelling as they approximate real-world results.

Now let's start with safety results on Slide 12. With longer follow-up, Zoci continues to stand out with a remarkably well-tolerated safety profile. I would like to focus your attention on the treatment-related adverse events in the 1.6 milligrams per kilogram cohort. Only 3 patients required dose reductions, all for Grade 1 events and no patients discontinued treatment. Results are even more impressive when you look at Grade 3 or higher treatment-related adverse events, which occurred in just 13% of patients, far lower than the 35% to 50% rate seen with other ADCs in this setting.

Pneumonitis and interstitial lung disease, which are notable concerns for some other ADCs were rare, low grade and manageable. In the 72 patients treated at 1.2 to 1.6 milligrams per kilogram dose levels, there were only 2 cases and both were Grade 1. This differentiated safety profile is important, not only because it allows patients to remain on therapy to derive benefit, but also because it positions Zoci as an ideal candidate for combinations in the first-line setting where tolerability is critical.

Turning to the next slide. Here, you can see the waterfall plot on the 102 patients who had at least 1 post baseline scan. The vast majority of patients, including those who had untreated brain metastases at baseline, showed target tumor regression with many being deep and durable responses. Half of the responders in the overall population, including half in the 1.6 mg per kilogram dose cohort are still ongoing at the data cutoff.

Turning to Slide 14. With longer follow-up and a larger sample size, the overall response rate remains consistent with earlier reports. The response is higher in patients who received the study treatment as second-line therapy with the best overall response of 60% across all doses. In the 1.6 milligram per kilogram cohort, the dose emerging as potential randomized Phase III dose achieved an overall response rate of 68%. We also continue to observe high systemic responses in patients with brain metastases, including an 80% ORR in patients who did not receive prior brain radiotherapy.

Intracranial disease affects up to 70% of small cell lung cancer patients and remains a key contributor to morbidity and mortality. Rapid onset of efficacy and tumor debugging allows for potential clinical benefit and future combinations with chemotherapies and immunotherapy. Beyond high response rates, durability is also important. Here again, Zoci is showing very encouraging signs. The median duration of response across all dose levels reached 6.1 months, and many patients are still on therapy after data cutoff.

On Slide 15, we see the spider plot showing the response being fast and patients having substantial clinical benefit. The median PFS across all patients was 5.4 months, a strong outcome in this heavily pretreated setting compared to other agents in second line, especially accounting for all doses and lines of therapy.

In conclusion, on Slide 16, we believe that Zoci has the potential to be both the first and best DLL3-targeted ADC for small cell lung cancer and ultimately to become an important treatment choice in this disease where patients desperately need better options. Zoci is delivering the right combination of efficacy, durability and tolerability. We're seeing deep and durable responses in a very tough to treat heavily pretreated population, including patients with brain metastases and those previously exposed to other DLL3 targeting therapies.

Importantly, this profile holds up across multiple geographies and with longer follow-up, giving us confidence in the robustness of this data. Safety remains best-in-class with no treatment discontinuations due to toxicity and very low rates of serious adverse events at 1.2 to 1.6 milligrams per kilogram. Looking ahead, our randomized Phase II study is ongoing to optimize dose selection, and we have already initiated our Phase III start-up activities towards a registrational trial versus investigator's choice.

Next slide. We're executing this program with remarkable speed. In less than 2 years, we have advanced from the start of global Phase I to pivotal phase. This is due to the remarkable dedication by an outstanding team, which keeps the momentum on this program, not only in second line, but in first-line and NEC, which will be the subject of upcoming updates. This pivotal study will compare Zoci against investigators' choice of therapy with overall response rate and overall survival as the primary endpoint.

Secondary endpoints include duration of response, progression-free survival, time to response, safety and quality of life. We will soon start enrolling patients into this registrational-enabling study with a planned interim readout in early 2027, which could potentially set the stage for an accelerated approval submission, a major milestone for patients and for Zai Lab.

As stated on Slide 19, beyond second-line small cell lung cancer, we're also pursuing indications in earlier lines of treatment where the opportunity is even larger. Given its efficacy to date and favorable safety profile, Zoci is particularly well suited for use in the first-line setting, either to enhance maintenance treatment or as a potential replacement for chemotherapy. We are currently evaluating Zoci in combination with anti-PD-L1 and chemotherapy in the Phase I study with the goal of augmenting or replacing chemotherapy.

Escalation for the doublet combination cohort in first-line small cell lung cancer is complete and is ongoing for the triplet cohort. We expect to share data in the first half of next year. As the data mature, we plan to move quickly into a pivotal study in the frontline setting in 2026. We're also exploring novel combination strategies with additional agents to further unlock Zoci's potential. We will be able to disclose more next year when we initiate a Phase I combination trial. We're executing this program with both speed and quality with the goal of fundamentally reshaping the treatment paradigm for patients with small cell lung cancer.

Next slide. Beyond small cell lung cancer, Zoci is also being evaluated in neuroendocrine carcinoma or NEC, an area of high unmet need with over 350,000 patients globally and a prognosis that remains poor. 5-year overall survival across multiple tumor types stands at additional 5% to 15%. The current standard of care is chemotherapy, which offers limited response and high toxicity with no targeted therapies available despite high DLL3 expression across NEC subtypes. We initiated a global Phase I/II study in May of this year and data are already looking promising, potentially supporting advancement into a registrational cohort next year. We plan to present detailed data at a medical conference in the first half of 2026.

In conclusion, Zoci is emerging as one of the most exciting opportunities in small cell lung cancer and potentially in neuroendocrine carcinoma. Over the next year, we will be reaching several important milestones, including pivotal trial initiations and early combination data that will continue to build momentum for this program using innovative registration trial. We look forward to keeping you updated as we work hard to deliver on Zoci's promise for patients. And now operator, please open the line for questions and answers.

[Operator Instructions] And the first questions come from the line of Jonathan Chang from Leerink Partners.

