Q4 2021 Zai Lab Ltd Earnings Call

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Our next question comes from Ziyi Chen from Goldman Sachs.

Thanks so much.

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[music].

Hello, ladies and gentlemen, thank you for standing by and welcome to Zaii Lab's 4th Quarter 2021 Financial Results Conference Call.

Please ask your question.

Alan, do you want to take this one?

Hello, Ladies and gentlemen, thank you for standing by and welcome to <unk> fourth quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

At this time, all participants are in the listen-only mode.

Hey, thank you for taking my questions.

Later, we will conduct a question and answer session and instructions will follow at a time.

As a reminder, today's call is being recorded.

A reminder, today's call is being recorded.

It is now my pleasure to turn the floor over to Billy Kerr, Chief Financial Officer of Zai Lab, who will make introductory comments.

This is Yu from Goldman.

Yeah, sure, Billy.

It is now my pleasure to turn the floor over to Billy Cho Chief Financial Officer at all because I love, who will make introductory comments.

Thank you, operator.

Thank you operator, good morning, good evening and welcome everyone dialogue recently issued a press release, providing the details of the company's financial results for the 12 months ended.

Fourth quarter ended December 31, 2021, as well as product highlights and corporate update.

The press release is available in the Investor Relations section of the company's corporate website at IR <unk> Die Laboratory Dot com.

Good morning, good evening, and welcome, everyone.

I think I got two questions on the financials.

Yeah, thanks for the question.

Today's call will be led by both of US not to do <unk> founder Chairperson and Chief Executive Officer shall be joined by Dr. Alan Sandler President and head of global development oncology, who will discuss advances with our oncology product candidate.

Hello, Brian Hart, President and head of global development Neuroscience autoimmune diseases, who will speak about the progress we've made in those three therapeutic areas and I will discuss the performance of our marketed products.

Crude with comments on our financial results additional executives will also be available as a question during the Q&A portion of the call.

As a reminder, during today's call dialog will be making certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095, including our business plans and objectives and timing of success of our clinical trials, our sales and revenue forecasts for our products and product candidates regulatory applications and commercial launches.

Forward looking statements are not guarantees of future performance.

Therefore, you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

We refer you to our SEC filings for a discussion of risk factors that could cause our actual results to differ materially from those discussed today.

Zai Lab recently issued a press release providing the details of the company's financial results for the 12-month standard and fourth quarter ended December 31, 2021, as well as product highlights and corporate updates. The press release is available in the Investor Relations section of the company's corporate website at ir.zailaboratory.com.

Number one is on the gloss margin in the fourth quarter.

So, yeah, so, as you of course know, that Maradi has announced the accepting the filing with the PDUFA date that we mentioned earlier in December.

At this time it is my pleasure to turn the call over to <unk>, founder Chairperson and Chief Executive Officer.

This message.

Thank you Kelly.

Today's call will be led by Dr. Samantha Du, Zai Lab's Founder, Chairperson, and Chief Executive Officer.

It's looked throughout the lower compared to previous quarters, 51% compared to 72% in third quarter 2021.

And we believe that we are already in contact with China regulators, and that will continue with our path forward.

Hello, everyone and thank you all for joining us.

She'll be joined by Dr. Alan Sandler, President and Head of Global Development Oncology, who will discuss advances with our oncology product candidates.

That should not change any of the timelines that we're looking for moving forward.

On this call I'll discuss highlights from our <unk> one.

And also, I know our partners, Maradi, are optimistic that, as you know, in the U.S., sometimes with data that's very encouraging, those announcements can come before, decisions can come before the PDUFA date.

Dr. Harald Reinhart, President and Head of Global Development, Neuroscience, Autoimmune, and Infectious Diseases, who will speak about progress we've made in those three therapeutic areas.

What we expect to accomplish in 2022.

And I will discuss the performance of our market products and conclude with comments on our financial results.

So I'm trying to understand a bit more about the reason behind what's the impact from the sales milestones, and also what's the impact from the rebates to the channel inventory in fourth quarter.

So, we're looking forward to continue to work with our partner, Maradi, on this exciting and potential first-in-class and best-in-class agent in China.

Suddenly one mark another year of strong.

Executions with airlines.

And if we average out or back it out, what will be the reasonable gloss margin assumptions we should be assuming for the portfolio going forward in 2022?

Thanks so much for taking our questions.

We significantly expanded our portfolio with <unk>.

And secondly, given the current funding environment in China and also globally for BATAC, last year, I think we still, companies still spent a decent amount of money on BD deals, licensing fees up to about, getting very close to $400 million.

But now, getting into 2022, when we are facing the challenge in the funding side, how should we think about budgeting for for those BD deals?

Thank you.

Essentially first in class and best in class.

Our next question comes from Jonathan Chang from SVB Leering.

We've made meaningful advances with our global pipeline of 11 months.

Including achieving proof of concept for CX <unk> two.

Our internally developed anti IL 17, the human body.

<unk>.

<unk> global right.

Are we going to spend still a lot of money on the BD deals this year?

Through business development.

Deepen our world class.

Lung cancer franchise.

With four additional promising drug candidates.

<unk> had a grasp it.

We bolstered our <unk>.

Franchise.

As Scotty Kumar.

Our pipeline of product opportunity.

And we expanded into newer style.

Deciding among Craig.

Alright.

We achieved additional regulatory submissions and approvals.

<unk>, our first non holiday approval for new Sarah.

Our commercial execution continues to gain strong momentum for hardware for marketed products.

We're also pretty good to have the doula included.

Our deal for first line ovarian cancer maintenance treatment.

We expect it to become the leading PARP inhibitor in ovarian cancer in China.

Unique label ovarian cancer patients.

Regardless of biomarker status.

Loss, but nowadays.

Further our pilot global team, both in the United States and China.

Building, a solid foundation to continue to grow Mexico.

Or we're going to be more focusing on budget control, refocusing on the clinical trials instead of BD?

We have set clear strategic priority for <unk>.

<unk> ourselves to lead the next wave for Biopharma innovation.

First.

Expedite bringing medicines to patients.

Accelerating important data readouts and regulatory filings for <unk> how are you.

Entire portfolio.

We plan to file the NDA.

<unk> in China in mid 2022 subject to ongoing discussions with MTA.

And to initiate a China Registrational study will be material.

In first line gastric cancer in greater China.

Second we will continue to invest in R&D and advance our internal pipeline with global rights.

We plan to move <unk> into.

Global development.

Up to <unk>.

Totally developed compounds with global rights in 2022.

Lastly, we will leverage our leading position in China for salary our recurring revenue base.

So innovation internally and externally with potentially transformative aspect and partnership opportunities.

Thank you.

Please go ahead.

Our mission is to build a leading global biopharmaceutical company.

Hey Ziyi, thanks for your two questions.

Hi guys, thanks for taking my question.

Looking ahead, we plan to have at least safety market product approval.

In more than 30 indications by 'twenty five.

We believe that the regulatory environment will continue to be supportive of innovative Biopharma company.

Sidelines.

We're also confident in the long term market potential of <unk>.

Differentiated workhorse portfolio.

<unk> to address.

This unmet medical need.

And to create significant value for all of our constituents.

<unk> our shareholders.

On bemurituzumab, to clarify, are you planning to initiate a registrational frontline gastric study in China in 4Q as a separate study from the Amgen Phase III studies?

For example, we are currently forecasting that peak sales of the current assets and now with lung cancer.

Kind of a franchise model.

Could generate up to a combined total of two $5 billion to $3 billion through 2000 and currency.

Additional executives will also be available to answer questions during the Q&A portion of the call.

So, in terms of growth margin, fourth quarter 2021, if you were to add back the non-recurring items, the $7.5 million NRDL negative adjustment, as well as, which was in the press release and in our 10K, it was also disclosed that in the cost of goods sold line item, there was also a one-time, Payment to GSK for hitting a certain revenue threshold of 8 million US dollars, And so without those one-time adjustments, gross margin would have actually increased quarter by quarter. So from 72% in third quarter to about 73% in fourth quarter. So for the year 2021, if you made those same adjustments, you would have also seen an increase as well.

And if so, can you discuss the rationale for this?

And now I'll turn the call over to a Doctor Islands Sandler Alan.

As a reminder, during today's call, Zai Lab will be making certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our business plans and objectives, and timing and success of our clinical trials, our sales and revenue forecast for our products and product candidates, regulatory application, and commercial launches. The forward-looking statements are not guarantees of future performance and therefore should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

I refer you to our SEC filings for discussion of risk factors that could cause our actual results to differ materially from those discussed today.

So gross margin in 2020 was 66 million, I'm sorry, 66% and 2021 normalized, it would have been around 70.9.

Thank you.

Thank you Samantha.

So in terms of going forward, you know, post-market for 2022 and even beyond, you know, as you know, it's really, Unsponsored ADR Unsponsored ADR Unsponsored ADR, Now, we believe, Adana, that, you know, it kind of tells nicely with where we are in our life cycle, you know, so our revenue momentum will continue this year and beyond.

At this time, it is my pleasure to turn the call over to Zai Lab's Founder, Chairperson, and Chief Executive Officer, Dr. Samantha Duke.

We're already going into productivity drive.

Alan Bakkew, Yes, sure.

By Labs oncology franchise continued to make progress on all fronts in the fourth quarter and we expect to have a busy and productive year in 2022.

So for example, in terms of our sales and marketing, you know, team size and spend, you know, we don't expect to see a notable increase this year for investments we made, you know, last year, and even the prior years, you know, we're going to enjoy some of the benefits while not sacrificing any growth and also with a mind towards preparing for additional launches in the coming years.

Thank you, Billy.

But we will expect to do additional deals.

Thanks for the question.

This is something that we're in discussion with our partners, Amgen, as the best method to move forward to get this exciting agent into patients in China.

And I'll let Jonathan and other colleagues chime in.

For <unk> the FDA recently accepted NDA filed by Marathi and second line non small cell lung cancer in the United States.

You know, we are very selective, as you know, but if there are opportunities, especially in this market, where there's a little bit of a dislocation, if there are very, you know, value creating opportunities that meet our very high threshold and criteria, we have the balance sheet to do it.

And we are at the point in time for our company's lifecycle where we have that flexibility to manage growth and productivity.

Alright, thank you.

With the Paducah date of December 14th 2022.

Our next question comes from Simas Fernandes from Guggenheim Securities, please ask your question.

In January of this year variety announce exciting clinical data from our phase II cohorts.

Great, thanks for the question.

Crystal one study in patients with <unk> mutated Gi cancers.

So just one quick question.

Revealing a 41% objective response rate and 100% disease control rate and the 27 evaluable patients.

You know, your next big catalyst, I think, really will be tied to CAR-XT.

Just love to get a sense for, you know, the key attributes that you think are likely to be most impactful.

In addition, and as.

Now in September Marathi reported the topline results from the phase II cohort in the Crystal one study.

You know, is it, you know, does it relate to both negative and positive symptoms?

And then just in terms of the overall environment in China, for what I think is, you know, largely a Nathan opportunity, but one supported by the Chinese government now, can you just walk us through how to think about the opportunity for CAR-XT in schizophrenia, but then perhaps more broadly in Alzheimer's disease?

Do you really view these as two unique potential indications?

Thanks.

In this study patients with second line.

Thanks, Seamus.

Non small cell lung cancer harboring the <unk> mutation retreated without aggressive monotherapy 600 milligram B I D. Revealing a 43% objective response rate and an 80% disease control rate.

Harald, do you want to take the first part of the question and maybe Jon can chime in on the second?

Yeah, thank you.

Thanks for the question.

It's really a new opportunity for us.

It's an anchor asset, as you already heard from others, and we see this really differentiated as a differentiated product for us and in the market here in general, and especially meeting an unmet need in China.

So having said that, you already hinted at the efficacy side in the schizophrenia symptom scores on the negative symptom side, which is something that is not well taken care of by current second generation antipsychotics.

The safety and Tolerability profile was consistent with previously reported findings for <unk> in patients with advanced non small cell lung cancer.

But it's not, by the way, it's also efficacious on the positive symptom side.

In addition, Marathi reported positive clinical data from a cohort of the phase one two crystal one study in patients with heavily pretreated colorectal cancer harboring the <unk> mutation.

So we're covering very broadly with this drug combination, the most important symptoms that you see in schizophrenia patients.

The second point which should really not be forgotten is safety.

In the safety of this drug, it has a totally different safety profile from all the other antipsychotics with their EPS, their exoperimental symptoms, and so on and so forth, which are a class effect seen regularly.

Weight gain commonly seen. Other side effects are related to the serotonin and dopamine urgent effects of this drug class.

We are obviously different here, and this is one of the differentiating features.

What we believe is that schizophrenia is not well covered on the symptom score, the negative symptom score, and that's a worldwide phenomenon, and we see ourselves differentiated here because there are no other drugs that really cover that area as well as Corona XT.

So having said that, the overall market size is considerable.

It's considerable in general, because schizophrenia is such a common indication, such common affliction.

But it's also something which the government in China is trying to address.

Now, there is still a deficit here in the coverage and in the in the clinical care setting in China for this indication.

It was recognized by the government in recent years and they will act accordingly.

It's already a well-known thing.

These results showed that at aggressive alone and with Cetuximab demonstrated significant clinical activity and broad disease control in these patients.

These results are very encouraging reinforce our view that <unk> has the potential to be a best in class compound for patients with <unk> mutations.

We plan to join global Phase III studies in second line, plus non small cell lung cancer and second line colorectal cancer in mid 2022.

Moving to <unk>, we plan to initiate a China or a registrational study in first line advanced gastric and gastroesophageal junction adenocarcinoma in greater China in 2022.

Schizophrenia is a very common affliction in China with what we assume is at least 8 million patients that are currently diagnosed as such, and we know that this doesn't cover everybody.

As you know, there's a significant number of patients that express FGFR-2B, and so this is something that we're, again, very excited about.

<unk> is a first in class F GFR <unk> inhibitor with a sizeable market opportunity in greater China.

We're still working on details as to how that is going to play out, and we'll, of course, be releasing more information as we get closer to that date.

This is not a very hard statistic.

But Jonathan, I think you are correct in assuming that it will be a registrational trial for partners.

It's also a very concentrated market, I should say, because, Unlike the U.S. or Europe, you don't see the treatment really initiated in a thousand small places, but it's much more concentrated in the medical centers.

I got it, but is there a reason why it would be like a separate study from the Amgen studies versus...

So we see this as a way to address rather quickly a high unmet medical need in China.

There are no approved therapies, specifically for these patients in China.

For that, sort of answer your question or should I go into any detail?

For tumor treating fields by lab partner Novocure anticipate top line data from the phase III pivotal lunar clinical trial testing the efficacy of TT fields, together with physician's choice immune checkpoint inhibitor or docetaxel for the treatment of patients with stage four.

No, that's very helpful.

Thank you.

Our next question comes from Yang Guang from Credit Suisse.

Non small cell lung cancer by year end 2022.

Hello, everyone, and thank you all for joining us.

Please ask your question.

You will recall that in May 2021, the FDA accepted the IDE supplement submitted by Novocure that incorporated recommended changes from the interim analysis of the lunar trial conducted by an independent data monitoring committee.

On this call, I'll discuss highlights, from our Tundi Tundi one, and What We Expect to Accomplish in 2022.

2021 marks another year of strong growth and execution for Zai Lab. We significantly expanded our portfolio.

Thanks for the question.

So, I got a quick one too.

So, for Q, we saw Optune sales is about 11.6, and then Chinlok sales is about, Unsponsored ADR, Hey, Yang, let me chime in here.

Thanks for your question.

<unk> reductions in the sample size to 276 patients and then the follow up period to 12 months.

So there are reasons.

But at the same time, I think, you know, at the moment, you know, so, so kind of in a nutshell, let me just, let me just walk you through those two questions then.

We believe that this protocol change as a reason for optimism.

For margin tucked the Mab, we filed an NDA in her two positive breast cancer with the NPA in December and the filing was accepted.

Our agenda is an FC engineered antibody molecule developed by Macrogenics is an antagonist of the her two receptor and has been approved by the FDA to be used in combination with chemotherapy for the treatment of patients with metastatic her two positive breast cancer following treatment with two or more.

Anti <unk> therapy.

XI conducted a bridging study of <unk> in combination with chemotherapy and advanced previously treated her two positive breast cancer that met its primary endpoint of median progression free survival as defined by achievement of at least 50% of the efficacy of <unk> plus.

Chemotherapy and the Sophia study.

The safety profile of margin tucked demand plus chemotherapy was acceptable and consistent with that seen in the Sophia trial.

You know, participating in.

Moving to our internal research and development program, you will recall from our R&D day last year that we embrace and open innovation model.

The Amgen.

Our goal is to file at least one IND per year and in 2022.

Plan to submit up to two <unk> for compounds with global right.

With an abundance of potentially best in class and first in class product. We're very excited about our oncology pipeline adds by lab.

Yeah, as Alan noted, I think right now we're prepared to say that it's going to be, in one way or another, an efficient registrational trial pathway.

Unsponsored ADR, Yeah, to work out the details is the best way to move forward with the option.

And now I will turn the floor over to Harold Reinhart to discuss progress in our neuroscience autoimmune and infectious disease therapeutic area.

Harold.

So Optune, fourth quarter sales was $11.6 million. And so for the year, $38.9 million.

I'm sorry, that can't be more.

Yes. Thank you Allen the fourthquarter broad several very encouraging new development clinical and regulatory in our autoimmune and infectious diseases franchise and added a new therapeutic franchise neuroscience.

So, you know, we've always said that the launch trajectory is not going to be the same as let's say, you know, a drug like the Jula, etc.

Got it.

But having said so, you know, we expect a very durable growth curve over time.

Thanks for tuning in.

Ill start with auto immune diseases, and if got TD Mont.

And we know this because we're also benchmarking because this is such a unique product.

Thank you.

Had a positive meeting with the NFPA TD Mont.

Our next question comes from Ziyi Chen from Goldman Sachs.

Suggest the potential for an accelerated regulatory approval for generalized myasthenia gravis in China.

Please ask your question.

Hey, thank you for taking my questions.

Subject to further discussion with the NFPA, we expect to file the BLA in mid 2022.

This is Yu from Goldman.

I think I got two questions on the financials.

