Q3 2023 Zai Lab Ltd Earnings Call
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Hello, Ladies and gentlemen, thank you for standing by and welcome to <unk> third quarter 2023 financial results Conference call.
At this time all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, today's conference is being recorded.
My pleasure to turn the call over to Christine Cho Senior Vice President of Investor Relations. Please go ahead.
Thank you operator, good morning, good evening and welcome to buy lots of third quarter of 2023 earnings call.
Today's call will be led by Dr. Samantha Du <unk> Lab's founder CEO and chair person she will be joined by Josh Smiley, President and Chief Operating Officer, Dr. Rafael Amado, President and head of Global Oncology Research and development Soccer, Howard Weinhardt, President and head of global development neuroscience autoimmune and <unk>.
Texas diseases.
Dr Yao Chen Chief Financial Officer.
Jonathan Wang our Chief business Officer will also be available to answer questions. During the Q&A portion of the call.
As a reminder, during today's call, we'll be making certain forward looking statements based on our current expectations. These statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from what we expect due to a variety of factors, including those discussed in our SEC filings.
We will also refer to product revenue growth rate on a constant exchange rate basis, which is a non-GAAP financial measure.
Please refer to our earnings release furnished with the SEC on November seven 2023 for certain disclosures regarding this non-GAAP financial leader.
At this time and it's my pleasure to turn the call over to doctors about the table.
Thank you Christine.
Hello, everyone and thank you all for joining us today.
Hello, all the year.
We have continued to success with one solid pipeline.
Including several important developments for key late stage programs.
That's called kick them off.
Following months of strategic cooperation.
Although still early in the launch.
We are encouraged by the initial demand for wheat Cogs and <unk>.
And by the positive feedback from both physicians and patients.
Josh will provide more detail on the progress of this very important product launch.
We're well positioned to execute on our corporate strategic goals.
Including the launch of multiple new products and new indications over the next two years.
Our pipeline of potential first in class.
I think cloud products.
Significant potential to meaningfully improve the lives of patients.
We expect this product candidates to contribute to our long term growth.
Shareholder value.
With that I'll pass it to Josh Josh.
Thank you Vanessa it is an exciting time at dialog that we wanted to have got the first F. CRM blocker approved for the treatment of generalized myasthenia gravis in China. There are over 170000 patients in China living with Gmg, many of whom continue to suffer from symptoms such as decreased muscle strength and mobility. Despite rich.
<unk> treatment.
<unk> is an important new treatment option for gmg. It has the potential to significantly change the way patients are treated today.
We've already made significant progress through our outreach efforts, having engaged around 75% of our top 200 hospitals since launch in September.
And while we are still in very early stages of the launch we are encouraged by the positive feedback from neurologists and patients.
We're seeing physicians gain experience is on depth guard and impressively nearly 70% of our top 100 Mg specialists have already prescribed <unk> garg to a patient.
Furthermore, many are repeat prescribers and we are seeing the depth and breadth of prescribing continue to increase.
We're focused on increasing awareness, providing education on the benefits of this important therapy and building a strong support network for physicians and patients.
Importantly, we are also working hard to increase patient access and we're in the negotiation process for <unk> inclusion on the NR <unk>, which would allow many more patients to be able to benefit from this therapy.
We're very excited by the potential of the guard and not just in <unk>, but across a wide range of new opportunities.
Earlier this year, we saw positive pivotal data in CIB P and by the end of 2023, we expect pivotal data in ATP and PV.
Next year, we're expecting the approval of subcutaneous <unk> in Gmg, and we believe that being able to provide alternative dosing option, both IV and subcutaneous is beneficial for patients and caregivers.
These are just some of the near term opportunities forgive guard to add additional layers of growth to the franchise.
Now turning to the rest of the commercial portfolio.
We delivered year over year product revenue growth in the third quarter of 22% on a reported basis and 27% on a constant currency basis.
In addition to the launch of Bib Guard the Jewel of hospital sales grew and it continued to be the leading PARP inhibitor in hospital sales for ovarian cancer in China Ken.
Can lock in new direct continued to benefit from their inclusion in the <unk> and our team was able to expand supplemental insurance coverage for Opco.
Looking ahead, we will continue to focus on the execution of our strategic goals.
First we are seeking to accelerate our medicines in the market and Dr drive revenue growth.
