Good morning. Thank you for joining us for our fireside chat with Zai Lab. We have with us here today, Josh Smiley, President and COO of the company. So to start, Josh, what's your strategic vision for the company? Where is it now, and where do you want to be in the next three to five years? Great. It's a good, good question to wake up on. We're, you know, we're ten years old this year, but, I think if you think about the next five years for Zai, we're at a really, exciting, point. Our vision is to, first to, to be a, a great, commercialization company in China. We have five products on the market, today. In Q2, those five products, in total grew at 45% and achieved $100 million in sales. We've got a series of launches over the next, five years, to get us to 2028 and, and, you know, our biggest product today is ZEJULA, our fastest growing is VYVGART. And then if you think about the products that are coming, we've got some of the most exciting products on a global basis we have rights to in China, including KarXT for schizophrenia and bemarituzumab for gastric cancer. We expect that portfolio in China to be able to grow at a 50% rate on a compound annual growth rate between now and 2028, which would take us from, you know, approximately $400 million in sales this year to $2 billion in sales. We're quickly achieving profitability. We'll be profitable on a cash basis in Q4 of 2025, so just whatever that is, five or six quarters from now. By 2028, with the growth of the portfolio, we'd expect to have operating margins in the 20%-30% range. So we're sort of moving from an early stage biotech, you know, beginning to launch, to a full stage commercial, cash-generating, machine. That's China. We'll continue to, as I say, launch products, but also bring in some new, regional products for China. But increasingly now in the second sort of, you know, phase of the company's growth and strategy, we have a global pipeline. We have three products that are in global clinical development that are beginning to generate some pretty interesting and exciting data, and we'll continue to bring those forward. So I would hope by over the course of the next five years, you see a, you know, great, sustainable, growing, cash-generating business in China and, really, exciting, few or more assets, ready to launch on a U.S. or global basis. You've provided two pieces of guidance. One is your 50% revenue CAGR from the end of 2023 to 2028. Right. And the other is your profitability guidance. So, can you provide more details on how to think about these different drivers, revenue, expenses, and what have you, over the next five years or so? Sure. Yeah. So as I mentioned, our growth in Q2 of this year was 45%. As we look at the second half of the year, that number should be higher as VYVGART, our most recent launch, becomes a bigger and bigger part of our sales base. We've said for this year, we expect VYVGART to sell over $80 million in China, which I think by any measures is a blockbuster launch. So that product will drive our near-term performance on top of our, you know, existing other four products. So I think you should expect, you know, growth in the second half of this year to be in that 50% range or so. I think as we get out into the next years, in 2025, VYVGART will be the biggest driver of growth. VYVGART is approved in China today for gMG, for myasthenia gravis, and will get an approval next year for CIDP. That's under review today in China, and that indication can be as big and as exciting as gMG. We'll submit KarXT. We've finished the bridging study. This is for schizophrenia. We'd look to submit that in China by the end of this year or early next year. So, you know, hopefully can have that starting to drive growth in the near term, followed, as I mentioned, by bemarituzumab as our other big product. So yeah, I think when we think about the next few years in terms of growth and profitability, really watch VYVGART, KarXT, bemarituzumab. Now we have a series of other exciting products as well. We'll have actually three new launches in the fourth quarter of this year. XACDURO, which is for hospital-acquired antibiotic-resistant infections, our ROS1 inhibitor that's in partnership with Bristol Myers Squibb for first line non-small cell lung cancer, and we'll also launch the SubQ version of VYVGART in the fourth quarter. So those will begin to contribute to growth as well. So I think with that kind of product launch sequence and portfolio strength, by you know, Q4 of 2025, the top line growth in the 50% range, balanced with very moderate expense growth. So this is how we get to profitability in the near term. I think for SG&A, you should expect very modest growth between now and the end of 2025. We've put in place the infrastructure to support products like VYVGART. Even as we launch CIDP, we won't really have to add much resourcing there. So and we're, you know, we're ready to launch the other, you know, indications that I mentioned. So very modest SG&A growth. I think if you look at R&D for us, we've been spending about $250 million a year. And I think even with the growing global portfolio and opportunities we have, we should be able to keep that number pretty flat because