Zeiss partner <unk> received approval for its got TD mode in Gmg in the United States in December 2021, and two.

Number one is on the GWAS margin in the fourth quarter.

It's looked throughout to lower compared to previous quarters, 51% compared to 72% in third quarter 2021.

So I'm trying to understand a bit more about the reason behind what the impact from the sales milestones and also what's the impact from the rebates to the channel inventory in fourth quarter.

We initiated clinical trials for <unk>.

Got taken out in China for other indications.

And if we average out or back it out, what will be the reasonable GWAS margin assumptions we should be assuming for the portfolio going forward in 2022?

I'm Mary immune thrombocytopenia, ICP chronic inflammatory demyelinating polyneuropathy CDP.

And secondly, given the current funding environment in China and also globally for ThoughtTech, last year, I think we still, companies still spent a decent amount of money on BD deals, licensing fees up to about, getting very close to $400 million.

But now, getting into 2022, when we are facing the challenge in the funding side, how should we think about the budgeting for for those BD deals?

Are we going to spend still a lot of money on the BD deals this year, or are we going to be more focusing on budget control, refocusing on the clinical trials instead of BD?

Thank you.

Hey Ziyi, thanks for your two questions.

In pemphigus as well as a pharmacokinetics study.

So, in terms of gross margin, fourth quarter 2021, if you were to add back the non-recurring items, the $7.5 million NRDL negative adjustment, as well as, which was in the press release and in our 10-K, it was also disclosed that in the cost of goods sold line item, there was also a one-time, Payment to GSK for hitting a certain revenue threshold of 8 million US dollars, And so without those one-time adjustments, gross margin would have actually increased quarter by quarter. So from 72% in third quarter to about 73% in fourth quarter. So for the year 2021, if you made those same adjustments, you would have also seen an increase as well.

So gross margin in 2020 was 66 million, sorry, 66% and 2021 normalized, it would have been around 70.9.

So in terms of going forward, you know, post-market for 2022 and even beyond, you know, as you know, it's really, Unsponsored ADR Unsponsored ADR Unsponsored ADR, Now, we believe at Zahleb that, you know, it kind of dovetails nicely with where we are in our life cycle, you know, so our revenue momentum will continue this year and beyond.

We're already going into productivity drive.

So for example, in terms of our sales and marketing, you know, team size and spend, you know, we don't expect to see a notable increase this year for investments we made, you know, last year, and even the prior years, you know, we're going to enjoy some of the benefits, while not sacrificing any growth and also with a mind towards preparing for additional launches in the coming years.

Unsponsored ADR, We make meaningful advances with our global pipeline of global assets, including achieving proof of concept for CL-1102, are internally developed anti-L17A human bodies who chronic packs of our for Global Right.

Next I'll talk about Zia and $11 two.

Through business development, we deepened our world-class gastric and lung cancer franchises with four additional promising drug candidates, including other.

We bolstered our autoimmune franchise with Eska Tikamot, a pipeline and a product opportunity, and we expanded into neuroscience with an exciting non-credit set.

Labs internally developed novel human <unk> antibody fragment.

We achieved additional registry submissions and approvals, including our first non-oncology approval for new therapy.

<unk> two is potentially the first IL 17 targeting topical treatment for patients with mild to moderate plaque psoriasis.

Last fall.

<unk> achieved proof of concept in a phase <unk> study and is now advancing into global clinical development.

We believe this is the first study to ever demonstrate penetration of the protein biological through Psoriatic skin.

Our resulting in a clinical response.

Skin penetration was demonstrated by changes in transcriptome for inflammatory markers with regards to efficacy topic closely held $11. Two resulted in a 45% relative clinical improvement in local policies score and improvement in erythema and scaling.

In target lesion size and improved responder rates.

Clinically we observed an early onset of action and consistent improvement over time.

CL 11, two had a benign safety profile comparable to placebo with treatment emerging adverse events that were fewer number and mild.

Pharmacokinetics studies confirmed lack of systemic absorption.

So Ryan this is affects approximately 125 million people worldwide of which 80% to 90% suffer from chronic plaque psoriasis.

S 70% to 80% of these patients have Mike to moderately severe disease, it's a strong rationale and patient need to develop a topical formulation with IL 17 directed therapy.

Directly on the leash and to avoid systemic exposure.

Current topical therapies provide limited efficacy will have.

Safety issues with long term use.

But we will expect to do additional deals.

Moving onto infectious diseases, our partnering cases announced positive topline results for <unk> known as <unk> from the global Phase III Registrational attack trial.

And I'll let Jonathan and other colleagues chime in.

You know, we are very selective, as you know, but if there are opportunities, especially in this market, where there's a little bit of a dislocation, if there are very, you know, value creating opportunities that meet our very high threshold and criteria, we have the balance sheet to do it.

And we are at the point in time of our company's life cycle where we have that flexibility to manage growth and productivity.

All right, thank you.

This trial evaluated the safety and efficacy of <unk> versus <unk> in patients with serious infections caused by Acinetobacter <unk>.

<unk> achieved the primary endpoint of statistical non inferiority in 'twenty HD all cause mortality.

Most patients had pulmonary infections with carb opinion resistant acinetobacter by many known as crap.

In addition, <unk> met the primary safety objective of this study achieving a statistically significant reduction in nephrotoxicity over call list.

Our next question comes from Simas Fernandes from Guggenheim Securities.

<unk> is the first investigational drug to demonstrate efficacy against crap.

Please, that's your question.

<unk> prospective well controlled clinical trial.

Great.

Grab infections are among the worst bacterial infections safe and effective treatment options are almost non existent.

Thanks for the question.

So, just one quick question.

As a narrow spectrum antibiotic <unk> targets grab actelion preferentially, thus potentially avoiding the collateral damage associated with broad spectrum antibiotics.

We look forward to bringing this drug to China, and Asia Pacific with severe grab infections that quite frequently seen in ICU.

And associated with high mortality.

We expect to file soon will do with regulators in China in the fourth quarter of 2022.

As Samantha mentioned, we received approval for Omadacycline desire for cap, where can each wyatt pneumonia and ABSSI skin infections and launched the product in December <unk>.

<unk> will have more to say about <unk> in a minute in his discussion of our commercial products.

Finally.

In the fourth quarter, we entered into the neuroscience area with our agreement with Corona Therapeutics for rights to car X key ingredient China.

You know, your next big catalyst, I think, really will be tied to CAR-XT.

<unk> is an oral investigational drug combination consisting of anomaly muscarinic agonist that stimulates <unk> four receptor in the central nervous system and trust.

Just love to get a sense for, you know, the key attributes that you think are likely to be most impactful.

And approved muscarinic antagonist that reduces the incidents of peripheral Gi side of things.

You know, is it, you know, does it relate to both negative and positive symptoms?

<unk> T has already demonstrated clinical benefit in phase II studies in schizophrenia, and Alzheimer's disease.

And then just in terms of the overall environment in China for what I think is, you know, largely a nascent opportunity, but one supported by the Chinese government now.

Can you just walk us through how to think about the opportunity for CAR-XT in schizophrenia, but then perhaps more broadly in Alzheimer's disease?

Do you really view these as two unique potential indications?

Thank you.

In the phase two emerge and want to trial <unk> demonstrated clinically meaningful and statistically significant improvement in pans total score.

Thanks, Jameis.

Harald, do you want to take the first part of the question?

Which is the total positive and negative syndrome scale.

And also in key secondary endpoints, including <unk> positive sub score and pants negative sub score.

And maybe Jon could chime in in a second.

<unk> T was well tolerated much better things anomaly in loan.

Yeah, thank you.

Corona is evaluating <unk> T in late stage clinical trials for the treatment of schizophrenia in psychosis and Alzheimers disease.

Thanks for the question.

It's really a new opportunity for us.

We are obviously different here, and this is one of the differentiating features.

It's an anchor asset, as you already heard from others, and we see this really differentiated as a differentiated product for us and in the market here in general, and especially meeting an unmet need in China.

So having said that, you already hinted at the efficacy side in the schizophrenia symptom scores on the negative symptom side, which is something that is not well taken care of by current second generation antipsychotics, but it's not by the way it's also efficacious on the positive symptom side so we're covering very broadly with this drug combination the most important symptoms that you see in schizophrenia patients.

The second point which should really not be forgotten is safety.

In the safety of this drug, it has a totally different safety profile from all the other antipsychotics with their EPS, their exoperimental symptoms, and so on and so forth, which are a class effect seen regularly.

What we believe is that schizophrenia is not well covered on the symptom score, the negative symptom score, and that's a worldwide phenomenon, and we see ourselves differentiated here because there are no other drugs that really cover that area as well as Corona XT.

Recently, a corona also initiated the phase three arise trial.

Weight gain, commonly seen. Other side effects are related to the serotonin and dopamine urgic effects of this drug class.

<unk> as an adjunctive treatment for schizophrenia.

Who in adequately respond to atypical anti psychotics.

Additionally, crew and our plans to initiate a phase three study in Alzheimer's patients with psychosis in mid 2022.

Results from a phase one b trial in healthy elderly volunteers indicate.

Standard doses of <unk> can be administered to elderly adults.

Maintaining a favorable tolerability profile.

XI lab work with Corona to design, the optimal strategy to accelerate the development and regulatory timeline of <unk> in China.

So having said that, the overall market size is considerable.

Now Billy will speak about progress with our commercial products and financial results.

It's considerable in general, because schizophrenia is such a common indication, such a common affliction.

But it's also something which the government in China is trying to address.

Thank you Harold.

<unk> the <unk> approved the NDA for Xyrem, a novel antibiotic with both oral and intravenous formulations for the treatment of community acquired bacterial pneumonia and acute bacterial skin and skin structure infection.

<unk> was launched in December .

<unk> was approved as a category one innovative drug and its locally manufactured in China. It is the fourth sorry that product the crews over the last 24 months.

We're also looking at how Optune has done, you know, sold throughout the world, including even Asia.

Our three other market products.

And so, you know, we feel pretty, you know, as months go by, as quarters go by, you know, we see the progress continuing well.

The op two <unk> continued to achieve robust revenue growth driven by strong demand in commercial execution.

We see that one of our focus areas execution is doing well.

Did you look continue to perform well building on the news from the last quarter for the first line ovarian cancer indication was included in the <unk> deal.

Our commercial execution continues to gain strong momentum for our four market, We're also pleased to have Sazula included in the NRDL for first-line ovarian cancer maintenance treatment, and we expect it to become the leading property inhibitor in the ovarian cancer in China, given its unique label for varying kinds of patients, regardless of biomarker size.

Last but not least, further grew our talented global team, both in the United States and China.

Now, there is still a deficit here in the coverage and in the in the clinical care setting in China for this indication.

This is important as the first line ovarian cancer maintenance treatment as a largest location for PARP inhibitors in China.

It was recognized by the government in recent years, and they will act accordingly.

With this favorable reimbursement decision is if youre a little unique label for ovarian cancer patients regardless of biomarker status. We expect that <unk> gained strong momentum this year and to achieve market share leadership.

No later than next year.

In addition.

As of December 31, 2021 video that was listed in early 1300 hospitals in China, providing a strong foundation for further interview on R&D.

Building a solid foundation for continuing growth and execution.

We have set clear strategic priorities for 2022. To position ourselves to lead the next wave of biopharma innovation.

First, we'll expedite bringing medicine to patients by accelerating important data results and registry filings across our entire portfolio, plan to file the NDA for ECMOC-TECMOC in China in mid-2022, subject to ongoing discussion with NMPA, and to initiate a China Registrational Study for Rheumatoid Arthritis, in first-line gastric cancer in Greater China.

Second, we will continue to invest in R&D and advance our internal pipeline with global rights.

We plan to move our CL1102 into full global development and submit up to two INDs for internally developed compounds with global rights in 2022.

Similarly, the large bulk of it is going well and we achieved solid growth.

Lastly, we will leverage our leading position in China to accelerate our growing revenue.

So, for example, the Supplemental Insurance Plan, we signed up 33 plans, and it's, you know, one of the top assets that can be reimbursed.

During the fourth quarter, our team focused on continue to crude market access.

And it's the only non-drug treatment option.

So it really speaks volumes about, you know, how much value Optune and two maturing fields can have in the marketplace.

By expanded commercial insurance and supplemental insurance coverage for Oxford, and educating our target position about a significant clinical benefit including survival benefit.

Currently offer is covered by 33 municipal or provincial supplemental insurance claim.

And has become one of the top ticket reimbursements from 'twenty one.

As you know the last year or last quarter I should say, we successfully launched Kinloss fourth.

Just in China, starting last summer the key focus of our launch increasing physician awareness market access and the number of patients treated by leveraging this trial data at Kinloss. Scott is the only fourth line gist treatment, regardless of the mutation status as well as the guideline recommendation by the Chinese society of clinical oncology.

Currently kilowatts thats been covered by 52 supplemental insurance clients with launch.

We're still assessing the impact of an intriguing results. However, we note that the fourth line Gist indication has over 7000, new patients every year in China growing.

We are committed to establishing <unk> as the standard treatment for this indication.

Now we're not here to make excuses, but I will also note that there were some restrictions in large hospitals in the northern region of China due to COVID.

This is already a well-known thing.

Now ill discuss our financial results.

Schizophrenia is a very common affliction epithet in China with what we assume is at least 8 million patients that are currently diagnosed as such, and we know that this doesn't cover everybody.

But again, we're not going to sit here and complain about that.

This is not a very hard statistic.

Product revenues for the fourth quarter and full year 2021 were $44 million at $144 $1 million respectively.

Over the same period last year part of revenues were $15 1 million.

$49 million respectively.

We're going to really just focus on making sure that the long-term trajectory remains robust.

It's also a very concentrated market, I should say, because, Unlike the U.S. or Europe, you don't see the treatment really initiated in a thousand small places, but it's much more concentrated in the medical centers.

Just completed our first calendar year of course location.

So we see this as a way to address rather quickly a high unmet medical need in China.

Very pleased with the successful launches and sales trajectory of our market product.

Congrats!

With many more product launches to come our commercial platform over time is expected to generate strong continued growth and considerable operating leverage.

So, the 9% quarter-by-quarter from third quarter to fourth quarter, one could say that it's a little slower than 12% from second quarter to third quarter, but I also want to make that small remark.

Could you look sales for fourth quarter, and full year, 2021 were $29 4 million and $93 $6 million respectively.

But 2022, we're pretty keen on the supplemental insurance strategy.

We see nice robust volume uptake coming from major plants like Shanghai, like Hangzhou, and it's great to see patients getting access to this technology.

Over the same period last year that drove our sales were $9 9 million.

At $32 2 million respectively.

Not that there was a negative $7 5 million nonrecurring adjustment to revenue.

Quarter 2021.

This was due to onetime compensation to distributors for <unk>. After 2021 price that remains in the distribution channel before the Anr deal implementation.

After sales for fourth quarter, and full year, 2021 were $11 $6 million and $38 $9 million, respectively and over the same period last year auto sales were $5 million to $16 $4 million respectively.

Kinloch in the fourth quarter was $2.9 million, $11.6 million for the year, you know, a significant growth year over year, but it was down from third quarter.

<unk> sales for fourth quarter, and full year, 2021 were $2 9 million and $11 $6 million respectively. Over the same period last year killer sales were <unk> $2 million.

$40 million respectively.

R&D expenses were $573 3 billion for 2021 compared to $242 $7 million for the same period in 2020. The increase in R&D expenses was primarily attributable to a $321 $3 billion, saying upfront payments for eight new license agreements compared to 83 $5 billion in 2020.

Expenses related to ongoing and newly initiated late stage clinical trials and payroll and payroll related expenses from increased R&D headcount.

Excluding upfront payments for new license agreement the core R&D expenses were $200 million installed 21 compared to $139 two to $1 40.

General and administrative expenses were $218 $8 million in 2021 compared to $111 3 million for the same period in 2014.

The increase was primarily due to payroll and payroll related expenses from increased commercial headcount and expanded commercial activities.

Hi, Lockwood chief expand its commercial operations across greater China.

<unk> reported a net loss of $704 5 billion for the full year of 2021 or a loss per share attributable to common stockholders of $7 a ticket.

Compared to a net loss of $268 9 million or.

Loss per share attributable to common stockholders of $3 40 success.

Curtis Palmer, excluding upfront payments for new licensing agreements, our cash used in operating activity and purchase of property equipment and intangible assets was $392 million in 2021.

sort of answer your question or should I go into any detail?

Compared to $143 2 million.

As of December 31, 2021, cash and cash equivalents short term investments and restricted cash totaled $1 1 billion.

Compared to $1 $9 billion as of December 31, 2020.

But it's not due to demand.

We would now like to turn the call back over to the operator to open up the line for questions.

We had some, you know, channel inventory build and I think that it was impacted also from the intrigue outcome and, you know, I think that's all we'll kind of say at this moment.

No, that's very helpful.

Operator.

But the more important point is that we see strong hospital demand in fourth quarter, which was, you know, which allowed us to absorb the inventory build.

Thank you.

Thank you.

I would now like to open the lines for questions. If you have a question. Please press star one at this time.

Our next question comes from Yang Huang from Credit Suisse.

And can we draw your request please press the pound key.

Please try to limit to one question each time.

Once again Thats star one for questions.

Please ask your question.

Our first question comes from the line of Michael <unk> from Jefferies. Please ask your question.

Unsponsored ADR, Our mission is to build a leading global biopharmaceutical company.

Looking ahead, we plan to have at least 50 market products approved by the end of this year, in more than 30 indications by 25.

Thanks for the question.

Hey, good morning, everyone. Thank you very much for the question.

Our question was around Juliet and thinking about the.

The growth trajectory in 2022, and 'twenty three 'twenty four.

As it relates to obviously getting expanded and our Dl, but also as Billy noted there was some price adjustments in the fourth quarter.

So how should we think about.

The growth in.

In the future coming years, but appreciating that we might expect price cuts every couple of years should talk about that in the outlook for Julia. Thank you very much.

We believe that the regulatory environment, continue to be supportive of innovative biopharma companies like Zai Lab.

So, I got a quick one too.

Hey, Mike This is bill I'll take your question. So yes, we're pretty excited to see the momentum earn.

