Okay, great. Welcome everyone to the Fireside Chat with Zai Lab. I'm Yigal Nochomovitz, one of the biotech analysts at Citi. It's my pleasure to have with me Tao Fu, who's the Chief Strategy Officer at Zai Lab. Welcome, Tao. Thank you, Yigal. Thanks for having us. To start out, maybe a good place to start would be to summarize Zai Lab's broad strategy for those listening that are less familiar with the story. What is the near-term mission of the company, and also what is the long-term mission of Zai Lab? Thanks for that question. Zai Lab is still a relatively young company, just founded seven years ago by our CEO, Samantha Du. We started from really being a partner of choice for U.S. and EU biotech companies and licensing their innovative assets, develop and commercialize those products in China. We built a very strong development commercial platform with end-to-end capabilities, and quickly transformed the company to a fully integrated biopharma leader in China. We launched three oncology products in the last 16 months. We operated in three therapeutic areas: oncology, autoimmune disease, and infectious disease. Within oncology, we have built five tumor franchises that cover over 50% of all cancer patients. We have a broad portfolio of 25 assets, with 12 in late-stage development, and among which five are U.S. FDA-approved products. We really have a very strong track record of execution so far and delivered all the milestones we set for ourselves. The near-term mission for the company is to continue to extend our current position as the partner of choice for developing and commercializing best medicines in China. In doing so, we aim to further increase our portfolio and pipeline of products in China. In the meantime, strengthen our leadership position. Importantly, we have built a pipeline of 11 assets we actually own global rights and substantial R&D capabilities. The long-term mission for the company is actually becoming a leading global biopharmaceutical company with a substantial portfolio and pipeline of products, not only with greater China rights, but globally. That makes a lot of sense. Thank you. You've been on pace for, as I've counted, about two-three business development deals annually, and that's very much in keeping with the business objectives that you outlined at the IPO. I get this question a lot from investors, and they'd like to know, and I'd like to know, whether this pace of BD, two-three deals a year, is something that we should expect to continue, and in what therapeutic areas do you expect to focus? Related to that, at what point in the company's trajectory would you start to decelerate the external asset acquisition and focus more heavily on internal discovery? It's a very good question. We do have a consistent record of in-licensing two to four new products per year in the last few years. We expect to be continuing to be very active in business development. For Zai, really the quality of the assets we bring in is a lot more important than the quantity. Quantity is not a metric for us. We're highly selective and only take in first-in-class and best-in-class assets from a global perspective, but also have a good strategic fit with Zai. It will make a lot of sense for us to continue to extend vertically within our existing disease franchises, to bring in synergistic assets like our recent deal with Mirati on their KRAS asset. We also are open to horizontally expanding to new areas, right? If you can find a great anchor asset addressing big unmet medical needs, we can build around it. Our recent partnership with argenx on efgartigimod is a good example of that. We extend into the severe autoimmune disease area. We don't plan to decelerate in licensing while we're focusing more heavily on internal discovery. Both are important to us. We have open innovation model and platform, and really like to source products both internal and externally, whatever the best science we can find. We did a couple of discovery deals recently with MacroGenics and with Schrödinger, are pretty good examples of that. We're leveraging external innovation to our global pipeline. In terms of therapeutic areas, you're in oncology, you've got a big footprint in oncology, emerging footprint in autoimmune, good footprint in anti-infectives, and then medical devices too with Optune. Is that mix of therapeutic areas how you're going to continue or might you just gravitate to one or more of those? We certainly want to continue to strengthen the franchise that we have. It just makes a lot of sense to create synergistic assets, right? We're open to looking at new areas. The bar is just going to be higher for those areas, right? It took a long time for us to find efgartigimod and really decide to enter into the severe autoimmune area, right? We think we have a great asset, and we can build around it. Another part of your strategy, which is very interesting, is that, as I understand it, you're contributing Chinese patients to global clinical trial efforts. For example, in the work you're doing with MacroGenics. How does that help you to have data in the Chinese patient population? How does that enhance the value proposition when you're pitching your drugs to Chinese physicians, especially when you're competing against medicines that were not evaluated in the local population? Maybe I first would