First question, can you discuss how you're thinking about the competitive -- about the time lines for Zoci development and how that positions Zoci in the competitive landscape?

Jonathan, it's Rafael. Yes, as I mentioned in the prepared remarks, we are starting the Phase III study at the moment. This study is slated to continue until 2027 and the accelerated approval opportunity remains viable to us after discussions with the FDA.

So we expect to file in 2027 for accelerated approval based on response as well as durability of response. And then the approval will depend on the exact timing of filing and review, but it could be as early as the end of '27, early '28. So that's how we're thinking about the pivotal trial, the first approval for Zoci.

Got it. And just second question, what is your latest thinking on the positioning of Imdelltra in the treatment paradigm? And how does that impact your development strategy and thinking around the commercial opportunity for Zoci?

Yes. This is a really interesting question. Of course, Imdelltra has a very broad development program. You obviously know the data that was presented at ASCO and then published. And it is in second line, but they have an extensive program in frontline as well and combinations as well will follow.

My sense, and this is just my own opinion, is that eventually Imdelltra will become more of a frontline agent. And it will obviously be given to patients that receive other agents in frontline, like potential ADCs as well. So -- and how the patient segmentation will take place, I think it will depend on the results. of the trials and also the patient characteristics as well. So I think it remains to be seen. There's a maintenance study that they have. There's a quadruple study that they have.

And then ADCs, particularly our product at the moment, we're thinking about positioning as a chemotherapy sparing product as well. And with its characteristics of rapid onset of action and rapid onset in patients with metastases, particularly untreated metastases and really good safety profile, I think it will compete well in frontline as well. But I think time will tell. It's still early. These studies still need to be executed and read out. So stay tuned. I think it's a good time for this disease that there are active agents that are all in development.

And the next questions come from the line of Li Watsek from Cantor Fitzgerald.

Maybe just 2. First, can you talk a little bit about how should we interpret the OR versus PFS, which metric is most relevant to look at in this setting? And then second, can you just comment a little bit on what you're seeing in frontline landscape, which is evolving quite rapidly? And what can you say about your frontline trial strategy and time line given your competitors are also moving into frontline very aggressively?

Yes. So the first question is duration of response versus PFS, which is a great question. So in single-arm trials, one has to be very careful comparing outcomes in general because the studies can be very different geographically, the number of patients that are enrolled can vary, the number of months of follow-up can vary. That means the number of patients that are censored.

So a lot of care has to go into comparing studies across each other. But more to the point of duration of response versus PFS, duration of response is really a more valid endpoint than PFS in single-arm trials. Duration of response is only calculated in patients that respond, and it's really a reliable measure of patient benefit in a single-arm trial because it measures how long patients are benefiting from the drug using the surrogate endpoint of response. And this is strictly as a result of treatment.

And so it's a really good interpretable efficacy endpoint for assessing activity as well as durability. When you look at PFS, PFS without a control arm is very difficult to interpret. There are differences between, as I mentioned before, regions versus global accruals between patient baseline factors.

PFS also includes stable disease patients and some stable disease patients may have very aggressive disease versus others that may have very stable disease. that is not growing very fast and maybe it's not a reflection of the drug. It's just a reflection of the natural history of the disease. That is not the case for duration of response, for instance.

And also PFS is calculated using Kaplan-Meier methodology, which is different from duration of response. Duration of response is just a median. So a lot of sensoring will exaggerate PFS. So if you have a short follow-up where a lot of patients are sensor, that is they haven't met either progression or death, they will tend to have a longer PFS than they will when the data matures. So one has to interpret PFS with caution when the follow-up is short. So I think in general, the regulatory endpoint for a surrogate endpoint such a response will follow response as well as duration of response rather than PFS.

The second question is the first-line strategy given the competition. And as I said before, there's 2 agents that have followed the strategy of maintenance. And then Imdelltra also is in first line. There's really no strategy at the moment of chemotherapy sparing. And we think that, that is an important strategy because many patients cannot get more than 4 to 6 cycles of platinum etoposide and maintenance PD-1.

And when you look at many of the ADCs that are moving to frontline, Padcev, for instance, is a good example where chemotherapy was eliminated by combining it with PD-1 -- and then some of the breast cancer ADCs are also going into frontline. So there's also -- there's already a history of being able to spare chemotherapy or at least reduce the chemotherapy burden and synergize with PD-1 agents.

So this is exactly what we're testing now. We have completed the combination with atezolizumab, and now we are in first line with carboplatin and atezolizumab. That accrual is going very well. The tolerability of our drug lends itself really well to this combination because the treatment-related AEs is relatively low. It's only 13%, which is actually the lowest of many of the ADCs that are out there. So we think that it will be a good agent to combine in first line, but to spare some of the side effects full dose chemotherapy. And as I said in the prepared remarks, we will finish this. We will present some of the data or the data up to the follow-up time next year in the first half of the year, and we plan to start a study looking exactly at that setting.

So I think there will be options for patients, either standard chemotherapy combinations, maintenance therapy or chemotherapy experience with ADC. And I think physicians will have a choice for their patients, which is really what we want to do with the development of these drugs.

And the next questions come from the line of Linhai Zhao from Goldman Sachs.

This is Linhai from Goldman Sachs. A little bit more on the recent registration of the Phase III trial in second line. Can you share a little bit more on the latest time line? I found that the current time line for the early '27 to file the AA approval, is it kind of delayed compared to our initial time line? And also in the ClinicalTrial.gov description, it said that the patient enrollment also includes second-line tarlatamab treatment can you help us understand if the patients with second-line tarlatamab treatment would be considered still a second line or third line? And how much percentage of such patients do we intend to enroll in this Phase III trial?

Thank you for the question. So we are including Imdelltra in the control arm because it's got accelerated approval, but obviously, it's got a definitive trial. And the use of tarlatamab in second line in the United States is a clear standard at the moment. So we, in a way, have the advantage of not having started it yet. We are pretty advanced with regards to other products, but we are going to compare to contemporary therapy rather than therapy that was really salvage with very little activity.