We're also confident in the long-term market potential of our differentiated, world-class portfolio designed to address significant unmet medical needs, to create significant value for all of our constituents. Including our shareholders.

So, for Q, we saw Optune sales is about 11.6, and then Chinlok sales is about, Unsponsored ADR, Yeah, let me chime in here.

Early momentum at the July and of course looking forward to implementing now the <unk> deal.

Inclusion for first line for all comer patients, which as we noted in the press release.

Our I call it is the largest.

Opportunities for PARP inhibitors in China.

I believe that.

Astrazeneca.

And.

The earnings that the emerging market sales for the parcel was around $400 million and more than 50% of that coming from China.

And what we can share with you in terms of what we see so far.

Because of that that we are following with our entry.

We've seen that.

The size of the pie.

The penetration of the PARP class in China.

And at the same time, our market share within that growing pie has both been increasing very nicely, we expect that to continue.

For the foreseeable future.

This year next year and even beyond in that part of the reason why we had made a comment on this call.

Literally next year, we actually you also expect to repeat or the market share leader in the park.

Class a space.

So hopefully that gives you a sense of.

Yes, but you're looking for to your question as well as the confidence that we have.

I think both the opportunity may ask vas bookings.

May I ask a little follow up on the second part of that question, which was related to the price adjustment in the fourth quarter, we saw that with another major drug as well in China, and so I'm not sure that Wall Street analysts may appreciate this adjustment every couple of years and how we need to think about that and what is your opinion.

So it is correct that this is universal.

Pretty pretty commonplace in our industry in China, where every time you are included in the NRG L. Right before you are going to have a nonrecurring adjustment.

So if your question Mike is that juul in particular.

What do you need to factor in.

Every couple of years.

Could there be a possibility that we have to renegotiate with for NRG yield that would be a case by case decision. As you know we also have additional indications.

We have time to replace but what I can tell you is that.

For renegotiating.

The current indication.

A lot more modest there.

A lot of headline numbers that you've seen so for example, we had a 23, 6% discount rate.

The first line indication, which is again, a very significant piece of the part of asset class.

A couple of years later on if we were to re negotiate.

It would be a lot more modest compared to the <unk>.

<unk>.

Okay. Thank you.

Yes.

Maybe just to add sorry, it's Jonathan here.

I was in a negotiation.

With the <unk> late last year. So maybe you can provide a bit more color.

Look I think it's an important addition for US first to include the first law frontline that gives us a very strong competitive advantage.

Even with the only all comer product in that frontline setting. So we are really going to expect to get a lot of volume in exchange for a modest discount.

This discount would not come if we didnt add this indication. So every two years when we do renew we do not expect or the things would change things could change for the better to we don't know.

But if we didn't have to add that new indication at this time, we will not have to be subject to that.

Discounts.

But I think given our competitive product profile and given the volume exchange.

We have already seen that in Q1.

We're getting very good traction in terms of market share growth.

Thank you that makes sense related to the expanded label. Thank you.

Thank you. Our next question comes from Eagle Cubo.

Cubo.

From Citigroup. Please go ahead.

Thanks for your question.

Hi, Samantha ability and team thanks for taking the question.

For example, we are currently focusing, in our lung and GI cancer franchise, could generate up to a combined total of $2.5 to $3 billion through 2030.

And so I think, you know, kind of reset our 2022.

And now, I'll turn the call over to Dr. Ellen Sandler.

You made some interesting comments in the opening remarks regarding the lung and Gi cancer franchises that can generate a policy.

$5 to $3 billion through 2030. So I was just wondering if you could just drill down a bit into that projection.

<unk> products are you referring to in lung and Gi.

Can you talk a little bit about the assumptions, you're using to get into that two $5 billion to $3 billion range and what the ramp might look like to get there.

Of course, how confident are you that you can.

And hit that two $5 billion to $3 billion window by 2030. Thank you.

Ellen.

Okay, yes, that's helpful.

So there are reasons.

Hey, Paul this is Billy.

Ill initiate and others can chime in.

So yes, if you could provide some more color, but before I do that I'll, just kind of recall that.

Look.

Just to wrap up our first calendar year of commercialization.

So we're off to the races and we are.

Great momentum that we're going to build upon.

And I think we have a lot of new products launching as you know a pretty intense on schedule for the next three or four years. So we need to make sure that goes well, so we're still making investments, but we felt as a team that dialogue.

Thank you, Samantha.

Thank you.

But at the same time, I think, you know, at the moment, you know, so, so kind of in a nutshell, let me just, let me just walk you through those two questions then.

So Optune, fourth quarter sales was 11.6 million. And so for the year, 38.9 million.

So, you know, we've always said that the launch trajectory is not going to be the same as, let's say, you know, a drug like vitriol, etc.

It was.

It may be useful.

To both the buy side sell side for us to offer up.

Kind of a framework.

How to think about the commercial opportunity and so.

We made those comments and you saw it in the release, so you guys I mean.

Additional color that I can provide or we can provide on the peak year revenue.

Number two $5 billion to $3 billion is that first of all it only includes our current portfolio.

Zai Lab's oncology franchise continued to make progress on all fronts in the fourth quarter, and we expect to have a busy and productive year in 2022.

Thank you.

The.

A lot of the equity data et cetera, where based on already statistics, we've already publicly disclosed that you guys have.

The portfolio in terms of revenue mix is very diversified.

And we're not giving specific numbers and.

And then just yet but.

It's nice to see that it's a pretty diverse revenue portfolio.

And because of the fact that we have so many products launching it you've got the waterfall effect as well.

Over the next three or four years.

<unk> got products launching and building launching and building sort of at the same time, so the growth curve.

Actually accelerates.

In the mid to later years.

But.

But I think thats, the extent of kind of additional color to provide at this time, but hopefully.

That helpful.

But having said so, you know, we expect a very durable growth curve over time.

Yes, no that's definitely a helpful anchor for our for our modeling.

And we know this because we're also benchmarking because this is such a unique product, we're also looking at how Optune has done, you know, sold throughout the world, including even Asia.

And so, you know, we feel pretty, you know, as months go by, as quarters go by, you know, we see the progress continuing well, we see that one of our focus areas is actually doing well.

And then just one on one follow up just on the broader the broader portfolio strategy. Obviously, you have a very nice mix of therapeutic areas oncology and infectious autoimmune and now Corona with neuroscience.

So for example, the Supplemental Insurance Plan, we signed up 33 plans, and it's, you know, one of the top assets that can be reimbursed.

And only kind of the only non-drug, you know, treatment option.

So it really speaks volumes about, you know, how much value Optune and tumor treatment fields can have in the marketplace.

Now, we're not here to make excuses, but I will also note that there were some restrictions in large hospitals in the northern region of China due to COVID.

But again, we're not going to sit here and complain about that.

Just wondering about how much broader can be willing to go therapeutically.

There are many novel mechanisms in other areas for instance, cardiovascular nephrology disease, even platform approaches in gene and cell therapy are very interesting.

Potentially extending the portfolio. So just could you talk in broad brush strokes about how youre thinking about broadening the therapeutics therapeutic reach with respect to your BD opportunities.

We're going to really just focus on making sure that the long-term trajectory remains robust.

So, the 9% quarter-by-quarter from third quarter to fourth quarter, one could say that it was lower than 12% from second quarter to third quarter, but I also want to make that small remark.

But 2022, we're pretty keen on the Supplemental Insurance Strategy.

We see nice, robust volume uptake coming from major plants like Shanghai, like Hangzhou, and it's great to see patients getting access to this technology.

Kinloch said the fourth quarter was $2.9M, $11.6M for the year, a significant growth year-over-year, but it was down from third quarter.

Yes, I mean, we just broke into neuroscience said, we're going to stay healthy busy with the four that we have but maybe.

So mapped out and looked at any sort of comments on that.

An additional ta strategy.

Okay.

But it's not due to demand.

Yes, Hi, Bill maybe I will just chiming Jonathan here.

We had some channel inventory build and I think that it was impacted also from the intrigue outcome.

And I think that's all we'll kind of say at this moment. But the more important point is that we see strong hospital demand in fourth quarter, which allowed us to absorb the inventory build.

Okay.

And so I think we kind of reset our expectations.

So I think for us.

I certainly want to <unk>.

To strengthen those therapeutic areas.

Which we have built a leadership position team.

Just being oncology alone, we're seeing really a lot of opportunities.

I think last year in autoimmune.

Science, we have expanded with two.

Hotline or product anchor opportunities in <unk> and <unk>.

Okay, yes, that's helpful.

I think we see a lot of these opportunities I think what we're really building a XI is a world class.

Company with truly innovative best in class or first in class assets.

Thank you.

If there are assets that are synergistic to what we have for their assets, which could help.

Help with a very large unmet medical need we certainly continue to pursue those opportunities we've seen a lot of these opportunities today actually these pipeline of product opportunities.

I think you can expect continue.

Quantities of deal flow.

This year.

So I think especially in these areas, where we have significant presence you can expect us to do what we've been doing good ads and.

And potentially expand in other areas.

As we pursue global opportunities or maybe other transformative opportunities as well.

Yeah.

Great. Thanks, Thanks very much.

Our next question comes from David Lee from Bank of America.

Thank you.

Thank you. Our next question comes from Andrew <unk> from Jpmorgan. Please ask your question.

Please have a go.

Our next question comes from David Lee from Bank of America.

Hey, guys. Thanks, so much for taking the question.

Just a quick specific question on <unk>.

For Adagraciv, the FDA recently accepted the NDA filed by Murady in second-line non-small-cell lung cancer in the United States, with a PDUFA date of December 14, 2022.

Great.

Please have a go.

<unk> with the U S to do first and second line.

In January of this year, Varady announced exciting clinical data from a Phase II cohort of the CRYSTAL1 study in patients with KRAS G12c mutated GI cancer. Revealing a 41% objective response rate and 100% disease control rate in the 27 evaluable patients.

In addition, at ESMO in September, Murady reported the top-line results of the phase two cohort in the CRYSTAL1 study. In this study, patients with second line, non-small cell lung cancer harboring the KRAS G12C mutation were treated with adagrassive monotherapy at 600 milligrams BID, revealing a 43% objective response rate and an 80% disease control rate. The safety and tolerability profile was consistent with previously reported findings for adagrassive in patients with advanced non-small cell lung cancer.

In addition, Murady reported positive clinical data from a cohort of the Phase 1-2 CRISPR-1 study in patients with heavily pretreated colorectal cancer harboring the KRAS G12C mutation. These results showed that adegrastam alone and with cetuximab demonstrated significant clinical activity and broad disease control in these patients.

Set for later this year are there plans to speak to regional regulators.

These results are very encouraging and reinforce our view that adagrassive has the potential, be a best-in-class compound for patients with KRAS G12C mutation.

Thank you, management, for giving me the chance to ask a question.

Great.

We plan to join Global Phase III studies in second-line plus non-small cell lung cancer and second-line colorectal cancer in mid-2022.

An approval on X channel China data.

For second line lung for at aggressive thanks, so much.

Thank you, management, for giving me the chance to ask questions.

Okay.

So some of my questions have been covered by the previous Q&A.

So some of my questions have been covered by the previous Q&A.

Alex do you want to take this one.

Memrituzumab is a first-in-class FGFR-2B inhibitor with a sizable market opportunity in Greater China. There are no approved therapies specifically for these patients in China.

So basically, now I have two questions.

So basically, now I have two questions.

Yes sure yes, thanks for the question so yeah.

Number one is, so what's your NRDL plan for your newly approved assets, for example, like Chinrock and Nuzara?

How shall we think about zero revenue ramp-up?

So this is my first question.

My second question is, currently you have $1.4 billion cash on your balance sheet.

Yes, so as you of course know that Marathi.

For tumor treating fields, Zai Lab partner Novacure anticipates top line data from the phase three pivotal lunar clinical trial testing the efficacy of TT fields together with physician's choice immune checkpoint inhibitor or dosotaxel for the treatment of patients with stage four non-small cell lung cancer by year end 2022. You will recall that in May 2021 the FDA accepted the IDE supplement submitted by Novacure that incorporated recommended changes from the interim analysis of the lunar trial conducted by an independent data monitoring committee, including reductions in the sample size to 276 patients and in the follow-up period to 12 months.

Number one is, so what's your NRDL plan for your newly approved assets, for example, like Chinrock and Nuzara?

How shall we think about zero revenue ramp up?

Accepting the filing with that Paducah date that we mentioned earlier in December .

So this is my first question.

And we.

My second question is, currently you have 1.4 billion cash on your balance sheet.

So how do you spend this money?

We believe that.

What about the burning rates and the cash run rate now?

That's my second question.

We are already in contact with.

China.

<unk> and that will continue with our path forward that should not change.

Any of the timelines that we're looking for moving forward and also I know our partners Marathi are optimistic that as you know in the U S.

We believe that this protocol change is a reason for optimism.

For margitustamab, we filed an NDA in HER2 positive breast cancer with the NMPA in December and the filing was accepted.

Margenza is an SC-engineered antibody molecule developed by Macrogenics and is an antagonist of a HER2 receptor and has been approved by the FDA to be used in combination with chemotherapy for the treatment of patients with metastatic HER2-positive breast cancer following treatment with two or more anti-HER2 therapies.

Sometimes with with data that's very encouraging.

Zai conducted a bridging study of margituximab in combination with chemotherapy in advanced previously treated HER2 positive breast cancer that met its primary end point of median progression pre-survival as defined by achievement of at least 50% of the efficacy of margituximab plus chemotherapy in the SOFIA study. The safety profile of margituximab plus chemotherapy was acceptable and consistent with that seen in the SOFIA trial.

Ounces can come before decisions can come before the Paducah date so.

Moving to our internal research and development program.

We're looking forward to continue to work with our partner variety on this exciting and potential.

First in class and best in class agents in China.

You will recall from our R&D day last year that we embraced an open innovation model.

So how do you spend this money?

Thanks, so much for taking our question.

Our goal is to file at least one IND per year, and in 2022, we plan to submit up to two INDs for compounds with global rights, with an abundance of potentially best-in-class and first-in-class products. We are very excited about our oncology pipeline at Zai Lab.

What about the burning rates and the cash run rate now?

Thank you.

Thank you. Our next question comes from Jonathan Chang from SBB Leerink. Please go ahead.

That's my second question.

Thank you, Davis.

Hi, guys. Thanks for taking my question.

<unk> be more of Tuesday, Nab to clarify are you planning to initiate a registrational frontline gastric study in China and for Q.

Separate study from the Amgen Phase III studies and if so can you discuss the rationale for that thank you.

Yes.

Alan back to you.

So I'll try to quickly address your two questions.

Yes sure. Thanks for the question.

The first part on NRDL plan.

So you are kind of right, you know, calling out New Zyra in particular, a drug like that would require, you know, antibiotic in China, even though it's next generation, you know, innovative petrosecond class, it would require NRDL for volume.

This is something that we're.

So, and it will be eligible for this year's negotiation.

In discussion with with our partners Amgen is the best method to move forward.

To get this exciting agent.

Into.

Patients in China.

As you know there is a significant number of patients that express <unk>.

And so this is something that we are again very excited about we are still working on details as to how that is going to play out and will of course be releasing more information as soon as we get closer to that date.

But Jonathan I think you are correct and that it will be a registrational trial for frontline.

Got it but is there a reason why it would be like a separate study front from the Amgen studies versus participating in the.

Unsponsored ADR, of those negotiations.

The Amgen studies.

Yes, Alan noted I think right now we are prepared to share would be one way or another inefficient registrational trial pathway.

Now to your second question about the Casper or how to Unsponsored ADR, So it gives us a lot of flexibility and buffer, as I mentioned before.

So we're still.

We're working closely with they are still working out.

Yes still work out the details is the best way to move forward with that with the option.

I'm, sorry that can't be more specific.

Yeah.

Got it thanks for taking the question.

Thank you.

And now I will turn the floor over to Harald Reinhart to discuss progress in our neuroscience, autoimmune, and infectious disease therapeutic area.

Thank you.

However, we're not going to rest on our laurels there.

Thank you. Our next question comes from <unk> Chen from Goldman Sachs. Please ask your question.

Harald.

Thank you, Davis.

You know, we are still in growth stage.

Hey, Thank you for taking my question. This is <unk> from Goldman.

Yeah, thank you, Alan.

So I'll try to quickly address your two questions.

I've got two questions on the financials number one is on the gross margin in the fourth quarter.

The fourth quarter brought several very encouraging new developments, clinical and regulatory, in our autoimmune and infectious diseases franchise, and added a new therapeutic franchise, neuroscience. I'll start with autoimmune diseases and FKTG mods. We had a positive meeting with the NMPA on FKTGMOD that suggests the potential for an accelerated regulatory approval for generalized mycelia gravis in China. Subject to further discussion with the NMPA, we expect to file the BLA in mid-2022.

Zai's partner, Argenix, received approval for FK-TIGIMOD in GMG in the United States in December 2021, and we initiated clinical trials for FK-TIGIMOD in China for other indications.

It's looked throughout two lower compared to previous quarters, 51% compared to 72% in third quarter of 2021, So I'm trying to understand a bit more about the reason behind what the impact from sales milestones and also what's the impact.

Primary Immune Thrombocytopenia, ITP, Chronic Inflammatory Demyelinating Polyneuropathy, CIDP, and PEMFIGUS, as well as a pharmacokinetic study.

The first part on NRDL plan.

So you are kind of right, you know, calling out a new Zyra in particular, a drug like that would require, you know, antibiotic in China, even though it's next generation, you know, innovative petrosecond class, it would require NRDL for volume.

The rebates to the inventory channel inventory in fourth quarter and if we.

Average out or back it out what will be the reasonable gross margin assumptions, we should we assume for the portfolio going forward in 2022 and.

Next, I'll talk about ZL1102, Zai Lab's internally developed novel human VH antibody fragment.

And secondly, given the current funding environment in China and also globally for <unk>.

CL-1102 is potentially the first IL-17 targeting topical treatment for patients with mild to moderate plaque psoriasis. Last fall, CL1102 achieved proof of concept in a Phase 1b study and is now advancing into global clinical development. We believe this is the first study to ever demonstrate penetration of a protein biological through psoriatic skin, resulting in a clinical response. Skin penetration was demonstrated by changes in transcriptome for inflammatory markers. With regards to efficacy, topical CL1102 resulted in a 45% relative clinical improvement in local PASI score, an improvement in erythema and scaling, in target lesion size, and improved responder rate.