comment that there is important benefit of participating in global trials by contributing Chinese patients in China. It actually have benefit for both us and our partner. By doing that, we can leverage the same global data set and accelerate the speed of regulatory approval in both China and worldwide, potentially, for our partner. We as a company actually have the most extensive experience of doing this. We have about 15 global trials ongoing with different partners. We have cases where we contributed up to 50% of the patients in a global trial or actually we enroll the first patient in the global trial. That's a very important element. I would say generating local data and have experience in Chinese patients is critical. One, to secure regulatory approval. It's pretty difficult to get your drug approved in China without any local experience. Importantly, it's very helpful to secure the support of the local KOLs, having them participate in your trials, really create the support for the product and the brand that certainly benefit you in the commercialization process as well. Okay, great. You mentioned the Schrödinger deal. I'd like to just explore that one a little bit more. Very interesting, obviously, they're focused on AI and computational drug discovery. Just talk a little bit about your interest and why you wanted to partner with Schrödinger, and how will the clinical responsibilities be divided between you and Schrödinger, and timelines for when you might expect a drug candidate to emerge from this collaboration. As you know, Schrödinger is the industry leader in AI and computational drug discovery, and they have a great track record with a couple marketed products already through their work. We have a particular strength in DNA damage repair as a company. This collaboration focus on a novel target in the program, targeting DNA damage repair. Really leveraging the strength of both companies from that perspective. The research portion will be conducted jointly by the scientific teams of both companies. Schrödinger focus on AI and computational chemistry to generate leads, and we will focus on DDR biology and pharmacology. Following the selection of a development candidate, we will assume the primary responsibility for global development, manufacturing, and commercialization. We can't provide a timetable for when the first product candidate at this time, but I would just say that the advantage of Schrödinger's computational platform is the turnaround time, and also the ability to select best-in-class compounds that are unique from the competition. You have Schrödinger, which is the discovery stage collaboration. You also have, I believe, some discovery collaboration work with MacroGenics. Am I missing any? Should investors expect additional discovery-focused deals, or are the deals going to be more with assets that where you already have POC from, say, U.S. clinical trials? We're always looking for new discovery focused collaborations. That's a big focus of the company. We certainly have earned a reputation to be a great partner. If you look at those two examples, MacroGenics give us access to a leading bispecific and multi-specific platform. Schrödinger obviously give us access to AI and computational chemistry. We have a couple of other smaller collaborations we entered into recently as well in another AI collaboration. There's antibody generation collaboration. We're going to continue to use external partnerships as a way to access cutting edge technology to complement our internal efforts. Makes sense. By my count, you have 14 oncology assets in your clinical pipeline, three of which are approved, which is great. That obviously begs the question as to whether there are any opportunities for natural combinations of those assets to study various combinations. I'd be curious to know if there are any that are being considered to do those combination clinical trials with your own assets. Yeah, it's a great opportunity for us. We're willing to explore combinations whenever the scientific rationale is strong. There are some examples we publicly disclosed already. For example, we're looking into combinations with our IO portfolio, whether it be in the PD-1 or PD-L1, bispecific with niraparib. We have Tumor Treating Fields combinations with niraparib. We have our internal portfolio, like the CDC7 inhibitor, which could also be combined with PARP inhibitors. There's many examples I can point to. This is a very important strategy for the company. Just as you point out, we have this broad synergistic portfolio. We're actually having an R&D day on September the 22nd. Our head of R&D will talk more extensively about this. Okay. That's actually one of my questions as far as what to expect there. We'll get to that a little bit later. If we could do a little bit of more of a deep dive into ZEJULA, which is obviously your first commercial product. Help us understand the commercial landscape in China for ovarian cancer. What do you need to get right to make the ZEJULA launch a success? Obviously, you're off to a very good start, but what do you need to continue that positive trajectory? How much of the ovarian market do you believe you have right now in terms of market share? Just to throw in one other question, what are you hearing anecdotally from the physician community about choosing ZEJULA