Over the next 12 to 18 months, we anticipate several important registrational data readouts, including for aftermarket demand and tumor treating fields in pancreatic cancer and we expect to initiate several important trials, including Fortitude 102 trial evaluating <unk> in first line gastric cancer.
Next year, we could see three or more N M P a approvals and for NDA or supplemental NDA submissions in China.
Second we are focused on driving profitability by leveraging our existing capabilities and platforms and by increasing productivity across the organization.
And third we continue to focus on expanding our pipeline through internal discovery and through regional and global collaborations.
We entered into a strategic partnership with meta link in April for our next generation D. L. L. III program, which we are currently advancing to a global phase one trial and we also have our topical IL 17 humour body, which is entering global phase II development.
In parallel we will continue to look for meaningful new external opportunities in strategic areas to further expand our pipeline.
We're very excited by the depth and breadth of our portfolio and we are confident that our commercial organization will be able to drive significant revenue growth over the next few years.
We are well positioned financially with a cash position of $822 million as of September 30th, which we believe will support our business and operations until we reach profitability.
And now I'll turn the call over to Dr. Mato Raphael.
Thank you Josh.
Within oncology R&D teams are focused on the development of our late stage pipeline and we have had several updates during the third quarter, which I will briefly highlight.
In August <unk> received its fourth breakthrough therapy designation in China for the treatment of patients with advanced solid tumors to hover neurotrophic divesting receptor kinase or <unk> gene fusion.
Progressed following treatment with tyrosine kinase inhibitors.
<unk> for potential treatment of Frost, one positive non small cell lung cancer really disclose results from the Registrational Trident. One study showed median duration of response of 34.1 months in median progression free survival of $35 seven months embarrassing kinase inhibitor naive patients.
This impressive durability has the potential to be a major differentiating factor in that.
As shown on medical products administrations, Thats accepted our new drug application for <unk> positive non small cell lung cancer with priority review and we look forward to bringing this important medicine to patients in need in China certainly feasible.
Additionally, FERC zaidi or our Nebraska are partnering Iraqi presented two year follow up data from the Crystal one starting September.
In the pooled analysis.
<unk> demonstrated durable efficacy with a median overall survival of $14. One month upfront 12, six months previously reported and a two year overall survival rate of 31% in basis with previously treated <unk> mutated non small cell lung cancer.
Exploratory analysis suggests a clinical benefit in patients with treated stable central nervous system metastases at baseline with responses noted at both most baseline commutation.
Right and the potential differentiation for other aggressive <unk> mutated non small cell lung cancer.
We await the results of the Crystal 12th trial off other aggressive against Docetaxel with just the ongoing confirmatory phase III study.
Which will form the basis for our submission in China in 2024.
In October our partner season announced that feedstock demonstrated superior overall survival progression free survival.
Active response rate versus chemotherapy and a pre specified interim analysis of the confirmatory phase III in Nova <unk> global trial in recurrent or metastatic cervical cancer patients with disease progression on or after frontline therapy.
We have participated in this study and continue on extension portion in China.
Moving to our internal global research and development programs regarding our dealer three antibody drug conjugate.
One zero, we just submitted an IND in the U S and are targeting to initiate a global phase one study in the first quarter of 2024.
Looking ahead over the next six to 12 months, we expect several important updates from some of our key oncology programs.
As we continue to expand in our balance our oncology pipeline I am pleased to announce that Dr. Robert Brown has joined xylem Chief Medical officer of oncology.
Robert impressive medical and drug development background will further strengthen our global oncology research and development team.
Dr. Brown will report to me and he will provide strategic leadership and support with respect to the clinical development of our oncology pipeline.
And now I will turn the floor over to Dr. Harald Reinhart to discuss the progress in our autoimmune infectious disease neuroscience therapeutic areas Carl.
We've made excellent progress across our auto immune diseases Enduro science therapeutic areas this last quarter.
Starting with regard <unk>, we launched the product for its first indication in gmg in mid September and already see significant market uptake.
We're also very excited about its potentially treating patients at Cie, DP, where chronic inflammatory demyelinating polyneuropathy.
Data from the global Triangle, we participated in showed a highly significant statistical and clinical benefit for patients, including the China subset. Indeed in September the Cte granted breakthrough therapy designation for SC sub Q TT.
<unk> for the treatment of patients with <unk>.
Existing treatment options are quite limited and problematic given the general reliance on long term steroids, where chronic immunoglobulin therapy.
