Thank you. Thank you everyone for joining this session at Goldman Sachs Global Healthcare Conference. This is Ziyi Chen, China healthcare analyst at Goldman. This session is for Zai Lab. Today, we are very pleased to have the Head of BD from Zai Lab, Jonathan Wang, to join this session to discuss with us the most updated progress in the BD and also the overall strategy of the Zai Lab. Thank you, Jonathan, for joining us. Thank you, Ziyi Chen. Thank you, Goldman Sachs. Yeah. Yeah. We're going to start with some of the broad questions. I think in the past six months, we have seen major progress in the BD side. I think, thanks to your and your team's great effort on getting all those assets in the past six months, we have seen four major deals coming in and the four major assets coming in. Let's start with the first one, which is the recent one. I think investors will be very interested to understand the progress you made on the KRAS G12C licensing from Mirati. First of all, would you please elaborate a little bit more about the rationale to get the asset and particularly in China, what kind of commercial opportunity we'll be looking at for this asset? Thanks for that question, Ziyi Chen. First of all, we're very excited about this collaboration with Mirati. KRAS has been a very hot target, and also with the recent approval with Amgen's asset, really solidifies the importance of KRAS in not only lung cancer treatment, but more broadly, perhaps in some of the GI-related tumors. The Mirati compound, in our mind, has the potential to be best class. In China, there'd be maybe an opportunity where we can move pretty quickly, given the Amgen product is still not approved, and also it's not even in the clinic yet in China. From a strategic perspective, if I take a step back, if we look at Zai's portfolio, especially in lung, especially in the GI-related tumors, I think we have built a very strong position, a leadership position with multiple assets that could be synergistic with each other. If we look at lung, not only do we have the IO assets, the PD-1, PD-L1, LAG-3, the Tumor Treating Fields recently had very encouraging data in lung. If we look at our targeted therapy, precision medicine, we have a ROS1, with Turning Point, a MET inhibitor. We also have the EGFR exon 20, which recently reported very encouraging data at the ASCO. Now with this KRAS, we have a very long and broad portfolio that can address different mutations, different patient subpopulations. Really we can create a lot of scale benefit, a lot of synergies, whether it's in development stage or in commercial stage. This KRAS really completes that puzzle. In addition to the opportunity that we may be able to combine it with our in-house pipeline, as well as potentially other pipeline assets that Mirati may explore on a global basis. We're going to work with Mirati very closely. We're going to try to join as many of their global trials as possible, thereby trying to help them accelerate their timeline, but also hopefully bring this asset in monotherapy and combination therapies quicker to patients in China. It's really strategic on many levels, this collaboration. Yeah, sure. Well, of course, it's going to be really strategically important to your lung cancer portfolio. Just one thing is that, if you look at the prevalence rate of KRAS G12C in China compared to Western population based on some of the recent data, well, it looks like the prevalence rate is a bit lower than in the Western population. What is your view on that if we look at the commercial potential, and we are paying $65 million up front plus near $300 million in milestone. How do you actually look at the commercial potential here in China? Yeah, that's a good observation. Based on literature, it does appear that the prevalence rate in China is lower than in the U.S. It's roughly about 4% or 5% of lung cancer, and about 2%-3% in colorectal. However, I must caution that there has not been any clinical studies done in China. Because also there's no approved drugs on the market, the diagnosed rate could potentially be a lot lower than what actually they may be. We could be one of the first KRAS to be put into clinical trials. Obviously, we'll know more from the study what the actual prevalence rate may be in China from our discussions with different KOLs. It does seem to be that there are a lot of patients with KRAS, that could potentially join our trial and very quickly. We'll find out more. From a commercial perspective, it is still very large. I mean, 4% or 5% of non-small cell lung cancer in China on an absolute basis, that is still a lot more than U.S. and Europe combined. Plus the colorectal patient population. It's still a pretty sizable commercial opportunity, and given the late-stage nature of this asset, given the potential to combine this with various other agents, given how hot KRAS is globally, we think it's a reasonable price to pay. Got it. Thank you for the color. Also, I think investors might be interested to understand the clinical pathway here in China for that one, because we do think that Mirati Therapeutics' asset, the KRAS G12C, could potentially be the first one, not first, but probably the first three to get to the market if the clinical pathway, clinical