over your competitor, LYNPARZA? Yeah, we believe probably the most important factor is the product profile and the label. We feel we have a big advantage there. LYNPARZA, as you know, is only approved for gBRCA mutant patients in first-line ovarian cancer. That's about 15% of this whole patient population. ZEJULA is actually approved for first-line for all comers, irrespective of mutational status. We have a big advantage there, and that's also supported by the national guideline. We think we're poised to become the leading PARP inhibitor in ovarian cancer in China. We don't have comprehensive market share data to disclose right now, but we believe we're actually taking market share from LYNPARZA. Over time, we will be the market share leader, at least in this indication. Okay. How many hospitals do you know? Do you have this level of detail in terms of how many hospitals currently have access to ZEJULA? How many provinces in China where you have sales force representation? Just curious how broadly you've launched so far. We had expanded our sales coverage pretty significantly. Now we have about close to 400 people, and really covering the vast majority of the country and the market potential. We discussed for the Q2, because we implement NRDL in March 1st and at the end of the Q2 was to June 30th. Just doing that implementation period, we increased our hospital listing by seven-fold to more than 800 hospitals. That's actually pretty impressive, set almost an industry record in that regard. The product has been very well received, and we also have been very proactively trying to maximize not only market access but our coverage. That's interesting. I don't think I've heard that statistic before. A sevenfold increase. From when to when? March 1st, that's when officially the NRDL started the implementation. Okay. In the Q2. March 1st, 2021. 2021, yes. That's very rapid. Wow. Correct. Okay. Interesting. My next question is about pricing and reimbursement, and the landscape for pricing and reimbursement in China for ZEJULA. You mentioned the NRDL. I would be curious to know what steps were necessary to get ZEJULA on the NRDL, and how has that helped you in terms of the better net price for ZEJULA? Our discussion for NRDL really centered around the value ZEJULA can provide to ovarian cancer patients based on the published clinical data and our approved label. Post-NRDL, the net price for ZEJULA for the 300 milligram dose is about $2,700 per month. It's lower if you have an individual dose of 200 milligrams. As you know, our revenue increased about 80% from Q1 to Q2. I talked about the effect of NRDL in terms of increasing hospital listing. It's very clear that we are seeing a significant increase in volume that far more than offset anything high on price. Okay. You have a dedicated manufacturing facility in Suzhou. I've been there, I've seen it. How has that helped you with the launch? Has that made things a lot more streamlined, and how has it improved your margins for this product? You may know, Yigal, that ZEJULA was actually marketed in China as a category one drug, so local innovation. One of the requirement is to have the product manufactured locally. I don't think we have disclosed details of our product cost for manufacturing ZEJULA in China. We feel very good about this decision to source product locally in our own facility, was the right decision from a cost standpoint. Also importantly, to give us much better control of the supply chain, which is always quite important. Okay. I know this is probably a question that's better for Billy, who's the CFO, but you can defer to him if you want, but I'm just curious, any thoughts on when the management team would be ready to give revenue guidance for ZEJULA? Do you need more quarters to get a better sense of the trajectory before you're willing to give revenue guidance? Yeah, I don't want to predict that timing. It's probably a better question for Billy, but we understand the pros and cons, Yigal, I think. We'll keep you posted on that. Okay. Let's move over to Optune, which is another one of your marketed products, the Tumor Treating Fields for glioblastoma. Help us understand, that one the strategy for launch was different. You decided to focus initially on the private pay market as opposed to going the NRDL route. Help everyone understand the strategic thinking as to why you did it that way for this product for brain cancer. That decision was actually not by our choice. It's a medical device, Optune, and currently there isn't an NRDL framework for medical device. We'll have to see how the reimbursement landscape will evolve for therapeutic devices. For now, we have a comprehensive market access strategy that focus on private pay, commercial insurance, and also supplemental local insurance. You might know this, Optune was already covered by several commercial insurance plans and were covered by supplemental insurance plan in large cities like Shanghai and Hangzhou. These are cities with 20 million, 50 million people, right? That's an important strategy in addition to the private pay market. Okay. You're not going the NRDL route even for other indications for Optune. Is that correct? There isn't a framework for device right now. That obviously could change in the future, but at least right now there isn't a framework. What about Optune for