We have seen how if granted two months up Q can meaningfully improve and stabilize disease symptoms in these patients.
Look forward to working with regulatory authorities in China to bring this important medicine to patients as soon as possible.
We also see significant potential of FY TT mode across multiple additional indications is we will continue to work with our partner <unk> an indication expansion.
Turning now to <unk> T. We are on track enrolling patients in the clinical bridging study to support our China registration.
<unk> is the combination of see normally and <unk>, which we are developing with our partner crew now for acute schizophrenia.
In September Corona submitted a new drug application to the FDA for this indication.
As a new class of anti psychotic, we believe that <unk> could become an important new treatment option for schizophrenia patients in China.
For Alzheimer's disease associated psychosis, or ADP Corona initiated the phase three adapt clinical trial program in the third quarter as we plan to participate in these studies and creative China next year.
And now <unk> will speak about progress with our commercial products and financial results.
Thank you.
Now I will discuss our third quarter 2020, sweeny financial results compared to the prior year period.
Total net product revenues for the third quarter of 2023 was $69 $2 million compared to $57 million for the same period in 2022, representing year over year growth of 22%.
Constant currency basis growth year over year, 27%.
This increase was primarily driven by increased sales volumes.
<unk> of vehicles and the decrease next TV Fox from the Covid pandemic.
Revenue growth was slowed by the effects on the hospital and physician practices.
The recent industrywide anti corruption enforcement efforts in China.
Our total net product revenues included $41 $6 million for secure which increased 6% from $39 $2 million acts as a cooler which is in that third year.
Continue to be the leading PARP inhibitor in Lasalle for ovarian cancer in China.
$11 $6 million were up Q, which increased 8% from $10 7 million in Dallas supported by increased patient access to this product in IV pain market.
$5 7 million in Dallas, which not which increased from $5 5 million notice supported by the <unk> in March 2026.
$5 5 million, which increased $1 $5 million supported by it and not be honest you March 'twenty places.
And $4 91, a novel mid card, which launched in September 2020.
Research and development expenses were $58 8 million for the third quarter of 2020 compared to $99 5 million for the same period in 2022.
This decrease was primarily due to a decrease in license fees for our license and collaboration agreement.
Selling general and administrative expenses were $68 $6 million for the third quarter of 2020.
<unk> $66 6 million for the same period E Dmitry.
This slight increase was primarily due to higher selling expenses to support new product launches, partially offset by a decrease in professional services fees.
<unk> reported a net loss of $69 $2 million.
Loss per ordinary share often sailpoint is $7 for the third quarter of 2023 compared to a net loss of $161 $2 million for the same period in 2022 or a loss per ordinary share punch one $7.
This decrease in net loss was primarily due to increase of product revenue the decrease of licensing fees.
This shift from foreign currency loss to gain.
We are in a strong financial position.
The quarter with $822 $2 million in cash and cash equivalents short term investments and restricted cash comp.
<unk> $876 4 million as of June 32023.
Based on our operating plan and our anticipated revenue growth.
Back to be able to fund our business profitability.
And with that I would now like to turn the call back over to the operator to open up the line for questions.
Operator.
Yeah.
Thank you we would now like to open the lines for questions. If you have a question. Please press star one one and your telephone at this time.
One moment for the first question.
First question comes from the line of Louise Chen from Cantor. Please go ahead.
Hi, congratulations on the quarter and thanks for taking my question. So I wanted to ask you on the <unk>, if you've seen any efforts to promote innovation and then also wears private insurance today, our commercial insurance and where do you think that will be over time and then the second question I wanted to ask you is on <unk>.
And what additional indications that you plan to move forward in the near term and what your next steps are there. Thank you.
Hi, Louise.
Just a month or two.
We're happy to answer your question.
I think overall in terms of the government.
Yeah.
We have seen.
They have made several very.
Serious measures.
Hum.
How's kind of industry recruiting multiple updates to them not to go over the last two years.
Recently.
<unk> continued.
To support you.
Ladies of medicine, especially.
In support medicines to address unmet medical needs.
So with the with our great.
Of course.
How reasonable Oh go into <unk>.
Right.
Specifically the increase.
Increasing the visibility and transparency film price, providing long term stability of pricing.
So all of that gave us more visible roadmap for a subsequent price comp for notebook.
Noble thoughts and also trucks like Oh.
Which treats patients with unmet needs.