strategy is right. Any preliminary thoughts here? You're going to do a bridging study in China or join their global trials. What's going to be the most efficient way to do that? Yeah. I think Mirati has, if I remember correctly, guided or have stated in public that in the second half of this year, they will be filing their NDA in the U.S. for the late lines immunotherapy in lung cancer. Certainly, if that is the case, and given their breakthrough therapy designation, that would really help us to potentially accelerate the pathway in China. Now, we just signed the deal. We need to discuss more with Mirati. We also need to have more dialogues with the Chinese CDE and NMPA. Until then, it is a bit too premature to really say what the regulatory pathway is. If I look at other products that we have successfully put onto the market, there is a range of possibilities from potentially an accelerated approval, leveraging their global data and maybe some PK data, to perhaps maybe conducting a bridging study. There are various options in front of us, but regardless, this has breakthrough therapy designation in the U.S., and this obviously addresses a very large unmet medical need here in China. We think that there may be a case for acceleration. Got it. Well, just a small question on that is, we read about the data coming from Mirati's assets, and we talked to some of the physicians. Some might show a big concern on the QT prolongation in a small percentage of patients. When you are doing all those due diligence on the assets, is that raising a flag to you? Yeah. We noted that as well. We talked to many KOLs in the U.S. and also in China. Now, first of all, the grade 3 or above QT prolongation is about 3%. If we look at that number, there are actually quite a few other approved targeted therapy products on the market also with similar range of QT prolongation as a percentage of patients in their clinical trials. One example is TAGRISSO. TAGRISSO has a QT prolongation grade 3 or above about 2.2%. That has certainly not stopped TAGRISSO being a very strong drug also in the lung area. When we talk to KOLs, they know that this is very manageable. It's short-lived. It's not sustaining. Based on the Mirati data, there is no arrhythmia currently observed. We think it's a manageable issue. If I look more generally at the AE profile of the drug compared to Amgen's products currently approved, Amgen's product actually has a label warning with their interstitial lung disease, which had fatal cases. From a treatment discontinuation rate, theirs is about 9% versus the Mirati drug, which is about 7%. Looking at totality, look, I don't want to say which one is better based on safety. There are pros and cons with each, but we certainly believe that the QT prolongation is manageable based on other drugs and based on KOL comments specifically with TAGRISSO. Got it. Well, that's really useful. Probably we can touch upon another asset here in the pipeline. Well, it's probably not in the pipeline, but a new indication is for the tumor microenvironment field Optune. We have seen really positive interim readout earlier this year in April. How should we look at the data, and what can potentially be the read across from the positive development from lung cancer to other solid tumors that the tumor microenvironment field is targeting? Because I think we are going to have ovarian cancers, liver cancers, pancreatic cancers upcoming for data readouts. What's your read here? Yeah. We're certainly very excited by the recent developments with TTF. I must also say that neither us nor Novocure has actually seen the data. This is from the DMC, and their recommendation to change the protocol has also been endorsed by the US FDA as well. We patiently await for that much shortened trial now and when that data probably comes out sometime next year. That is certainly very exciting for lung cancer patients and for TTF as a franchise. To your point, there are many other important readouts coming up. The first one is probably going to be in liver cancer, which is going to probably sometime later this quarter, very soon, actually, imminently. You're going to have ovarian cancer interim readout for that pivotal trial as well in the second half of this year. Our own gastric cancer should finish enrollment by the end of this year as well, this local study in China. The important thing is now, if this does work in lung, and it's already approved in GBM, obviously, as well as in mesothelioma, therefore, this has been approved outside of GBM, now in the chest cavity, first with mesothelioma and now potentially with non-small cell lung cancer. Then you look at in combination with the TTFields in various other solid tumors in phase II trials, for example, in pancreatic, in ovarian cancer, all of them have actually shown a much longer PFS benefit, potentially, at least empirically compared to the standard of care, then you're looking at a product that across different tumor types, in phase II, in phase III, all seems to be working. That gives you a much greater confidence in the potential of this product working in some of these other indications, which would have pivotal data readouts coming up. We believe this is very revolutionary. We think this is