Clinically, we observed an early onset of action and consistent improvement over time.

CL-1102 had a benign safety profile comparable to placebo, with treatment-emerging adverse events that were few in number and mild. Pharmacokinetic studies confirmed lack of systemic absorption.

Psoriasis affects approximately 125 million people worldwide, of which 80 to 90% suffer from chronic plaque psoriasis.

As 70 to 80 percent of these patients have mild to moderately severe disease, it's a strong rationale and patient need to develop a topical formulation with IL-17 directed therapy that works directly on the lesion and avoids systemic exposure.

Current topical therapies provide limited efficacy or have safety issues with long-term use.

Last year I think we still companies still spent a decent amount of money on BD deals licensing fees up to about.

Moving on to infectious diseases, our partner Antasis announced positive top-line results for Sulbactam durlabactam, known as SULDUR, from the Global Phase III Registrational ATT&CK Trial. This trial evaluated the safety and efficacy of suldor versus colistin in patients with serious infections caused by acinetobacter baumannii. Sodor achieved the primary endpoint of statistical non-inferiority in 28-day all-cause mortality. Most patients had pulmonary infections with carbapenem-resistant acinetobacter baumanii, known as CRAB. In addition, SODOR met the primary safety objective of the study, achieving a statistically significant reduction in nephrotoxicity over colistin.

Sodor is the first investigational drug to demonstrate efficacy against CRAB in a prospective, well-controlled clinical trial.

Crab infections are among the worst bacterial infections.

Safe and effective treatment options are almost non-existent. As a narrow-spectrum antibiotic, SOLDUR targets grab bacteria preferentially, thus potentially avoiding the collateral damage associated with broad-spectrum antibiotics.

We look forward to bringing this drug to China and Asia-Pacific where severe crab infections are quite frequently seen in ICUs and associated with high mortality.

We expect to file a soldier with regulators in China in the fourth quarter of 2022.

Getting back close to $400 million.

But now getting into 2022, when we are facing the challenging in the funding side.

How should we think about the budgeting for what those BD deals are we going to spend still a lot of money on the BD deals this year or we're going to be more focusing on budget control refocusing on the clinical trials instead about BD. Thank you.

As Samantha mentioned, we received approval for Omadacycline Nocira for CAP, or Community Acquired Pneumonia, and APSI skin infections, and launched the product in December.

So, and it will be eligible for this year's negotiation.

There's no doubt about that.

Hey, Jason Thanks for your two questions.

No.

In terms of gross margin.

Fourth quarter 2021, if you were to add back the nonrecurring items was $7 $5 million and our deal a negative adjustment.

Billy Cho will have more to say about Nazira in a minute in his discussion of our commercial product.

And finally, in the fourth quarter, we entered into the neuroscience area with our agreement with Karuna Therapeutics for rights to CAR-XP in Greater China. CAR-XT is an oral investigational drug combination consisting of xenomaline, a muscarinic agonist that stimulates M1, M4 receptors in the central nervous system, and traspium, an approved muscarinic antagonist that reduces the incidence of peripheral GI side effects. CAR-XT has already demonstrated clinical benefits in phase two studies in schizophrenia and Alzheimer's disease.

As well as which was in the press release and in our 10-K. It was also disclosed that into cost of goods sold line item. There was also a one time.

Payment to GSK for hitting a certain revenue threshold of $8 million.

And so without those one time adjustment gross margin would have actually increased quarter over quarter from 72% in third quarter.

About 73% in <unk>.

Quarter.

So for the year 2021, if you made the same adjustment you would have also seen an increase as well so gross margin in 2020 with $66 million I'm sorry, 66%.

In 2021.

Normalized it would've been around 79.

So.

In terms of going forward.

Gross margin for Q2 and even beyond.

As you.

As you know it's really.

Unsponsored ADR, of those negotiations.

Driven by sort of the product mix in <unk>.

Launch trajectories of each product at their particular point in time.

So there might be some.

We need some time to find that kind of a steady state because we have such.

Our launch schedule, but.

You see that we're already seeing some certain productivity gains right.

Even in the gross margin level.

So.

And then with that said that takes away a segue into your second question.

Now, to your second question about the Casper or how to Unsponsored ADR, So it gives us a lot of flexibility and buffer, as I mentioned before.

So yes, 2021 was our most active year.

Eight new.

Partnerships and assets.

Which we're quite excited about.

And we're very confident that it can create a lot of value, but you do hit on the point as well.

The current capital markets environment is a little bit different than in the previous year.

However, we're not going to rest on our laurels there.

Now.

We believe that.

It kind of dovetails nicely with where we are in our lifecycle.

Our revenue momentum will continue this year and beyond.

But we're also entering into productivity stage at the same time.

We're already going into productivity drive. So for example in terms of our sales and marketing.

Team size and spend we don't expect to see a notable increase this year the investments we've made.

So I made comments earlier about the, you know, some operating leverage and productivity drive in the commercial investments we made so far.

Last year.

The prior years.

You know, our R&D, core R&D spend did increase 80% year over year from 2020 to 2021.

We're going to enjoy some of the benefit.

Not sacrificing any growth and also with a mind towards preparing for additional launches in the coming years.

Our R&D, quite frankly, has been very efficient given the size of our portfolio. It will increase this year given the progress we're making with many new assets we brought in last year as well.

But we will and we expect.

To do additional deals and I'll, let top end and other colleagues chime in.

You know, we are still in growth stage.

But you can expect us to maintain the same level of productivity and efficiency in the R&D side.

We are very selective as you know, but if there are opportunities.

Especially in this market, where theres a little bit of a dislocation.

If there are very value creating opportunities.

So, again, you know, it gives us, you know, a lot of flexibility on how to manage growth and productivity from here on out.

Our very high threshold criteria.

We have the balance sheet to do it and we are at a point in time for our Companys lifecycle, where we have that flexibility to manage growth and productivity.

All right.

Alright. Thank you. Our next question comes from Siemens Fernandez from Guggenheim Securities. Please ask your question.

In the phase two emergent one trial, CARX-T demonstrated clinically meaningful and statistically significant improvement in PANS total score, which is the total positive and negative syndrome scale, and also in key secondary endpoints including PAN's positive subscore and PAN's negative subscore. Car XT was well tolerated, much better than Xenomelon alone.

Thank you, Billy.

Great. Thanks for the question. So just one quick question.

Your next big catalyst.

I think really will be tied to car T.

That's very helpful.

Just love to get.

For the key attribute that you think are likely to be most impactful.

I have no further questions.

Is it.

Does it relate to both negative and positive symptoms.

And then just in terms of the overall.

Environment in China.

For what I think is largely a nascent opportunity, but one supported by.

Corona is evaluating CAR-XT in late stage clinical trials for the treatment of schizophrenia and psychosis in Alzheimer's disease. Recently, Corona also initiated the Phase III ARISE trial, evaluating CAR-XT as an adjunctive treatment for schizophrenia in adults who inadequately respond to atypical antipsychotics.

The Chinese government now can you just walk us through how to think about the opportunity for <unk> in schizophrenia, but then perhaps more broadly in Alzheimer's disease do you really view these as two unique potential indications.

Additionally, Corona plans to initiate a phase three study in Alzheimer's patients with psychosis in mid-2022.

Results from a phase 1B trial in healthy elderly volunteers indicate that standard doses of CAR-XT can be administered to elderly adults while maintaining a favorable tolerability profile.

Zai Lab will work with Corona to design the optimal strategy to accelerate the development and regulatory timeline of CAR-XT in China.

Yes.

Now, Billy will speak about progress with our commercial products and financial results.

Thank you.

Thanks Seamus.

Harold do you want to take the first part of the question that maybe chunk of time into the second.

Billy.

And next question comes from Wilfred Green from Macquarie Police.

Yes. Thank you thanks for the question Mitch.

Thank you for taking my question.

Really a new opportunity for us.

Thank you, Harald.

I've got a quick one on PTF.

As an anchor asset su.

In December, the NMPA approved the NDA for Nezira, a novel antibiotic with both oral and intravenous formulations for the treatment of community-acquired bacterial pneumonia and acute bacterial skin and skin scrupture infections. The product was launched in December.

And we see this really differentiated it's a differentiated product for us and in the market in general and especially meeting an unmet need in China.

Xyros was approved as a Category 1 innovative drug and is locally manufactured in China. It is the fourth Zai Lab product approved over the last 24 months.

Our three other market products, Dejula, Optune, and Kinloch, continue to achieve robust revenue growth driven by strong demand and commercial value.

The doula continues to perform well, building on the news from the last quarter when the first line ovarian cancer indication was included in the NRDL. This is important, as the first line ovarian cancer maintenance treatment is the largest indication for PARK inhibitors in China.

With this favorable reimbursement decision and the doula's unique label for varying cancer patients regardless of biomarker status, we expect the doula to gain strong momentum this year and to achieve market share leadership.

No later than next year.

In addition, as of December 31, 2021, Zijulu was listed in nearly 1,300 hospitals in China, providing a strong foundation for further interviewing.

So having said that you already hinted at the efficacy side in the.

Schizophrenia symptom scores on the negative symptom side, which is something that is not well taken care of by currency continuation interestingly cuttings.

But it's much and by the way. It also efficacious on the positive symptom side. So we are covering very broadly witness drug combination. The most important symptoms that you see in schizophrenia patients.

The second point, which is really not beef about safety.

And the safety of this drug it has a totally different safety profile from all the other antipsychotic with the EPA is the extra pyramidal symptoms and so on so forth.

<unk> seen Reagan and the weight gain common commonly seen other side effects are related to the tune and dopamine boutique you think too. These plants. We are obviously different here and this is one of the differentiating features would.

What we believe is that the schizophrenia is not well.

Covered on the symptom score the negative symptom score and that's a worldwide phenomenon and we see ourselves differentiated here because there are no other drugs that really cover that area as well as <unk>.

So having said that the.

Overall market size is considerable considerable in general because schizophrenia, it's such a common indication since common affliction.

But it's also something which the government in China is trying to address.

Now there is still a definite cta in the coverage and in the.

In the clinical care setting in China for this indication has been so recognized by the government in recent years and they will act accordingly, so really when announcing.

Schizophrenia is.

Very common.

Present in China with would we assume it's at least 8 million patients currently diagnosed as such and we know that this doesn't become a everybody. This is not a very hard statistics.

It's also a very concentrated market I should say because.

Unlike the U S or Europe , you don't see the treatment really initiated in small places, but it's much of a country too concentrated in the medical centers. So we see this as a way to address rather quickly.

Medical need in China.

Does that.

Sort of answer your question solution to go into any details.

No that's very helpful. Thank you.

Okay.

Thank you. Our next question comes from Yang Huang from Credit Suisse. Please ask your question.

Okay.

Similarly, the launch of Optune is going well and will achieve solid growth.

Thanks for the question so I.

I've got a quick one too.

So for <unk>, we saw up to them.

<unk> is about 11 points 11, six handle that ching log sale.

24249, something.

<unk> sales Q over Q is accurate declining and cross all pure sales folks who assumes also that of a slowdown for Q over Q just want to get some color is there a particular reason for what we are asking for them to truck sales for Q1.

Click away.

For the full year two jobs.

Performance of the year.

Hey, Doug let me chime in here. Thanks for your question. So there are reasons.

But at the same time I think.

At the moment, so kind of in a nutshell, let me just.

Maybe just walk you through those two questions then so opportune fourth quarter sales of $11 6 million and so for the year $38 9 million.

So we've always said that the launch trajectory is not kind of DSA, Mike with a drug like <unk> et cetera.

But having said so.

We expect a very durable growth curve over time, and we know this because we're also benchmarking.

Such a unique product we're also looking at all opportunities.

All throughout the world, including even Asia.

And so we feel pretty awesome.

Multiple bias quarters go by.

We see the progress continuing well we.

We see that one of our focus areas.

Doing well. So for example, the supplement to assurance plan, we signed up 33 plants and it's one of the top assets.

During the fourth quarter, our team focused on continuing to improve market access by expanding commercial insurance and supplemental insurance coverage for options and educating target physicians about its significant clinical benefits.

It can't be reimbursed.

And oney.

As the only non drug.

Treatment options. So it really speaks volumes about how much value opportunity tumor treating fields and can have in the marketplace.

Now, we're not sure to make excuses, but I will also note that.

There were some restrictions in large hospitals in the northern region of China due to Covid.

But again, we're not going to sit here and complain about that we're going to really just focus on making sure that the long term trajectory.

It remains robust.

No.

9% corporate quarter over quarter from third quarter to fourth quarter.

One could say that it's slower than 12% from second quarter third quarter, but I also want to make that small remark.

But twice.

<unk> done quite too we're pretty keen on the supplemental insurance strategy, we see nice robust volume uptake coming from major plans like Shanghai Hangzhou.

And it's great to see patients getting access to this technology.

Ken lock.

Fourth quarter was $2 9 million $11 6 million for the year.

<unk> growth year over year.

But it was down from third quarter, but it is not due to demand.

We had some channel inventory build.

And I think that there was impact at all.

The intrigue outcome.

And I think Thats, all we will say at this moment, but the more important point.

Is that we see strong hospital demand in fourth quarter, which was.

Which allowed us to absorb.

The inventory build.

And so.

I think kind of reset barak talked quite your path.

Okay.

Thank you very much.

Thank you. Our next question comes from David Li from Bank of America. Please ask your question.

Great. Thank you management for giving me the challenge to ask a question. So some of some of my question has been covered by the.

Previous Q&A, so basically now I have two questions number one is.

What's your.

Our plan for your newly approved assays for jumbo like shingles and news hour.

Shall we think about zero revenue ramp up. So this is my first question. My second question is currently you have $1 4 billion.

Cash on your balance sheet, so how to spend this money.

Our billing rates and as our cash run rate now.

That's my second question.

Thank you.

Thank you David.

Try to quickly address your two questions. The first part on NR deal plan. So you are kind of right no calling out these already particular, a drug like that.

Would require antibiotics in China.

Even though its next generation innovative purchase second class.

It would require enter deal for volume.

And it will be eligible for this year's negotiation.

And then I think you were mentioning about the dealer, but maybe you can talk about the HELOC as well. So you can look at also eligibility with eligible last year and it'll be eligible this year for the negotiation for fourth line. So we'll make the right strategic decision.

Based on the outcome of those negotiations now to your second question about the cash burn or how to.

Allocate our capital usage.

Do have a strong balance sheet, we ended the year with one little over $1 4 billion.

And you will see that in terms of core cash spend outside of the upfront PD activities. It was just shy of $310 million.

So it gives us a lot of flexibility and buffer as I mentioned before however, we're not going to rest of our lives there.

We are still in growth stage, there is no doubt about that but we're also entering into productivity stage at the same time, so I made comments earlier about the.

There's no doubt about that.

But we're also entering into productivity stage at the same time.

So I made comments earlier about the, you know, some operating leverage and productivity drive in the commercial investments we made so far.

Some operating leverage and productivity drive in the commercial investments we've made so far.

You know, our R&D, core R&D spend did increase 80% year over year from 2020 to 2021.

R&D.

Core R&D spend did increased 80% year over year for 2020 to 2021 R&D quite frankly has been very efficient given the size of our portfolio.

Our R&D, quite frankly, has been very efficient given the size of our portfolio. It will increase this year, given the progress we're making with many new assets we brought in last year as well.

We will increase this year given the progress, we're making with mainly new assets. We brought in last year as well, but you can expect us to maintain that same level of productivity efficiency.

But you can expect us to maintain the same level of productivity and efficiency in the R&D side.

R&D.

So, again, you know, it gives us, you know, a lot of flexibility on how to manage growth and productivity from here on out.

Right so.

Again.

It gives us.

A lot of flexibility on how to manage growth and productivity from here on out.

All right.

Alright. Thank you believe thats very helpful. I have no further question David.

Thank you, Billy.

Thank you. Our next question comes from Wilfred Yang from Macquarie. Please ask your question.

What is our expectation for gastric cancer as we expect to have pilot trial data later this year?

Thank you for taking my question I've got a quick one on TTS tumor treating fields.

It is our expectation for gastric cancer as we have.

Okay.

Hello trial data later this year, so how should we.

So how should we think of the efficacy that will lead us to design to move further to a larger clinical trial?

How should we think of the bar for efficacy that will lead us to design to look further to the largest clinical trial. Thanks.

Hey, Alan, do you want to take this last question?

Hey, Alan do you want take this last question yes.

Yes sure. Thanks for the question.

As you as you pointed out what we'll be doing it will be analyzing the data looking at in particular response rates progression free survival.

See how that matches up with historical controls to see whether.

That data is exciting that to move forward.

In a next Registrational type randomized study.

We're excited and looking forward to the data readout moving forward so.

Stay tuned and hopefully that addressed your question.

Got it.

Great. Thank you I am showing no further questions at this time I will now turn the call back to <unk> CEO , Samantha Du for closing remarks.

Thank you operator, I want to thank everyone for taking the time to join us on our call today.

We appreciate the support and looking forward to updating you again after the fourth quarter.

Operator, you may now discontinue the call. Thank.

Thank you.

Thank you.

That does conclude our conference for today. Thank you for participating you may all disconnect.

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No.

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Yes.

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Okay.

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Currently, Austin is covered by 33 municipal or provincial supplemental insurance, and has become one of the top treatments reimbursed in 2021.

That's very helpful.

Yeah.

Hello, Ladies and gentlemen, thank you for standing by and welcome to design Labs fourth quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

I have no further questions.

Yeah, sure.

Thank you.

Thanks for the question.

As a reminder, today's call is being recorded.

As we noted last year, or last quarter, I should say, we successfully launched Kinloch's fourth-line GIST in China starting last summer. The key focus for our launch is increasing physician awareness, market access, and the number of patients treated by leveraging Invictus trial data and Kinloch's status as the only fourth-line GIST treatment regardless of the new patient status, as well as the guideline recommendation by the Chinese Society of Clinical Oncology.

It is now my pleasure to turn the floor over to Billy Cho, Chief Financial Officer, I'll pause I love, who will make introductory comments.

Currently, Kinloch has been covered by 52 supplementary insurance plans this month.