a lot of the products I'm mentioning are sort of finishing their phase III program, so we've got some capacity in that number to be able to put back against the global pipeline. So I'd say, you know, in total, very modest operating expense growth in the near term, sales growth in the 50%+ range, that gets you to profitability in 2025. Just to be clear on profitability, what we're really focused on is cash. We wanna begin to generate cash, positive cash flow from the business in Q4 of 2025. So if you look at our total expense base, and use, you know, really more like EBITDA as the measure, so back out depreciation, amortization, we don't have much of that. And stock-based compensation, you know, you get a number of, you know, a little bit more than $80 million you'd back out from our total base. But if you back that out, I think the math is pretty clear. From there, you know, for the period between 2026 and 2028, really, it's continuing to drive sales growth, launch those new products that I mentioned, and we should be able to do that with, again, pretty moderate expense growth. Of course, we'll put in place a new sales force to launch schizophrenia. But it's a pretty focused opportunity. Similarly, for gastric cancer, for bemarituzumab, we'll make some investments. But I think on top of the base that we have today, those are gonna be pretty incremental. Okay, so then just to be clear, how do you actually define profitability? Is it cash, GAAP, non-GAAP? It'd be Non-GAAP. Non-GAAP, and non-GAAP really for us, really, the only thing that's of any magnitude would be stock-based compensation. I think that's pretty common across biotech companies to back that number out, again, it's non-GAAP. That's about $80 million a year. All right, so then taking a little bit of step back here on a bigger picture basis, how would you define the regulatory landscape in China? What has happened to NRDL? Seems like they're more focused now on innovative products as well. Can you just give us an overview? Yeah, I think, you know, despite the sort of macro worries, challenges, and, you know, concerns about, about China, I think if you look over the last few years at the on-the-ground regulatory environment, I would take that to cover, you know, getting new drugs approved, how they're priced, how they're supported and funded. It's been really positive. This summer, Premier Li Qiang outlined a national sort of comprehensive program to continue to drive the innovative industry, biotech industry in China and access to medicine, to innovative medicines for patients. So a series of incremental improvements, like how do you speed up the approval process for innovative drugs? How do you ensure once they're added to NRDL, that they're quickly available to patients? Those are all really positive things, and particularly positive for companies like Zai, who are focused on bringing sort of first-in-class, best-in-class medicines into China. I think on the pricing side, the last few years, again, have been positive. We're seeing more transparency. Most notable change that we saw coming into this year or for NRDL listing for 2024 is this option to pursue a simplified renewal. Every two years, you go through a mandatory price negotiation in China as part of the NRDL for products that are already on, in the past, so the past three cycles or so, since NRDL has been around, that's a brand-new start over negotiation. Now, beginning with this last cycle, you had the option to choose an algorithm that gave you predictability and transparency around pricing, and frankly, led to much less pricing adjustments or declines than they had in the past. You know, having worked in global pharma for a long time, I equate this to Japan, where it's, you know, the pricing doesn't necessarily get better over time, but it's very transparent, very predictable, and I think that's a hugely positive move. I think the other piece on the NRDL is the recognition that to get really good, innovative drugs into China or developed in China, you've got to have a good pricing. You've got to reward innovation in your home market. And I think we saw that with VYVGART. We came out with a price of $800 per vial or about $32,000 per year, which I think was well above what most analysts and investors thought was practical or possible in China. I think, again, lots of really positive on the ground types of moves. Okay, great. How does Zai Lab differentiate itself from other China-based biotech companies? What is your unique business commercial strategy? I think it starts with the breadth and depth of our portfolio. If you look at the, you know, some of the drugs that I've mentioned, we've got some of the most exciting products in the world, right? VYVGART, which I think everybody here and, you know, listening in knows about, you know, a super exciting advance for many very debilitating conditions in immunology. We're gonna follow that, as I mentioned, with KarXT. There was a great article in the Financial Times this morning about the innovation that KarXT represents for patients with schizophrenia around the world. To have a chance to be able to launch that product in China is really exciting b emarituzumab for gastric