And so as a result, because tarlatamab prolonged survival and it's an active drug, we have increased the sample size of the study to retain the power of the study and the treatment effect. So that extra accrual may lead to slight delay, and we're trying to mitigate that by increasing the number of sites. But we still think that we will get accelerated approval or data to file for accelerated approval in 2027.

The issue of including tarlatamab, I think, is important and it will reflect real-world usage in the United States. So the percent of patients that receive tarlatamab, I think, will vary, but it will reflect, again, what is the usage in the U.S. And as you know, that use will change with time. It is included as physician choice.

So we are not forcing which agent the physician should choose. But if they choose to use tarlatamab, they will. With regards to tarlatamab in third line, some patients may have failed tarlatamab and they could enter the study. And likewise, those patients that have not received tarlatamab when they go into the treatment arm, they could receive tarlatamab upon progression. So that would attenuate any treatment effect of tarlatamab as well. So in summary, I think we're doing a contemporary trial that incorporates the therapies that are available.

And I think it will be more valid with regards to what happens in the real world. It gives physicians options, and we will try to accelerate the trial to try to decrease any potential delay in accrual. And again, we're still guiding towards end of '27, early '28 for approval. And the last comment I will make is the first approval is based on response. The tarlatamab response rate is 35% in the Phase III study as opposed to 68% to 70% for our drug. So we're not actually very concerned with the accelerated approval. We just want to make sure that the power for survival is correct.

Just to clarify that the second line allotment in this trial was considered as the control group, right?

So tarlatamab -- inclusion of tarlatamab for patients that are tarlatamab naive will be in the control group. But as I said before, any patient in the treatment arm that had not received tarlatamab could receive tarlatamab. I mean we don't control post-progression therapies.

And the next questions come from the line of Anupam Rama from JPMorgan.

This is Joyce on for Anupam. For your pivotal study, it looks like ClinicalTrials.gov is also showing that you will look at 2 doses, assuming that they are 1.2 and 1.6 mg per kg. Could you just talk about what points were discussed with regulatory agencies when aligning on dose selection and your continued confidence in 1.6 as the likely dose for approval?

Thanks, Joyce. That's a great question. So we have been spending a lot of time trying to hone into the dose and have frequent dialogue with the agency. FDA agrees that 1.2 and 1.6 are the doses to really look at. And we started a randomized cohort in the current study 001 comparing 1.2 versus 1.6. So we actually are close to finishing that cohort. But just in case we didn't have sufficient numbers of patients, we built in a randomization or run-in phase into the Phase III study.

I think as soon as we achieve the number of patients in each one of the arms, which will include patients in the 001 and in the pivotal trial 003, we will choose a dose and then drop the other arm of the pivotal trial. Of course, we will have to have agreement with the FDA to do that. But at the moment, our expectation is that 1.6 would be the dose given its therapeutic index. And I think doing that work is really important because although one could go higher or lower, the therapeutic index of ADCs still remains narrow.

As you can see, there's only 0.4 mg per kg difference between these 2 doses, but they can result in significant differences in efficacy or durability. So it behooves us, I think, to have this in the Phase III study. We may be able to drop that dose soon if we get clarity from the 001 trial on what the dose is and get agreement from FDA.

Great. And then just a follow-up, if I could, just zooming out, your registrational strategy positions you about 1.5 to 2 years ahead in the space versus others. Could you just speak to how important that lead time is in terms of competitive advantage, especially with how the landscape continues to quickly evolve?

Yes. I think we -- as I mentioned before, we are extremely pleased and proud of the work that the team has done to move this program expeditiously and fast. We studied a lot of doses. We've opened many sites around the world. We think we have a study that really represents real-world patients, and we have excellent data with response rate in the 70% range with the dose that we believe is going to be the randomized Phase III dose.

So that speed is really important because if one doesn't do this careful work and does it in an expeditious manner, one would pay a price in the Phase III study. And I think choosing a dose that was very effective, but at the same time, extremely safe as ADCs go with no discontinuations, only Grade 1 ILD in a couple of cases, 13% Grade 3 plus mostly hematologic toxicity. I think that is really best-class type doses that we've been able to achieve and uncover with this product. And it also opens the door not just for this, this is on line of therapy, but as I mentioned before, for frontline combinations and neuroendocrine carcinomas and other tumor types.

So this is an advantage that allows us to move really fast, and we plan to continue to have dialogue with FDA and potentially obtain drug designations that help us develop this in an expeditious manner. So in drug development, 1.5 years is really a very long period of time. It's not just the properties of the drugs, which are excellent in this case, but it's also how it is developed and how quickly do we move. And I think in this case, this program is world-class, I think.

And the questions come from the line of Yigal Nochomovitz from Citi.

This is Caroline on for Yigal at Citi. We were wondering if you could tell us more about the significance of the brain mets data in small cell lung cancer. And what is it about this drug's construct that apparently does a very good job with CNS penetration and activity? Did this exceed your expectations?

Yes. Thank you for the question. As I mentioned before, brain metastasis is a big problem in this disease. When patients develop it, their median survival is very short. And close to 2/3 of patients or beyond can get brain metastases, and they survive about 5 months. There are poor candidates for systemic therapy, for instance, and their disease tend to be really fast growing. And it's actually an area of relapse even in patients that have systemic disease control. So they have to come off the drug because of brain metastases.

So the numbers that we quote are patients that responded that had brain metastases. We are now doing an analysis of patients that responded in the brain using renal criteria, which is a 2-dimensional way of measuring CNS tumors, and we plan to present that next year. And that data, I think, is even more impressive. I think the response rate that we've attained, particularly in patients that have never been treated for brain metastases is very impressive.