Oh, a box right.
On the R&D question short term I think that impacts the whole industry.
But lithium long term I think under option.
They're positive force.
In the long run.
The long term.
Especially.
So companies that.
Hum.
The first is that right.
Unmet medical needs.
Stop here and let me sorry, Thank you for asking the question.
Okay. Thanks, Samantha it's Josh good morning, Louise Thanks for the questions.
I'll touch on the commercial insurance question briefly.
I think this is probably an underappreciated.
Positive also in the China market over the last few years I think if you look back to.
End of 2020, I think about 40 million people were covered through some form of supplemental.
Marshall insurance by the end of 2022 that number was 150 army, yes about $150 million, we do see that growing to somewhere above 200, I mean, it's been growing this year and growing somewhere above $200 million by the middle of the decade I think.
Industry reports put that projection somewhere in the range of 200 to 300 million.
People of course that that size is.
As big as many of the.
Bigger western countries and.
The supplemental insurance and supports.
Reimbursement at rates.
For innovative drugs that are closer to U S or western prices. So that's an important segment and its growing for us it's important for op two <unk>.
Our opportunity is not eligible for <unk>.
Listing because it's categorized as a medical device now and we've had very good experience with supplemental insurance. We're covered on nearly 100 different supplemental insurance plans thats grown from 73, a year ago and by our account were second only to Keytruda in terms of the <unk>.
Number of plans, where we're covered by so while we think for our portfolio overall.
D L lift.
Lifting is the primary sort of focus given that.
Important unmet needs, where we're addressing with our drug this Samantha reference the supplemental insurance market does provide an important <unk>.
Stop and and supplemental sort of coverage for drugs, while they are in the pre NR Dl phase or for things like opportune that arent eligible yet. So thanks for that question I think Carol you can cover that.
I think the question Louise you had about the next indications for gift card.
Yes, Thank you Josh and thanks for the question.
Indeed.
The lineup of new indications coming up in this year next year for submission and data on obviously approval.
Before I just spoke about.
Following that.
CIB P.
It's a very important indication for us it's a large market in China three times larger than the U S. B.
You say and as such it is a steady also that has shown incredible benefit from <unk> treatment in a patient population that is not well served currently with only IV AIG.
Following that.
Two other indications one is a <unk> 2%.
Cytopenia indication for which you've already seen steady results earlier this year with the <unk>.
<unk>.
And following that roughly at the same time, there should be <unk> with various food <unk> says this is our third one that is coming through.
As a result.
The ITT and the PV study.
Bruce to come.
End of this year.
So this is our lineup is also a new indication that we want to start next year, which is in tip thyroid eye disease.
<unk> way of showing and highlighting the efficacy of <unk> T demand.
<unk>.
That is at.
At least in the foreseeable future lineup. Thank you.
Thank you yeah.
Also just wonder Idaho click up quick points.
And the commercial or the Chile.
That's been in discussion for few years.
They see it.
<unk> be more and more putting into agenda.
And of course right.
One booking effectively wuxi.
I think that's not somewhere.
Sure.
Not being choppy I think there is.
But of course strong.
<unk> profile people.
So quote, but trying to lobby for the benefits of patients so I'm hopeful for that.
Thank you.
Thank you for the questions next question comes from the line of Michael Yee of Jefferies. Please go ahead.
Hi, Thanks for taking the question. This is charging went on a line for Michael <unk>.
Two questions first can you tell us about the ongoing.
The China anti corruption campaign.
What do you see there.
Did you expect any kind of aftermath impact during Q4.
And so forth.
And secondly, I think a couple of I'll be guard.
First.
I guess you had mentioned a five minute himself in just two weeks after the September launch so I wonder.
How much <unk> guard is actually led demand versus stocking inventory.
And.
I guess, you also mentioned that 70% of the top 100 specialists have already prescribed so how would you characterize the penetration there. Thanks.
So Josh kilometer.
Final question.
Oh go ahead license Coca Cola, Okay, well Samantha provided some some broader comments on anti corruption I think to get to the specifics.
A question around impacts for.
For the remainder of the year.
First.
As.
<unk> stated in the Samantha has talked about I think from a long term perspective focus on anti corruption in health care is good for everyone patience and companies in <unk>.
Providers.
And certainly for a company like us that focuses on bringing.
Innovative drugs for unmet needs, but in the short term there is no doubt in Q3 it had.