cancer, which is, you know, as I think most of you know, you know, significantly overrepresented in Asian patients, and this is a kind of advance we haven't seen in this, you know, disease state in many, many years. So we've got best-in-class products across a breadth of therapeutic areas, that I think puts us in a really unique position, certainly with physicians, as they see us bringing this kind of innovation to their practices in China. Certainly the institutions we work with and the way we do clinical development. Just to be clear, I think if you look at other partners that, you know, Western biotechs may choose to work with in China, many of them use CROs to do the development work in China. We've got over eight hundred people in China that do all of the work of clinical development, within China. This includes site monitoring, data analysis, protocol development, and otherwise, I think that's a unique advantage we have. Okay, great. Can you talk about your commercial product portfolio in China? Maybe go through each product and what the growth potential is, and what are your key products? Obviously- Sure VYVGART. Yeah, yeah, yeah. I mean, obviously- [inaudible] ..every question that's gonna start with VYVGART, so I won't this time. You know, our biggest product. Yeah today in terms of just absolute sales is ZEJULA, a PARP inhibitor for ovarian cancer. This is in partnership with GSK. Of course, we compete. This is a very competitive space on a global basis. We compete directly with Lynparza or AstraZeneca. But I think relative to any other major market in the world, we're the only one where ZEJULA is the market share leader in ovarian cancer, so we beat Lynparza there. We've been on the market for a number of years. Lynparza just is facing generic competition now, so the class is mature, but, you know, what we've seen is good growth for ZEJULA. We'd expect to continue to grow our share and to grow our sales. And it's by far the biggest product of the other three mature products that I'll mention. What we have said is we expect that portfolio, of course, driven by ZEJULA, to grow at about 20% per year for the next few years, okay? So still really good growth prospects and potential for ZEJULA in the near term. Other three products that are on the market today are Qinlock for late-line GIST. It's a relatively small product, really important if you have a late-line GIST, but a relatively modest product. Growing very well. We got NRDL listing last year. We'd expect it to continue to grow. We've got the other NRDL product we have is NUZYRA. It's a broad-spectrum antibiotic, also growing well as a function of NRDL listing, should continue to grow. And then our fourth existing product, other than VYVGART, is Optune for glioblastoma. This is a medical device. This is in partnership with Novocure. It's basically electrodes that you wear in sort of like a soft helmet on your head. It's been on the market for a few years. It's not eligible for NRDL listing because medical devices aren't covered through NRDL in China today, so we market that through the supplemental insurance, cash paying market. And I think it brings significant benefits to patients, but it is, you know, it's expensive and you're kind of limited to a smaller segment. So we did announce in Q2 that while we expect that product to continue to be an important innovative therapy for patients with glioblastoma, I think we're gonna focus on those core centers and areas where we can drive you know sales and profitability over time. So I think that's probably a more modest product for us. Now, that technology you know is the backbone for other potential indications like non-small cell lung cancer and pancreatic cancer. More to come on that later. Of course, then VYVGART, which I've mentioned, $80 million or more in sales in 2024. Just to give us a couple statistics, there are about 170,000 patients with gMG in China. If we look at the data for launch this year, we're getting about 1,000 new patients per month. So I think by the end of this year, probably somewhere in the range of, you know, 10,000 or more patients probably will have had a chance to benefit from VYVGART. The way it's used, it's used in cycles. You know, our assumption, based on the clinical data and what we see in other markets in the world where it's already been launched and a little bit more mature, is patients will take about five cycles per year. That's how you get that $32,000 number I mentioned. But so, you know, if you think of $80 million this year, maybe 10,000 patients, still most of them early in their cycles, you know, I think we're pretty clear that we see this as a product just in gMG alone, that, you know, should be $400 million-$500 million on an annual basis. You then add CIDP in and some of the other indications, and we've been pretty clear in saying this is a billion dollar plus product. But those are the five that are on the market today. We're pleased with the performance of all of them. I say we've made some adjustments with Optune to focus on, you know, productivity and where we can get the maximum benefits to patients. I think otherwise it's full speed ahead. Congratulations on the VYVGART sales during