really a new modality which is coming up that could be really truly a platform. The unique thing about it's so safe that you can combine TTF almost with anything, with PD-1, with chemotherapy, et cetera. We think it could be really a backbone therapy for many different types of all kind of patient populations, as monotherapy or as combination therapy. Got it. That's very interesting. As we mentioned at the beginning of the session, that is Zai Lab has been really active this year on the BD side. Now we have already built a very strong pipeline for lung cancer, and now we also have a pretty strong pipeline for gastric cancers. Historically, like with our incubators, also with the option for brain cancer, we also have women cancers. Going forward, we try to understand a bit more about your BD strategy. What kind of areas, well, in oncology or outside oncology, you will be looking at. Particularly, earlier this year, we did another round of financing. I think Zai Lab now is sitting on a very strong cash position. Any new strategy you are bringing up to the company and any new areas you will be targeting? Yeah, thanks for that question. Since the inception, for the last six, seven years, our BD strategy have always evolved as well. I think under Samantha's leadership, we have really been a pioneer, being the sort of go-to partner, the partner of choice, for many of our Western companies. Initially, it's really about China market access, how to bring these products quicker to China. It has really evolved more to about how we can work collaboratively, like in the case of Mirati, like argenx, where we can help them accelerate some of their global trials. We can do some innovative trials ourselves in China. We're going to continue to evolve. I think there are three disease areas which we have really built a very strong presence in, namely in oncology. Within oncology we have sort of four or five disease strongholds, like lung, like GI, like hematology, women's oncology, and brain tumor, for example. Now we have VYVGART, for example, and that in itself is a pipeline product opportunity. All of a sudden, we have a very strong presence in severe autoimmune diseases, coupled with our own, obviously, IL-17. In areas where we're strong in, we're going to continue to make them stronger, like in lung, like in GI, with KRAS, with the Cullinan asset, et cetera. In other areas, like what we did with EFGAR, like what we did with the REGN1979 asset, we can also very quickly, we have demonstrated ability to get something in an area which we haven't had presence before, but because of these type of anchor assets, very quickly build our presence to demonstrate to our partner that we're capable of doing that. There probably will be other areas outside of what we have historically been active in. We could build positions there, too. Beyond that, if I take a step back, the company strategy is really to be a global biopharmaceutical company, focusing on innovation. I think in addition to these regional rights collaborations, a part of our BD strategy more broadly will also be about how we can help the company accelerate its path to be a global important player. I think we're always very open-minded. It's not just licensing, we're open to a lot of creative deal structures. Let's see where that takes us. Our BD team is also getting stronger as well. I think we've been doing a lot of deals, as you mentioned, over the last 12 months. Our current BD pipeline looks as promising as ever, too. We're very encouraged and excited about the future going forward. Got it. On the BD side, we probably have a more broader question is that we see increasing number of pharma companies, biotech companies in China to get into the space, right? Everyone looking at global assets, since there's a huge gap in China versus in U.S. and Europe in terms of pipeline. Have you seen the competition actually is increasing and triggering some potentially higher price for some of the high-quality assets, and you are facing more intensive competition for some of the assets when you are looking for assets that can strengthen your pipeline? Let's say you're going to do a perfect pitch. What will be the key message you're going to deliver to potential partners to win the deals? Yeah, it's a good question. Look, there's no doubt that there's more companies in general, given the capital, given the growing market. There's more companies, whether to do discovery or to do licensing, that's sort of popping up here in China. Let's look at the results. I think, since we went public for the last three years, the deals that we've been doing both the quantity as well as the quality, not only the quality of asset, but the quality of the partners, is just increasing. I think what's important is at Zai, we are very consistent. We consistently bring not one or two, sometimes multiple good assets every single year, and with different types of partners as well. We may lose one deal, we may lose two, why not? So far we really haven't. We may lose one day, right? At a sort of macro level, we have been very consistent as the go-to partner, the ideal partner. Why is that fundamentally? It's because we have a very strong team, under some tremendous leadership, across the entire