If you look at the rest of the studies, they never included these kinds of patients. They included patients that were treated and that were -- that had stable disease on treatment. They didn't have any new metastases and their metastasis was not growing. In our case, if a patient had de novo brain metastases and didn't have symptoms, we did include those patients. And to our surprise, we saw 80% of the patients -- 80% of the metastases responding. We have accumulated more and more examples of those.

So we think this is really important for a patient that comes in that has brain mets and really doesn't have a lot of time to, for instance, go to a neuro radiologist to receive Brachytherapy or Gamma Knife for any other radiotherapy localized procedures that are used because that delays systemic therapy. And in the meantime, the patient is progressing, whereas being able to give this antibody and control both the intracranial as well as systemic disease is, I think, really important. And we hear this from our investigators all the time.

And then lastly, in terms of why this happens, we think the blood-brain barrier is disrupted and antibodies can penetrate the brain. But more importantly, this is an antibody that has picomolar affinity. So you combine even low numbers of DLL3 molecules in the surface of the cell. And because of the bystander effect and internalization, both direct and indirect effect, cause very rapid decrease in the size of these brain lesions to the point that they don't actually get treated with radiotherapy. They only receive the systemic therapy.

So I think it is a property of the drug that I think will play well in the treatment of the disease and it's not observed with other agents.

[Operator Instructions] And the questions come from the line of Clara Dong from Jefferies.

Congrats on all the progress. So I saw you're planning to initiate a Phase I global study of Zoci plus novel combo in 2026. So we're wondering, could you share more details about this trial and the design, particularly in light of today's data update? And what you see as the potential significance or rationale behind this novel combination?

As I mentioned before, we think that this is potentially best-in-class, particularly based on tolerability and also mechanism of action. So obviously, ADCs are not the only drugs being developed in small cell lung cancer. And we want to position this drug as a cornerstone of potential future combinations that make biological sense. At this point, it's premature for us to disclose what other studies we will be doing. We will explore other indications that we will announce with time. But there are other agents that have orthogonal mechanisms of actions that could combine well with these therapies.

And as I mentioned before, immunotherapies are some of those. And we -- I think we should just stay tuned and see what time brings. And right now, we're obviously focused on standing up this Phase III study and then moving forward rapidly with the first line as well as neuroendocrine carcinomas, but we will explore other combinations to see whether we can find synergy for these patients and then place Zoci as a centerpiece of therapy along lines of therapy and combinations with other agents.

We have no further questions at this time. I will now hand back to you, Mr. Rafael Amado, for closing remarks.

Well, thanks, everybody, for your great questions today and for joining us. Again, I'm incredibly proud of the team's progress, and I really look forward to sharing our next steps as we advance this program with you as well as our entire pipeline in oncology, which is moving equally fast. So with that, operator, you may disconnect.

Thank you. This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines. Thank you.

Good afternoon, everyone. Thank you for joining us today. My name is Jack Lin, I'm the China biotech analyst for Morgan Stanley. And today, it's our pleasure to invite Zai Lab to join us in this conference. And today with us, we have Josh Smiley, President and COO of the company; as well as Ms. Samantha Du, the Founder, Chairperson and CEO of the company. Thank you for joining us today.

Thank you, Jack.

And before we start, for important disclosures, please visit the Morgan Stanley research webpage at www.morganstanley.com/researchdisclosures. For any other questions you might have, please reach out to your Morgan Stanley sales representative.

So let's get started. So Josh and Samantha, so for -- just in case there are investors here that are not super familiar with us and the latest update of the company, could you give us kind of a brief introduction in terms of who we are, what's Zai Lab about?

And I will start. And Zai Lab was founded in 2014 and then we IPOed in NASDAQ and dual listed on Hong Kong Stock Exchange also 2019. So we have -- now we have our own discovery, development and commercialization in China. We have about 1,700 employees across the world, majority in China, right, commercial in China. And R&D, we have R&D and all the corporate functions in Boston and also in South Bay. Company have -- currently, we have 8 launched commercial products and also 2 more to get approval, this -- later this year or early first quarter next year. And that's on the China rights side. And on the global side, we have DLL3 ADC, second line, we're entering pivotal trial. First line, we are still -- we're starting first-line combos and also for neuroendocrine, I would say, in second line for small cell lung cancer -- non-small cell lung cancer.

And also, we have a full global pipeline. We have internally discovered IL-13, IL-31, finished primate studies and entering pivotal -- Phase I in U.S. this year. And so next year, we're going to have -- in October, DLL3, we will give the full update at a major medical conference on the second line and the Phase II studies. And we're also going to next year, early -- sometime next year, first line small cell lung cancer -- non-small cell lung cancer and also neuroendocrine will have updates as well. And so we -- internally, we focus our pipeline in oncology and immunology. But for our pipeline in China, we also let -- we also have some in neuro and because, for example, our key product and name again?

COBENFY, KarXT.

COBENFY, KarXT, yes. Yes. And it's the [ psycho -- it's developed ] for neuro. And there's a huge population in China. This is a drug hasn't been approved with a black-box for 70 years. So we own the China rights. And also for our partner, argenx product, which we own in China is also fast growing. And last year, we had total sales of USD 400 million, and we have $800 million cash in the bank. So overall, I think company is in a very healthy state. Josh, you want to?

Great. Very good.

That's perfect. Thanks for the overview. So kind of -- when we talk about we are in multiple different therapeutic areas, and we have a big operation in commercial and R&D. But kind of before we dive into all of that, I kind of want to start off with, so in-licensing model. This is a kind of an innovation model that really first put Zai Lab on the map, I guess, a couple -- quite a few years ago. And it's been a bit of time since then. I'm just curious to kind of better understand. So for the in-licensing model, how do we see -- given the current landscape in China and globally, how do we evaluate this model now? Are there still opportunities? And where do we go from here with this kind of innovation model?