the quarter, and I saw that you had raised your guidance from $70 million + to $80 million + Yeah. I guess if we look at the math, your next two quarters are rather flattish to get to $80 million +. I know you said $80 million +. Right. So, you know, what's the thinking behind that? Our thinking is I don't wanna be up here with you next time and be like, "You said this number, and you guys didn't make it." So I think, you know, we have historically not given annual guidance or product level guidance. So this is the first really time we're giving, you know, more precise or specific guidance. So we wanna just be clear in giving a floor, okay? So I think we'd be disappointed if, given all the dynamics I just mentioned, if sales don't continue to grow on a quarter-over-quarter basis. So really, I think it's, you know, take this as being, you know, focus on the plus, I guess. But, you know, I don't think we wanna put in place a number that we're, you know, struggling to achieve. Again, I think by any measure, if we look, you know, at the end of the year, if we're anywhere above $80 million, I think everybody would say that's a really successful launch and you're off to a really good start. The thing to watch on VYVGART, I think, is can we get all those patients, continue to drive new patients into the funnel, and then keep them on therapy for the, you know, three, four, five cycles per year? I think if we're able to do that, even if you get, you know, 10% penetration, you know, in the market, you know, so 170,000, if you can get 17,000 patients in any given year, taking about 5 cycles, in itself, that's like $400 million-$500 million in sales. We know that all these patients will benefit from VYVGART. So it's, you know, it's a challenge of just, you know, getting them in, making sure physicians know how to identify the best patients for VYVGART this year and next year, and then staying on top of getting them back in for the cycles so that they, you know, can experience, you know, normal living and not be challenged by all the things that come with gMG. ... What about SubQ? SubQ was approved in July, and we'll launch it in Q4, so we're going through the normal process in China. We import VYVGART into China. We don't make it locally. We participate in argenx's global supply chain. So we're going through the normal process of getting that into China. We'll launch in Q4. It will not be on NRDL until just given the batch processing that works for NRDL. There are only updates once every twelve months. We missed the window on approval to get it approved on NRDL in 2025. So really, for the next eighteen months, we'll get it available on supplemental insurance and for cash-paying patients, and otherwise. But the big thing we'll focus on in the next for gMG is the IV form until we get into 2026. The SubQ version does present, you know, really good benefits for patients and otherwise. But treatment paradigm today in China is, patients travel to centers anyway for treatment and otherwise, so we don't see the lack of, you know, broad access for SubQ as a big barrier to getting more and more patients. But certainly, by 2026, with the new indications coming and otherwise, we expect it to be a SubQ and a patient-administered market. Okay, great. And we already know you mentioned about CIDP and TED- Yeah. but what other indications are on the table? Yeah. Yeah, so CIDP, next. Again, I, you know, I think we certainly expect an approval sometime in early or the first half of 2025. We will join the thyroid eye disease trial this year. That's a even bigger, you know, population than anything we see for gMG or CIDP. And then I think if you look at the other, you know, near-term indications, we will be joining the ocular gMG study, also seronegative, so really building out the gMG portion of the franchise. We're running a series of studies for argenx in China as POC studies, to think about what are the next suite of indications. Sjögren's, we'll be, you know, looking at and most likely joining that trial. BP, we're part of. I think if you... You know, I think, argenx talks about 10 plus phase III indications. I think, you know, you should assume that almost all of those, we're gonna be participating in China because we see. You know, take the, whatever the patient population looks like in the U.S. and multiply it by four, and that's kind of the opportunity we see in China. Great. So before we move off VYVGART, I just wanted to see if there are any additional questions from the audience? Okay, well. Yeah. So how will the two be complementing each other? Yeah, yeah. So the question was, as we launch, will it cannibalize some of the IV or, you know, does it expand the market? I think a little bit of both. Again, what I would say is, you know, from our experience with Optune, so for a product that's not on NRDL, you know, you're probably limited to just somewhere in the range of 20% of the population. So if you are a patient, you know, today, who's getting VYVGART as an IV, and you have... You know, if you worked at Zai, for example, we have commercial insurance and other things that sort of wrap around and cover products, therapies and treatments that aren't covered through