And impact on prescribing patterns and on health care utilization we.
We see that in our results and I think all companies to varying degrees or are seeing that I think now there have been these focuses in the past in China I think this one given that.
The sort of quick way it was rolled out I think the generalities.
Yes.
As opposed to very specific pieces did cause some.
Some some challenges in utilization in Q3, resulting in fewer patients being seen fewer procedures.
Health care practitioners, who who otherwise would have attended educational events and other things who didn't do that in Q3 to the same degree and we did have an impact on.
Sales rep access where hospitals, where we are.
Sort of blocking access to ramp now we've seen much of that now begin to normalize as we're here into the fourth quarter. So.
We expect and hope that by the end of this year, we're back to sort of normal practices and again good for long term.
For the industry and certainly for XI, but we will see some lingering effect I think in the fourth quarter.
<unk>.
Relatively modest.
The things that we're focused on particularly the zipcard launch and I'll transition into that for your question.
While wallet, which has been challenging given those factors that I mentioned, we've been able to get off to I think a really good start in terms of the launch and logon to activities.
As you mentioned.
Our sales in the third quarter for Bib Guard.
Really represent just a few weeks of commercial activity. Just a reminder to everybody. We were approved right at the end of June we shipped product from Soochow in early September so just a little bit more than 60 days from approval by our count that is.
Yes small of a gap between approval and shipping is as we have seen so we're quite proud of that but again. It only represents a few weeks of utilization from a commercial perspective in Q3. So of course, a decent amount of those sales represent initial stocking but.
Now that we're through the end of October we're seeing really good physician.
Stepped into and patient prescribing and utilization.
The guard.
As you referenced if you look at just our top 100 prescribers.
More than 70% have already.
Written a prescription are used vipin garg for their patients and of those physicians I think.
Approximately half of already become repeat prescribers so.
For launch metrics. These are really good and exciting I think indicators.
Overall demand and certainly we will expect as we get into the fourth quarter that utilization to continue and we will see certainly restocking so.
We do expect to record sales in the fourth quarter for sure as the patients continue to.
Use and get the benefits of <unk>. The one thing I would say for the fourth quarter.
Yes, we are in the middle of NR Dl negotiations now for potential listing next year.
And.
To the extent that that leads to a favorable result.
We have a couple of things that could impact.
Quarter sales for gift card, one would be to the extent that there is channel inventory, we would make a pricing adjustment in line with whatever that NR deal prices.
It's negotiated at the end.
We also have seen in prior years.
A lot of experience with drugs are gaining in our D. All access I think if you're a piece of physicians who are ready.
Ready to start a patient on the drug in sometime in September and December.
December and they know it listing is coming in January you may see some delays in starts so I think those things could.
Impacted fourth quarter utilization, a little bit, but overall I think all the the initial operational metrics and leading indicators are really positive for good garden, we're really excited about the launch of this drug.
Got it that's very helpful. Thank you.
Thank you for the question just one moment for the next question.
Next question comes from the line are you, calling noctule Margaret's from Citigroup. Please go ahead.
Yes, Hi, Samantha Jos and team. Thanks for the questions just a few more on the <unk>.
Launch you comment on whether these early adopters, where community or academic centers, and then where the patients new to therapy for Mg or had previously been on an IV.
And then if you could comment overall in terms of how many patients are currently on the cart and what what the overall prescribing accounts.
Number is I know you mentioned the 100 top accounts, but how many total prescriber accounts are you focused on in China overall, thank you.
Thanks, Josh.
Tried to cover some of that as much as I can.
I think first in terms of.
The.
Accounts and how we're we're focused there about.
600 hospitals that so just a reminder, there are like 200000 patients with.
MG in China that are diagnosed and in some form of treatment.
About 170000 of those have gmg, so that's sort of the universe, we're looking at.
About 170000 about 80%.
Patients are treated at one of about 600 or about somewhere between 500 600 hospitals. So that's what we're really targeting overtime is that 80% of the business.
If you look and you sort of get down to prescribers.
Finally about the about the same so we've got about 600 prescribers that are really our core our core focus and again, they're spread across about 600.
Hospitals.
So it's very concentrated.
Got about 80 reps right now that are focused on those accounts, we'll grow that that number to about 150.
Post <unk> and that will cover again 80 plus percent of the prescribing universe. So when we talk about top 100 hospitals.
That's our top 100 prescribers.