I think for China -- for China market, right, we think if their product, they are synergistic with our existing pipeline. We're still interested in China rights because China is still -- I think the -- looking back, China just started NRDL reimbursement 2018. So just -- it's not long, it's 7 years, but the market has been growing. And like for the Iressa, it's close to USD 1 billion sales already in China. So several products are reaching that kind of scale. And that's for China. So we're still interested in great assets either stand-alone pipeline of product or asset synergistic with our existing China pipeline.

But for global rights, we -- of course, we are very selective. And we prefer that in the therapeutic areas, we have strong expertise, strong internal expertise, and we combine our own discovery with external innovation. So we opened a good -- with our presence in China for the last 25 years and as the first company, biotech company, that was the previous company, and we have a lot of know-how in terms of the market, in terms of the people, in terms of the good clinical sites. So we're definitely open to in-licensing good global assets.

Got it. And I think as you mentioned, for in-licensing side of the equation, we have done a lot in oncology, and then we make a big foray into, I think, neurology/immunology with VYVGART. And then we're also kind of exploring further into kind of the CNS space with KarXT. So I mean you mentioned in terms of whatever we're looking for next direction has to be synergistic. But just given the existing landscape in China and considering the competition and considering the outlook, like is there any particular area that we might look to further build up in, whether it's neurology or immunology, given that we have 2 pretty major assets in the space already?

Yes, definitely because we already have great products in those 2 areas. Like earlier this year, we did the pove, right, from Vertex. So that's also synergistic with our immunology pipeline. And so if there is -- in China for China rights, immunology, oncology and also neurology, definitely we'll be interested with a synergistic combination. But for global rights, we prefer to stay in the therapeutic areas where like as I said, oncology, immunology where we feel we are very -- we can handle the global trials ourselves.

Understood. So I think that's a good place to kind of also transition to. So the other side of your equation is, we have made a lot of strides and efforts into leveraging kind of internal discovery or leverage other approaches to developing potential global assets, right? So could you kind of walk us through your thought process in terms of how do we balance between internal discovery or kind of getting global rights to other assets externally? How do we balance that? And in terms of carrying forward, what kind of assets or what's our consideration in terms of looking for partnership to bring an asset further along or in terms of doing it ourselves for the global expansion?

Josh runs the BD team and here, I'll let Josh answer that.

Yes. Yes. I mean, I'll start. As we think about the global pipeline, we do have our own discovery capabilities. And I think what we've sort of focused on there is where do we think we can make the biggest difference. So we're focused on large molecule platforms like monoclonal antibodies, ADCs, bispecifics in oncology and immunology. So while we have some chemistry capabilities, I think our view is other people can do that differently better and so on. And we'll focus on a handful of good discovery programs a year.

I think our experience, both Samantha's as well as mine, I used to work at Eli Lilly, she worked at Pfizer, is once you start to get up to 10, 20, 30 projects per year in the candidate space, it gets very hard to manage, and there's lots of temptations to move things forward that aren't best-in-class. So we're going to pick precedented mechanisms where we think we can make a difference with those technologies and initiate those programs. And I think probably it's fair to assume the equivalent of 1 to 2 INDs a year out of our own focused efforts, we're going to supplement that then with business development focused on, I think, early phase opportunities. I think we can make the most difference.

If we look at opportunities in the preclinical to early clinical space where we can add some insights, leverage our global development capabilities to bring something, it's a good idea to bring it forward fast. And I think we saw that on the DLL3 program. So again, I think there as Samantha mentioned, focused on oncology and immunology, we have the scientific capabilities, the insight and the development capabilities to move those fast.

I would think of that over time, probably similarly, one -- the equivalent of 1 to 2 INDs a year coming out of that space. We look all over the world. We want innovation to be first-in-class, best-in-class kind of opportunities. Increasingly, we see some of those opportunities in China. And of course, we have -- with Samantha's background and network and our experience in China, we have really good -- the whole team. We have great insights there. But I think -- so maybe more frequently, you'll see things like the ADC program that we did with DLL3, but I'm based in Boston, our business development teams all over the world. We're looking at stuff everywhere.

Perfect. So yes, I think in terms of this direction that you're mentioning, especially in immunology, right? So we recently also published a global report that focus that we think immunology is one area of out-licensing from China. That's relatively less tapped than, say, oncology or cardiometabolic obesity space specifically, right? There's been good healthy deals from China for these kind of assets. So if you could walk through us in terms of how do we think about the opportunity set in this immunology space, right? How could we leverage this kind of potential need if it becomes the next wave of out-licensing, then how are we positioned in this space?

I'll start. Yes. And then you can jump in. I think, first, what we see, if we contrast immunology with oncology, I think what we see with immunology is a little bit of patient data and a little bit of differentiation goes a long way, right? So I think with oncology, we can get excited about the mechanisms and you still have to run all the trials and you get surprised on overall survival and all those kind of things. I think with immunology, you know pretty quickly whether you have an opportunity or not. So we're quite interested in that space. We have great expertise in immunology.

Now we're running -- I mean, we've got probably the equivalent of probably approaching 1,000 patients in clinical trials because we do all the China work for argenx and now for pove and otherwise. So our ability to learn from our portfolio and to leverage clinical sites and investigators and other things, I think, gives us a real capability boost and advantage. So I think we're going to look for -- again, I think we're probably less interested given the company of our size and otherwise in totally novel biology. But I think for precedented mechanisms where a new modality may make sense or where there's still a race or an opportunity through creative design or fast-moving sort of development, we're going to want to take advantage of that.

And I think we see ourselves able to play across a range of the immunology conditions. And I say, the good thing, and I would take our IL-13/31 as an example, I think by this time next year, we should begin to generate data in atopic dermatitis patients, where, again, whether it's a better dosing regimen, faster onset of action or better relief on itch, a little bit of that data, I think, becomes a pretty valuable asset. And we'll see that -- we'll look for that to bring in and develop ourselves as well for other conditions. Sorry, Samantha, jump in.

No, it's great.