And next question comes from Wilfred Green from Macquarie Police.

You know, as you point out, what we'll be doing is we'll be analyzing the data, looking at, in particular, response rates, progression pre-survival, to see how that matches up with historical controls to see whether that data is exciting enough to move forward in a next registrational-type randomized study.

Thank you operator, good morning, good evening and welcome everyone dialogue recently issued a press release, providing the details of the company's financial results for the 12 months ended in fourth quarter ended December 31, 2021, as well as product highlight a corporate update.

The press release is available in the Investor Relations section of the company's corporate website at IR that Die Laboratory Dot com.

Today's call will be led by both of US not to do <unk> founder chairperson and Chief Executive Officer.

He will be joined by both of our Sandler President and head of global development oncology, who will discuss advances with our oncology product candidate.

Hello, Brian Hart, President and head of global development neuroscience, autoimmune and infectious diseases, who will speak about the progress we've made in those three therapeutic areas and I will discuss the performance of our market products and conclude with comments on our financial results. Additional executives will also be available to answer questions. During the Q&A portion of the call.

As a reminder, during today's call dialog will be making certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095, including our business plans and objectives and timing of success of our clinical trials, our sales and revenue forecast for our products and product candidates regulatory applications and commercial launches.

Forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance upon them. These.

These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect I refer you to our SEC filings for a discussion of risk factors that could cause our actual results to differ materially from those discussed today.

We're still assessing the impact of the in-treat results.

Thank you for taking my question.

So, we're excited and looking forward to the data readout moving forward.

At this time it is my pleasure to turn the call over to <unk>, founder Chairperson and Chief Executive Officer buckets marketed.

Thank you peony.

However, we note that the 4th line GIST indication has over 7,000 new patients every year in China and growing.

I've got a quick one on TTF, premature cancer.

So, stay tuned, and hopefully that addressed your question.

Hello, everyone and thank you all for joining us.

And we're committed to establishing Kinloch as a standard treatment for this indication.

Right, thank you.

On this call.

Discuss highlights from our Sunday to do one and what we expect to accomplish in 2022.

Now I'll discuss our financial results. Product revenues for the fourth quarter and full year 2021 were $44 million and $144.1 million, respectively. Over the same period last year, product revenues were $15.1M and $49M respectively.

Cynthia one mark another year of strong growth and.

Execution goes online.

We significantly expanded our portfolio with <unk>.

Essentially first in class and best in class.

We've made meaningful advances with our global pipeline of 11 months.

Including achieving proof of concept for <unk> two.

Our internally developed anti IL 17, the human body.

Chronic plaque psoriasis.

Global right.

What is our expectation for gastric cancer?

Through business development, we deepen our work masker chink of lung cancer franchises.

For additional promising drug candidates.

As we expect to have pilot trial data later this year.

Including other graphic.

So how should we think of the bar, the efficacy that will lead us to design to move further to a larger clinical trial?

Hey, Alan, do you want to take this last question?

We bolstered our Mi franchise.

That's got to come off a.

Yeah.

Our pipeline of product opportunity.

Yeah, sure.

And we expanded into neuroscience.

<unk> car T.

We achieved additional regulatory submissions and approvals.

<unk>, our first non oncology approval for this era.

We just completed our first calendar year of commercialization and are very pleased with the successful launches and the sales trajectory of our market product. With many more product launches to come, our commercial platform over time is expected to generate strong, continued growth, and considerable operating revenue. The julep sales for fourth quarter and full year 2021 were $29.4 million and $93.6 million respectively.

Our commercial execution continues to gain strong momentum for our four marketed products.

We're also pretty used to have a doula included.

Our deal for first line ovarian cancer maintenance treatment.

And we expect it to become the leading PARP inhibitor in Melbourne country in China.

It's uniquely though for Varian consultation.

Regardless of biomarker status.

Last but not least with.

Further our pilot global team, both in the United States and China.

Building, a solid foundation to continue to grow Mexico.

Thanks for the question.

We have set clear strategic priorities for <unk> to be true.

You know, as you point out, what we'll be doing is we'll be analyzing the data, looking at, in particular, response rates, progression pre-survival, to see how that matches up with historical controls, to see whether that data is exciting enough to move forward in a next registrational-type randomized study.

So, we're excited and looking forward to the data readout moving forward.

From ourselves to lead the next wave for Biopharma.

Sure.

So, stay tuned, and hopefully that addressed your question.

First well.

Expedite bringing medicines to patients.

By accelerating important data readouts and regulatory filings for <unk> how are you.

<unk> entire portfolio.

We plan to file the NDA for <unk>.

<unk> in China in mid 2022 subject to ongoing discussions with <unk>.

And to initiate a China Registrational study will be mature for Mt.

In first line gastric cancer in greater China.

Second we will continue to invest in R&D and advance our internal pipeline with global rights.

We plan to move <unk> into full global development.

Meet up to 294 internally developed compounds with global rights in 2022.

Lastly, we will leverage our leading position in China to salaries are growing revenue base.

So innovation internally and externally with potentially transformative aspects and partnership opportunities.

Right, thank you.

Our mission is to build a leading global biopharmaceutical company.

I am showing no further questions at this time.

Looking ahead, we plan to have at least 50 market Perl that's approval.

More than 30 indications by 'twenty five.

We believe that the regulatory environment.

<unk> to be supportive of innovative Biopharma company like satellite.

We're also confident in the long term market potential of our differentiated workhorse portfolio.

Trying to address it.

Discipline unmet medical need.

And to create significant value for all of our constituents.

Clothing, our shareholders.

For example, we're currently forecasting that peak sales of the current right now.

And our lung and Gi.

Fantastic.

Could generate up to a combined total of two five to 3 billion through 2030.

I will now turn the call back to Zai Lab CEO, Samantha Du, for closing remarks.

I am showing no further questions at this time and I'll turn the call back to Zai Lab CEO, Samantha Du, for closing remarks.

And now I'll turn the call over to a Doctor Islands Sandler Alan.

Thank you, operator.

Thank you, operator.

Thank you Samantha.

I want to thank everyone for taking the time to join us on the call today.

I want to thank everyone for taking the time to join us on the call today.

Over the same period last year, the yielded sales were $9.9M and $32.2M respectively. Note that there was a negative $7.5 million non-recurring adjustment in revenue in Q4 2021. This was due to one-time compensation to distributors for Cedula sold at the 2021 price that remained in the distribution channel before the NRDL implementation.

We appreciate your support and looking forward to updating you again after the fourth.

We appreciate your support and looking forward to updating you again after the fourth.

By Labs oncology franchise continued to make progress on all fronts in the fourth quarter and we expect to have a busy and productive year in 2022.

Opt-in sales for fourth quarter and full year 2021 were $11.6 million and $38.9 million, and over the same period last year, options sales were $5 million and $16.4 million respectively. Kinloch sales for Q4 and FY 2021 were $2.9M and $11.6M respectively.

Over the same period last year, Kinloch sales were $0.2M and $0.4M respectively.

For EDA granted the FDA recently accepted the NDA filed by Marathi in second line non small cell lung cancer in the United States.

With the Paducah date of December 14th 2022.

In January of this year variety announced exciting clinical data from our phase two cohorts of the Crystal one study in patients with K Ras <unk> mutated Gi cancers.

Revealing a 41% objective response rate and 100% disease control rate and the 27 evaluable patients.

In addition, it is.

Now in September Marathi reported the top line results from the phase II cohort in the Crystal one study.

In this study patients with second line.

Non small cell lung cancer harboring the <unk> mutation, who were treated with <unk> monotherapy at 600 milligram B I D. Revealing a 43% objective response rate and an 80% disease control rate.

The safety and Tolerability profile was consistent with previously reported findings for allograft that in patients with advanced non small cell lung cancer.

In addition, Marathi reported positive clinical data from a cohort of the phase one two crystal one study in patients with heavily pretreated colorectal cancer harboring the <unk> mutation.

These results showed that at aggressive alone and with Cetuximab demonstrated significant clinical activity and broad disease control in these patients.

These results are very encouraging reinforce our view that at a graph that has the potential to be a best in class compound for patients with <unk> mutations.

We plan to join global Phase III studies in second line non small cell lung cancer and second line colorectal cancer in mid 2022.

Moving to <unk> to the map, we plan to initiate a China or a registrational study in first line advanced gastric and gastroesophageal junction adenocarcinoma in greater China in 2022.

Emirates Who's a mab as a first in class F. GFR <unk> inhibitor with a sizeable market opportunity in greater China.

There are no approved therapies, specifically for these patients in China.

For tumor treating fields Guy lab partner Novocure anticipate top line data from the phase III pivotal lunar clinical trial testing the efficacy of TT fields, together with physician's choice immune checkpoint inhibitor or docetaxel for the treatment of patients with stage four.

Non small cell lung cancer by year end 2022.

You will recall that in May 2021 the FDA accepted the IDE supplement submitted by note that your that incorporated recommended changes from the interim analysis of the lunar trial conducted by an independent data monitoring committee.

Including reductions in the sample size to 276 patients and then the follow up period to 12 months.

We believe that this protocol change as a reason for optimism.

For margin custom App, we filed an NDA in her two positive breast cancer with the NPA in December and the filing was accepted.

Our agenda is an FC engineered antibody molecule developed by Macrogenics is an antagonist of the her two receptor and has been approved by the FDA to be used in combination with chemotherapy for the treatment of patients with metastatic her two positive breast cancer following treatment with two or more.

Anti <unk> therapy.

XI conducted a bridging study if module demand in combination with chemotherapy and advanced previously treated her two positive breast cancer that met its primary end quite a median progression free survival as defined by achievement of at least 50% of the efficacy of <unk> plus.

Chemotherapy and the Sophia study.

The safety profile of margin attached to Nab, plus chemotherapy was acceptable and consistent with that seen in the Sophia trial.

R&D expenses were $573.3 million for 2021 compared to $222.7 million for the same period in 2020. The increase in R&D expenses was primarily attributable to $321.3 million in upfront payments for eight new licensing agreements compared to $83.5 million in 2020.

Operator, you may now discontinue the call.

Operator, you may now discontinue the call.

Moving to our internal research and development program, you will recall from our R&D day last year that we embrace and open innovation model.

Expenses related to ongoing and newly initiated late-stage clinical trials and payroll and payroll-related expenses from increased R&D had, Excluding up-front payments for new licensing agreements, the core R&D expenses were $252 million in 2021 compared to $139.2 million in 2022.

Selling general and administrative expenses were $218.8 million in 2021, compared to $111.3 million for the same period in 2014. The increase was primarily due to payroll and payroll net expenses from increased commercial headcount and expanded commercial activities, as Zai Lab continued to expand its commercial operations throughout Greater China.

Our goal is to file at least one IND per year and in 2022.

Plan to submit up to two <unk> for compounds with global right.

With an abundance of potentially best in class and first in class product. We are very excited about our oncology pipeline of dry lab.

Zai Lab reported a net loss of $704.5 million for the full year of 2021, or a loss per share attributable to common stockholders of $7.58 compared to a net loss of $268.9 million, or a loss per share attributable to common stockholders of $3.46, but the same carried into 2020. Excluding up-front payments for new licensing agreements, our cash used in operating activity and purchase of property and equipment and intangible assets was $309.2 million in 2021.

Thank you.

Thank you.

And now I will turn the floor over to Harold Reinhart to discuss progress in our neuroscience autoimmune and infectious disease therapeutic area.

Thank you, compared to $143.2 million in 2017.

Harold.

As of December 31st, 2021, cash and cash equivalent short-term investments in restricted cash totaled $1.41 billion compared to $1.19 billion as of December 31st, 2020.

Thank you.

Thank you.

Yes. Thank you Allen the fourth quarter brought several very encouraging new development clinical and regulatory in our autoimmune and infectious diseases franchise and added a new therapeutic franchise neuroscience.

Well, that does conclude our conference for today.

We would now like to turn the call back over to the operator to open up the line for questions.

Thank you for participating.

Operator, Thank you.

We would now like to open the lines for questions.

I'll start with autoimmune diseases, and if got TD Mont.

If you have a question, please press star 1 at this time.

And to withdraw your request, please press the pound or hash key.

Had a positive meeting with the NMB TD.

TD Mont that suggest the potential for an accelerated regulatory approval for generalized myasthenia gravis in China.

Please try to limit to one question each time.

Subject to further discussion with the NFPA, we expect to file the BLA in mid 2022.

Once again, that's style one, full question.

Our first question comes from the line of Michael Yee from California.

Zeiss partner <unk> received approval for its got TD mode in Gmg in the United States in December 2021 .

<unk> two trials for <unk> in China for other indications.

Primary immune thrombocytopenia ICP.

<unk> inflammatory demyelinating, Polyneuropathy, CDP and pemphigus as well as a pharmacokinetics study.

Unsponsored ADR, Good morning, everyone.

Next I'll talk about zelle, 11th to XI lapse internally developed novel Human VH antibody fragment.

Thank you very much for the question.

<unk> 11 O. Two is potentially the first IL 17 targeting topical treatment for patients with mild to moderate plaque psoriasis.

Our question was around, Zijilia, and thinking about the growth trajectory in 2022 and 2023 and 2024, as it relates to obviously getting expanded NRDL, but also, as Billy noted, there were some price adjustments in the fourth quarter.

So how should we think about the growth in the future coming years, but appreciating that we might expect price cuts every couple of years?

Last fall CL 11 O to achieve proof of concept in the phase <unk> study and is now advancing into global team to development.

So talk about that in the outlook for Zijilia.

We believe this is the first study to ever demonstrate penetration of the protein biological through Psoriatic skin.

Thank you very much.

<unk> in a clinical response.

Hey Mike, this is Billy.

Skin penetration was demonstrated by changes in transcriptome for inflammatory markers.

I'll take your question.

With regards to efficacy topical CL 11 O. Two resulted in a 45% relative clinical improvement in local policies score and improvement in erythema and scaling it.

<unk> target lesion size and improved responder rates.

Clinically we observed an early onset of action and consistent improvement over time.

Seattle 11, two had a benign safety profile comparable to placebo with treatment emerging adverse events as we have fewer number and miles.

Pharmacokinetic studies confirmed lack of systemic absorption.

Suraj. This is affects approximately 125 million people worldwide of which 80% to 90% suffer from chronic plaque psoriasis.

S 70% to 80% of these patients have mild to moderately severe disease is a strong rationale and patient need to develop a topical formulation with IL 17, directed therapy that worked directly on the leash and to avoid systemic exposure.

Current topical therapies provide limited efficacy will have safety issues with long term use.

Moving onto infectious diseases, our partnering cases announced positive topline results for <unk> known as <unk>.

From the global Phase III Registrational attack trial.

This trial evaluated the safety and efficacy of <unk> versus <unk> in patients with serious infections caused by Acinetobacter <unk>.

<unk> achieved the primary endpoint of statistical non inferiority in 'twenty HD all cause mortality.

Most patients had pulmonary infections with cobre, Panama resistant acinetobacter by many known as crap.

In addition, <unk> met the primary safety objective of this study achieving a statistically significant reduction in different toxicity over policy.

<unk> is the first investigational drug to demonstrate efficacy against crap in a prospective well controlled clinical trial.

Crab infections are among the worst bacterial infections safe and effective treatment options are almost nonexistent.

As a narrow spectrum antibiotic so toward targets grab bacteria preferentially, thus potentially avoiding the collateral damage associated with broad spectrum antibiotics.

We look forward to bringing this drug to China and Asia Pacific.

Severe crab infections that quite frequently seen in ICU and associated with high mortality.

We expect to file so we'll do it with regulators in China in the fourth quarter of 2022.

You may all disconnect.

Well, that does conclude our conference for today.

As Samantha mentioned, we received approval for Omadacycline desire for cap work required pneumonia and app see skin infections and launched the product in December .

<unk> will have more to say about <unk> in a minute in his discussion of our commercial products.

Thank you.

Thank you for participating.

Finally in.

In the fourth quarter, we entered into the neuroscience area with our agreement with Corona Therapeutics for rights to car T ingredient China.

Thank you.

<unk> is an oral investigational drug combination consisting of anomaly muscarinic agonist that stimulates <unk> receptors in the central nervous system and trust beam and approved muscarinic antagonist that reduces the incidents of peripheral Gi side of things.

<unk> T has already demonstrated clinical benefit in phase II studies in schizophrenia, and Alzheimer's disease.

In the phase II emerge and going to trial <unk> demonstrated clinically meaningful and statistically significant improvement in pans total score.

Which is the total positive and negative symptom scale.

And also in key secondary endpoints, including pans positive sub score.

<unk> negative sub score.

<unk> T was well tolerated much better thanks anomaly in alone.

Corona is evaluating <unk> T in late stage clinical trials for the treatment of schizophrenia in psychosis and Alzheimers disease.

Recently Corona also initiated the phase three arise trial evaluating <unk> as an adjunctive treatment for schizophrenia.

Who in adequately respond to atypical anti psychotics.

Additionally, crew and our plans to initiate the phase III study in Alzheimer's patients with psychosis in mid 2022.

Results from a phase one b trial in healthy elderly volunteers indicate that standard doses of <unk> can be administered to elderly adults, while maintaining a favorable tolerability profile.

XI lab work with Corona to design, the optimal strategy to accelerate the development and regulatory timeline of <unk> in China.

Hello, ladies and gentlemen, thank you for standing by and welcome to Zaii Lab's fourth quarter 2021 Financial Results Conference call. At this time, all participants are in the listen-only mode.

Now Bill will speak about progress with our commercial products and financial results.

Later, we will conduct a question and answer session and instructions will follow at a time.

Thank you Harold.

As a reminder, today's call is being recorded.

In December the NFPA approved the NDA for Xyrem.

All lines have bought it with both oral and intravenous formulations, but accumulative community acquired bacterial pneumonia and acute bacterial skin and skin structure infection.

The product was launched in December <unk>.

<unk> was approved as a category one innovative drug and its locally manufactured in China. It is the fourth sorry that product the crews over the last 24 months.

It is now my pleasure to turn the floor over to Billy Cho, Chief Financial Officer of Zai Lab, who will make introductory comments.

Thank you, operator.

Our three other market products.

The op two <unk> continued to achieve robust revenue growth driven by strong demand in commercial execution.