It's a pretty concentrated group.
In terms of patient numbers again, I would just say that we're seeing really good.
Utilization in prescribing patterns among.
Among our physicians I think even given the.
Challenges, we've seen with anti corruption in the third quarter. If you look at just the top 200 hospitals of that about 600 that I mentioned I think that at least 75% of those hospitals, we have reps that are able to get in and have an in.
In person.
Discussions and education with physicians, so I think we're off to a good start there.
In terms of the.
What those patients who are getting.
S markets might look like most of them have had some kind of treatment.
For for Gmg and <unk>.
Next of.
<unk>.
Ivy.
<unk> steroids and other.
Sort of older treatments again, I think the thing that.
We've said historically here is this is a well diagnosed population and they are treated just with older therapy. So I think it's fair to assume that most of the patients who are getting <unk> today.
Getting it and has had other treatments for for Gmg for sure. So I think thats and Thats really our focus with them.
The initial patient group is to get those patients who are in.
Not response, responding well to current therapies and in many cases could be in an acute phase.
Of Gmg so.
By almost by definition I think these are patients who have tried other than had been on other therapies before.
Thanks Nicole.
Okay. Thanks, and then if I could just one quick follow up Josh you mentioned with respect to the inventory once you've had the negotiations with the URL that you'd take a pricing adjustment, but if that inventory flowed into the market. Before 2024, then it would it would reflect the <unk> price or would it not just could you just clarify how that works mechanically.
Yeah.
It would represent.
Channel inventory that had been shipped in that's already in the market and we just adjust that we would adjust the price to whatever the NR dlp's here. So <unk> seen <unk> seen this was a jewel of over the last few years when we've had.
A new price either as a function of an initial listing or subsequent negotiation. We we look at the channel inventory and make a make a price adjustment for that piece, so it'll be whatever whatever's in in the market at that time.
Again.
I say that just to say that that is that just a common effect will describe that when we if and when this happens when we report our next quarter sales again, though what I would say is we're seeing good good patient utilization today. So.
We expect there's going to be a decent out of patients who have already been on access and utilized.
By the end of this year.
Alright. Thanks.
Thank you for the questions one moment for the next questions.
Okay.
Yeah.
Next question comes from the line of <unk> Rama from Jpmorgan. Please go ahead.
Hey, guys. Thanks, so much for taking my question. So on this discard launch for in Gmg, how should we be thinking about reimbursement dynamics going into next year and our Dl self pay any sort of private insurance contribution and how do you expect that to change over the next couple of years. Thanks, So much.
Thanks, Dan upon this Josh.
First we're in the in the middle of NR deal negotiations for 2024 lifting as you recall, our big focus was to try to get an approval in the first half of 2023, so that would be eligible to roll right into these negotiations we're in the middle of those now so not going to comment on potential price.
But.
If we end up with a mute.
Mutually acceptable price.
And are able to.
Move to a listing for NRG al for 2024.
In the past that generally happens in in January of the calendar year. So January of 2024, and once then that happened that would then.
Supersede or take out any commercial or supplemental insurance or private pay so of course, that's why we're we're focused on on.
Making that happen because it opens up the market for the 170000 patients who we believe can benefit from this therapy. So I think I think what what's the next important milestone is to <unk>.
Conclude that negotiation and see where we end up on price and if that's the case then it becomes a matter in 2024.
Getting that lifting and then getting that.
That access pushed down to the as I mentioned, the $5 to 600 hospitals that are critical to our.
Patient base and that should based on historical experience is that that over.
Over time, it takes a couple of quarters to get that all the way pulled through to all the hospitals, but.
Again, with an acceptable price and NRG lifting in 2020 for that then we have basically open access for all of those patients who are suffering from gmg today and.
Of course, that's subject to the normal.
No.
Every two year negotiation, but as Samantha mentioned in the upfront question Theres been a lot of.
Positive developments and how you renew price and go through these pieces. This is the transparency and automatic renewable piece. So we.
We're really focused on getting a good.
Price reflective of the value that they've got can bring to patients to get that for NR Dl listing in 2024 and of course, we can't say much more than that at this point, but more to come there as we proceed through the negotiations.
Thanks, so much for taking my question.
Given the questions one moment for the next question.
Next question comes from the line of <unk> Chen from Goldman Sachs. Please go ahead.
Thank you for taking my questions.
Just two questions. One is on the full year guidance Scotia, I remember that.