Yes. So we've been talking a lot in terms of the strategic level, right? If I think we can take a bit deeper into the individual pipelines. So I think as you guys mentioned earlier, DLL3 ADC is really one of the key assets that we have in terms of our globalization plan. Could you kind of give us a bit more background in terms of -- given that all the positive data this DLL3 has published, how do we see its differentiation from the current landscape? There are fairly many other competitions in the whole small cell lung cancer space, right? And in terms of how do we prioritize our clinical development strategies for this asset specifically and also kind of the development plan forward, partnership how far long. Could you kind of lay it out for us in terms of how we see this one to come to fruition basically?

Go ahead.

Okay. I'll start. So I think -- I mean, of course, in small cell lung cancer, there's lots of, Jack, as you say, sort of investment and developments otherwise. But if we look at the thing that's right in front of us, which is second line and later small cell lung cancer, there's really 2 options today in the U.S. and even fewer options outside the U.S. It's some kind of chemo regimen or IMDELLTRA. And IMDELLTRA is off to a great start in the U.S., I think, trending towards -- annualizing towards like $500 million in sales. But it's a difficult drug to administer in a second-line setting.

Our view is that -- well, first, the overall response rate is what, 35%, I think, in the confirmatory trial and sort of there are challenges in terms of monitoring patients. And otherwise, our view is probably somewhere in the range of 20% or less of patients have access to that drug in the U.S. just because of the monitoring and the safety concerns. And that is why I think we see ourselves as Samantha mentioned at the beginning, in a position for an accelerated approval in second line and later small cell lung cancer in the U.S. by the end of 2027. So about 2 years from now.

And I think that, that space in the U.S. is pretty -- it's pretty big, right? I mean so if IMDELLTRA is trending at that level after less than 2 years on the market and a pretty limited sort of patient aperture, I think, we see this as a pretty big opportunity. And we think -- certainly, from a DLL3 perspective, we think that's a great target. I think, of course, IMDELLTRA validates that. But I think from an ADC perspective, we see this as an opportunity to provide much better patient response. Our data is 79% ORR in the targeted dose that we're taking into the registration study and a very mild safety profile, less than 6% serious adverse events in the trial.

What we know relative to other DLL3 ADCs is we're going to be first by somewhere in the range of 18 to 24 months, I think, is the advantage we have today when we think about the IDEAYA data from the weekend and the next one, Roche in event coming behind that. So we like where we're positioned in the late line setting. And again, that's very easy to see and very definable. I think the space then where we're going to see lots of continued innovation, this is great for patients, is in the frontline setting, and we're doing studies today to support a first-line registration study next year in combination with PD-1 and with or without chemo, we'll see what the data looks like. And then I think over time, other opportunities to combine with emerging agents.

I guess the final one I would say is we also see data on B7-H3s as another ADC approach for small cell lung cancer, I think certainly in the second-line setting, we like the profile of -- I think our drug is cleaner, the target is cleaner, and we see that show up in terms of -- certainly in terms of safety and safety events. So I think for us, it's full speed ahead in the second line study. We'll get that up and running this year. Be in a position, we believe, to submit data for an accelerated approval in the U.S. in late '24 and approval in late 2027 with the final confirmatory overall survival data coming after to be in the same trial. So we're really excited about this opportunity.

Understood. Yes. No, I think there's a lot of anticipation for these assets. And I think kind of following up on the time line that Samantha was sharing, I think you touched on it as well that we are potentially expecting kind of a durability type of data on the second-line setting, sometime this October. That's what we expecting and then...

In the mid year, [ next October ]. Yes.

Okay. And also first line sometime next -- early next year. So if you can walk us through in terms of what kind of data or what kind of bar we would be expecting. So first for the second-line setting, if you're looking at the durability, how should we think about the data that's come out? And also for the frontline setting, we haven't really seen much yet from anybody really. So what are going to be kind of the key things that you're going to look for in that first print of kind of first-line combination data?

Please go ahead.

Maybe you want me to start. I think in the second-line data that we'll show in October, it will be -- it's about basically 6 months more data from what we showed at ASCO in June. And I think what's most important in that data set will be to get to the confirmed ORR. Again, we showed a 79% ORR in the dose that we're taking into the registration study in the dose and setting. Of course, just given the maturity of that data, some of that was unconfirmed. So I think the bar we'd expect to be is -- again, there's no reason -- we don't have any reason to believe that won't hold up. But I think the bar we say is somewhere above 60% ORR on a confirmed basis in that dose and in that setting, we think is a winner, okay? And I think we're anxiously awaiting the data cut in the presentation. I think the thing that's a question from the ASCO data, just given the maturity of it, is the duration data, right? So DOR and PFS. And I think that by the data cut that we provide in October, we will presumably have reached the medians. So we'll be able to provide that on a real basis.

And I think there -- again, if we think about the second-line setting, I think probably the bar is 4 months or so of PFS or durability overall. I mean for us, I think our DOR and PFS should be pretty close together. We have every reason to believe that we'll be doing better than that, okay? So I think we think about plus or minus 6 months is probably the right place to be. Again, we don't have any -- I'm not saying that's what it's going to be, but I think that's just based on what we could eyeball from the data before.

I think we're trending in that direction. But I think drug in the second-line setting that's at a 60% ORR and something better than 4 months with the safety profile that we have, which, of course, contributes to those other 2 variables, we think is an exciting opportunity, be benefit the patient and I think puts us in a good position for an accelerated approval. I think as we get into the first-line setting, of course, we need to see the data. And otherwise, I'd say there's not a lot yet.

But the view would be with a mild safety profile that we have with our -- with 1310 combined with a PD-1, we should be able to get the targeted effects of chemo without all the safety liabilities, which should lead to very good PFS and OS benefit versus the current standard of care, which is PD-1 plus chemo regimen. We'll see how that data, as I say -- as Samantha said, we're looking at multiple sort of cohorts there to decide what's the right approach there. But again, I think that anything that can add modest benefits in terms of PFS and survival is going to be an important addition for clinicians in terms of how to treat patients.