Did you look continue to perform well building on the news from the last quarter for the first one ovarian cancer indication was included in the <unk> deal.

So, yeah, we're pretty excited to see the momentum, early momentum in the Jula, and of course, looking forward to implementing now the NRDL, you know, inclusion for first line for all comer patients, which as we noted in the press release and the current call, it is the largest market opportunities for PARP inhibitors in China.

I believe that AstraZeneca released in their earnings that their emerging market sales for the parcel was around $400 million, and more than 50% of that came from China.

This is important.

The first line ovarian cancer maintenance treatment is a largest location for PARP inhibitors in China.

With this favorable reimbursement decision.

Thats unique label for various cancer patients regardless of biomarker status, we expect that <unk> gained strong momentum this year and to achieve market share leadership.

No later than next year.

In addition, as of December 31, 2021 video that was listed in the early 1300 hospitals in China, providing a strong foundation for further interview on R&D.

Similarly, large Bob Quint is going well and we achieved solid growth.

During the fourth quarter, our keen focus on continue to improve market access by <unk>.

On the commercial insurance and supplemental insurance coverage for Oxford, and educated target position about a significant clinical benefits, including survival benefit.

Currently <unk> is covered by 33 municipal or provincial supplemental insurance claim.

And has become one of the top ticket reimbursements totaled 21.

As we noted last year or last quarter I should say, we successfully launched Kinloss fourth four slides just in China, starting last summer the key focus of our launch increasing physician awareness market access and the number of patients treated by leveraging this trial data at Kinloss. Scott is the only fourth line gist treatment.

Carlos of the mutation status.

As well as the guideline recommendation by the Chinese society of clinical oncology.

Currently Kinloss thats been covered by 52 supplemental insurance clients will launch.

We're still assessing the impact of an intriguing results. However, we note that the fourth line Gist indication has over 7000, new patients every year in China growing.

We are committed to establishing <unk> as the standard treatment for this indication.

Now ill discuss our financial results.

Product revenues for the fourth quarter and full year, 2021 were $44 million and $144 1 million respectively.

Over the same period last year part of revenues were $15 1 million.

$49 million respectively.

Just completed our first calendar year of course location.

Very pleased with the successful launches and sales trajectory of our market product.

With many more product launches to come our commercial platform over time is expected to generate strong continued growth and considerable operating leverage.

Did you look sales for fourth quarter, and full year, 2021 were $29 4 million and $93 $6 million respectively.

Over the same period last year that drove our sales were $9 9 million at $32 $2 million respectively.

That there was a negative $7 5 million nonrecurring adjustment to revenue in fourth quarter of 2021. This was due to onetime compensation to distributors for <unk>. After 2021 price that remains.

The distribution channel before the Anr deal implementation.

After sales for fourth quarter, and full year, 2021 were $11 $6 million and $38 $9 million respectively.

Over the same period last year after sales were $5 million $16 million respectively.

<unk> sales for fourth quarter, and full year 2021 were $2 9 million.

$6 million, respectively over the same period last year killer sales were <unk> $2 million and Youre quite affordable indulgence separately.

R&D expenses were $573 3 billion for 2021 compared to $222 $7 million for the same period in 2020. The increase in R&D expenses was primarily attributable to a $321 $3 billion, saying upfront payments for eight new license agreements compared to $83 $5 billion in 2020.

Expenses related to ongoing and newly initiated late stage clinical trials and payroll and payroll related expenses from increased R&D head count.

Excluding upfront payments for new license agreement the core R&D expenses were $200 million installed 21 compared to $139 two to $1 40.

General and administrative expenses were $218 $8 million in 2021 compared to $111 3 million for the same period in 2014.

The increase was primarily due to payroll and payroll related expenses from increased commercial headcount and expanded commercial activities at <unk>.

Lockwood chief expand its commercial operations across greater China.

<unk> reported a net loss of $704 $5 million for the full year of 2020 or a loss per share attributable to common stockholders of $7 58.

Compared to a net loss of $268 9 million or.

Loss per share attributable to common stockholders of $3, 46%.

Same period in 2020, excluding upfront payments for new licensing agreements, our cash used in operating activity and purchase of property equipment and intangible assets was $392 million in 2021.

<unk> to $143 2 million up 20.

As of December 31, 2021, cash and cash equivalents short term investments and restricted cash totaled $1 1 billion.

Compared to $1 $9 billion as of December 31, 2020.

We would now like to turn the call back over to the operator to open up the line for questions.

Operator.

Thank you.

I would now like to open the lines for questions. If you have a question. Please press star one at this time.

And can we draw your request please press the pound key.

Please try to limit to one question each time.

Once again Thats star one for questions.

Our first question comes from the line of Michael <unk> from Jefferies. Please ask your question.

And what we could share with you in terms of what we see so far based on the data that we are following is that with our entry, Unsponsored ADR, And at the same time, our market share within that growing pie has both been increasing very nicely.

Good morning, good evening, and welcome, everyone.

Hey, good morning, everyone. Thank you very much for the question.

Our question was around Juliet and thinking about the.

The growth trajectory in 2022, and 'twenty three and 'twenty four.

As it relates to obviously getting expanded and our Dl, but also as Billy noted there were some price adjustments in the fourth quarter.

So how should we think about.

The growth.

In the future coming years, but appreciating that we might expect price cuts every couple of years should talk about that in the outlook for Julia. Thank you very much.

Zai Lab recently issued a press release providing the details of the company's financial results for the 12-month standard and fourth quarter ended December 31, 2021, as well as product highlights and corporate updates. The press release is available in the Investor Relations section of the company's corporate website at ir.zailaboratory.com.

Hey, Mike This is bill I'll take your question.

So, yes, we're pretty excited to see the momentum.

Early momentum at the July and of course looking forward to implementing now the <unk> deal.

Inclusion for first line for all comer patients, which as we noted in the press release.

Correct call it is the largest.

Market opportunities for PARP inhibitors in China.

Today's call will be led by Dr. Samantha Du, Zai Lab's founder, chairperson, and chief executive officer.

I believe that.

Astrazeneca released into earnings that the emerging market sales for the parcel was around $400 million and.

More than 50% of that coming from China.

And what we can share with you in terms of what we see so far based on the debt that we are following with our entry.

We've seen that.

The size of the pie.

So the penetration of the PARP class in China.

And at the same time, our market share within that core Pi has both been increasing very nicely, we expect that to continue.

We expect that to continue for the foreseeable future this year, next year, and even beyond.

For the foreseeable future.

This year next year and even beyond in that part of the reason why we had made the comment.

And that's part of the reason why we had made the comment on this call that, you know, no later than next year, we actually also expect to be the market share leader in the park, you know, as a class in space.

On this call.

No later than next year, we actually also expect to repeat or the market share leader in the park.

The class a space. So hopefully that gives you a sense of.

So hopefully that gives you a sense of, you know, the answer that you're looking for to your question as well as the confidence that we have in both the opportunity.

Yes, but you are looking for to your question as well as the confidence that we have.

She'll be joined by Dr. Alan Sandler, President and Head of Global Development Oncology, who will discuss advances with our oncology product candidates.

Dr. Harold Reinhart, President and Head of Global Development, Neuroscience, Autoimmune, and Infectious Diseases, who will speak about progress we've made in those three therapeutic areas.

I think both the opportunity to ask SaaS bookings.

May I ask, may I ask?

May I ask a little follow up on the second part of that question, which was related to the price adjustment in the fourth quarter.

May I ask a little follow up on the second part of that question, which was related to the price adjustment in the fourth quarter, we saw that with another major drug as well in China, and so I'm not sure that Wall Street analysts may appreciate this adjustment every couple of years and how we need to think about that and what is your opinion.

We saw this with another major drug as well in China.

And so I'm not sure that Wall Street analysts may appreciate this adjustment every couple of years and how we need to think about that.

And what is your opinion?

Yeah.

So it is correct that this is universal, pretty commonplace in our industry in China, where every time you are included in the NRDL, right before you're going to have a nonrecurring adjustment.

Yes. So it is correct that this is universal.

Pretty pretty commonplace in our industry in China, where every time you are included in the <unk> right. Before you are going to have a non recurring adjustment.

So if your question Mike is fourth of July in particular.

What do you need to factor in.

Every couple of years.

Could there be a possibility that we have to renegotiate with <unk> that will be a case by case decision. As you know we also have additional indications that there'll be a tenant replace but what I can tell you is that.

For renegotiating.

The current indication.

A lot more modest.

A lot of headline numbers that you've seen so for example, we had a 23, 6% discount rate.

So if your question, Mike, is for Zijula in particular, you know, what do you need to factor in, you know, every couple of years?

Get the first line indication, which is again a great.

And the third piece of the part of asset class.

You know, could there be a possibility that we have to renegotiate with, you know, for NRDO?

A couple of years later on if we were to re negotiate.

That would be a case-by-case decision.

Yeah, as you know, we also have additional indications that we have time for place, but what I can tell you is that, you know, for renegotiating the current indication, it's a lot more modest than, you know, a lot of the headline numbers that you...

It would be a lot more modest compared to the <unk>.

But we've seen this happen.

Thank you.

So for example, we had a 23.6% discount, right?

Yes.

Just to add sorry, it's Jonathan here.

I was in a negotiation.

With Eni deal late last year. So maybe you can provide a bit more color.

To get the first line indication, which is a, you know, again, a very significant piece of the part of asset class.

Look I think it's an important addition for US first to include the first lot of frontline that gives us a very strong competitive advantage.

Given where the only all comer product in that frontline setting. So we are really going to expect to get a lot of volume in exchange for a modest discount.

This discount would not come if we didnt add this indication. So every two years when we do renew we do not expect or the things would change things could change for the better to we don't know.

But if we didn't have to add that new indication at this time, we would not have.

Be subject to that disk.

A discount.

But I think given our competitive product profile and given the volume exchange.

I think we've already seen that in Q1.

We're getting very good traction in terms of market share growth.

Thank you that makes sense related to the expanded label. Thank you.

And I will discuss the performance of our market products and conclude with comments on our financial results.

Thank you. Our next question comes from Eagle.

<unk> from.

<unk> from Citigroup. Please go ahead.

Hi, Samantha ability and team thanks for taking my question.

You know, a couple of years later on, if we were to renegotiate, it'd be a lot more modest compared to, you know, the precedent that we've seen.

Made some interesting comments in the opening remarks regarding the NCI cancer franchises that can generate a policy.

$5 to $3 billion through 2030. So I was just wondering if you could just drill down a bit into that projection, which products are you referring to in lung and Gi could you talk a little bit about the assumptions you're using to get into that two $5 billion to $3 billion range and what the ramp might look like to get there.

Of course, how confident are you that you can hit that two $5 billion to $3 billion window by 2030. Thank you.

Thank you.

Additional executives will also be available to answer questions during the Q&A portion of the call.

Hey, Paul this is Billy.

Ill initiate and others can chime in.

Yes, if you could provide some more color, but before I do that I'll, just kind of recall that.

Look we just to wrap up our first calendar year of critical location.

So we're off to the races and we are.

Great momentum that we're going to build upon.

And I think we have a lot of new products launching as you know a pretty intense on schedule over the next three or four years. So we need to make sure that goes well, so we're still making investments, but we felt as a team that dialogue.

Yeah, and Mike, maybe just to add, sorry, it's Jonathan here, I was in a negotiation with DNRDL late last year, so maybe you can provide a bit more color.

As a reminder, during today's call, Zai Lab will be making certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our business plans and objectives, and timing and success for our clinical trials, our sales and revenue forecast for our products and product candidates, regulatory application, and commercial launches.

The forward-looking statements are not guarantees of future performance and therefore should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

It was.

It may be useful.

To both the buy side sell side for us to offer up.

Kind of a framework on how to think about the commercial opportunity and so.

We made those comments and you saw it on the release. So you guys I mean additional call. It that can provide or we can provide on the peak year revenue.

Number two and a half of $3 billion is that first of all it only includes our current portfolio.

I refer you to our SEC filings for discussion of risk factors that could cause our actual results to differ materially from those discussed today.

At this time, it is my pleasure to turn the call over to Zai Lab's founder, chairperson, and chief executive officer, Dr. Samantha Duke.

The.

A lot of the equity data et cetera, where based on already statistics, we've already publicly disclosed and that you guys have.

Thank you, Billy.

The portfolio in terms of revenue mix is very diversified.

Hello, everyone, and thank you all for joining us.

On this call, I'll discuss highlights, from our Tundi Tundi one, and What We Expect to Accomplish in 2022.

And we're not giving specific numbers and.

2021 marks another year of strong growth in execution for that, has significantly expanded our portfolio.

And then just yet but.

It's nice to see that as a pretty diverse revenue portfolio.

And because of the fact that we have so many products launching it you've got the waterfall effect as well.

So over the next three or four years.

Scott products, launching and building launching and building sort of at the same time, so the growth curve.

Actually accelerates.

Unsponsored ADR, We make meaningful advances with our global pipeline of 11 assets, including achieving proof of concept for CL-1102, are internally developed anti-L17A human body for chronic plaque survival, for Global Right.

Through business development, we deepened our world-class gastric and lung cancer franchises with four additional promising drug candidates, including Addergast.

In the mid to later years.

We bolstered our autoimmune franchise with Asgard Tick-Mod, a pipeline in the product opportunity, will be expanded into neuroscience with an exciting non-credit card.

We achieved additional registry submissions and approvals, including our first non-oncology approval for new therapy.

Our commercial execution continues to gain strong momentum for our four markets.

But.

We're also pleased to have Zazula included in the NRDL for first-line ovarian cancer maintenance treatment, and we expect it to become the leading property inhibitor in the ovarian cancer in China, given its unique label for varying kinds of patients, regardless of biomarker status.

But I think thats the extent of kind of additional color has been provided at this time, but hopefully you find it helpful.

Last but not least, further grew our talented global team, both in the United States and China.

Building a solid foundation for continuing growth and execution.

We have set clear strategic priorities for 2022. To position ourselves to lead the next wave for biopharma innovation.

First, we'll expedite bringing medicines to patients by accelerating important data results and registry filings across our entire portfolio.

Planned to file the NDA for ECMOC-TECMOC in China in mid-2022, subject to ongoing discussion with NMPA, and to initiate a China Registrational Study for Rheumatoid Arthritis, in first-line gastric cancer in Greater China.

Second, we will continue to invest in R&D and advance our internal pipeline with global rights. We plan to move our CL1102 into full global development and submit up to two IND, so internally developed compounds with global rights in 2022.

Lastly, we will leverage our leading position in China to accelerate our growing revenue.

Look, I think it's an important addition for us first to include the first slot frontline.

Yes.

Currently a helpful answer for our for our modeling.

That gives us a very strong competitive advantage, you know, given we're the only all-comer product in that frontline setting.

And then just one follow up just on a broader and broader portfolio strategy. Obviously, you have a very nice mix of therapeutic areas oncology and infectious autoimmune and now Corona with neuroscience. So just wondering about how much broader can be willing to go therapeutically.

So we are really going to expect to get a lot of volume in exchange for a modest discount.

There are many novel mechanisms in other areas for instance, cardiovascular nephrology disease, even platform approaches in gene and cell therapy are very interesting.

Potentially extending the portfolio. So just could you talk in broad brush strokes about how youre thinking about broadening the therapeutics therapeutic reach with respect to your BD opportunities.

Yes, I mean, we've just broken to neuroscience and we're going to stay healthy busy with the four that we have but maybe.

As you map out and look at any additional comments on the.

An additional ta strategy.

Yes, Hi, Bill maybe I will just chiming Jonathan here Jonathan.

So I think for us.

I certainly want to continue to strengthen those therapeutic areas.

We have built a leadership position thing I think just being oncology alone, we're seeing really a lot of opportunities.

But I think last year in autoimmune.

Science, we have expanded with two.

Pipeline of product anchor opportunities in <unk> and <unk>.

I think we see a lot of these opportunities I think what we're really building a XI is a world class.

A company with truly innovative best in class or first in class assets.

Unsponsored ADR, But I think, you know, given our competitive product profile and given the volume exchange, I think we've already seen that, you know, in Q1 that, you know, we're getting very good traction in terms of market share.

Unsponsored ADR, Our mission is to build a leading global biopharmaceutical company.

Looking ahead, we plan to have at least 50 market products approval, in more than 30 indications by 25.

So if there are assets that are synergistic to what we have.

We believe that the regulatory environment, continue to be supportive of innovative biopharma companies like Zai Lab.

We're also confident in the long-term market potential of our differentiated, world-class portfolio designed to address significant unmet medical needs, to create significant value for all of our constituents.

Our assets, which could help.

Help with a very large unmet medical need we certainly continue to pursue those opportunities we've seen a lot of these opportunities today, that's actually these pipeline of product opportunities.

I think you can expect continue.

Quantities of deal flow.

This year.

So.

I think especially in these areas, where we have significant presence you can expect.

Picked us to do what we've been doing good ads.

Potentially expand in other areas.

As we pursue global opportunities or maybe other transformative opportunities as well.

Great. Thanks, Thanks very much.

Thank you.

Thank you. Our next question comes from Andrew <unk> from Jpmorgan. Please ask your question.

That makes sense related to the expanded label.

Hey, guys. Thanks, so much for taking the question.

Just a quick specific question on <unk>.

<unk> with the U S to do first and second line setting.

Thank you.

Set for later this year are there plans to speak to regional regulators on an approval on X channel China data.

Thank you.

For second line lung for at aggressive thanks, so much.

Alex do you want to take this one.

Our next question comes from Yigal Nochomovitz from CTC.

Yes sure yes, thanks for the question so yes.

Yes, so as you of course know that Marathi.

Hi Samantha, Billy, and team.

As the accepting the filing with that Paducah date that we mentioned earlier in December .

Thanks for taking the questions.

And.

You made some interesting comments in the opening remarks regarding the lung and GI cancer franchises that could generate... Unsponsored ADR Unsponsored ADR Unsponsored ADR Unsponsored ADR, Hey Yigal, this is Billy.

We believe that.

We are already in contact with.

China.

<unk> and that will we will continue with our path forward that should not change.

Any of the timelines that we're looking for moving forward and and also I know our partners Marathi are optimistic that as you know in the U S.

Sometimes with with data that's very encouraging.