mesothelioma? That one's already on the market in Hong Kong. What have you learned from the Hong Kong launch that will help you when you launch in mainland China for mesothelioma for Optune? I'll just say, really, if you look at a mesothelioma glaucoma indication, the significance of that is really the validation of the mechanism of action of TTFields in the torso indications, right? The market itself is not significant, really. It provide an important technical proof of principle for future indication, like non-small cell lung cancer, like the LUNAR trial indication. That's probably the significance of mesothelioma. We certainly will have some user experience for the torso indication of how you apply that. That will be very interesting and good learning when we get into those much bigger indications in the torso area. Okay. There's six indications that you're studying with NovoCure, non-small cell, brain mets, pancreatic, ovarian, gastric, liver cancer. Can you provide any prioritization of which ones are going to launch first or are they all in parallel? Well, we're excited about all these indications. That's why we really like Optune, right? It's a pipeline and a product opportunity. It can, when it's also be successful, can touch over 2 million patients potentially in China. Obviously, the lung and gastric markets are very large in China. LUNAR is, because of the acceleration, it will be more advanced. You can probably get data read out sometime next year. Liver cancer is also very big in China. Disproportionately big in Asian countries. NovoCure, as you know, just this week received FDA breakthrough designation for liver in the first-line liver cancer in combination of atezol and Avastin, which is exciting. We'll also be participating in the phase III liver cancer file. We'll follow the data, Yigal, in making these clinical decisions. It's very clear that there is a broad range of potential applications for this technology. We talked about the category one status for ZEJULA and the local manufacturer. As I currently understand it, you are importing Optune into China. Is there any point where you would consider manufacturing that device yourself, or is the structure where you import the best and most efficient way to do this? Yeah, we would need to discuss that with our partner and come to a mutual decision. I don't think we want to say anything publicly until we have something aligned with NovoCure on that front yet. Okay, sure. Let's move on to your final commercial product, QINLOCK, for gastrointestinal stromal tumor. You've launched in fourth line GIST. What have been the learnings from that launch? What's worked, what hasn't worked? Have there been any surprises? How is this going to help you launch in second line GIST, which, well, we're still waiting for the data, but let's stick with the question about the launch in fourth line GIST. The launch has gone pretty well from our perspective. We did a lot of pre-launch preparations, including the name patient program we did in the Hainan province. We actually got approval in all regions of greater China, including Hong Kong and Taiwan, in 6 months. We have reached thousands of healthcare professional, face-to-face and online. The product was recommended by the CSCO guideline. This is the equivalent of ASCO for 4th line GIST with a 1A recommendation. It's also recommended for 2nd line GIST already. We're receiving good supplemental insurance coverage. So far we are quite pleased with the initial uptake. It's still early days, obviously. Okay. Again, this question may be better suited for the chief medical officer of the company. You can pass on this one if you want, I'd be curious to know what are the reasons why we should expect a positive outcome for the INTRIGUE trial in second line GIST? Yigal, you're very tuned into the data. Their phase I, phase II data is actually very robust across all lines, right? Pretty impressive PFS data. We think provide a pretty large margin compared to what's available. Obviously we're eagerly waiting for the INTRIGUE trial results and hopefully will be available in the second half of this year, right? Yes. I believe it's the fourth quarter of this year. Yes. Okay. Let's keep going. There's a lot of topics to cover here. You have a lot of stuff in the pipeline. For omadacycline, you're getting close to a decision from NMPA on that one, which would be obviously the first infectious disease product to reach the market from your pipeline. How much are you doing currently in terms of launch preparations, and what are the key factors in the antibiotic space that you need to get right to make this a successful launch? Just remind investors that when NUZYRA, which is the brand name, is approved, we will be using a contract sales force through our partnership with Hanhui Pharmaceuticals. This is a company that has significant experience in detailing antibiotics and have a large dedicated sales force for antibiotic, bio normal antibiotics in China. We will be promoting NUZYRA as really the best in class tetracycline. It has many benefit, once daily oral and IV, broad spectrum, have two indications. We'll be working closely with our partner Hanhui on this product. Okay. Then I believe you have some other antibiotics that are further behind in the pipeline. Could you remind us about those and how they're