I think the good thing then over time, and we see this in all the other tumors where you start to get investment and see progress is you start to stack those months up, right? And over time, there'll be opportunities to not only pursue whatever we decide to pursue from a first-line perspective next year. I think there'll be other combinations that will make sense in first-line or maintenance setting, including things like combinations with T-cell engagers and otherwise. So we'll think about all that over time. But I think for the near term, it's using the ADC mechanism to get the more powerful benefits of chemo when combined with the PD-1 without the safety challenges that come with the more promiscuous dosing that you have to do without an ADC.

Yes, yes. And also, we're also doing trials on neuroendocrine based on our preliminary and first -- and POC, we saw the responses, right? So if that -- next year, we'll report that data. I think if that data looks even 20%, that's the breakthrough for that field.

Yes, yes, second line in those neuroendocrine tumors, the ORR and response -- I mean, and durability is pretty low in terms of approved or standard of care today. And again, it's early responses, right? So you don't need to see many to get excited here, and we're excited.

Yes.

Yes. So lots of things to look forward to in the next 6 to 12 months for this asset. And I know we have quite a few kind of major assets, bema, KarXT, VYVGART, right? Just kind of on the topic of -- while we were on the topic of kind of immunology, right? I also want to ask in terms of pove, right? In terms of the overall kind of development landscape and the competitive landscape in China, right, it's not necessarily kind of like the very first one to kind of be doing this. So could you share with us in terms of like the underlying rationale why we choose pove at this time point to kind of explore in this place -- space in China?

I'd start with it's a very big opportunity. I think we look at IgAN in China. Overall, it's in the millions of patients opportunity. And while there's lots of developments in the space, I think from an APRIL/BAFF inhibitor, which we think is the combination of those 2 pathways, I think we think is the most powerful approach to IgAN. We like -- we started discussions with Alpine before they were acquired by Vertex. So we like that asset. We like that space. And I think it's -- we think it's a best-in-class opportunity. But again, I think given the size of the market, having multiple new mechanism approaches, whether it's just a BAFF or the combination or others, I think, is going to be good here in launching the best-in-class as maybe second or third or whatever.

And again, a lot of this is going to depend on the data and depend on the specific regulatory path in China. We do believe we're set up well and aligned well with what Vertex is pursuing in the U.S. in terms of an accelerated approval with the interim data cut mid next year. We think that's a workable approach in China as well. So we think we have an opportunity to be near the front of the line, maybe not first in terms of the various mechanisms here, but certainly best-in-class over time.

But again, I think even in a competitive space here, that's not a bad thing because this is all -- these are all new approaches to treating IgAN in China. And again, there's a huge market opportunity. So having more than one pathway and maybe multiple competitors even with the same pathways is probably okay. But I think the things we know relative to the others who may or may not launch before us or after us or close to us is, we know we've got dosing benefits, and I think we believe we'll probably have a deeper and more permanent type of benefit. Again, that has to be -- that has to play out, but we really like the opportunity.

Understood. And yes, I think that's what I was thinking because it doesn't hurt to kind of have -- it's a new area to have some others kind of pave the way and we come in with a much better products to help with the penetration. So I mean, I'm being watchful of the time. There's other questions I kind of want to go through in terms of kind of the overall China biotech landscape. But again, we know that we have quite a few major products. So if you kind of give us -- maybe spend the next 3 minutes -- or 3, 4 minutes or so, kind of give us a talk about our big products, like KarXT, VYVGART, bema. And I think those are the kind of 3 major ones. In terms of things we should look forward to in the next 6 to 12 months for these kind of assets.

I'll start with VYVGART. Next 6 months -- so first, the first thing to look at is we're -- it's -- we continue to get more patients in and get them on therapy for longer. And longer for us is getting patients up to at least 3 courses of therapy to get the full benefits of consolidation therapy. And then more than 3 over time to prevent relapses and to make sure that patients with gMG in China can work and live totally normal and healthy lives, and this drug gives you the chance to do that, right?

But I think in terms of then sort of meaningful pieces, the most meaningful for this year is in the rearview mirror, but just very close in the rearview mirror, and that's the adoption or the publication of new national guidelines for gMG treatment in China. In those guidelines, VYVGART is positioned as a frontline therapy for patients with mild to moderate gMG and patients who are active, and it reinforces the need to get patients to at least 3 courses of therapy to get the benefits of consolidation therapy. We know from other places where you're building a market, other markets, other therapeutic areas, guidelines make a difference. They're a big difference. We've seen that in GLPs and everything else around the world. So that was big.

The next sort of big inflection point for us will be NRDL for 2026. Of course, we want to manage a reasonable price for the IV version, but we need to get the subcu Hytrulo version added in 2025. We expect we will. That will be a big unlock in terms of patient benefits, convenience, persistency over the course of the therapy. I think those are the things to think about in the near term.

Maybe back to our comments on pove, getting a few more competitors in this space will be good. I mean we still only have like 10% of patients who could benefit from a newer therapy like VYVGART getting -- even getting prescribed today. So having a few more launches and reasonable competition, I think, will help us overall. We'll see that over the course of the next 12 to 18 months.

So I think that's for VYVGART. I think, for COBENFY or KarXT, it's getting the approval and getting out and educating physicians on the benefits of this product. I think we do have some advantages in China relative to the U.S., and that is the concentration of patients, that's still very concentrated in big urban psych wards, monotherapy -- atypical antipsychotic monotherapy is by far the standard of care. It's more diverse in the U.S. where you have much more combination therapy and otherwise. So the label, the opportunity with COBENFY is very straightforward in China. We just need to get approved and get out on the market.