<unk> can come before decisions can come before the Paducah date so.

I'll initiate and others can chime in.

We're looking forward to continuing to work with our partner variety on this exciting and potential.

First in class and best in class agents in China.

So yeah, we could provide some more color.

Thanks, so much for taking our question.

Thank you. Our next question comes from Jonathan Chang from SBB Leerink. Please go ahead.

But before I do that, I'll just kind of recall that, you know, we just wrap up our first calendar year of commercialization.

Hi, guys. Thanks for taking my question.

So we're off to the races, and we have great momentum that we're going to build upon.

And, you know, I think we have a lot of new products launching, as you know, a pretty intense launch schedule over the next three, four years. So we need to make sure that goes well.

Daimler Tuesday, Nab to clarify are you planning to initiate a registrational frontline gastric study in China and for Q.

So we're still making investments. But we felt as a team at Zai Lab that it was, you know, it may be useful to, you know, both the, you know, buy side, sell side, for us to offer up, you know, kind of a framework on how to think about the commercial opportunity.

And so, you know, we made those comments, and you saw it on the release.

So Yigal, I mean, additional call that I can provide, that we can provide on, you know, the peak year revenue, you know, number of two and a half to $3 billion is that first of all, it only includes our current portfolio.

Separate study from the Amgen Phase III studies and if so can you discuss the rationale for that thank you.

Alex back to you.

Yes sure. Thanks for the question.

This is something that we're at.

In discussion with with our partners Amgen is the best method to move forward.

To get this exciting agent.

Into.

Patients in China.

As you know there is a significant number of patients that express <unk>.

And so this is something that we are again very excited about we're still working on details as to how that is going to play out and will of course be releasing more information as soon as we get closer to that date.

But Jonathan I think you are correct and the remainder will be a registrational trial for frontline.

Got it but is there a reason why it would be like a separate study from the Amgen studies versus participating in the.

<unk> studies.

Yes, Alan noted I think right now we are prepared to share at that point would be one way or another inefficient registrational trial pathway.

Unsponsored ADR, actually accelerates- Unsponsored ADR, Yeah, no, that's definitely a helpful anchor for our modeling, thanks.

Unsponsored ADR, For example, we're currently focusing in our lung and GI cancer franchise, could generate up to a combined total of $2.5 to $3 billion through 2030.

And now I'll turn the call over to Dr. Alan Sandler.

So we're still.

Working closely with they are still working out.

Yes to work out the details.

Best way to move forward with that with the option.

I'm, sorry that can't be more specific.

Got it thanks for taking the questions.

Thank you.

Thank you, Samantha.

Thank you. Our next question comes from Lee Chen from Goldman Sachs. Please ask your question.

Zai Lab's oncology franchise continued to make progress on all fronts in the fourth quarter, and we expect to have a busy and productive year in 2022.

For adegrassis, the FDA recently accepted the NDA filed by Murady in second-line non-small cell lung cancer in the United States, with a PDUFA date of December 14, 2022.

In January of this year, MARATI announced exciting clinical data from a Phase II cohort of the CRYSTAL1 study in patients with KRAS G12c mutated GI cancer. Revealing a 41% objective response rate and 100% disease control rate in the 27 evaluable patients. In addition, at ESMO in September, Mirati reported the top-line results of the Phase II cohort in the CRYSTAL1 study.

In this study, patients with second line, non-small cell lung cancer harboring the KRAS G12C mutation were treated with adagrassive monotherapy at 600 mg BID, revealing a 43% objective response rate and an 80% disease control rate. The safety and tolerability profile was consistent with previously reported findings for adagraftib in patients with advanced non-small cell lung cancer.

In addition, Murady reported positive clinical data from a cohort of the Phase 1-2 CRISPR-1 study in patients with heavily pretreated colorectal cancer harboring the KRAS G12C mutation. These results show that adegrastam alone and with cetuximab demonstrated significant clinical activity and broad disease control in these patients.

These results are very encouraging and reinforce our view that adagressive has the potential, be a best-in-class compound for patients with KRAS G12C mutation.

Yeah.

We plan to join Global Phase III studies in second-line plus non-small cell lung cancer and second-line colorectal cancer in mid-2022.

And then just one follow-up just on the broader portfolio strategy, obviously you have a very nice mix of therapeutic areas, oncology and infectives, autoimmune, and now corona with neuroscience.

We believe that this protocol change is a reason for optimism.

Moving to bemerituzumab, we plan to initiate a China registrational study in first-line advanced gastric and gastroesophageal junction adenocarcinoma in Greater China in 2022.

Hey, Thank you for taking my question. This is <unk> from Goldman.

For margituximab, we filed an NDA in HER2-positive breast cancer with the NMPA in December and the filing was accepted.

Memrituzumab is a first-in-class FGFR-2B inhibitor with a sizable market opportunity in Greater China. There are no approved therapies specifically for these patients in China.

Margenza is an SC-engineered antibody molecule developed by Macrogenics and is an antagonist of a HER2 receptor and has been approved by the FDA to be used in combination with chemotherapy for the treatment of patients with metastatic HER2-positive breast cancer following treatment with two or more anti-HER2 therapies.

For tumor treating fields, Zai Lab partner Novacure anticipates top line data from the phase three pivotal lunar clinical trial testing the efficacy of TT fields together with physician's choice immune checkpoint inhibitor or dosotaxel for the treatment of patients with stage four non-small cell lung cancer by year end 2022. You will recall that in May 2021, the FDA accepted the IDE supplement submitted by Novacure that incorporated recommended changes from the interim analysis of the lunar trial conducted by an independent data monitoring committee, including reductions in the sample size to 276 patients and in the follow-up period to 12 months.

Zai conducted a bridging study of margitoximab in combination with chemotherapy in advanced previously treated HER2 positive breast cancer that met its primary end point of median progression pre-survival as defined by achievement of at least 50% of the efficacy of margitoximab plus chemotherapy in the SOFIA study. The safety profile of margituximab plus chemotherapy was acceptable and consistent with that seen in the SOFIA trial.

I think I got two question on the financials number one is on the gross margin in the fourth quarter.

Moving to our internal research and development program.

Throughout two lower compared to principal quarter's 51% compared to 72% in third quarter 2021.

I'm trying to understand a bit more about the reason behind.

What's the impact from sales milestones and also what's the impact.

The rebates to the inventory channel inventory in fourth quarter and if we.

Average out or back it out what will be the reasonable gross margin assumptions, we should be assume for the portfolio going forward in 2022 and.

You will recall from our R&D day last year that we embrace an open innovation model.

Our goal is to file at least one IND per year, and in 2022, we plan to submit up to two INDs for compounds with global rights, with an abundance of potentially best-in-class and first-in-class products. We are very excited about our oncology pipeline at Zai Lab.

And secondly, given that the current funding environment in China and also globally for Barb Pak.

And now I will turn the floor over to Harald Reinhart to discuss progress in our neuroscience, autoimmune and infectious disease therapeutic areas.

Harald.

Last year I think we still companies still spent a decent amount of money on BD deals licensing fees up to about.

Getting back close to $400 million.

But now getting into 2022, when we are facing the challenging the funding side.

How should we think about the budgeting for.

For those BD deals are we going to spend a lot of money on the BD deals this year or we're going to be more focusing on budget control refocusing on the clinical trials instead about BD. Thank you.

So just wondering about how much broader you'd be willing to go therapeutically.

Yeah, thank you, Alan.

Hey, David Thanks for your two questions.

As you know, there are many novel mechanisms in other areas, for instance, cardiovascular nephrology, bone disease, even platform approaches in gene and cell therapy are very interesting to potentially extend the portfolio.

The fourth quarter brought several very encouraging new developments, clinical and regulatory, in our autoimmune and infectious diseases franchise, and added a new therapeutic franchise, neuroscience.

I'll start with autoimmune diseases and FKITG mods.

We had a positive meeting with the NMPA on FKTGMOD that suggests the potential for an accelerated regulatory approval for generalized mycelia gravis in China. Subject to further discussion with the NMPA, we expect to file the BLA in mid-2022.

So.

Zai's partner, Argenix, received approval for FKR-TIGIMOD in GMG in the United States in December 2021, and we initiated clinical trials for FKR-TIGIMOD in China for other indications.

In terms of gross margin.

Primary Immune Thrombocytopenia, ITP, Chronic Inflammatory Demyelinating Polyneuropathy, CIDP, and PAMFGS, as well as a pharmacokinetic study.

Fourth quarter 2021, if you were to add back the non recurring items was $7 5 million and our deal a negative adjustment.

As well as which was in the press release and in our 10-K. There was also disclosed that into cost of goods sold line item. There was also a one time.

Payment to GSK for hitting a certain revenue threshold of $8 million.

And so without those one time adjustment gross margin would have actually increased quarter over quarter from 72% in third quarter.

About 73% in <unk>.

Quarter.

So for the year 2021, if you made the same adjustment you would have also seen an increase as well so gross margin in 2020 with $66 million I'm sorry, 56%.

Next, I'll talk about ZL1102, Zai Lab's internally developed novel human VH antibody fragment.

CL-1102 is potentially the first IL-17 targeting topical treatment for patients with mild to moderate plaque psoriasis. Last fall, CL1102 achieved proof of concept in a Phase 1b study and is now advancing into global clinical development. We believe this is the first study to ever demonstrate penetration of a protein biological through psoriatic skin, resulting in a clinical response. Skin penetration was demonstrated by changes in transcriptome for inflammatory markers. With regards to efficacy, topical CL1102 resulted in a 45% relative clinical improvement in local PASI score, an improvement in erythema and scaling, in target lesion size, and improved responder rate.

In 2021.

Normalized it would've been around 79.

Clinically, we observed an early onset of action and consistent improvement over time.

So.

In terms of going forward.

Gross margin for 2022 and even beyond.

As you as you know it's really.

CL-1102 had a benign safety profile comparable to placebo, with treatment-emerging adverse events that were fewer in number and mild. Pharmacokinetic studies confirmed lack of systemic absorption.

Psoriasis affects approximately 125 million people worldwide, of which 80 to 90% suffer from chronic plaque psoriasis.

Driven by sort of the product mix and launch trajectories of each product at that particular point in time.

So there might be some.

We will need some time to find that kind of a steady state because we have such intense launch.

Launch schedule.

Hopefully you see that.

We're already seeing.

Productivity gains right.

Even in the gross margin level.

No.

And then with that said that take rates into a segue into your second question.

As 70% to 80% of these patients have mild to moderately severe disease, there's a strong rationale and patient need to develop a topical formulation with IL-17 directed therapy that works directly on the lesion and avoids systemic exposure.

Current topical therapies provide limited efficacy or have safety issues with long-term use.

Moving on to infectious diseases, our partner Antasis announced positive top-line results for sulbactam duolobactam, known as SULDUR, from the Global Phase III Registrational Attack Trial. This trial evaluated the safety and efficacy of suldor versus colistin in patients with serious infections caused by acinetobacter barmanii. Soldor achieved the primary endpoint of statistical non-inferiority in 28-day all-cause mortality. Most patients had pulmonary infections with carbapenem-resistant S-neutrobacter baumanii, known as CRAB. In addition, SOLDOR met the primary safety objective of the study, achieving a statistically significant reduction in nephrotoxicity over colistin.

Sodor is the first investigational drug to demonstrate efficacy against CRAB in a prospective, well-controlled clinical trial.

Crab infections are among the worst bacterial infections.

So yes, 2021 was our most active year.

Safe and effective treatment options are almost non-existent. As a narrow-spectrum antibiotic, SOLDUR targets grab bacteria preferentially, thus potentially avoiding the collateral damage associated with broad-spectrum antibiotics.

We look forward to bringing this drug to China and Asia-Pacific where severe crab infections are quite frequently seen in ICUs and associated with high mortality.

Got you.

We expect to file Suiduo with regulators in China in the fourth quarter of 2022.

Partnerships and assets.

As Samantha mentioned, we received approval for Omadacycline Nocira for CAP, or Community Acquired Pneumonia, and APSI skin infections, and launched the product in December.

Billy Cho will have more to say about Mozaira in a minute in his discussion of our commercial product.

Which we're quite excited about.

And we're very confident that it can create a lot of value, but you do hit on the point as well.

Our current capital market environment is a little bit different than in the previous years.

So just, could you talk in broad brush strokes about how you're thinking about broadening the therapeutic reach with respect to your BD?

Yeah, I mean, we just broke into neuroscience and we're going to stay awfully busy with the four that we have, but maybe, you know, to map out and look at any additional comments on additional TA strategy.

Now we believe ads on it.

It kind of dovetails nicely with where we are in our lifecycle.

So our revenue momentum will continue this year and beyond.

Yeah, hi Billy.

We're already going into productivity drive. So for example in terms of our sales and marketing.

Team size of spend we don't expect to see a notable increase this year the investments we've made.

Last year.

And even the prior years.

We are going to enjoy the benefits.

While not sacrificing any growth and also with a mind towards preparing for additional launches in the coming years.

But we will and we expect.

To do additional deals and I'll, let top end and other colleagues chime in we are very selective as you know, but if there are opportunities.

Maybe I'll just chime in.

Especially in this market, whereas there is a little bit of a dislocation.

If there are very value, creating opportunities that meet our very high thresholds and criteria.

We have the balance sheet to do it and we are at a point in time for our Companys lifecycle, where we have that flexibility.

To manage growth and productivity.

Jonathan here.

Great. Thank you. Our next question comes from Siemens Fernandez from Guggenheim Securities. Please ask your question.

Jonathan?

And finally, in the fourth quarter, we entered into the neuroscience area with our agreement with Karuna Therapeutics for rights to CAR-XT in Greater China. CAR-XT is an oral investigational drug combination consisting of xanomeline, a muscarinic agonist that stimulates M1, M4 receptors in the central nervous system, and traspium, an approved muscarinic antagonist that reduces the incidence of peripheral GI side effects. CAR-XT has already demonstrated clinical benefits in Phase 2 studies in schizophrenia and Alzheimer's disease.

Great. Thanks for the question. So just one quick question. Your next big catalyst I think really will be tied to car T.

Love to get a sense for the key attribute that you think are likely to be most impactful.

Is it.

Does it relate to both negative and positive symptoms.

And then just in terms of the overall.

Environment in China.

For what I think is largely a nascent opportunity, but one supported by.

The Chinese government now can you just walk us through how to think about the opportunity with <unk> and schizophrenia, but then perhaps more broadly in Alzheimer's disease do you really view these as two unique potential indications. Thanks.

Yeah.

Thanks Seamus.

So I think for us, we certainly want to continue to strengthen those therapeutic areas, which we have built leadership positions in.

Harold do you want to take the first part of the question and maybe John could tighten in the second.

I think just in oncology alone, we're seeing really a lot of opportunity.

Yes. Thank you thanks for the question.

But I think last year, you know, in autoimmune...

Really a new opportunity for us.

Euroscience, we have expanded with two, you know, pipeline of product anchor opportunities in FCAR and in CARXT.

As an anchor.

And as you already heard from others and we see this really differentiated it's a differentiated product for us and in the market in general and especially meeting an unmet need in China. So having said that you already hinted at the efficacy side in the.

I think we see a lot of these opportunities.

I think what we're really building at ZEII is a world-class, you know, company with truly innovative best-in-class or first-in-class assets.

In the phase two emergent one trial, CARX-T demonstrated clinically meaningful and statistically significant improvement in PANS total scores, which is the total positive and negative syndrome scale, and also in key secondary endpoints, including PAN's positive subscore and PAN's negative subscore. CAR XT was well tolerated, much better than senomaline alone.

Corona is evaluating CAR-XT in late stage clinical trials for the treatment of schizophrenia and psychosis in Alzheimer's disease. Recently, Corona also initiated the Phase 3 ARISE trial, evaluating CAR-XT as an adjunctive treatment for schizophrenia in adults who inadequately respond to atypical antipsychotics.

Additionally, Corona plans to initiate a phase three study in Alzheimer's patients with psychosis in mid-2022.

Results from a phase 1B trial in healthy elderly volunteers indicate that standard doses of CAR-XT can be administered to elderly adults while maintaining a favorable tolerability profile.

Zai Lab will work with Corona to design the optimal strategy to accelerate the development and regulatory timeline of CAR-XT in China.

Schizophrenia symptom scores on the negative symptom side on the which is something that is not well taken care of by currency continuation interesting economy.

And now Billy will speak about progress with our commercial products and financial results.

Billy.

But it's not by the way it also efficacious on the positive symptom side. So we are covering very broadly with this drug combination the most important <unk> in schizophrenia patients.

Thank you, Harald.

In December, the NMPA approved the NDA for Nezira, a novel antibiotic with both oral and intravenous formulations for the treatment of community-acquired bacterial pneumonia and acute bacterial skin and skin scrupture infections. The product was launched in December.

Xyros was approved as a Category 1 innovative drug and is locally manufactured in China. It is the fourth Zai Lab product approved over the last 24 months.

Our three other market products, Dejula, Optune, and Kinloch, continue to achieve robust revenue growth, driven by strong demand and commercial, The doula continues to perform well, building on the news from the last quarter when the first line of ovarian cancer indication was included in the NRDL.

This is important as the first line of ovarian cancer maintenance treatment is the largest indication for PARK inhibitors in China.

With this favorable reimbursement decision and Tejula's unique label for bearing cancer patients regardless of biomarker status, we expect Tejula to gain strong momentum this year and to achieve market share leadership.

The second point, which is really not beef about safety.

No later than next year.

In addition, as of December 31st, 2021, the Jula was listed in nearly 1,300 hospitals in China, providing a strong foundation for further interviewing.

Similarly, the launch of Optune is going well, and we'll achieve solid growth. During the fourth quarter, our team focused on continuing to improve market access by expanding commercial insurance and supplemental insurance coverage for options and educating target physicians about its significant clinical benefits.

The safety of this drug it has a totally different safety profile from all the other anti psychotics.

EPA is the extra pyramidal symptoms and so on so forth reached a classic <unk> seen regularly weight gain common commonly seen other side effects are related to the serotonin dopamine boutique effects of this drug class.

We see different here and this is one of the differentiating features.

What we believe is that the schizophrenia is not well.