spectrum of different functions for a functional company from the sort of preclinical development stage, that's where we really can help the partner accelerate things, and we've demonstrated we've been able to do that. On the regulatory side, I think we're second to none. We've been able to do things where many people just haven't been able to. We've been a pioneer, in fact, and even going faster than our original communications to Wall Street, to our partners. On the commercial side, we are building a very strong team under William's leadership that is about 700- 800 people now, and is doing quite well for the product that has been launched. We have many success case stories and successful track records. Ultimately, it's about trust. We've been able to instill that trust in potential partners. We have been reinforcing this trust in existing collaborations. For example, Turning Point, that is a collaboration we've been able to expand after just six months to go to a second asset. I think, we've just been very consistent, and we have been able to deliver on our promises. In a country where, even though the reform is progressing rapidly, it's still relatively a new market to many companies. The last thing they want is to really worry about China. They want a partner who can really help them accelerate. They don't want to worry about the data that's produced, whether it's in compliance, whether commercially there's any issues. There could be a lot of things that can go wrong, right? For their lead asset, for their best asset, they want to put it in the right hands. I think at Zai, we have demonstrated that. I think that is ultimately the most important aspect. Got it. Well, one thing we have noticed that we are pushing forward some of the in-house discovered assets into clinical stage. Now we have ZL-1310, we have CD47 with the Claudin 18.2. Those two assets are highlighted in AACR this year, and also we have IL-17, right? I think every single year we're probably going to see more assets moving. It's more like in-house developed. Within Zai Lab, how you guys are going to balance the resources in terms of BD, which is still contributing a lot of the pipeline now, and also the in-house discovery, which can potentially be more like future growth drivers. How actually you're going to balance that and in terms of picking the right target for drug discovery and development. What's the rationale for picking some of the targets and what's the strategy behind? Yeah, that's a good question. Look, I think it's actually more synergistic, that the two really complements and helps each other. Certainly when we look at our licensing opportunities, our early-stage team, discovery preclinical team really helps us to look deeply into the preclinical profile of the different compounds, molecules. Similarly, because of our understanding of the disease pathways, for example, with the PARP inhibitor in sort of the DDR space, with many precision medicines that we have in IO we have in those spaces, we have better idea, or more know-how in picking the right targets, in picking the right molecules, in our own discovery efforts too. I think they actually complement each other. From a resource perspective, I think for now it's definitely still going to be more collaboration. We have three in-house programs that's currently in the clinic. We have over a dozen, actually much more than that, through licensing that's in various stages of development or commercialization. I think over time that shift may change a bit more. I don't know if it'll ever be 50/50, or it may actually tip the other way. We don't have a specific goal. It's really when we look at whether we're in-house or licensing, we evaluate whether the compound has the potential to be globally relevant, to being globally first or best in class and have differentiation. If we think we can do that, then we'll probably do it ourselves. If we think there are compounds like the Mirati KRAS G12C that's looking very promising, very late stage, then we want to work with the best partners there. I think it's really a case-by-case. We are taking a portfolio view approach to assembling our sort of diverse programs. Whatever we do, there obviously will have to be synergies as well. Likely, with our own discovery efforts, it'll be areas that's sort of adjacent to or sort of similar to clinical programs we already have. Got it. Probably we're going to switch gear for a bit, down to the commercialization part, because this is actually a rare capability that a biotech company with a relatively short history can actually do it. In China now, we only feel there's a small bunch of biotech companies can actually build a decent commercial infrastructure. What about the commercial strategy now, compared to some of the established pharma in China, and also compared to multinational in China? I think PARP inhibitor, ZEJULA, is probably one of a good example, right? We're trying to hear more about that because you're already competing the number one oncology franchise from multinational players, which is Merck plus AstraZeneca, and their upcoming is number 1 domestic oncology powerhouse. I mean, Hengrui in China, also one of the big biotech company, BeiGene in the market. You are really