Bema, we've said we need to wait now given the most recent update from Amgen, who owns the global disclosure on this product. They've said that in FORTITUDE-101, where we hit on the prespecified interim analysis on overall survival, they've said in the final analysis, which is just descriptive, which is 6 months further follow-up, they saw the overall survival benefit decrease.

Given that announcement and the fact that there's a second study 102, that's about to read out, we've just said we're going to -- we will pause on our bema submission efforts, wait for that data package that altogether and move forward. So I don't think we have much to say on bema other than gastric cancer is a huge opportunity in China. There's a big unmet need. And we hope that bema is part of that, part of the go-forward treatment paradigm.

Understood. Perfect. Just one quick question, I think to follow up on the COBENFY as well. So we're expecting a pretty near-term approval. And I understand given the kind of the cycle, there might be a period of time where it's not covered under NRDL. So how do we think about in terms of the NRDL strategy when it comes to pricing, given I think there is some dynamic you mentioned, that's fairly concentrated in China, and that could be good for commercial adoption. So how do we think about in terms of the commercial strategy for under NRDL and also the things that -- key items that we're going to be progressing on during that period before it actually gets covered under NRDL?

I think first, yes, we -- best case scenario is we get an approval right toward the end of the year or very early next year. So we will have some period of time probably close to a calendar year before it's eligible for NRDL listing. That's just the way the process works in China. I think, though, if we fast forward to whatever that is, and we'll work back, I think we can look at lots of reference points in China and the way that the pricing dynamics are set. And I think it's fair to assume that we can or should be at somewhere between 10% to 15% of the U.S. net price which on a daily basis could be $5 or more, you put that against the patient population in China, and you can get to pretty exciting commercial numbers without having to make unrealistic assumptions about -- at any given time, the amount of patients or the penetration relative to atypical antipsychotics like COBENFY.

I think in the period between when we're approved and when we have NRDL listing, again, these are patients who certainly need different therapies. This is a drug without a black box warning. It's a drug that provides lots of benefits as it relates to the negative symptoms associated with schizophrenia. So we'll pursue every opportunity through commercial insurance, supplemental insurance. There's lots of trends in China now to try to amplify the opportunities for drugs before they go on to NRDL to be reimbursed and then otherwise. And I think I wouldn't put a huge number in for 2026 in the models, but I think we certainly expect a lot of patients to begin to benefit from this drug and physicians to get experience using it in 2026 in anticipation of a 2027 take-off.

Yes. Understood. Perfect. So I think -- let me walk into kind of a broader topic. So given kind of the rise of China biotech through this year, we're getting a lot more attention. Curious to think about what are your thoughts in terms of moving forward, how does China biotech or just China innovation positions in the global ecosystem, right, in the years down the line? And in terms of having this more nuanced relationship, I guess, with overseas innovators, are there -- what kind of potential geopolitics or policy-related risks or things that you might be concerned with? Or you feel like you might not need to be concerned with?

Let me answer your last question first. I think the U.S.-China relationship has been rocky, we know that for the -- and even before COVID, right? However, we're in a very different field. We are in medicine sales. Even during World War II, right, you have to give treatment to captives, right, even the war captives, soldiers captives. So I think so far, we haven't -- from China and the government side, from the U.S. government side, all the meetings have been to -- I think people are not too concerned about this because we are now seeing -- we are not like database sensitive. We're not into the [ mapping ] genomics, we're really into providing medicine for patients with medical needs. So that's -- I just stop there. But I would say never -- cannot say -- what's the word?

Never say never.

Never say never, right? So I can't -- I'm not a politician. I got a question one time and say when China is going by Times Square, I was like, well, oh, okay. I said I'll recommend you a few very well-known commercial real estate developers, ask him that question, right. But anyway -- so I think coming back to the China ecosystem. I think -- actually, if you flashing back when I first went back, that was 2001, and China was still in the mode of generics and traditional Chinese medicines. I remember the first company when I founded to apply an IND required 2 years and also drug approval between China, even after China joined ICH, between China and U.S. is 5, 7 years lag. But it just -- 2 decades later, now you see more than 5,000 biotech companies. I think this attributed to, I think, number 1 is, over the last 2 decades, you see a heavy investment from multinationals, are setting up R&D centers. And also, you see the policy, China joined ICH. China's regulatory process improved. China also opened up national reimbursement system for innovation -- innovative drugs. So I think all of this and also because the -- lot of also talents, home-grown talent and also a lot of talents who have been sent back to China, just like in the '80s in Japan, when I was working in [ '80s, ] '90s at Pfizer, we set up R&D center in Osaka, Japan. Each year, we spend $1 billion. So we intubate a lot of talents for the country.

I think multinationals have done that for China too, but also looking back the talents, I think if you look at the people, Josh, right? You look American. You are American, right? But -- and China is attractive market. And the policy, I think, is more and more through -- I think it's bumpy. I would say bumpy, but still the trend is going up, right? And another one, so patients, patient is there over the last 2 decades. I remember the first global multiple center trials was conducted in China was a project I was involved when I was at Pfizer that was in 1997. Back those days, there's -- you pretty much have to put the people there, just do it for them just for the sake of patients.

But after 2 decades, China actually, especially in oncology, in anti-infectives, now immunology, has actually built up the expertise, a lot of global KOLs. Now in a lot of global trials, I think you see the leading KOLs from China and the publications now it's actually exceeding U.S. in scientific journals, new England Journal of Medicine, all of that. So I think patients there, KOLs there, the entrepreneurs there and more and more capital is flowing in, even the Chinese government wants to do 3 pillar industries, one is semiconductor, AI and then life science, innovative life sciences. That's first time ever they announced that. So I think that is good for whole human being because you don't want the U.S. to be the only country to support innovation, pay for innovation and the more and more country doing that is going to be good for everyone.

Awesome. Perfect. Excellent. So I think -- yes, I think we're coming up on time. So we'll close it here. And thank you so much both Samantha and Josh for joining us today. And thank you, everyone for coming.

Thanks, Jack.

Thank you.