Covered on the symptom score the negative symptom score and Thats a worldwide phenomenon and we see ourselves differentiated here because there are no other drugs really cover that area as well as <unk>.

So having said that.

The overall market scientists considerable considerable in general because schizophrenia, such common indication since coming affliction.

But it's also something which the government in China is trying to address.

Now there is still a deficit.

Coverage in the.

In the clinical care setting in China for this indication as well so we keep management the government. The recent years and they will act accordingly, so really when announcing.

Schizophrenia is very common.

If this had been China with would be assume it's at least 8 million patients currently diagnosed as such and we know that this doesn't kind of everybody. This is not a very hard statistics.

It's also a very concentrated market and should say because.

Unlike the U S. A Europe you don't see the treatment really initiated in small places, but it's much of a country. It's concentrated in the medical centers. So we see this as a way to address rather quickly.

Medical need in China.

Does that.

Sort of answer your question or should I go into any details.

No that's very helpful. Thank you.

Thank you our next.

Question comes from <unk> Yang Huang from Credit Suisse. Please ask your question.

Okay.

Thanks for the question so I got it.

Quick one too.

So for <unk>, we saw up to them.

It was about 11 points 11 six.

<unk>.

Unsponsored ADR, If there are assets which could help with a very large medical need, we certainly continue to pursue those opportunities.

To Paul took nine something.

Jim Locke self care are all curious actually declining.

Across four of Chill sales <unk> also a lot of a slow down if we look at Q over Q just want to get some color is there a particular reason or what sort of asking for them to trucks. They also want a full queue.

For the full year two jobs.

Marshall performance every year.

We've seen a lot of these opportunities today, actually.

Hey, Alex let me chime in here. Thanks for your question. So there are reasons.

These pipeline of product opportunities, I think you can expect to continue quantities of deal flow this year, so I think especially in these areas where we have significant presence, we can expect us to do what we've been doing good at and potentially expand in other areas as we pursue global opportunities or maybe other transformative opportunities as well.

Unsponsored ADR, Thank you.

But at the same time I think.

At the moment.

It kind of in a nutshell, let me just.

Our next question comes from Anupam Rama from J.P. Morgan.

Maybe just walk us through those two questions then so opportune fourth quarter sales at that point $6 million and so for the year $38 9 million.

Please, that's your question.

So we've always said that the launch trajectory if not could it be as same as let's say a truck like the jewelry et cetera.

Having said so we.

We expect a very durable growth curve over time.

We know this because we're also benchmarking business such a unique product. We're also looking at opportunities.

So throughout the world.

Even Asia.

And so we feel pretty.

As months go by as quarters go by.

We see the progress continuing well we.

We see that one of our focus areas.

Currently, opt-in is covered by 33 municipal or provincial supplemental insurance, and has become one of the top treatments reimbursed in 2021.

Doing well. So for example, the supplement to insurance plan, we signed up 33 plants and it's one of the top assets.

It can be reimbursed.

And oney.

As the only non drug.

Treatment options. So it really speaks volumes about how much value opportunity tumor treating fields.

<unk> in the marketplace.

Hey guys, thanks so much for taking the question.

Now, we're not sure to make excuses, but I will also note that.

There were some restrictions in large hospitals in the northern region of China due to Covid.

Just a quick specific question on Adagrassive.

With the U.S. PDUFA and Second Line set for later this year, are there plans to speak to regional regulators on an approval on ex-China data for Second Line lung for Adagrassive?

But again, we're not going to sit here and complain about that we're going to really just focus on making sure that the long term trajectory.

<unk> remains robust so.

9% corporate quarter over quarter from third quarter to fourth quarter.

One could say that it was.

Lower than 12% from second quarter third quarter, but also want to make that small remark.

But.

<unk> done quite too we're pretty keen on the supplemental insurance strategy, we see nice robust volume uptake coming from major plan like Shanghai and Hangzhou.

And it's great to see patients getting access to this technology.

As we noted last year, or last quarter, I should say, we successfully launched Kinloch's fourth-line GIST in China starting last summer.

The key focus of our launch is increasing physician awareness, market access, and the number of patients treated by never-to-date Invictus trial data and Kinloch status as the only fourth-line GIST treatment, regardless of the new patient status, as well as the guideline recommendation by the Chinese Society of Clinical Oncology.

Ken lock.

Currently, Kinloch has been covered by 52 supplementary insurance plans this month.

Fourth quarter was $2 9 million $11 6 million for the year.

Significant growth year over year.

We're still assessing the impact of the in-treat results.

However, we note that the 4-fine-gist indication has over 7,000 new patients every year in China and growing.

But it was down from third quarter, but it's not due to demand.

And we're committed to establishing Kinloch as a standard treatment for this indication.

We had some channel inventory build.

And I think that there was impact at all from the intrigue outcome.

And I think Thats, all we will kind of stay at this moment, but the more important point is that we see strong hospital demand in fourth quarter, which was.

Which allowed us to absorb.

The inventory build.

And so.

It kind of resets are still quite cheap.

Okay.

That's helpful. Thank you very much.

Now I'll discuss our financial results. Product revenues for the fourth quarter and full year 2021 were $44 million and $144.1 million respectively. Over the same period last year, product revenues were $15.1 million and $49 million respectively.

Thank you. Our next question comes from David Li from Bank of America. Please ask your question.

Great. Thank you management for giving me the channels to ask a question. So some of some of my question has been covered by the.

Previous.

Q&A. So basically now I have two questions number one is.

We just completed our first calendar year of commercialization and are very pleased with the successful launches and the sales trajectory of our market product. With many more product launches to come, our commercial platform over time is expected to generate strong, continued growth, and considerable operating leverage.

The julep sales for fourth quarter and full year 2021 were $29.4 million and $93.6 million respectively. Over the same period last year, the Jula sales were $9.9M and $32.2M respectively.

So what's your.

Our plan for your newly approved assays for jumbo like <unk> and new Zara.

Note that there was a negative $7.5 million non-recurring adjustment in revenue in Q4 2021. This was due to one-time compensation to distributors for Cedulas sold at the 2021 price that remained in the distribution channel before the NRDO implementation.

Opt-in sales for fourth quarter and full year 2021 were $11.6 million and $38.9 million, and over the same period last year, options sales were $5 million and $16.4 million respectively. Kinloch sales for Q4 and full year 2021 were $2.9M and $11.6M respectively.

And over the same period last year, Kinloch sales were $0.2M and $0.4M respectively.

Shall we think about zillow rapidly ramp up. So this is my first question. My second question is currently you have $1 4 billion.

Cash on the balance sheet, so how to spend this money.

Our billing rates and as a cash run way now.

That's my second question.

Thanks, David So I'll try to quickly address your two questions. The first part on NR deal plan. So you are kind of right no calling out these already particular, a drug like that.

Would require antibiotics in China.

Even though its next generation innovative purchase second class it.

It would require enter deal for volume.

So.

It will be eligible for this year's negotiation.

And then I think you were mentioning about digital but maybe you could talk about kind of luck as well. So you can look at also eligible it eligible last year and it will be eligible this year for Aratana negotiation.

Fourth line, so we'll make the right strategic decision.

Based on the outcome.

Of those negotiations now to your second question about the cash burn or how to.

Allocate our capital uses we.

We do have a strong balance sheet, we ended the year with one little over one 4 billion.

And you will see that in terms of core <unk>.

Cash spend.

Side of the upfront BD activities.

It was just shy of $310 million.

So it gives us a lot of flexibility and buffer as I mentioned before however, we're not going to rest of our lives there.

We are still in growth stage, there is no doubt about that but we're also entering into productivity stage big time, So I made comments earlier about the.

Some operating leverage and productivity drive in the commercial investments we've made so far.

R&D expenses were $573.3 million for 2021 compared to $222.7 million for the same period in 2020. The increase in R&D expenses was primarily attributable to $321.3 million in upfront payments for eight new licensing agreements compared to $83.5 million in 2020.

R&D.

Expenses related to ongoing and newly initiated late-stage clinical trials and payroll and payroll-related expenses from increased R&D had, Excluding upfront payments for new licensing agreements, the core R&D expenses were $252 million in 2021 compared to $139.2 million in 2022.

Core R&D spend good increased 80% year over year for 2020 to 2021, R&D quite frankly has been very efficient.

Selling general and administrative expenses were $218.8 million in 2021, compared to $111.3 million for the same period in 2014. The increase was primarily due to payroll and payroll net expenses from increased commercial headcount and expanded commercial activities, as Zai Lab continued to expand its commercial operations throughout greater China.

Zai Lab reported a net loss of $704.5 million for the full year of 2021, or a loss per share attributable to common stockholders of $7.58, compared to a net loss of $268.9 million, or a loss per share attributable to common stockholders of $3.46, but the same period in 2020.

Excluding up-front payments for new licensing agreements, our cash used in operating activity and purchase of property and equipment and intangible assets was $309.2 million in 2021, compared to $143.2 million in development.

As of December 31, 2021, cash and cash equivalents, short-term investments in restricted cash totaled $1.41 billion compared to $1.19 billion as of December 31, 2020.

Even the size of our portfolio. It will increase this year given the progress, we're making with mainly new assets. We brought in last year as well, but you can expect us to maintain the same level of productivity and efficiency in the R&D.

Side so.

Again.

It gives us.

A lot of flexibility on how to manage growth and productivity from here on out.

Alright. Thank you I believe that's very helpful. I have no further questions.

Okay.

We would now like to turn the call back over to the operator to open up the line for questions.

Thank you. Our next question comes from Wilfred Yang from Macquarie. Please ask your question.

Operator.

Thank you for taking my question I've got a quick one on TTS tumor treating fields.

What is our expectation for gastric cancer as we have.

<unk>.

It's got to happen.

Pilot trial data later this year, so how should we.

How should we think of the bar for efficacy that will lead us to design to look further into the largest clinical trial. Thanks.

Thank you.

Hey, Al if you want to take this last question yes.

We would now like to open the lines for questions.

Yes sure. Thanks for the question.

If you have a question, please press star 1 at this time.

Please try to limit to one question each time.

And to withdraw your request, please press the pound or hash key.

As you as you point out what we'll be doing it will be analyzing the data looking at in particular response rates progression free survival.

Once again, that's style one, full question.

How that matches up with historical controls to see whether.

That data is exciting that to move forward.

In a next Registrational type randomized study.

Our first question comes from the line of Michael Yee from California.

We're excited and looking forward to the data readout moving forward so.

Stay tuned and hopefully that addressed your question.

Got it.

Thanks so much.

Great. Thank you I'm showing no further questions at this time I will now turn the call back to <unk> CEO , Samantha Du for closing remarks.

Okay.

Alan, do you want to take this one?

Unsponsored ADR, Good morning, everyone.

Yeah, sure, Billy.

Thank you very much for the question.

Thank you operator, I want to thank everyone for taking the time to join us on our call today.

Yeah, thanks for the question.

Our question was around Zajulia and thinking about the growth trajectory in 2022 and 23 and 24, as it relates to obviously getting expanded NRDL.

So, yeah, so as you of course know that Maradi has announced the accepting the filing with the PDUFA date that we mentioned earlier in December.

But also, as Billy noted, there were some price adjustments in the fourth quarter.

And we believe that we are already in contact with China regulators and that will continue with our path forward.

So how should we think about the growth in the future coming years, but appreciating that we might expect price cuts every couple of years?

That should not change any of the timelines that we're looking for moving forward.

So talk about that in the outlook for Zajulia.

And also I know our partners Maradi are optimistic that as you know in the U.S. sometimes with data that's very encouraging, those announcements can come before, decisions can come before the PDUFA date.

Thank you very much.

So we're looking forward to continue to work with our partner Maradi on this exciting and potential first in class and best in class agent in China.

Hey, Mike, this is Billy.

Thanks for taking.

I'll initiate and others can chime in.

Thanks so much for taking our questions.

I'll take your question.

We appreciate the support and looking forward to updating you again after the fourth quarter.

So yeah, provide some more color.

Thank you.

So, yeah, we're pretty excited to see the momentum, early momentum in the Jula, and of course, looking forward to implementing now the NRDL, you know, inclusion for first line for all comer patients, which, as we noted in the press release and the current call, it is the largest market opportunity for PARP inhibitors in China.

But before I do that, I'll just kind of recall that, you know, we just wrap up our first calendar year of commercialization.

Our next question comes from Jonathan Chang from SVB Leering.

Unsponsored ADR, And at the same time, our market share within that growing pie has both been increasing very nicely.

So we're off to the races, and we have great momentum that we're going to build upon.

Please go ahead.

We expect that to continue for the foreseeable future this year, next year, and even beyond.

And, you know, I think we have a lot of new products launching, as you know, pretty intense on schedule over the next three, four years.

Hi, guys.

And that's part of the reason why we had made the comment on this call that, you know, a little later than next year, we actually also expect to be the market share leader in the park, you know, as a class in space.

So we need to make sure that goes well.

Thanks for taking my question.

So hopefully that gives you a sense of, you know, the answer that you're looking forward to your question as well as the conference that we have in both the opportunity- May I ask, may I ask?

So we're still making investments. But we felt as a team at Zai Lab that it was, you know, it may be useful to, you know, both the, you know, buy side, sell side, for us to offer up, you know, kind of a framework on how to think about the commercial opportunity.

On bemurituzumab, to clarify, are you planning to initiate a registrational frontline gastric study in China in 4Q as a separate study from the Amgen Phase III studies?

May I ask a little follow up on on the second part of that question, which was related to the price adjustment in the fourth quarter.

And so, you know, we made those comments, and you saw it on the release.

And if so, can you discuss the rationale for this?

We saw that with another major drug as well in China.

So Yigal, I mean, additional call that I can provide, that we can provide on, you know, the peak year revenue, you know, number of two and a half to $3 billion is that first of all, it only includes our current portfolio.

Alan, back to you.

And so I'm not sure that Wall Street analysts may appreciate this adjustment every couple of years and how we need to think about that.

Operator, you may now discontinue the call. Thank.

Unsponsored ADR, I should accelerate.

Yes, sure.

And what is your opinion?

Unsponsored ADR, Yeah, no, that's definitely a helpful anchor for our, for our modeling, thanks.

Thanks for the question.

Yeah, yeah.

And then just one, one follow-up just on the broader, the broader portfolio strategy.

This is something that we're in discussion with our partners, Amgen, as the best method to move forward to get this exciting agent into patients in China.

So it is correct that this is universal, you know, pretty, pretty commonplace in our industry in China, where every time you are included in the NRDL, right before you're going to have a non-recurring adjustment.

Obviously, you have a very nice mix of therapeutic areas, oncology and infectious autoimmune, and now Karuna with neuroscience.

Thank you.

As you know, there's a significant number of patients that express FGFR-2B, and so this is something that we're, again, very excited about.

Unsponsored ADR Unsponsored ADR, So for example, we had a 23.6% discount, right?

Thank you.

Thank you.

So just wondering about how much broader you'd be willing to go therapeutically.

We're still working on details as to how that is going to play out, and we'll, of course, be releasing more information as we get closer to that date.

To get the first line indication, which is a, you know, again, a very significant piece of the power of asset class.

Our next question comes from Anupam Rama from J.P. Morgan.

Thank you.

As you know, there are many novel mechanisms in other areas, for instance, cardiovascular, nephrology, bone disease, even platform approaches in gene and cell therapy are very interesting to potentially extend the portfolio.

But Jonathan, I think you are correct in assuming that it would be a registrational trial for front line.

You know, a couple of years later on, if we were to renegotiate, it'd be a lot more modest compared to, you know, the precedence that we've seen.

Please, that's your question.

So just, could you talk in broad brush strokes about how you're thinking about broadening the therapeutic reach with respect to your BD?

That does conclude our conference for today, Thank you for participating.

I got it, but is there a reason why it would be like a separate study from the Amgen studies versus... Unsponsored ADR, The Amgen.

Thank you.

Hey guys, thanks so much for taking the question.

Yeah, we just broke into neuroscience and we're going to stay awfully busy with the four that we have.

Yeah, as Alan noted, I think right now we're prepared to say that it's going to be, in one way or another, an efficient registrational trial pathway.

Yeah, and Mike, maybe just to add, sorry, it's Jonathan here.

Just a quick specific question on Adagrassive.

But maybe, you know, Samantha, I don't know if you have any additional comments on additional TA strategy.

Unsponsored ADR, Yeah, to work out the details is the best way to move forward with that with the option.

I was in a negotiation with the NIDL late last year, so maybe you can provide a bit more color.

With the U.S. PDUFA and Second Line set for later this year, are there plans to speak to regional regulators on an approval on ex-China data for Second Line Lung for Adagrassive?

Yeah, hi, Billy.

I'm sorry, that can't be more.

Look, I think it's an important addition for us first to include the first slot frontline that gives us a very strong competitive advantage, you know, given we're the only all-comer product in that frontline setting.

Maybe I'll just chime in.

Got it.

So we are really going to expect to get a lot of volume in exchange for a modest discount.

Jonathan here.

Unsponsored ADR, Thank you.

Jonathan, yeah.

That makes sense related to the expanded label.

So I think for us, we certainly want to continue to strengthen those therapeutic areas, which we have built leadership positions in.

Thank you.

I think just in oncology alone, we're seeing really a lot of opportunity.

Thank you.

But I think last year, you know, in autoimmune...

Our next question comes from Yigal Nochomovitz from Citigroup.

Neuroscience, we have expanded with two, you know, pipeline of product anchor opportunities in FCAR and CARXT.

Hi, Samantha, Billy, and team.

I think we see a lot of these opportunities.

Thanks for taking the questions.

I think what we're really building at ZEII is a world-class, you know, company with truly innovative best-in-class or first-in-class assets.

You made some interesting comments in the opening remarks regarding the lung and GI cancer franchise that they can generate.

Unsponsored ADR, If there are assets which could help with a very large medical need, we certainly continue to pursue those opportunities.

Unsponsored ADR Unsponsored ADR Unsponsored ADR Unsponsored ADR, Hey Yigal, this is Billy.

We've seen a lot of these opportunities today, actually.

These pipeline of product opportunities, I think you can expect to continue quantities of deal flow this year.

I think especially in these areas where we have significant presence, you can expect us to do what we've been doing good at and potentially expand in other areas as we pursue global opportunities or maybe other transformative opportunities as well.

Great, thanks.