competing with those number ones in the market. How's the performance look like now, and how you guys are actually differentiate yourself in the commercial side from those major competitors? I think first, we have been doing pretty well. I think in Hong Kong, we did very well. Then when we launched in China earlier last year, we were under some handicap from a commercial infrastructure perspective, given LYNPARZA already on the NRDL, and LYNPARZA is launched, I think 18 months or something like that ahead of us in mainland China. That gave them edge because we were on self-pay. Nevertheless, we did pretty decent, I think, in that first year for sale being handicapped. We were able to successfully get onto the NRDL at the end of last year to be eligible to a reimbursement from March of this year. So far what we're seeing is very encouraging. We were able to list the product onto a lot of hospitals. We actually listed in the most number of hospitals compared to other oncology products that got NRDL reimbursed, just really showing the execution of our team. Our team overall is about 700-800 people. In a very short span of time, we're able to, under William's leadership, to build a pretty sizable commercial team. Many of them come from very good backgrounds. Many of them launched several products, including TAGRISSO, and others, with William when he was at the head of oncology BU at AstraZeneca. I think the execution, we'll see more of it. I think fundamentally, a lot of it is also to the product itself. That's why we have a lot of pride in the pipeline that we have assembled. There is real differentiation in niraparib compared to other PARP inhibitors. It is the only PARP inhibitor that is approved and validated, that can address the all-comer patient population, that does not need a diagnostic test in a first-line setting. We would be, if the criteria is similar to last year, we should be eligible for NRDL reimbursement negotiation later this year, even for the first-line setting as well. This product has both on efficacy, on safety, on convenience, a lot of differentiating factors compared to LYNPARZA. BeiGene and Hengrui's PARP inhibitor are still just approved in the third line in the gBRCA setting. I think it's really the competition is between us and LYNPARZA. We're pretty confident we can gain shares. We have built a pretty good commercial team under William's leadership with a differentiating asset. We're pretty confident. Got it. Beyond oncology space, now you've got VYVGART, right, to get into the autoimmune diseases area. In China, one of the questions we always have is that we have been looking at the market for many years, well, but still for most of the autoimmune drugs, even like Humira, like ENBREL, they didn't do very well in China, right? I'm trying to get your thoughts on that. Do you actually envision there's going to be an inflection point for the autoimmune market in China? What's going to be your strategy to get VYVGART into China while some other, the autoimmune disease drugs might not doing that well? I try to understand a bit more about that strategy. Sure. First of all, historically, the TNF alpha, for example, hasn't really done that well. There's probably a lot of legacy issues. More recently, for example, DUPIXENT is actually doing not so bad. It's also addressing diseases, autoimmune diseases that address pretty large patient populations, being more mild to moderate kind of diseases. When we picked VYVGART as really our anchor asset to go into this space-We've done a lot of various KOL and expert primary research. This product addresses many different types of severe autoimmune diseases, and many of them have very deadly consequences. Also, many of these diseases, patients go seek care at a very limited number of hospitals, high concentration of them. Many, by the way, still, even though gMG, for example, is actually on the rare disease list in China, there's still about over 200,000 patients. It's not small by any means. The features that I described relevant to VYVGART actually makes it more like an oncology product in that there's concentration, in that it can be very deadly, in that there's huge unmet medical need with very limited treatment options currently. Consequently, we believe this is the perfect product to use to build around a commercial team that can be very similar to our oncology commercial team to really fully maximize the potential of VYVGART. By the way, VYVGART is actually touching a lot of hospital departments that we're already in, for example, in hematology, where this product is being developed in ITP and CIDP, also neurology for the leading patient, gMG, has some synergies with our Optune product as well because the hospitals where neurology is strong, Optune also is very strong in. There are synergies, there are relevance with oncology. It's very severe. I think if any product can succeed, this should be the one. Got it. Well, a bit more also about the talents, because I think as a biotech company in China now, you are building a full-fledged platform. Talent's definitely being very critical to you guys. Could you please update us on how many headcounts you have in the clinical team now, discovery team, commercial, you mentioned about 700- 