Previously earlier in the year, you give the guidance of 300 million in U S. Dollar revenue target this year.
Now with all of those anticorruption disruptions and third quarter.
Of course, there has been foreign exchange impact.
Should we think about the self target for this year, what kind of level is it's really achievable.
My second question is really on the margin because in the past few quarters has been relatively stable, but in into the third quarter of this year.
On the year over year basis on a quarter over quarter basis, the margin has been declining by.
2% to 3% so trying to understand whether that was really because FDA Ralph the Africa pitch Mod.
If that's the case then.
How should we think about FY <unk> crush margin and profit margin going forward, and particularly just going to be a.
Really new drug still need a lot of investment into sales and marketing commercialization. So how.
Think about the return on this asset.
Any estimates on how big the drug could be to make it profitable. Thank you.
Thanks, I'll start with a question on <unk>.
Sort of.
Outlook for the year and then Jim you can comment on the second question.
Yes, when we did our Investor day in June what we said was consensus at the time for 2023 was approximately $300 million, we weren't giving guidance. We said that we were comfortable with that that outlook I think the two things that have changed and you mentioned them.
Since then have been.
Sort of a full year effect of the currency.
Decline basically the weakening.
Versus the U S. Dollar. So that's that's now fully of course reflected in our Q3 results and expected in Q4 and then the.
The impact from the anti corruption.
Efforts, which again I think it will be mostly concentrated in Q3 with as I mentioned, a little lingering effect into Q4, I think if you put both of those together.
I think we're I think if I look at I don't know if consensus is not fully updated but I think if I see consensus today, that's and maybe in that $270 million range I think thats probably reflects those two events of course.
We're focused on.
Getting back to full strength as it relates to sales reps in front of physicians driving the guard uptake continuing to drive.
Outperformance for the jewel of relative to the class. So I think all of those all of the underlying dynamics that we talked about over the summer in our Investor day all.
We're just dealing with the.
The currency effect, which is what it is and then the <unk>.
Packed that we saw in Q3 with with that abate.
Debating I think in Q4, but probably a little bit of an effect. So I think those things probably put us.
On a on a reasonable long term trend, but we are absorbing those two impacts.
In Q3 and Q4.
Judging you cannot comment on that.
Profitability question.
Yes. Thanks for the question so first off I'm going to answer the question about 19% of quota.
Our gross margin as you said is that impacted by the product mix.
Next sometimes one time nature in the <unk>.
Pardon me.
Okay.
We are going to see some of that would be the peak quarter over quarter today. So for third quarter. It is not because the bank of America. So just wondering can you with that and then I think you can focus on the year to date growth Mike.
<unk> will be better than just picking up the one quarter.
And then over the next couple of years, we are going to see a ceiling.
New products launched in May was going to drive significant revenue growth towards our gross margin for the long run we will continue to increase over time as the volume picks up.
And coming to a specific question about how far.
At that time, it will be the same on the trying to take that one.
We're going to increase and I think the appointment.
Looking on the manufacturing process discounting.
<unk> yourself.
And that will drive the cost the unit cost.
Very very dramatically.
So we are going to continue to see.
Gross margin to increase significantly over time.
And then sales and marketing efforts last guys. Just mentioned is there any concentrated effort.
Talking about 600 hospitals.
Just a limited number of specialty.
So we are talking about France.
Not a huge scale of that.
And so you might Keith we're very confident that we are on the trajectory.
To achieve the profitability levels and also for the company.
Thank you.
Two questions.
Our next question comes from the line of Jonathan Chang from Leerink Partners. Please go ahead.
Mr. <unk>. Your line is open you may on mute locally.
Okay. Mr. Chin. Your line is now open please on mute locally.
She would like to ask questions. Please press star one.
I'm showing no further questions at this time I will now turn the call back over to <unk> CEO, Samantha Du for closing remarks.
Thank you operator.
I want to thank everyone.
We're taking the time.
Joining us on the call today.
We have pushed retail support.
Forward to update you again.
Fourth quarter of 'twenty three.
<unk>.
We are optimistic about the future upside lineup we will.
Work hard towards achieving our three hour and.
As we all know what they are.
Peter you May now disconnect this call.
Thank you.
Ladies and gentlemen that does.
Today's conference call. Thank you for your participation you may now disconnect your lines.
Yeah.
Okay.
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Yes.
Okay.
Yes.
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