NRDL. I think then SubQ becomes a, you know, a better option. It's quicker, it's more convenient, and otherwise. So some, you know, some modest percentage of patients who are started on IV probably will switch to SubQ. But given the growth we're seeing in IV, I don't think that's gonna be all that noticeable in terms of, you know, sort of the ramp. Really, I think our real approach here will be, yes, if a patient comes in, they already have. You know, the physician knows they have access to supplemental insurance and otherwise. I think they, you know, they may start them on, on SubQ instead of IV. So I would say, you know, for the most part, over the next year or so, probably some small portion of patients will get started on SubQ. Some even smaller portion will probably convert from IV to SubQ. But really, again, I'd say for the next year or so, it's still gonna be, you know, 90% or so of volume, I think, is gonna flow through the IV formulation. Okay, so let's move on to something else. Yeah. Muscarinic, KarXT Yes. Yeah, yeah. How's that gonna change the treatment paradigm, and what do you think about this product for you guys in China? Yeah. Oh, I mean, we're super excited about this product. I mean, first, just to participate, I mean, this is the first, you know, truly, novel treatment for schizophrenia in, I don't know, seventy years or so, right? I mean, the atypical antipsychotics, which have been, you know, big, contributors, you know, to, to patients' well-being and otherwise, for a long time, are really just, you know, sort of, variations on even older therapies. So this is a first, new mechanism in so many years. And the benefits that come with this mechanism that we've seen in the clinical trials. Of course, there's a FDA PDUFA date, you know, coming very soon, and we'd expect it, you know, I think we'd expect, we'd all expect to see a, you know, a good outcome from there. But presuming, you know, the launch, I think the benefits that we see in the clinical trials, and I presume we'll see in real-world settings, not just in China, but everywhere around the world, is that this product, you know, certainly treats the positive symptoms of schizophrenia. So, you know, reduces hallucinations and all the, you know, the challenges that come with that, without the burdens of things like weight gain and somnolence and extrapyramidal effects and otherwise. So, you know, the thing that is a challenge today, I was part of launching Zyprexa, so I remember this. It's a long time ago. But, you know, the challenges today for patients with schizophrenia is they don't wanna stay on drugs, even though they do suppress some of the really challenging aspects. They, you know, they cause lots of bad, you know, bad feelings, weight gain, and otherwise. So, you have patients who cycle in and out of treatment. I think the benefit we presumably are gonna see with KarXT is it's a much more long-term opportunity and long-term therapy. Which would allow for patients to be able to, you know, get jobs, live with their families, as opposed to in institutions and otherwise. I think in China, there's, you know, at least eight million patients with schizophrenia. So this is, you know, relative to the other drugs, I was talking about a hundred and seventy thousand patients with gMG. I mean, this is orders and orders of magnitude bigger. What we do know from, you know, 70 years of experience with the typical antipsychotics and atypical antipsychotics, is patients, you know, go through lots of different therapies. So I think, you know, at some point in patients' lives, they're gonna try almost anything that's got, you know, that's got some efficacy in clinical data against schizophrenia. So we, you know, we have a huge population. I think there's a strong recognition in China that patients with schizophrenia are not receiving great care today. There are lots of those 8 million patients, I think 4 million are being treated in some kind of inpatient or quasi-inpatient setting, you know, like some big psych wards in big urban hospitals. KarXT, I think, provides a real mechanism of maybe being able to get those patients back into the community, back with their families, being active members of the society. So, I mean, we're quite, quite excited about this opportunity, again, on a global basis, but certainly in China, where there's a huge patient population and a compelling need. You know, we have finished the bridging study that we had to run in China, because there weren't any Chinese patients in the original Karuna trials. We've completed that study. We'd looked, as I mentioned, to submit, you know, as early as the end of this year. You know, a regular timeline would say very early next year. I think there's lots of reasons to believe this will... You know, the regulatory process will be relatively smooth. Again, and we're gonna leverage what FDA does, you know, this month and look to launch this soon. There is no reason this shouldn't be a billion-dollar type of annual opportunity in China. I don't mean to focus on all the numbers, of course, we're all investors here and otherwise, but because of the benefit that it can bring to patients. And you... Again, with eight million