different from omadacycline? We have a partnership with Entasis on a treatment for Acinetobacter baumannii, which is a very deadly pathogen, and actually not very common in the U.S., but actually sadly pretty prevalent in China. This is a disease with very little treatment options. We have an ongoing phase III trial with our partner called the ATTACK trial. We actually expect to read out, actually in the second half of this year as well. If the trial is successful, that will be our second antibiotic product potentially. It's a very good product for China because of the big unmet economy. Is that one being manufactured in your manufacturing plant or not? We're still working through the manufacturing strategy, Yigal. Let's talk about the partnership with Mirati, which was just recently struck for adagrasib, which is the KRAS G12C inhibitor. Curious how did that partnership come about? Why did you decide to partner with Mirati on this asset? What's the size of the G12C opportunity in China? We obviously like the asset. We have been talking to them for quite a while. We're glad we're able to cement this important partnership. We're attracted to it because the significant unmet medical need in KRAS G12C mutant patients, and we also like the product profile. It's very differentiated and potentially best in class. The annual incidence for G12C mutations in China in non-small cell lung cancer is about 3%-5%. We also feel this could be also the possibility of under-diagnosis, because in the past, there was just no effective treatment. It's a significant opportunity. Adagrasib has demonstrated very compelling efficacy and favorable tolerability from our perspective. We will be working with Mirati very comprehensively on the entire development program for both monotherapy and combinations in non-small cell, in CRC, including several of their registrational studies. We may also have unique opportunity. Actually, this is important because we may have the opportunity to lead in China, because the other G12C agent by Amgen hasn't started KRAS studies in China yet. Am I correct that you will do studies with Mirati adagrasib in China, Chinese patients? Is that the plan? For multiple top-line trials. Both monotherapy and combination. You mentioned combinations. Obviously, Mirati is doing many combinations with PD-1, with cetuximab, with the SHP1 inhibitor, and others. Are you considering any combos with the existing oncology assets in your pipeline, or would you just follow the plan that Mirati outlined with their combo work? Certainly to the extent we can, we will support the global programs. We will also look into any unique local combination we can do. We have a development right in China to do those other combinations. We just need to go through a scientific evaluation, though. Switching to autoimmune and efgartigimod which is also very interesting. You've characterized that as a pipeline and a product. Are there certain indications that are on the top of your priority list for efgartigimod in China? To what extent do you believe you'll be able to leverage the data that argenx has already generated for filing in China? I would say our priority indications are pretty much the same as those for them. We will participate in multiple trials. In fact, we already have five CTAs approved in China since we signed the partnership. It's very rapid progress on the clinical front. For gMG, it's too late for us to participate in the pivotal trial because they've already completed. We expect to leverage that data set. We're having ongoing discussions with NMPA about what the best regulatory path will be in China. Are there any other assets that you wanted to highlight in your pipeline before we move on and talk about some of your internal discovery work? Yeah, you covered pretty comprehensively already. I would just point to maybe our gastric cancer franchise and the lung cancer franchise. bemarituzumab, the FGFR2B, is a very large opportunity in China. There are 700,000 new gastric cancer patients per year in China, and FGFR2B cover about 30% of those, right? It's a massive opportunity. We also had successful phase II trial, and we're working with our partner Amgen for this program. That's potentially a massive opportunity. In the lung cancer area, we have this very nice precision medicine portfolio covering all different mutations. We talk about KRAS, but we also have VQOL for ROS1 entrectinib. We have C-MET, we have the CLN-081 product that cover exon 20 insertion mutation. Very nice, almost like a unique suite of products that cover different mutations within non-small cell lung cancer. Maybe I'll highlight those two. There's another one we're probably both forgetting. What about the Regeneron, the CD3, CD20? Exactly. That's our Simao franchise, the anchor there. We like the product and especially DLBCL is a very large opportunity in China with large unmet medical needs. Yeah, we're working with Regeneron very closely on that as well. One other question that just popped into my mind is that you obviously have a very good track record now with multiple partnerships with very well-recognized biotechs, Amgen, Regeneron, Mirati, the list goes on. In the early days, I imagine it was more outreach from the BD department at Zai. How much more is it now more of an inbound situation where you're getting a lot of inbound