800. Right? And also, how do you feel like the competition for the talents now in the China market? We understand there are numerous new biotechs that are emerging, right? They're also competing for those talents, the direct level above and some of the entry level staffs. What's your take on that? First of all, on the people side, we have actually about 1,400, maybe approaching 1,500 FTEs. Obviously, we have presence in the U.S. on both the east and west coast. The vast majority of those people are still in mainland China. If I split between the major functions, commercial is about 700-800. The clinical development operation team is probably around about 500 and maybe a bit more than that now. Various other functions like manufacture as well, we have some people there. We have been good at attracting talent. We have been doing a great job in trying to retain talent. I'm sure a lot of people or other companies want to steal some of our people away from us. I think under Samantha's leadership on the financial incentive side, pretty much the majority of our employees have equity ownership in the company, and are well compensated. More importantly, I think at Zai Lab, we have really built a culture around the U.S. biotech culture, really results-driven, execution-oriented. People really feel a sense of achievement, and getting things done. Also very importantly, we have a great pipeline. I think whether it's the development colleagues, whether it's the commercial sales team, they all want to work with differentiated product. They want to work with good programs. I think it's really a reinforcing kind of cyclical positive circle, that sort of you have good product, and it attracts good people, and then good people are happy, and then they are able to, whether discovery or partnership, bring in more better products. That's why actually, the turnover rate at Zai, I think is probably the lowest in the industry, despite the fact that probably many people want to, as I mentioned, grab a lot of talent from Zai. We've been able to retain, we've been able to continue to attract and even attract, as you saw in some of these recent announcements, some of these global leading people like Alan Sandler, who was head of oncology for solid tumors at Genentech globally. We'll continue to build our presence both in China, infrastructure, as well as the U.S., with the ultimate ambition of being a global company, that is primarily based in China. Got it. Well, since you already mentioned about the talent recruitment in the U.S. and also the global part of your story. Lastly, we would like to touch upon on your global strategy, right? Now you got in-house projects, and also you got potential, the ambition to get some of the global rights for some potential future assets. How you will look at the global strategy play out for Zai Lab as a company. Now you're pretty much building everything in the pipeline life-saving model, right? In the future, in terms of the resource allocation, in terms of the talent recruitment, in terms of the assets, how the global strategy will be like? Yeah. It takes different stages and phases, I think first of all. At Zai, we've always been operating at a very fast pace of speed. I think you may see in our corporate deck, there's like every three years, there's a significant evolution in the company's trajectory. We are hoping in the next three years, we will be a much stronger company from a global perspective. We've been going on that trajectory step by step, first with the inclusion of very strong talent, both globally as well as still continuously here in China. Talent is very important. Then, the pipeline. Now through there, we have from a discovery from our in-house efforts, we have assets with global rights, and we're going to continue to advance those and bring other preclinical assets to the clinic. Then we're going to also try to boost those efforts, obviously, with business development, to also have global rights to programs both inorganically as well as organically. I think all of these are going to happen at the same time. We're also obviously going to take advantage of the fact that being a China-based global company, there are certain diseases, certain indications where we may have an advantage to develop for the world, in solid tumors, in, for example, infectious diseases, autoimmune diseases, which as you know, are very prevalent here in China. I think there are many angles that we're doing, and we've taken a lot of different approaches. The vision, the mission is very clear. We want to be a global company. We want to be a company like Takeda and Daiichi Sankyo's, because there's a very strong talent wing here, and we want to take advantage of that. Also very importantly, we want to build this leadership position in China and bring good therapies to Chinese patients. Hopefully very soon we can do that for the global patient population as well. Great. I think our time is up, and thank you very much, Jonathan, for your sharing, and we're definitely looking forward to more deals, more clinical progress readouts from Zai Lab. Looking forward to that. Thank you. Thank you. It's always a pleasure talking with you, Ziyi. Thank you. Yeah. Thank you. Thank you, Jonathan. Okay. Bye-bye.