patients, you don't need that many on KarXT at any given time to get pretty exciting numbers in your models, right? Okay, great. So switching to another product, XACDURO, I know it's approved in the U.S. Is it approved in China yet? I believe it might be. Yes, yes. Yes. You've given some pretty big numbers there. Yeah. and it's a different market than what we see here in the U.S. Right. So can you explain why, and why it could be such a big product in China? Yeah, this is, you know, this is for hospital-acquired, ventilator-associated, pneumonia and basically, you know, infectious disease. In China, there's a much higher rate of antibiotic resistance than there is in the West, and also there's, you know, more incidence of, hospital-acquired infection in China. Some of this just has to do with the size of the hospitals and, you know, otherwise. So I think when we look at the. You know, there's like 300,000 cases per year of, pneumonia infections, which is what XACDURO goes after. I think in the U.S., the numbers are, you know, in the probably tens of thousands or something. So it's, it's an order, orders of magnitude different challenge in China. The current, you know, standard of care is colistin, and it's. I think patients who get these infections, the mortality rate in China is about 40%. And I think if you look at the data from the phase III trials, which we did a lot of the work on because of the size of the patient population in China, the difference in cure rates, I think it's a little bit better than 60% on XACDURO versus 40% on colistin in rough numbers, and colistin's got lots of other challenges associated with it. So the opportunity and need is, you know, super compelling, and so we have said, "Hey, if you start to do the.. You know, look at that math and look at that opportunity. There are, you know, lots of reasons to get excited about this being a multi-hundred million dollar annual opportunity in China, you know, up to 500 million or so. And we see that for sure. The challenge, this is a different kind of commercial challenge than what we see with VYVGART, where it's very concentrated. You know the patients, you know the treating physicians. You know, these patients, you know, nobody goes into the hospital with this pneumonia infection, right? So you have to be in every ICU, you have to, you know, educate physicians and otherwise. I think we'll work with a partner to help us, at least at launch, get this, you know, somebody who's already in the ICUs and otherwise, and, you know, we'll have more to talk about in that regard over the next couple months. But again, I mean, in terms of the benefit that you can bring to patients, a 40% mortality rate across hundreds of thousands of patients, I think it's pretty, it's pretty exciting. We'll launch that product in the fourth quarter. It's been approved. Again, we're going through the inspection process and otherwise in China, and we'll announce how we're gonna reach all those, you know, all those ICUs and get that education process started. We're almost out of time, but I do wanna ask you, anything I didn't ask you, any closing comments? What's your strategic- Yeah ... vision for the company over the next several years? Yeah, no, I think it's a great, great time at Zai. Again, challenges on a macro perspective notwithstanding, if you look at the components of the things that are, you know, getting us excited about, you know, getting up in the morning, going to work, it's the five products that we have today, which are really good. These next suite of products which, you know, on a global basis, are exciting, and they are just as exciting or even more exciting in China. I think we do have, you know, compelling competitive advantages given the breadth of the portfolio, the clinical development expertise that we have. And I think the thing we haven't talked about, 'cause I've spent a lot of time on my answers, is the global portfolio. We are increasingly excited. I mean, again, bread and butter for us, for financials for the next few years is drive that portfolio in China, drive profitability. But in the background, and hopefully increasingly in the foreground, will be the things, the opportunities we have to bring drugs to patients, not just in China, but the U.S. and elsewhere. I think the one that, you know, that you'll see some data on in the fourth quarter is our DLL3 ADC antibody. It's in phase I in a phase I study, looked at in second line and later small cell lung cancer. But we're gonna. We've announced that we have an oral presentation at the ESMO meeting in late October, dose escalation, multiple-dose ascending data in, you know, a decent amount of patients. So I think that's one that I'm, you know, increasingly excited. Again, as I mentioned, I've been around pharma stuff for a really long time. I think in oncology, you start to see, you know, in this kind of data early in development, whether you have something that's you think is gonna be a real drug and gonna benefit patients. You know, you can assess that data in October, but we're getting pretty excited about that. Great. Thank you for joining us today. Okay. Yeah. All right, thank you. Thanks, Louise. Thanks, everybody.