interest, in terms of in-licensing? Is that a true statement or are you still doing a lot of scouting for assets? We do both. We're always being very proactive. It's fair to say we're actually getting more inbounds just because the track record we established for ourselves, right? The platform we already built, and now we have three products approved and commercialized with early success. I just don't think anybody else have that type of track record. Zai is certainly on the top of the list when companies are thinking about partnering their assets in China. That's very helpful. We're not going to sit on our laurels, and we continue to be proactive as well. Another question that I get a lot from people that are learning the Zai Lab story is, if you can say quantitatively, great. Otherwise, just qualitatively, for every asset that you do in license, how many do you look at? Is it one in 10, one in 20, one in 100? Can you just give us a sense as to what the filtering looks like as far as your BD efforts? Yeah, I don't think we track that way. Like I mentioned earlier, the quality is a lot more important than quantity. We have a great team to do these evaluations. Our track record speaks for itself. We're going to continue to be very active in this area. Then let's finally just talk about your internal R&D, which is also gaining steam. What are the priorities in the internal discovery efforts? A very important question is how do you decide strategically whether to pursue the target internally with your R&D group or just to do a deal and access the target through a deal? We'll also go into this in our R&D day, but in general terms, our decisions to invest in a program internally depend on several factors. We like to invest in area that we have deep scientific expertise, right? DDR is a very good example, and other selected areas in immuno-oncology for large molecules. We like programs that have strong synergies with our existing pipeline. For example, the CDC inhibitor could be combined with niraparib. In terms of internal versus external, as I discussed earlier, we really embrace this open innovation platform and source the best science wherever we can find it. Really, we're agnostic to where the product candidate comes from. In terms of the pace of IND filings, you've guided to one to two IND filings per year. Is that something that we should expect to continue over time? Yeah, with the capabilities we build, we're pretty comfortable with that. We'll generate at least one IND filing per year. We certainly aim for more than that. just if you could spend just a couple of minutes just what was interesting about CD47, CDC7, and IL-17 that were the targets that you decided to pursue first, as I understand it? Yeah, I already talked about philosophically how we think about building our internal pipeline really focusing on the areas we have a deep understanding of the science. Also have existing capabilities we can leverage. Certainly if there's any synergies with our existing pipeline, that's very helpful. CDC7 is a very good example of that. That's really generally how we think about why we pick these targets. We're actually going to do a deeper dive in our R&D Day. People also are Head of R&D for both oncology and autoimmune disease. We'll talk about these programs. That'll be my last question is just, you've mentioned the R&D Day a few times. Obviously, a lot of work goes into those events. Tell us what are the categories of new information or pipeline progress that we should expect from the R&D Day? We'll do a deep dive into the whole product portfolio and pipeline, Yigal, including our internal pipeline. We'll work through each part one by one and discuss the science, the key clinical data, the differentiation, the market opportunity we see, and the timetable. We'll also discuss the significant capabilities we have in R&D, what we have built globally and our strategy. We have become a pretty complex company, I would say, Yigal, given the depth of our portfolio. We appreciate sometimes it's difficult for investors to absorb all that, so what we try to do is really help them go through our pipeline and our capabilities through the R&D Day. We really encourage all our investors to join. Sorry, I just thought of one more housekeeping question. You also broke ground on building a biologics therapeutics plant near or next to the manufacturing facility for Suzhou. Just give us a status update. Where does the construction stand with the biologics manufacturing plant? Is it ready to go or is it still being built? It's still in the works. Yigal, what we have talked about is we're breaking ground, I will call it an R&D center in Suzhou. We have actually a pretty big piece of land, we acquired favorably through the Suzhou government. We're building a new sort of R&D center. The biologic manufacturing is a big part of that. We expect to extend our existing capability, which is more manufacturing clinical trial materials. We'll give you more information in the future. It's also in the work. Okay. Yeah. Tao, thank you. Thank you very, very much for the insights. Much appreciated. I look forward to returning to Shanghai at some point, hopefully not too distant future, to see all the progress. We look forward to welcoming you again, Yigal. Thanks very much for having me. Okay. Take care. Yeah. Bye-bye.